Schedule 14A Information
Proxy Statement Pursuant to Section 14(a) of the Securities
Exchange Act of 1934
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 Section 240.14a-11(c) or Section 240.14a-12
TEAM INC.
------------------------------------------------
(Name of Registrant as Specified In Its Charter)
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(Name of Person(s) Filing Proxy Statement, if other than the Registrant)
Payment of Filing Fee (Check the appropriate box):
[X] No fee required
[ ] Fee computed on table below per Exchange Act Rules 14a-6(i)(1) 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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TEAM, INC.
200 HERMANN DRIVE
ALVIN, TEXAS 77511
(281) 331-6154
NOTICE OF 2003 ANNUAL MEETING OF SHAREHOLDERS
TO BE HELD ON THURSDAY, SEPTEMBER 25, 2003
To the Shareholders of Team, Inc.:
The 2003 Annual Meeting of Shareholders of Team, Inc. (the "Company") will
be held on Thursday, September 25, 2003 at 3:00 p.m. at the Company's offices,
200 Hermann Drive, 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
KPMG LLP as the independent certified public accountants to audit the
Company's accounts for the fiscal year ending May 31, 2004.
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 August 15, 2003
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 2003 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/ PHILIP J HAWK
Philip J. Hawk
Chairman of the Board of Directors
and Chief Executive Officer
August 26, 2003
YOUR VOTE IS IMPORTANT.
PLEASE SIGN, DATE AND RETURN THE ACCOMPANYING PROXY CARD PROMPTLY.
TEAM, INC.
200 HERMANN DRIVE
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 vote the common stock of the
Company at the 2003 Annual Meeting of Shareholders (the "2003 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 is being mailed to shareholders beginning on August 28, 2003.
The Company will bear the 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 2003 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 KPMG LLP as independent certified public accountants of the
Company for the fiscal year ending May 31, 2004; 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. Ted W. Owen 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 August 15, 2003, the record date for
determining shareholders entitled to vote at the 2003 Annual Meeting, the
Company had 7,584,954 shares of common stock, $0.30 par value per share ("Common
Stock"), outstanding and entitled to vote. 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 August 15, 2003, 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 as
shares at the meeting in tabulations of the votes cast on proposals presented to
shareholders, whereas broker non-votes are not counted as shares at the meeting
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 six 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 to
constitute the Board of Directors at seven, divided into three classes with
staggered three-year terms.
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 2006, and 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 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
power of attorney to act as proxies at the 2003 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 any 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 August 15, 2003 concerning the
nominees for election at the 2003 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. ................................. 65 Director 1992
E. Theodore Laborde................................... 65 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. Mr. Johnson is also a director of Security
State Bank in Anahuac, Texas.
Mr. Laborde served in various capacities with J&H Marsh & McLennan, Inc.,
an insurance brokerage firm, in New Orleans for 35 years until his retirement in
1997. From 1982 until his retirement, Mr. Laborde acted as Managing Director of
the New Orleans operation. J&H Marsh & McLennan, Inc. is a subsidiary of Marsh &
McLennan Companies. Mr. Laborde is a director of Gulf Coast Bank & Trust Co. in
New Orleans, Louisiana and is involved in various privately held family
businesses.
DIRECTORS CONTINUING IN OFFICE
Set forth below is certain information concerning the five 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
---- --- ---------------- -------- --------------
Philip J. Hawk................. 49 Chairman of the Board and Chief 1998 2005
Executive Officer
George W. Harrison............. 75 Director 1995 2004
E. Patrick Manuel.............. 55 Director 2001 2004
Louis A. Waters................ 65 Director 1998 2005
Sidney B. Williams............. 69 Director 1973 2004
2
Mr. Hawk was appointed Chairman of the Board and Chief Executive Officer of
the Company in November 1998. From 1993 to 1998, Mr. Hawk held the position of
President and Chief Executive Officer of EOTT Energy Partners, L.P., an energy
marketing and service company. Mr. Hawk is also a director of ABS Group of
Companies and resigned as a director of Highlands Insurance Group in March 2003.
