-----BEGIN PRIVACY-ENHANCED MESSAGE----- Proc-Type: 2001,MIC-CLEAR Originator-Name: webmaster@www.sec.gov Originator-Key-Asymmetric: MFgwCgYEVQgBAQICAf8DSgAwRwJAW2sNKK9AVtBzYZmr6aGjlWyK3XmZv3dTINen TWSM7vrzLADbmYQaionwg5sDW3P6oaM5D3tdezXMm7z1T+B+twIDAQAB MIC-Info: RSA-MD5,RSA, Cqy0K98MXEil1LOYBb3XJ8VIrfjh1wUy/Qs09BtjH6y7PG0N4mUAbsomjp0Dd3RZ YYxryCG/MB3NmP7JexmJ3g== 0000950129-97-003788.txt : 19970918 0000950129-97-003788.hdr.sgml : 19970918 ACCESSION NUMBER: 0000950129-97-003788 CONFORMED SUBMISSION TYPE: DEF 14A PUBLIC DOCUMENT COUNT: 1 CONFORMED PERIOD OF REPORT: 19971030 FILED AS OF DATE: 19970916 SROS: AMEX FILER: COMPANY DATA: COMPANY CONFORMED NAME: TEAM INC CENTRAL INDEX KEY: 0000318833 STANDARD INDUSTRIAL CLASSIFICATION: SERVICES-MISCELLANEOUS REPAIR SERVICES [7600] IRS NUMBER: 741765729 STATE OF INCORPORATION: TX FISCAL YEAR END: 0531 FILING VALUES: FORM TYPE: DEF 14A SEC ACT: SEC FILE NUMBER: 000-09950 FILM NUMBER: 97681040 BUSINESS ADDRESS: STREET 1: 1019 SOUTH HOOD STREET CITY: ALVIN STATE: TX ZIP: 77511 BUSINESS PHONE: 2813316154 MAIL ADDRESS: STREET 1: 1019 SOUTH HOOD STREET CITY: ALVIN STATE: TX ZIP: 77551 DEF 14A 1 TEAM INC. 1 SCHEDULE 14A (RULE 14A-101) 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 [ ] 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 TEAM, INC. - -------------------------------------------------------------------------------- (Name of Registrant as Specified in its Charter) - -------------------------------------------------------------------------------- (Name of Person(s) Filing Proxy Statement, if other than the Registrant) Payment of Filing Fee (Check the appropriate box): [X] No fee required. [ ] Fee computed on table below per Exchange Act Rules 14a-6(i)(l) 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: - -------------------------------------------------------------------------------- 2 TEAM, INC. 1019 SOUTH HOOD STREET ALVIN, TEXAS 77511 (281) 331-6154 NOTICE OF 1997 ANNUAL MEETING OF SHAREHOLDERS TO BE HELD ON OCTOBER 30, 1997 To the Shareholders of Team, Inc.: The 1997 Annual Meeting of Shareholders of Team, Inc. (the "Company") will be held on Thursday, October 30, 1997 at 3:00 p.m. Houston time, at the Nolan Ryan Center, 2925 South Hwy. 35 Bypass, Alvin, Texas 77511 for the following purposes: 1. To elect two persons to serve as Class II Directors for a term of three years on the Company's Board of Directors consisting of three classes of directors with staggered terms; 2. To consider and vote on a proposal to approve the appointment of Deloitte & Touche LLP as the independent certified public accountants to audit the Company's accounts for the fiscal year ending May 31, 1998; and 3. To transact such other business as may properly come before the meeting and all adjournments thereof. The Board of Directors has fixed the close of business on September 12, 1997 as the record date for determination of shareholders who are entitled to notice of and to vote either in person or by proxy at the Annual Meeting of Shareholders and any adjournment thereof. All shareholders are cordially invited to attend the meeting in person. Even if you plan to attend the meeting, YOU ARE REQUESTED TO SIGN, DATE AND RETURN THE ACCOMPANYING PROXY AS SOON AS POSSIBLE. By Order of the Board of Directors /s/ WILLIAM A. RYAN William A. Ryan Chairman of the Board of Directors, President and Chief Executive Officer September 25, 1997 YOUR VOTE IS IMPORTANT. PLEASE SIGN, DATE AND RETURN THE ACCOMPANYING PROXY CARD PROMPTLY. 3 TEAM, INC. 1019 SOUTH HOOD STREET ALVIN, TEXAS 77511 (281) 331-6154 PROXY STATEMENT GENERAL This Proxy Statement and the accompanying proxy card are furnished in connection with the solicitation of proxies by the Board of Directors of Team, Inc., a Texas corporation (the "Company"), to be voted at the 1997 Annual Meeting of Shareholders (the "1997 Annual Meeting"), and at any adjournment thereof, to be held at the time and place and for the purposes set forth in the accompanying Notice. This Proxy Statement and enclosed form of proxy are being mailed to shareholders beginning on or about September 26, 1997. The Company will bear costs of soliciting proxies in the accompanying form. In addition to the solicitation made hereby, proxies may also be solicited by telephone, telegram or personal interview by officers and employees of the Company. The Company will reimburse brokers or other persons holding stock in their names or in the names of their nominees for their reasonable expenses in forwarding proxy material to beneficial owners of stock. All duly executed proxies received prior to the 1997 Annual Meeting will be voted in accordance with the choices specified thereon, unless revoked as described below. As to any matter for which no choice has been specified in a proxy, the shares represented thereby will be voted by the persons named in the proxy: (1) FOR the election of the two nominees listed herein as Class II Directors for a term of three years; (2) FOR the proposal to approve the appointment of Deloitte & Touche LLP as independent certified public accountants of the Company for the fiscal year ending May 31, 1998; and (3) in the discretion of such person in connection with any other business that may properly come before the meeting. Shareholders may revoke their proxy at any time prior to the exercise thereof by written notice to Mr. Kenneth M. Tholan of the Company at the above address of the Company, by the execution and delivery of a later dated proxy or by attendance at the meeting and voting their shares in person. Proxy cards that are not signed or that are not returned are treated as not voted for any purposes. VOTING SECURITIES As of the close of business on September 12, 1997, the record date for determining shareholders entitled to vote at the 1997 Annual Meeting, the Company had outstanding and entitled to vote 