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UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 10-K/A
(Amendment No. 1)
Annual Report Pursuant to Section 13 or 15(d) of the
Securities Exchange Act of 1934
For the fiscal year ended December 31, 2005
Commission File Number: 0-16284
TECHTEAM GLOBAL, INC.
(Exact name of registrant as specified in its charter)
DELAWARE 38-2774613
(State or other jurisdiction (I.R.S. Employer
of incorporation) Identification No.)
27335 WEST 11 MILE ROAD, SOUTHFIELD, MI 48034
(Address of principal executive offices) (Zip Code)
Registrant's telephone number, including area code: (248) 357-2866
Securities registered pursuant to Section 12(b) of the Act: NONE
Securities registered pursuant to Section 12(g) of the Act:
Title of Each Class Name on each exchange on which registered
------------------- -----------------------------------------
Common Stock, $.01 par value NASDAQ(R) National Stock Market
Indicate by check mark if the registrant is a well-known seasoned issuer, as
defined in Rule 405 of the Securities Act. Yes [ ] No [X]
Indicate by check mark if the registrant is not required to file reports
pursuant to Section 13 or Section 15(d) of the Act. Yes [ ] No [X]
Indicate by check mark whether the Registrant (1) has filed all reports required
to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during
the preceding 12 months (or for such shorter period that the Registrant was
required to file such reports), and (2) has been subject to such filing
requirements for the past 90 days. Yes [X] No [ ]
Indicate by check mark if disclosure of delinquent filers pursuant to Item 405
of Regulation S-K is not contained herein, and will not be contained, to the
best of Registrant's knowledge, in definitive proxy or information statements
incorporated by reference in Part III of this Form 10-K or any amendment to this
Form 10-K. [ ]
Indicate by check mark whether the registrant is a large accelerated filer, an
accelerated filer, or a non-accelerated filer. See definition of "accelerated
filer and large accelerated filer" in Rule 12b-2 of the Exchange Act. (Check
one):
Large accelerated filer [ ] Accelerated filer [X] Non- accelerated filer [ ]
Indicate by check mark whether the registrant is a shell company (as defined in
Rule 12b-2 of the Exchange Act). Yes [ ] No [X]
The aggregate market value of the Registrant's common stock held by
non-affiliates of the registrant as of June 30, 2005 was approximately
$123,072,000 (based on the June 30, 2005 closing sales price of $12.94 of the
Registrant's common stock, as reported on the NASDAQ(R) National Stock Market).
For the sole purpose of making this calculation, the term "non-affiliates" has
been interpreted to exclude directors and executive officers of the Company.
Such interpretation is not intended to be, and should not be construed to be, an
admission by TechTeam Global, Inc. or such directors or executive officers of
the Company that such directors and executive officers of the Company are
"affiliates" of TechTeam Global, Inc., as that term is defined under the
Securities Act of 1934.
The number of shares outstanding of the registrant's common stock as of March
10, 2006 was 10,029,204.
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TECHTEAM GLOBAL, INC.
FORM 10-K/A (AMENDMENT NO. 1)
TABLE OF CONTENTS
PAGE
NUMBER
------
EXPLANATORY NOTE
PART III
Item 10 Directors and Executive Officers of the Registrant 3
Item 11 Executive Compensation 6
Item 12 Security Ownership of Certain Beneficial Owners and
Management and Related Stockholder Matters 10
Item 13 Certain Relationships and Related Transactions 12
Item 14 Principal Accountant Fees and Services 12
SIGNATURES 14
Exhibit 23.1 Consent of Independent Registered Public Accounting Firm 15
2
EXPLANATORY NOTE
TechTeam Global, Inc. (collectively with its subsidiaries, the "Company,"
"TechTeam," "we," "us," and "our") is filing this Amendment No. 1 to Form 10-K/A
("Amendment No. 1") solely to provide the disclosures required to be filed under
Items 10, 11, 12, 13 and 14 of Part III of its Annual Report on Form 10-K for
the fiscal year ended December 31, 2005 ("Form 10-K"), which was originally
filed with the Securities and Exchange Commission ("SEC") on March 16, 2005.
This Amendment No. 1 is necessary as the Company will not file its Definitive
Proxy Statement with the SEC by April 30, 2006, as it initially anticipated.
This Amendment No. 1 contains only the sections of the Form 10-K that are being
amended. The remaining sections of and exhibits to the Form 10-K as originally
filed, which are not included herein, are unchanged and continue in full force
and effect as originally filed. Except for the amended Items contained in Part
III, this Amendment No. 1 speaks as of the date of the original filing of the
Form 10-K and has not been updated to reflect events occurring subsequent to the
original filing date.
PART III
ITEM 10. DIRECTORS AND EXECUTIVE OFFICERS OF THE REGISTRANT
The backgrounds of the Company's directors are as follows:
WILLIAM C. BROWN, 54, became a director in April 2006. Mr. Brown has been
President and Chief Executive Officer of TechTeam since February 16, 2006.