Mr. Waters presently manages personal investments. He retired in March 2002
as Chairman of the Board of Tyler Technologies, Inc. ("Tyler"), a New York Stock
Exchange listed company. Tyler's principal business is providing information
management services to local governments. Mr. Waters was elected to Tyler's
Board of Directors in August 1997 and elected Chairman of the Board in October
1997. In addition, Mr. Waters is one of the founders and was the first Chairman
of the Board of Browning-Ferris Industries, Inc. ("BFI"). He served as Chairman
and Chief Executive Officer from 1969 through 1980, Chairman of BFI's Executive
Committee from 1980 through 1988, and Chairman of the Finance Committee from
1988 to March 1997. Mr. Waters also directed BFI's international activities,
serving as Chairman and Chief Executive Officer of BFI International, Inc. from
1991 to March 1997, when he retired from full-time duty with BFI.
Mr. Harrison is retired. Prior to his retirement in 1997, he served as
Senior Vice President of the Company for more than five years. During his tenure
with the Company, Mr. Harrison was involved in most aspects of the Company
including operations, engineering, manufacturing, marketing and research and
development.
Mr. Manuel is presently an independent investor and a paid consultant to
the Company. These have been his principal occupations since April 1999. For
more than five years prior to that time, he was the principal shareholder and
president of X-Ray Inspection Co., which is now a wholly-owned subsidiary of the
Company that engages in the business of NDT inspection services. X-Ray
Inspection Co. was purchased by the Company in April 1999. Mr. Manuel is a
director of Tri-Parish Bank in Eunice, Louisiana.
Mr. Williams is the 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. Williams and Mr. Laborde are brothers-in-law.
MEETINGS AND COMMITTEES OF THE BOARD
The Board of Directors held five regular meetings during the fiscal year
ended May 31, 2003. No director attended fewer than 75% of the meetings held
during the period for which he served as a member of the Board and the
Committees on which he served.
The Board of Directors has an Executive Committee, an Audit Committee, a
Compensation Committee and a Corporate Governance Committee, which will fulfill
the functions of a Nominating Committee. The Executive Committee is composed of
Messrs. Hawk, Williams and Waters. The Executive Committee is responsible for
assisting with the general management of the business and affairs of the Company
as needed during intervals between meetings of the Board of Directors. The
Executive Committee met three times during fiscal 2003.
The Audit Committee is composed of Messrs. Waters, Laborde, and Johnson.
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 three times during fiscal 2003. The Board has determined
that Louis A. Waters is an audit committee financial expert within the meaning
of SEC regulations.
The Compensation Committee, composed of Messrs. Johnson, Harrison, Manuel
and Williams, reviews management performance and makes recommendations to the
Board of Directors concerning management
3
compensation and other employment benefits. The Compensation Committee met once
during fiscal 2003 regarding specific employee matters.
In January 2003, the Board of Directors approved the formation of a
Corporate Governance Committee, whose purpose will be (i) to ensure the
processes of the Board are sufficient and consistent with its oversight role of
the Company, (ii) to evaluate the contribution and participation of all Board
members and (iii) to make recommendations regarding Board membership. The
Corporate Governance committee is comprised of Messrs. Williams and Waters. The
Committee did not hold a meeting during fiscal 2003.
AUDIT COMMITTEE REPORT
The audit committee consists of the three members of the Company's Board of
Directors identified above. Each committee member is independent, as that term
is defined in Section 121 of the American Stock Exchange's ("AMEX") listing
standards. In January 2000, the Board of Directors adopted a written charter for
the audit committee, which was included as Appendix A to the Proxy Statement of
the Company for its 2000 annual meeting.
The audit committee has reviewed and discussed the audited financial
statements for the fiscal year ended May 31, 2003 with management and has
discussed with KPMG LLP, the independent auditors for the Company, the matters
required to be discussed by SAS 61 (Codification of Statements on Auditing
Standards).
The audit committee has also received the written disclosures and the
letter from the independent accountants required by Independence Standards Board
Standard No. 1 (Independence Standards Board Standard No. 1, Independence
Discussions with Audit Committees), and has discussed the auditors' independence
with KPMG.
Based on the review and discussions referred to above, the audit committee
recommended to the Board of Directors that the audited financial statements be
included in the Company's Annual Report on Form 10-K for the fiscal year ended
May 31, 2003.