5,940,842 shares of common stock. Each share of common stock is entitled to one vote with respect to each matter to be acted upon at the meeting. The holders of a majority of the total shares of common stock of the Company issued and outstanding as of September 12, 1997, whether present in person or represented by proxy, will constitute a quorum for the transaction of business at the meeting. Abstentions, or with respect to the election of directors withholds, are counted for purposes of determining the presence or absence of a quorum for the transaction of business while broker non-votes are not so counted. Additionally, abstentions and/or withholds are counted in tabulations of the votes cast on proposals presented to shareholders, whereas broker non-votes are not counted for purposes of determining whether a proposal has been approved. PROPOSAL ONE -- ELECTION OF DIRECTORS GENERAL The Company's Restated Articles of Incorporation and Bylaws provide that the Company's Board of Directors will consist of not less than five nor more than nine persons, the exact number to be fixed from time-to-time by the Board of Directors. The Board of Directors has fixed the number of directors constituting the Board of Directors at five, divided into three classes with staggered three-year terms. 4 The Board of Directors has nominated two Class II Directors to be elected to serve a three-year term expiring on the date of the Annual Meeting of Shareholders of the Company to be held in 2000, and to hold office until their successors are duly elected and qualified. Messrs. Jack M. Johnson, Jr. and E. Theodore Laborde have been nominated by the Board of Directors to stand for re-election as Class II Directors for a three-year term. Directors are elected by a plurality of votes cast at the Annual Meeting. Unless contrary instructions are set forth in the proxies, the persons with full authority to act as proxies at the 1997 Annual Meeting will vote all shares represented by such proxies for the election of the nominees named therein as directors. Should any of the nominees become unable or unwilling to accept nomination or election, it is intended that the persons acting under the proxy will vote for the election, in the nominee's stead, of such other persons as the Board of Directors of the Company may recommend. The management has no reason to believe that either of the nominees will be unable or unwilling to stand for election or to serve if elected. NOMINEES Set forth below is certain information as of September 12, 1997 concerning the nominees for election as Class II Directors at the 1997 Annual Meeting, including the business experience of each for at least the past five years:
PRESENT POSITION DIRECTOR NAME AGE WITH THE COMPANY SINCE ---- --- ---------------- -------- Jack M. Johnson, Jr.............................. 59 Director 1992 E. Theodore Laborde.............................. 59 Director 1991
Mr. Johnson has been Managing General Partner of Wintermann & Company, a general partnership that owns approximately 25,000 acres of real estate in Texas which is used in farming, ranching and oil and gas exploration activities, for more than the past five years. Mr. Johnson is also President of Winco Agriproducts, an agricultural products company that primarily processes rice for seed and commercial sale, and is on the Board of Directors of Houston National Bank located in Houston, Texas with assets of approximately $100 million. Mr. Johnson is also a Director of Security State Bank in Anahuac, Texas. Mr. Laborde has served in various capacities with J & H Marsh & McLennan, Inc., an insurance brokerage firm, in New Orleans, Louisiana, for approximately 35 years. Since 1982, Mr. Laborde has acted as Managing Director of the New Orleans operation. J & H Marsh & McLennan, Inc. is a subsidiary of Marsh & McLennan Companies. DIRECTORS CONTINUING IN OFFICE Set forth below is certain information concerning the three directors continuing in office until the expiration of their respective terms, including the business experience of each for at least the past five years:
PRESENT POSITION DIRECTOR EXPIRATION OF NAME AGE WITH THE COMPANY SINCE PRESENT TERM ---- --- ---------------- -------- ------------- William A. Ryan................ 70 Chairman of the Board of 1987 1999 Directors, President and Chief Executive Officer Sidney B. Williams............. 64 Director 1973 1998 George W. Harrison............. 69 Director 1995 1998
Mr. Ryan was elected Chairman of the Board of Directors, President and Chief Executive Officer of the Company in August of 1995. Previously, Mr. Ryan was President and Chief Operating Officer of Continental Materials Corporation in Chicago, Illinois, from 1974 until his retirement in August 1995. Continental Materials Corporation engages in the business of manufacturing heating and cooling equipment and producing minerals and mineral products, and its common stock is listed on the American Stock Exchange. 2 5 Mr. Williams is a sole shareholder of a professional corporation which is a partner in the law firm of Chamberlain, Hrdlicka, White, Williams & Martin in Houston, Texas and has been a partner in that firm for more than the past five years. Mr. Harrison has been a director of the Company since November 1995. He is currently a consultant for the Company and previously served as Team's Senior Vice President and was involved in most aspects of the Company including operations, engineering, manufacturing, marketing and research and development. Mr. Williams and Mr. Laborde are brothers-in-law. MEETINGS AND COMMITTEES OF THE BOARD OF DIRECTORS The Board of Directors held six regular meetings and two telephone conference meetings during the fiscal year ended May 31, 1997. No director attended fewer than 75% of the meetings held by the Board and the Committees on which he served. The Board of Directors has an Executive Committee, an Audit Committee and a Compensation Committee but does not have a Nominating Committee. The Executive Committee is composed of Messrs. Ryan and Williams. The Executive Committee is responsible for assisting with the general management of the business and affairs of the Company during intervals between meetings of the Board of Directors. The Executive Committee met weekly during fiscal 1997. The Audit Committee is composed of Messrs. Laborde, Johnson and Harrison. The Audit Committee is charged with the duties of recommending the appointment of the independent certified public accountants; reviewing their fees; ensuring that proper guidelines are established for the dissemination of financial information to the Company's shareholders; meeting periodically with the independent certified public accountants, the Board of Directors and certain officers of the Company and its subsidiaries to ensure the adequacy of internal controls and reporting; reviewing consolidated financial statements; and performing any other duties or functions deemed appropriate by the Board. The Audit Committee met one time during fiscal 1997. The Compensation Committee, composed of Messrs. Johnson and Williams reviews management performance and makes recommendations to the Board of Directors concerning management compensation and other corporate benefits. The Compensation Committee met three times during fiscal 1997 regarding specific employee matters. COMPENSATION OF DIRECTORS All non-employee directors currently receive an annual fee of $20,000 of which one-half ($10,000) is paid in cash on a quarterly basis. The remaining $10,000 is paid in Company stock on July 1 of each year with the number of shares calculated by dividing $10,000 by the closing price per share on the preceding business day. In December 1991, the Company adopted the Non-Employee Directors' Stock Option Plan, as amended through March 28, 1997 (the "Non-Employee Director Plan"), which authorizes options to purchase 220,000 shares of common stock for directors of the Company who are not employees of the Company or any of its affiliates. During the year, the Board of Directors approved the amendment of the Non-Employee Director Plan to increase the maximum number of shares which may be offered from 220,000 to 265,000 shares. The purpose of the Non-Employee Director Plan is to attract and to retain the services of experienced and knowledgeable independent individuals as directors, to extend to them the opportunity to acquire a proprietary interest in the Company so that they will apply their best efforts for the benefit of the Company, and to provide such individuals with an additional incentive to continue in their position. Pursuant to the Non-Employee Director Plan, each non-employee director receives automatic grants of options upon such director's appointment, re-appointment, election or re-election to the Board of Directors equal to the product obtained by multiplying five thousand (5,000) by the number of years, or any part of any year, that such director is appointed or elected to serve on the Board of Directors. The exercise price of the options is equal to the fair market value of the Company's common stock on the date of grant, and the options expire ten 3 6 years after the date of grant. In December 1996, the Board of Directors repriced all outstanding options to $2.125 per share. Options to purchase 5,000 shares vest on the date of grant and each anniversary thereafter until all of the options granted are fully vested. Currently, under the Non-Employee Director Plan, one director has been granted options to purchase 30,000 shares at $2.125 per share, one director has been granted options to purchase 25,000 shares at $2.125 per share, one director has been granted options to purchase 40,000 shares at $2.125 per share, and one director has been granted options to purchase 80,000 shares at $2.125 per share. None of the Company's directors exercised their options under the Non-Employee Director Plan during the preceding fiscal year. CURRENT DIRECTORS AND EXECUTIVE AND OTHER OFFICERS The following table sets forth information regarding the current directors and executive and other officers of the Company:
YEAR YEAR ELECTED ELECTED NAME OF AS AS DIRECTOR OR OFFICER AGE DIRECTOR OFFICER POSITION WITH COMPANY ------------------- --- -------- ------- --------------------- William A. Ryan(1)................... 70 1987 1995 Chairman of the Board of Directors, President and Chief Executive Officer Kenneth M. Tholan.................... 58 -- 1996 Executive Vice President and Chief Operating Officer Margie E. Rogers..................... 54 -- 1996 Vice President, Chief Financial Officer, Secretary and Treasurer John P. Kearns....................... 41 -- 1996 Vice President Clark A. Ingram...................... 41 -- 1996 Vice President William H. Nelson.................... 31 -- 1996 Controller and Assistant Secretary Sidney B. Williams (1)(3)............ 64 1973 -- Director George W. Harrison (2)............... 70 1995 1974 Director E. Theodore Laborde (2).............. 59 1991 -- Director Jack M. Johnson, Jr.(2)(3)........... 59 1992 -- Director