Louis A. Waters, Chairman
Jack M. Johnson, Jr.
E. Theodore Laborde
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 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
4
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
Company's stock option programs. 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 plans. 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 and 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 comparable
companies. In certain circumstances, bonuses may be awarded to those executive
officers who have made outstanding individual contributions during the current
fiscal year. Subsequent to the end of fiscal 2003, each officer of the Company
received an increase in base salary and a bonus commensurate with levels of
responsibility and individual performance.
Additionally, all executive officers are eligible to receive stock options
and bonuses in the form of stock at the Committee's discretion. By increasing
senior management's equity position in the Company, the interests of the
shareholders and the executives will be more closely aligned.
Performance Measures
When evaluating annual executive compensation, the Committee considers the
Company's earnings, adjusted for certain unusual or nonrecurring 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 fiscal 2003, 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.
5
This Compensation Committee Report was for the most part prepared by
management at the direction of the Committee, and approved by the Committee.
Jack M. Johnson, Jr., Chairman
George W. Harrison
E. Patrick Manuel
Sidney B. Williams
COMPENSATION COMMITTEE INTERLOCKS AND INSIDER PARTICIPATION
Director Sidney B. Williams is the sole shareholder of a professional
corporation that is a partner in the law firm of Chamberlain, Hrdlicka, White,
Williams and Martin of Houston, Texas, which rendered services to the Company
during fiscal 2003. Fees to the law firm did not exceed five percent (5%) of
that law firm's gross revenue for its last full fiscal year. The Company and E.
Patrick Manuel are parties to a Consulting Agreement dated April 9, 1999 and
effective until April 9, 2004, under which Mr. Manuel provides certain
assistance and advice concerning the Company's NDT inspection service business
as requested by the Company in consideration for consulting fees of $120,000 per
year and a vehicle allowance of $5,400 per year. The Company also leases an
office and shop building in Lafayette, Louisiana from Mr. Manuel for rental of
$54,000 per year, and a smaller office and shop building in Sulphur, Louisiana
for rental of $18,600 per year.
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 in four equal quarterly installments.
The remaining $10,000 is paid in the form of Common Stock. The stock payments
are made 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. 1,250
shares were issued to each non-employee director on July 1, 2003.
In December 1991, the Company adopted the Non-Employee Directors Stock
Option Plan (the "Non-Employee Director Plan"). The Non-Employee Director Plan
authorizes options to purchase an aggregate of 410,000 shares of Common Stock
for directors of the Company who are not employees of the Company. 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 an automatic grant of options upon such director's appointment,
reappointment, election or reelection 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 years after the date of grant. 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. During fiscal 2003, Mr. Waters was granted options to
purchase 15,000 shares with an exercise price of $8.60 per share, pursuant to
his election to the Board of Directors at the 2002 Annual Meeting of
Shareholders.
6
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:
DIRECTOR OFFICER
NAME OF DIRECTOR OR OFFICER AGE SINCE SINCE POSITION WITH COMPANY
--------------------------- --- -------- ------- ---------------------
Philip J. Hawk(1).................... 49 1998 1998 Chairman of the Board of
Directors and Chief Executive
Officer
Kenneth M. Tholan.................... 64 -- 1996 President and Chief Operating
Officer
Ted W. Owen.......................... 51 -- 1998 Senior Vice
President -- Finance &
Administration, Chief
Financial Officer, Secretary
and Treasurer
John P. Kearns....................... 47 -- 1996 Senior Vice President
George W. Harrison(3)................ 75 1995 -- Director
E. Theodore Laborde(2)............... 65 1991 -- Director
Jack M. Johnson, Jr.(2)(3)........... 65 1992 -- Director
E. Patrick Manuel(3)................. 55 2001 -- Director
Louis A. Waters(1)(2)(4)............. 65 1998 -- Director
Sidney B. Williams(1)(3)(4).......... 69 1973 -- Director
---------------
(1) Member of the Executive Committee.
(2) Member of the Audit Committee.
(3) Member of the Compensation Committee.
(4) Member of the Corporate Governance Committee.