- --------------- (1) Member of the Executive Committee (2) Member of the Audit Committee (3) Member of the Compensation Committee Mr. Tholan joined the Company in June 1996 as General Manager of the Company and shortly thereafter was elected as Vice President. In 1997, he was named Executive Vice President and Chief Operating Officer. Previously, from 1993 to 1996, Mr. Tholan held the position of Vice President and General Manager for Furmanite America, Inc. (a Kaneb company) with responsibility for the Southwest Division, as well as engineering and manufacturing of on-site mechanical services for the refinery, chemical and other related industries. From 1989 to 1992, Mr. Tholan served as Vice President of Smith Diamond, a division of Smith International, Inc. He was responsible for the engineering, manufacturing and sales of synthetic diamond bits and other related products to the oil and gas industry. Ms. Rogers joined the Company in 1989 as Corporate Controller and assumed the position of Assistant Secretary in 1995. In 1996, she assumed the positions of Vice President, Secretary, Treasurer and Chief Accounting Officer of the Company. In 1997, she was named Chief Financial Officer. Mr. Kearns joined the Company in 1980 as a design engineer and assumed his position as Vice President of Engineering and Manufacturing in 1996. Mr. Kearns has been involved with the Company's engineering, manufacturing and research and development functions for more than the last five years. Mr. Ingram joined the Company in 1988 as Risk and Human Resource Manager and assumed his position as Vice President of Human Resources in 1996. Mr. Ingram has been involved with the Company's human resources, insurance and employee benefits for more than the last five years. 4 7 Mr. Nelson joined the Company in 1993 as Assistant Controller and assumed his position of Assistant Secretary in 1996 and Corporate Controller in 1997. Prior to joining the Company, Mr. Nelson was employed by the accounting firm of Coopers & Lybrand. COMPLIANCE WITH SECTION 16(A) OF THE SECURITIES EXCHANGE ACT Section 16(a) of the Securities Exchange Act of 1934, as amended, requires the Company's officers and directors, and persons who own more than 10 percent of a registered class of the Company's equity securities to file reports of ownership and changes of ownership with the Securities and Exchange Commission. Officers, directors and greater than 10 percent stockholders are required to furnish the Company with copies of all Section 16(a) reports they file. Based solely on its review of the forms received by the Company, or written representations from certain reporting persons that no Form 5 reports were required for those persons, the Company believes that during the year ended May 31, 1997, all filing requirements applicable to the Company's officers, directors and greater than 10 percent shareholders were satisfied. EMPLOYMENT AND OTHER AGREEMENTS Mr. Ryan is a party to an employment and consulting agreement with the Company. This agreement terminates on May 31, 2002, unless terminated earlier with or without cause by either Mr. Ryan or the Company. Pursuant to the terms of such employment agreement, Mr. Ryan has agreed not to disclose any confidential information regarding the Company without the prior written consent of the Company. Further, Mr. Ryan has agreed not to compete with the Company for a period of two years following his termination of employment. Pursuant to such employment agreement, in the event Mr. Ryan is terminated without cause or resigns, he would be entitled to severance payments for a specific length of time. Also, if Mr. Ryan's employment is terminated, for the remainder of the term of the Agreement, Mr. Ryan will consult with the Company and receive a consulting fee of $50,000 per year. See also "Deferred Compensation Plan for Mr. Ryan." EXECUTIVE COMPENSATION AND OTHER MATTERS The following table sets forth compensation information for the fiscal years ended May 31, 1997, 1996 and 1995 for the Chief Executive Officer and the other executive officers of the Company earning in excess of $100,000 during the Company's 1997 fiscal year (the "Named Executive Officers"): SUMMARY COMPENSATION TABLE
OTHER ANNUAL RESTRICTED ALL OTHER COMPEN- STOCK OPTIONS/ LTIP COMPEN- NAME AND SALARY BONUS SATION AWARD(S) SARS PAYOUTS SATION PRINCIPAL POSITION YEAR ($) ($) ($) ($) (#) ($) ($) ------------------ ---- ------- ------ ------- ---------- -------- ------- --------- William A. Ryan,(1)................. 1997 212,692(3) 50,000 -- -- -- -- -- Chairman of the Board of Directors, 1996 230,769(3) -- -- -- 60,000(4) -- -- President and Chief Executive Officer Kenneth M. Tholan,(2)............... 1997 118,808 20,000 -- -- 15,000 -- -- Executive Vice President
- --------------- (1) Mr. Ryan was named an executive officer during fiscal 1996. (2) Mr. Tholan was named an executive officer during fiscal 1997. (3) Includes $175,000 and $125,000 for 1997 and 1996, respectively, deferred at the option of Mr. Ryan. See "Deferred Compensation Plan for Mr. Ryan." (4) Includes options to purchase 40,000 shares which were repriced in December 1995 and options to purchase 20,000 shares which were granted to Mr. Ryan in December 1995. 5 8 FISCAL 1998 COMPENSATION OF THE CHIEF EXECUTIVE OFFICER Mr. Ryan is a party to a new employment agreement with the Company effective June 1, 1997 and terminating May 31, 2002. Pursuant to the terms of such employment agreement, Mr. Ryan will receive an annual salary of $100,000 and is guaranteed a performance bonus of not less than $50,000 annually. In the event Mr. Ryan ceases to be the Company's Chief Executive Officer, he will continue to receive this salary for one year. Thereafter and until the termination of the employment agreement, Mr. Ryan will act as a consultant for the Company and will receive $50,000 annually. Pursuant to the terms of the employment agreement, Mr. Ryan has agreed not to disclose any confidential information regarding the Company without the prior written consent of the Company and, under certain circumstances, not to compete with the Company for a period of two years following his termination of employment. DEFERRED COMPENSATION PLAN FOR MR. RYAN Effective January 1, 1996, an agreement was entered into with Mr. Ryan by which he is permitted, prior to the beginning of each calendar year, to elect to defer a designated portion of his regular annual salary for income tax purposes. The deferred salary is contributed by the Company into a trust held and managed by a designated bank, until distributed to Mr. Ryan in the future. The amount of such deferred salary in fiscal 1997 and 1996 is included in the above Summary Compensation Table. The trust is treated as a grantor trust for federal income tax purposes. As a result, the agreement provides that the annual income tax on the trust's taxable income shall be paid by the Company and not charged to the trust. Therefore, the trust's taxable income for 1996 will be included in the Company's consolidated federal tax return. OPTION GRANTS IN FISCAL 1997 The following table sets forth additional information with respect to stock options granted in 1997 to the Named Executive Officers:
PERCENTAGE OF TOTAL NUMBER OF OPTIONS SECURITIES GRANTED TO UNDERLYING EMPLOYEES IN EXERCISE EXPIRATION GRANT DATE NAME OPTIONS 1997 PRICE DATE VALUE ---- ---------- ------------- -------- ---------- ---------- Kenneth M. Tholan(1)................... 15,000 100% $2.00 11/30/99 $ 16,200
- --------------- (1) Pursuant to the vesting schedule in Mr. Tholan's Option Agreement, 7,500 shares are currently exercisable, 3,750 become exercisable on January 1, 1998 and 3,750 become exercisable January 1, 1999. OPTION EXERCISES IN LAST FISCAL YEAR AND FISCAL YEAR END OPTION VALUES The following table provides certain information with respect to any options exercised during the fiscal year ended May 31, 1997 by each of the Named Executive Officers and the value of their options at the end of fiscal 1997:
VALUE OF UNEXERCISED NUMBER NUMBER OF UNEXERCISED IN-THE-MONEY OF SHARES OPTIONS AT END OPTIONS AT END ACQUIRED OF FISCAL 1997 OF FISCAL 1997 ON VALUE --------------------------- --------------------------- NAME EXERCISE REALIZED EXERCISABLE UNEXERCISABLE EXERCISABLE UNEXERCISABLE ---- --------- -------- ----------- ------------- ----------- ------------- William A. Ryan............ -- N/A 60,000 -- -- -- Kenneth M. Tholan.......... -- N/A 7,500 7,500 -- --
6 9 COMPENSATION COMMITTEE OF THE BOARD OF DIRECTORS Jack M. Johnson, Jr. -- Chairman Sidney B. Williams COMPENSATION COMMITTEE REPORT Pursuant to rules adopted by the Securities and Exchange Commission, the Compensation Committee of the Board of Directors (the "Committee"), which is composed entirely of independent outside directors, has furnished the following report on executive compensation: The Committee's major responsibilities include, but are not limited to, the following: 1. Reviewing the Company's major compensation and benefit practices, policies and programs with respect to executive officers; 2. Reviewing executive officers' salaries and bonuses; and 3. Administering the Company's stock option plans. Following review and approval by the Committee, all issues pertaining to the compensation of, and the grant of options to, the executive officers are submitted to the full Board of Directors for approval. COMPENSATION PHILOSOPHY The Committee's compensation philosophy operates on several different levels. First, the Committee must ensure that the compensation is competitive in order to attract and retain highly qualified executives. In order to facilitate the first objective, the Committee as a rule considers various compensation surveys and proxy statements for companies in the industry of comparable size and complexity to the Company. Second, in order to motivate its executives, the Committee links executive pay levels to the performance of the Company through the grant of options pursuant to the stock option program. Third, the Committee endeavors to reward outstanding individual contributions to the Company and to set compensation at levels that reflect each executive officer's individual contribution towards the Company's goals through its bonus and stock option programs. The Committee endeavors to support the Company's commitment to providing superior shareholder value. The compensation and related programs are designed to reward and motivate executives for the accomplishment of the Company's commitment to its shareholders. COMPENSATION PROGRAM COMPONENTS To achieve its compensation goals, the compensation program consists of four components -- base salary, bonuses, various employee benefits (including medical and life insurance and 401(k) plan benefits generally available to the employees of the Company) and the Company's stock option plan. The total program is structured to deliver a significant percentage of pay through at-risk pay programs which reward executives if the performance of the Company warrants. Maximizing shareholder value is a basic principle underlying the Company's pay programs. Annually, the Committee seeks to review the base salary of each executive officer to determine its fairness. During its annual consideration of the base salaries of the executive officers, the Committee considers the level of responsibility, experience and performance of each executive officer. The Committee also takes into account the competitive conditions of the marketplace, the Company's profitability as well as the cost of living index. When reviewing competitive conditions of the marketplace, the Committee considers the Company's pay levels with those of companies of similar size and complexity. As the Company believes there is no survey data relating to the Company's service industries, the Company studies compensation surveys for companies of a similar size and complexity and various other data and information brought to its attention, including proxy statements, of companies in the Company's service industry. Based on such information, the Committee endeavors to ensure that the pay levels fall in the median range of the amounts paid by the 7 10 comparable companies. In certain circumstances, bonuses may be awarded to those executive officers who have made outstanding individual contributions during the current fiscal year. Additionally, all executive officers are eligible to receive stock options, at the Committee's discretion, giving them the right to purchase shares of the Company's stock at a specified price in the future. By increasing senior management's equity position in the Company, the interests of the shareholders and the executives will be more closely aligned. To that end, Mr. Tholan was granted an option to purchase 15,000 shares in July 1996 for the price of $2.00 per share. The Company granted Mr. Tholan a $15,000 increase in salary upon his promotion to Executive Vice President. Ms. Rogers received an $11,500 increase in salary upon her promotion to Chief Financial Officer. Subsequent to year end, the officers of the Company received bonuses commensurate with levels of responsibility and individual performance. PERFORMANCE MEASURES When evaluating annual executive compensation, the Committee considers the Company's earnings, adjusted for certain unusual or non-recurring items, return on net investment and cash flows. These factors are compared to the Company's prior year's performance, its annual business plan and the performance of other companies which operate in the same industry segments as the Company. These performance measures assist the Committee in ensuring that the interests of its shareholders, as well as its executives, are represented in a fair and equitable manner. No specific fixed weighting or formula is applied to such performance measures. Rather, the Committee exercises its judgment in evaluating financial and non-financial factors and in determining appropriate compensation. OTHER The Omnibus Budget Reconciliation Act of 1993 (the "Act") restricts the ability of a publicly-held corporation to deduct compensation in excess of $1,000,000 paid to its Chief Executive Officer and the four most highly compensated officers. During the 1997 fiscal year, the threshold was not met for any of the executive officers. However, the Committee continually reviews all aspects of the Act in order to determine future compliance issues regarding same. This Compensation Committee Report was for the most part prepared by management at the direction of the Committee, and approved by the Committee. COMPENSATION COMMITTEE INTERLOCKS AND INSIDER PARTICIPATION Mr. Williams served on the Committee and Board of Directors during fiscal 1997. Mr. Williams is also a sole shareholder of a professional corporation which is a partner in the law firm of Chamberlain, Hrdlicka, White, Williams and Martin in Houston, Texas which rendered services to the Company during fiscal 1997. Fees to the law firm did not exceed five percent of that law firm's gross revenue for its last full fiscal year. In addition, each of the members of the Committee has been granted options under the Company's Non-Employee Director Plan. 8 11 COMPARISON OF TOTAL SHAREHOLDER RETURN The following graph compares the Company's cumulative total stockholder return on its common stock for a five-year period (May 31, 1992 to May 31, 1997), with the cumulative total return of the American Stock Exchange Market Value Index ("ASEMVI"), and a peer group of companies selected by the Company. The "Peer Group" is described in more detail below. The graph assumes that the value of the investment in the Company's common stock and each index was $100 at May 31, 1992 and that all dividends were reinvested. COMPARISON OF CUMULATIVE TOTAL RETURN* NEW PEER GROUP
MEASUREMENT PERIOD (FISCAL YEAR COVERED) TEAM INC ASEMVI PEER GROUP 1992 100 100 100 1993 75.93 111.03 59.28 1994 67.50 111.60 55.88 1995 29.53 124.69 38.50 1996 42.19 172.95 60.61 1997 31.64 175.56 68.75
ASSUMES INITIAL INVESTMENT OF $100 * TOTAL RETURN ASSUMES REINVESTMENT OF DIVIDENDS NOTE: TOTAL RETURNS BASED ON MARKET CAPITALIZATION 9 12 COMPARISON OF CUMULATIVE TOTAL RETURN OLD PEER GROUP
MEASUREMENT PERIOD (FISCAL YEAR COVERED) TEAM INC ASEMVI PEER GROUP 1992 100 100 100 1993 76 111 80 1994 68 111 64 1995 30 125 48 1996 42 173 55 1997 32 176 50
The peer group is composed of five companies which provide industrial and/or leak repair services. The first graph reflects the Company's new peer group selected in good faith based on similar line of business basis. The peer group was changed due to the sale of the Company's environmental engineering and consulting division. The members of the new peer group are C. H. Heist Corp., Industrial Holdings, Inc., Kaneb Services, Inc., Matrix Service Company and Versar, Inc. The returns of each company have been weighted according to their respective market capitalization for purposes of arriving at a peer group average. The second graph was prepared for comparative purposes and charts the performance of the company against its old peer group. The members of the old peer group are Air and Water Technologies Corporation, Dames & Moore, Inc., International Testing Services, Inc., Kaneb Services, Inc. and Versar, Inc. The foregoing graph is based on historical data and is not necessarily indicative of future performance. 10 13 SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT The following table sets forth certain information regarding the beneficial ownership of the Company's common stock (the only class of voting securities of the Company) as of September 12, 1997 of (a) each person known by the Company to be the beneficial owner of more than 5% of the outstanding Common Stock, (b) each director or nominee for director of the Company, (c) the Named Executive Officers and (d) all executive and other officers and directors of the Company as a group. The information shown assumes the exercise by each person (or all directors and officers as a group) of the vested stock options owned by such person and the exercise by no other person (or group) of stock options. Unless otherwise indicated, the address of each person named below is the address of the Company at 1019 S. Hood St., Alvin, Texas 77511.