Mr. Tholan joined the Company in June 1996 and shortly thereafter was
elected as Vice President. In 1997, he was named Executive Vice President and
Chief Operating Officer and in January 1998 was promoted to President of the
Company. Mr. Tholan is a director of a privately-held security consulting firm,
Secure Solutions International, Inc., located in Houston, Texas.
Mr. Owen joined the Company in February 1998 and was elected Vice
President, Chief Financial Officer, Secretary and Treasurer in April of 1998 and
was promoted to Senior Vice President-Finance and Administration in 2003. From
1994 to 1997, Mr. Owen held the position of Business Practices Officer for
Alyeska Pipeline Service Co in Anchorage, Alaska.
Mr. Kearns joined the Company in 1980 as a design engineer and assumed the
position of Vice President of Engineering and Manufacturing in 1996. He was
promoted to Senior Vice President in 1998. Mr. Kearns has been involved with the
Company's engineering, manufacturing and research and development functions for
more than the last five years.
CODE OF ETHICAL CONDUCT
The Company has adopted a code of ethics that applies to all employees and
the Company directors. A copy of such code, entitled "Team, Inc. Code of Ethical
Conduct", has been filed with the SEC as an exhibit to the Company's 10-K Report
for the fiscal year ended May 31, 2003. Also, a copy of this Code is posted on
the Company's Internet Web site at www.teamindustrialservices.com.
7
EXECUTIVE COMPENSATION AND OTHER MATTERS
The following table sets forth compensation information for the fiscal
years ended May 31, 2003, 2002 and 2001 for the Chief Executive Officer and the
other executive officers of the Company earning in excess of $100,000 during the
Company's 2003 fiscal year (the "Named Executive Officers"):
COMPENSATION TABLE
COMPENSATION
ANNUAL COMPENSATION ------------
YEAR ------------------- SECURITIES ALL OTHER
ENDING SALARY BONUS UNDERLYING COMPENSATION
NAME AND PRINCIPAL POSITION MAY 31 ($) ($) OPTIONS ($)(1)
--------------------------- ------- -------- -------- ------------ ------------
Philip J. Hawk(2)........................... 2003 275,008 90,000 --
Chairman of the Board and Chief 2002 269,015 120,000 50,000
Executive Officer 2001 240,130 55,000 --
Kenneth M. Tholan........................... 2003 186,354 52,000 7,000
President and Chief Operating Officer 2002 183,438 52,000 30,000
2001 165,130 37,000 13,000
Ted W. Owen................................. 2003 165,104 36,000 7,000 23,972
Senior Vice President -- Finance & 2002 158,669 36,000 15,000
Administration, Secretary & 2001 140,823 21,000 8,000
Treasurer
John P. Kearns.............................. 2003 127,508 32,000 7,000
Senior Vice President 2002 123,092 32,000 15,000
2001 102,785 21,000 8,000
---------------
(1) Represents the net realized value of options exercised in the years
indicated. Mr. Owen exercised options to acquire 4,000 shares in fiscal
2003.
(2) Mr. Hawk is a party to an employment agreement with the Company in which he
is to serve as the Company's Chief Executive Officer until the earlier of
(i) January 31, 2005, (ii) his voluntary resignation or (iii) his
termination with or without cause by the Company. Mr. Hawk has agreed not to
compete with the Company during the term of the agreement and for a period
of two years following termination of the agreement. Also, Mr. Hawk has
agreed not to disclose any confidential information regarding the Company
without the prior written consent of the Company.
OPTION GRANTS IN FISCAL 2003
The following table sets forth additional information with respect to stock
options granted in fiscal 2003 to the Named Executive Officers:
POTENTIAL REALIZABLE
VALUE AT ASSUMED
PERCENTAGE OF ANNUAL RATES OF STOCK
NUMBER OF TOTAL OPTIONS PRICE APPRECIATION
SECURITIES GRANTED TO FOR OPTION TERM(1)
UNDERLYING EMPLOYEES IN EXERCISE EXPIRATION ----------------------
NAME OPTIONS FISCAL 2003 PRICE DATE 5% 10%
---- ---------- ------------- -------- ---------- --------- ----------
Kenneth M. Tholan............ 7,000 5.9% $9.00 7/20/2013 $39,620 $100,406
Ted W. Owen.................. 7,000 5.9% $9.00 7/20/2013 $39,620 $100,406
John P. Kearns............... 2,000 1.7% $9.00 7/20/2013 $11,320 $ 28,687
---------------
(1) Potential realizable value is based on the assumption that the Common Stock
price appreciates at the annual rate shown (compounded annually) from the
date of grant until the end of the option term. The stock prices at the end
of the option term for the options granted in fiscal year 2003 are $14.66
and $23.44, assuming 5% and 10% appreciation rates, respectively for options
granted to all officers. The amounts of hypothetical appreciation reflect
required calculations at rates set by the Securities and
8
Exchange Commission and, therefore, are not intended to represent either
historical appreciation or anticipated future appreciation in the price of
Common Stock.