NUMBER OF NAME AND ADDRESS OF BENEFICIAL OWNER SHARES OWNED(1) PERCENTAGE ------------------------------------ --------------- ---------- William A. Ryan....................................... 125,500(2) 2.0% Sidney B. Williams.................................... 120,906(3) 2.1% 1400 Citicorp Center 1200 Smith Street Houston, Texas 77002 E. Theodore Laborde................................... 35,886(4) 0.6% 601 Poydras Street, Suite 1850 New Orleans, Louisiana 70130 Jack M. Johnson, Jr................................... 34,000(5) 0.6% 127 N. McCarty Eagle Lake, Texas 77434 George W. Harrison.................................... 177,063(6) 3.0% 2119 Sieber Drive Houston, Texas 77017 Kenneth M. Tholan..................................... 12,500(7) 0.2% All directors and executive and other officers as a group (10 persons)............................. 527,975(8)(9) 8.4% Armstrong International, Inc.......................... 700,000(10) 11.8% 2081 S.E. Ocean Blvd., 4th Floor Stuart, Florida 34996-3376 Brinson Partners, Inc................................. 483,600(11) 5.5% 209 South LaSalle Chicago, Illinois 60604-1295 Dimensional Fund Advisors, Inc........................ 382,200(12) 8.4% 1299 Ocean Avenue, 11th Floor Santa Monica, California 90401
- --------------- (1) The information as to beneficial ownership of common stock has been furnished, respectively, by the persons and entities listed. Each individual or entity has sole power to vote and dispose of all shares listed opposite his or its name except as indicated below. (2) Includes 10,500 shares owned by Joan Ryan, Mr. Ryan's wife, and 110,000 shares which may be acquired pursuant to the exercise of stock options by Mr. Ryan. (3) Includes 2,685 shares owned by Nancy Williams, Mr. William's wife, and 1,000 shares held as custodian under the Uniform Gift to Minors Act for Mr. William's nephews. Mr. Williams disclaims any economic interest in these shares. Also includes 75,000 shares which may be acquired pursuant to the exercise of stock options by Mr. Williams. (4) Includes 1,886 shares owned by Mr. Laborde and his wife, Mary Laborde, as joint tenants. Also includes 30,000 shares which may be acquired pursuant to the exercise of stock options by Mr. Laborde. (5) Includes 25,000 shares which may be acquired pursuant to the exercise of stock options by Mr. Johnson. 11 14 (6) Includes 45,000 shares which may be acquired pursuant to the exercise of stock options by Mr. Harrison. (7) Includes 12,500 shares which may be acquired pursuant to the exercise of stock options by Mr. Tholan. (8) Includes 308,000 shares which may be acquired pursuant to the exercise of stock options. (9) Includes shares allocated to employees through their participation in the Company's Employee Stock Ownership Plan and the Salary Deferral Plan and Trust. According to the latest statements for said plans, no shares are allocated to the Named Executives. However, 4,415 shares are allocated to other officers in the Salary Plan and Trust and 891 shares in the Employee Stock Ownership Plan. (10) The Company has relied upon information contained in Schedule 13D/A filed with the SEC on August 4, 1997 and Form 4 filed with the SEC on September 5, 1997. According to Schedule 13D/A, 650,000 shares are owned by Armstrong International, Inc., and according to Form 4, 50,000 shares are owned by Merrill H. Armstrong and Barbara I. Armstrong, both of whom are officers of Armstrong International, Inc. (11) The Company has relied upon information contained in Schedule 13G/A filed with the SEC on February 12, 1997. According to the amended Schedule 13G, the shares are owned directly in part by Brinson Partners, Inc., a Delaware corporation, and in part by Brinson Trust Company, an Illinois corporation, which is a wholly-owned subsidiary of Brinson Partners, Inc. Brinson Partners, Inc. is wholly-owned by Brinson Holdings, Inc., a Delaware corporation, which is wholly-owned by SBC Holding (USA), Inc., a Delaware corporation, which is wholly-owned by Swiss Bank Corporation, a Swiss banking corporation. (12) The Company has relied upon information contained in Schedule 13G filed with the SEC on February 5, 1997. Dimensional Fund Advisors, Inc. ("Dimensional"), a registered investment advisor, is deemed to have beneficial ownership of 382,200 shares of Team, Inc. stock as of December 31, 1996, all of which shares are held in portfolios of DFA Investment Dimensions Group, Inc., a registered open-end investment company, or in series of the DFA Investment Trust Company, a Delaware business trust, or the