The following stock options were granted in June 2003 under the 1998
Incentive Stock Option Plan to the Named Executive Officers: Mr. Tholan, 8,000
shares; Mr. Owen, 4,000 shares; and Mr. Kearns, 4,000 shares. All of the
foregoing options have an exercise price of $8.25 per share. Since the options
were granted subsequent to the end of fiscal 2003, they are not reflected in the
option grants table above.
OPTION EXERCISES IN LAST FISCAL YEAR AND FISCAL YEAR END OPTION VALUES
The following table provides certain information with respect to options
exercised during fiscal 2003 by each of the Named Executive Officers:
NUMBER OF NUMBER OF VALUE OF UNEXERCISED
SHARES UNEXERCISED OPTIONS AT IN-THE-MONEY OPTIONS AT
ACQUIRED VALUE END OF FISCAL 2003 END OF FISCAL 2002(1)
ON REALIZED --------------------------- ---------------------------
NAME EXERCISE ($) EXERCISABLE UNEXERCISABLE EXERCISABLE UNEXERCISABLE
---- ----------- -------- ----------- ------------- ----------- -------------
Philip J. Hawk........... -- -- 235,534 164,466 $938,543 $634,499
Kenneth M. Tholan........ -- -- 139,000 11,000 $608,930 $ 29,250
Ted W. Owen.............. 4,000 $23,972 53,750 7,250 $217,815 $ 14,625
John P. Kearns........... -- -- 60,250 4,750 $262,755 $ 14,625
---------------
(1) The value of unexercised in-the-money options is the difference between (i)
the closing price of the Company's Common Stock on the last trading day of
fiscal 2003 ($7.80) and (ii) the exercise price of the in-the-money options,
multiplied by the number of underlying shares subject to the options.
9
COMPARISON OF TOTAL SHAREHOLDER RETURN*
The following graph compares the Company's cumulative total shareholder
return on its Common Stock for a five-year period (May 31, 1998 to May 31,
2003), 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, 1998 and that all dividends were reinvested.
(PERFORMANCE GRAPH)
Cumulative Total Return
---------------------------------------------------------
5/98 5/99 5/00 5/01 5/02 5/03
TEAM, INC. 100.00 68.35 45.57 61.77 187.34 157.97
AMEX MARKET VALUE (U.S. &
FOREIGN) 100.00 107.03 127.86 124.08 113.32 109.85
PEER GROUP 100.00 63.46 48.36 69.50 38.71 42.35
---------------
Assumes Initial Investment of $100
* Total return assumes reinvestment of dividends
Note: Total returns based on market capitalization
The peer group is composed of four companies which provide industrial
and/or leak repair services. The returns of each company have been weighted
according to their respective market capitalization for purposes of arriving at
a peer group average. The members of the peer group are T-3 Energy Services,
Inc., Xanser Corporation, Matrix Service Company and Versar, Inc.
The foregoing graph is based on historical data and is not necessarily
indicative of future performance.
10
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 August 15, 2003 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 stock options owned by such person
that are currently exercisable or exercisable within 60 days of August 15, 2003.
Unless otherwise indicated, the address of each person named below is the
address of the Company at 200 Hermann Drive, Alvin, Texas 77511.
PERCENTAGE OF
NUMBER OF SHARES OUTSTANDING
NAME AND ADDRESS OF BENEFICIAL OWNER BENEFICIALLY OWNED(1) COMMON STOCK
------------------------------------ --------------------- -------------
Philip J. Hawk......................................... 300,534(2) 3.3%
Kenneth M. Tholan...................................... 160,000(3) 1.9%
Ted W. Owen............................................ 59,524(4) *
John P. Kearns......................................... 72,025(5) *
Sidney B. Williams..................................... 144,620(6) 1.7%
1200 Smith Street, Suite 1400
Houston, Texas 77002
E. Theodore Laborde.................................... 75,500(7) *
601 Poydras Street, Suite 1815
New Orleans, Louisiana 70130
Jack M. Johnson, Jr. .................................. 79,214(8) *
P.O. Box 337
Eagle Lake, Texas 77434
George W. Harrison..................................... 222,277(9) 2.7%
2119 Sieber Drive
Houston, Texas 77017
Louis A. Waters........................................ 1,240,214(10) 15.0%
520 Post Oak Blvd., Suite 850
Houston, Texas 77027
E. Patrick Manuel...................................... 502,855(11) 6.1%
1206 Hwy 190 West
Eunice, Louisiana 70535
All directors, nominees and executive officers as a
group
(10 persons)......................................... 2,856,763(12),(13) 34.5%
Houston Post Oak Partners, Ltd......................... 1,200,000 14.5%
520 Post Oak Blvd., Suite 850
Houston, Texas 77027
Babson (David L) & Co. ................................ 504,400(14) 6.1%
One Memorial Dr.
Cambridge, MA 02142
---------------
* Less than 1% of outstanding Common Stock.
(1) The information as to beneficial ownership of Common Stock has been
furnished, respectively, by the persons and entities listed, except as
indicated below. 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 235,534 shares which may be acquired pursuant to the exercise of
stock options currently exercisable or exercisable within 60 days of August
15, 2003.
11
(3) Includes 139,000 shares which may be acquired pursuant to the exercise of
stock options currently exercisable or exercisable within 60 days of August
15, 2003 and 60 shares held in an employee benefit plan.
(4) Includes 53,750 shares which may be acquired pursuant to the exercise of
stock options currently exercisable or exercisable within 60 days of August
15, 2003 and 2,774 shares held in an employee benefit plan.
(5) Includes 60,250 shares which may be acquired pursuant to the exercise of
stock options currently exercisable or exercisable within 60 days of August
15, 2003, and 7,775 shares held in an employee benefit plan.
(6) Includes 2,685 shares owned by Nancy Williams, Mr. William's wife, 1,000
shares held as custodian under the Uniform Gift to Minors Act for Mr.
William's nephews, and 3,000 shares gifted to Mr. Williams adult children.
Mr. Williams disclaims any economic interest in these shares. Also includes
30,000 shares which may be acquired pursuant to the exercise of stock
options currently exercisable or exercisable within 60 days of August 15,
2003.
(7) Includes 1,886 shares owned by Mr. Laborde and his wife, Mary Laborde, as
joint tenants. Also includes 45,000 shares which may be acquired pursuant
to the exercise of stock options currently exercisable or exercisable
within 60 days of August 15, 2003.
(8) Includes 45,000 shares which may be acquired pursuant to the exercise of
stock options currently exercisable or exercisable within 60 days of August
15, 2003.
(9) Includes 45,000 shares which may be acquired pursuant to the exercise of
stock options currently exercisable or exercisable within 60 days of August
15, 2003.
(10) Includes 25,000 shares which may be acquired pursuant to the exercise of
stock options currently exercisable or exercisable within 60 days of August
15, 2003. Also includes 1,200,000 shares owned by Houston Post Oak
Partners, Ltd., a Texas limited partnership of which Mr. Waters is the sole
general partner.
(11) Includes 15,000 shares which may be acquired pursuant to the exercise of
stock options currently exercisable or exercisable within 60 days of August
15, 2003.
(12) Includes 693,534 shares which may be acquired pursuant to the exercise of
stock options currently exercisable or exercisable within 60 days of August
15, 2003.
(13) Includes 10,549 shares held in the employee benefit plan.
(14) Based upon 13F filing for quarter ended June 30, 2003.
The Company does not know of any arrangement that may at a subsequent date
result in a change of control of the Company.
12
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 KPMG LLP as independent
certified public accountants to audit the Company's accounts for the fiscal year
ending May 31, 2004. Approval of the appointment will require the affirmative
vote of a majority of the shares represented and voted at the meeting.