DFA Group Trust and DFA Participation Group Trust, investment vehicles for qualified employee benefit plans, all of which Dimensional Fund Advisors, Inc. serves as investment manager. Dimensional disclaims beneficial ownership of all such shares. The Company does not know of any arrangement that may at a subsequent date result in a change of control of the Company. PROPOSAL TWO -- APPOINTMENT OF INDEPENDENT PUBLIC ACCOUNTANTS The Company's Audit Committee has recommended and the Board of Directors has approved and now recommends the appointment of Deloitte & Touche LLP as independent certified public accountants to audit the Company's accounts for the fiscal year ended May 31, 1998. The firm has audited the Company's accounts since 1974. Approval of the appointment will require the affirmative vote of a majority of the shares represented and voted at the meeting. A representative of Deloitte & Touche LLP will attend the 1997 Annual Meeting with the opportunity to make a statement if such representative desires to do so and to respond to appropriate questions presented at the meeting. OTHER BUSINESS Management does not intend to bring any business before the meeting other than the matters referred to in the accompanying notice and at this date has not been informed of any matters that may be presented to the meeting by others. If, however, any other matters properly come before the meeting, it is intended that the persons named in the accompanying proxy will vote, pursuant to the proxy, in accordance with their best judgment on such matters. 12 15 SHAREHOLDER PROPOSALS Any proposal by a shareholder to be presented at the Company's Annual Meeting of Shareholders in 1998 must be received by the Company no later than May 28, 1998 in order to be eligible for inclusion in the Company's Proxy Statement and form of proxy used in connection with such meeting. By Order of the Board of Directors /s/ WILLIAM A. RYAN William A. Ryan Chairman of the Board of Directors, President and Chief Executive Officer September 25, 1997 13 16 THIS MAP SHOWING THE NOLAN RYAN CENTER IS PROVIDED FOR THE CONVENIENCE OF SHAREHOLDERS ATTENDING THE 1997 ANNUAL MEETING. COMPLIMENTARY PARKING WILL BE PROVIDED. IN CASE OF ANY DIFFICULTY, PLEASE TELEPHONE THE COMPANY AT (281) 331-6154. TEAM, INC. ANNUAL MEETING (2925 SOUTH HWY. 35 BYPASS) [NOLAN RYAN CENTER] 17 PROXY CARD PROXY CARD TEAM, INC. The undersigned hereby appoints Kenneth M. Tholan and Margie E. Rogers, and either or both of them, with full power of substitution in each, as proxy or proxies of the undersigned to represent and vote all of the shares of common stock of Team, Inc. ("Company"), which the undersigned is entitled to vote at the 1997 Annual Meeting of Stockholders of the Company to be held on Thursday, October 30, 1997, at 3:00 p.m. Houston time, at the Nolan Ryan Center, 2925 South Hwy. 35 Bypass, Alvin, Texas 77511, and at any adjournments or postponements thereof. The Board of Directors recommends a vote FOR the nominees for class II Directors and FOR proposals 2 and 3. THIS PROXY IS SOLICITED ON BEHALF OF THE BOARD OF DIRECTORS OF THE COMPANY. PLEASE MARK, SIGN, DATE AND RETURN THIS PROXY AS SOON AS POSSIBLE IN THE ENCLOSED ENVELOPE. THIS PROXY WILL BE VOTED AS SPECIFIED. IF NO CHOICE IS SPECIFIED FOR A PROPOSAL, THIS PROXY WILL BE VOTED "FOR" THE PROPOSAL. Any proxies previously given by the undersigned are hereby revoked. Receipt of Notice of the above Annual Meeting of Shareholders and of the related Proxy Statement is hereby acknowledged. (Continued and to be signed on reverse side.) 18 TEAM, INC. PLEASE MARK VOTE IN OVAL IN THE FOLLOWING MANNER USING DARK INK ONLY. WITHHOLD AUTHORITY FOR all to vote for FOR all nominees, except nominees all nominees vote withheld for those named below: 1. Election of two Class II members of the Board of Directors: [ ] [ ] [ ] Nominees: Jack M. Johnson, Jr. ___________________________ E. Theodore Laborde Nominee Exceptions FOR AGAINST ABSTAIN 2. Proposal to approve the appointment of [ ] [ ] [ ] Deloitte & Touche as the independent certified public accountants of the Company FOR AGAINST ABSTAIN 3. In their discretion on such other matters as [ ] [ ] [ ] may properly come before the meeting and any adjournments thereof. Dated: _______________________________ , 1997 Signature(s):________________________________ ________________________________ NOTE: (When signing as attorney, executor, administrator, trustee, guardian, corporate officer or other agent, please give full title.)
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