A representative of KPMG LLP will attend the 2003 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.
The following table sets forth the fees billed by KPMG LLP in each of the
past two fiscal years:
FY 2003 FY 2002
-------- -------
Audit Fees.................................................. $120,500 $90,000
Audit-Related Fees.......................................... $ 23,000 $23,000
Tax Fees.................................................... $ 82,115 $72,350
All Other Fees.............................................. $ 3,105
Audit fees for fiscal 2002 do not include $30 thousand of fees associated
with reviews of quarterly information on Form 10-Q, which were paid to a
predecessor auditor. The $120,500 for fiscal 2003 includes $15,000 as an
estimated final billing. Audit-related fees consist of fees associated with the
audit of the Company's 401(k) Plan. Tax fees consist of fees associated with the
preparation of the Company's Federal and state income tax returns for the years
indicated and includes a pre-approved estimate of $73,000 for fiscal 2003.
The Audit Committee meets annually to pre-approve audit and tax fees for
the ensuing year. More than 90% of fees paid to KPMG pertaining to fiscal 2003
were pre-approved by the audit committee.
Effective August 31, 2001, the Company determined to change its independent
auditor. Deloitte & Touche LLP audited the Company's financial statements for
the fiscal years 2001 and 2000 and expressed an unqualified opinion thereon. The
decision to change auditors was approved by the Audit Committee of the Board of
Directors.
There were no disagreements with Deloitte & Touche LLP on any matter of
accounting principles or practices, financial statement disclosure or auditing
scope or procedure. Additionally, there were no reportable events concerning
accounting matters under applicable SEC rules during the past two years.
The Company has filed, as an exhibit to its Form 8-K/A report on October 5,
2001, a letter from the former accountant, addressed to the Securities and
Exchange Commission, expressing agreement with the above statement.
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 at 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.
13
SHAREHOLDER PROPOSALS
Any proposal by a shareholder to be presented at the Company's Annual
Meeting of Shareholders in 2004 must be received by the Company no later than
May 10, 2004 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/ PHILIP J. HAWK
Philip J. Hawk
Chairman of the Board of Directors
and Chief Executive Officer
August 26, 2003
14
This map is provided for the convenience of shareholders attending the 2003
annual meeting. Complimentary parking will be provided. In case of any
difficulty, please telephone the Company at (281) 331-6154.
TEAM, INC.
ANNUAL MEETING
(200 HERMANN DRIVE)
(MAP)
[Front of Proxy Card]
PROXY TEAM, INC. PROXY
Proxy Solicited on Behalf of the Board of Directors
For the Annual Meeting of Shareholders -- September 25, 2003
The undersigned hereby appoints KENNETH M. THOLAN AND TED W. OWEN, and each of
them separately, as proxies, with full power of substitution and revocation, to
vote, as designated on the reverse side hereof, all of the shares of voting
stock of Team, Inc. held of record by the undersigned on August 15, 2003, at the
Team Inc. 2003 Annual Meeting of Shareholders to be held at the Company's
offices, 200 Hermann Drive, Alvin, Texas 77511, at 3:00 p.m. (local time) on
September 25, 2003, and any adjournment(s) thereof.
PLEASE VOTE, SIGN, DATE AND RETURN THIS PROXY CARD
PROMPTLY USING THE ENCLOSED ENVELOPE
(Continued and to be signed on reverse side.)
[Back of Proxy Card]
TEAM, INC.
PLEASE MARK VOTE IN OVAL IN THE FOLLOWING MANNER USING DARK INK ONLY.
1. Election of Directors of the Company For Withheld For All Nominee exceptions
Nominees: Jack M. Johnson, Jr. and All All Except written in below:
E. Theodore Laborde
O O O -----------------------------
-----------------------------
2. Ratification of the appointment of For Against Abstain
KPMG LLP as independent public
accountants of the Company O O O
The undersigned acknowledges receipt of the Notice of Annual Meeting of
Shareholders and the Proxy Statement.
Date:
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Signature(s)
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Please sign exactly as your name appears.
Joint Owners should each sign personally. Where applicable, indicate your
official position or Representation capacity.