Previously, Mr. Brown had been a vice president in the Americas Group BTO
organization at IBM since March of 2004. During this period, Mr. Brown served in
the positions of Vice President of Sales for the Americas and Vice President of
the Americas Public Sector. From April 2001 until mid-2003, Mr. Brown was
President, Chief Executive Officer, and a member of the Board of Directors at
Aztec Software, Inc., a small publicly-traded Indian company. In the late
1990's, until he left IBM to join Aztec, Mr. Brown was Vice President of the
Worldwide Application Management Services business, one of four major
outsourcing segments in IBM Global Services.
KIM A. COOPER, 47, has been a director since March 1996 and became Chairman
of the Board in May 2003. Mr. Cooper is President and Chief Executive Officer of
Exceed, LLC, a technology consulting and services company, which he founded in
June 2003. Between February and June 2003, he served as an IT consultant. From
October 2002 through February 2003, Mr. Cooper served as President and Chief
Executive Officer of GlobalSim, Inc., a leading driver simulation software
company, during which time GlobalSim was reorganized and sold. From April 2000
through October 2002, Mr. Cooper was the Chief Operating Officer of Sorenson
Media, Inc., a prominent streaming media company. In January 1996, Mr. Cooper
founded and became the Chairman and Chief Executive Officer of Digital Harbor
International, Inc., a Java software development company. Mr. Cooper sold
Digital Harbor in September 1999. Mr. Cooper is on the Board of Directors of
Sento, Inc. (traded under the symbol "SNTO").
WILLIAM F. COYRO, JR., 62, has been a director since August 2001. From
August 2001 through February 3, 2006, Dr. Coyro was the President and Chief
Executive Officer of TechTeam. Dr. Coyro is the founder of TechTeam and he was
Chairman of the Board previously from its inception through February 2000. He
was also President and Chief Executive Officer of TechTeam from its inception
through December 1997, at which point he remained the Company's Chief Executive
Officer through December 1998. From February 2000 through August 2001, TechTeam
employed him as a consultant to management and the Board of Directors.
G. TED DERWA, 67, has been a director since February 2003. Mr. Derwa
retired from Ford Motor Company in 1999 after 36 years of service in various
management and senior executive positions. Prior to his retirement in December
1998, Mr. Derwa was the Director of the Technical Services Office with global
responsibility for Ford Motor Company's data centers, telecommunications, office
automation, engineering workstations, systems support, helpdesk, and information
technology advanced design and research.
3
WALLACE D. RILEY, 78, has served as a director of TechTeam from 1987 to
1988 and from 1993 to the present. Mr. Riley is an attorney at law and, since
July 2004, has been the managing partner of the firm of Wallace D. Riley &
Associates, PLLC. For the five preceding years, he was the President and Senior
Partner of the firm of Riley, Roumell & Connolly, P.C. He is the past President
of the State Bar of Michigan as well as past President of the American Bar
Association. He was a member of the Board of Governors of the American Bar
Association from 1979 through 1980 and from 1982 through 1985.
GREGORY C. SMITH, 61, has been a director since March 2001. In February
2004, Mr. Smith became President and Chief Operating Officer of New Center
Stamping, Inc., an automotive supplier. Mr. Smith had been the Chief Executive
Officer, President, and Chairman of the Board of Directors of New Center
Stamping, Inc., for the five previous years. Between 1976 and 1988, he was the
Chairman and CEO of Wolverine Technologies, Inc., a building products company
traded on the New York Stock Exchange.
RICHARD G. SOMERLOTT, 64, has been a director since TechTeam's inception.
Dr. Somerlott has been a practicing dentist and a managing partner of
Endodontics Associates Professional Corporation during the past five years.
RICHARD R. WIDGREN, 63, became a director in May 2005. Mr. Widgren is
currently Vice President -- Finance, Treasurer, and Chief Financial Officer of
Urban Science, Inc., a retail sales channel consulting company, where he began
employment in August 2001. From April 2001 through August 2001, he was Chief
Financial Officer of Presidion, Inc. Between July 2000 and March 2001, Mr.
Widgren served as a business consultant assisting various clients on business
management and profit improvement projects. Between January 2000 and June 2000,
he was Vice President and Chief Financial Officer of Simplified Employment
Services, Inc., an employee leasing company. Previously, Mr. Widgren served as
Vice President -- Finance and Corporate Controller of Kelly Services, Inc. Mr.
Widgren is a member of the Detroit Medical Center Board of Directors, where he
serves as the chairman of the Audit Committee.
INFORMATION REGARDING EXECUTIVE MANAGEMENT
All executive officers serve at the pleasure of the Board of Directors. There
are no family relationships among any of the directors or executive officers of
TechTeam. The following is a description of the background of TechTeam's
executive officers not otherwise described above.
LARRY W. GRANGER, 60, Chief Operating Officer. Mr. Granger joined TechTeam
in December 2002 as Vice President of Professional Services. He was appointed
Chief Operating Officer in October 2003. For the prior three years, Mr. Granger
was the President and Chief Executive Officer of Perodon, L.L.C., an IT
outsourcing company. From August 1998 through December 1999, he was the Chief
Information Officer of Visteon Corporation.
ROBERT W. GUMBER, 57, Vice President of Operations Europe, Middle East, and
Africa. Mr. Gumber joined TechTeam in September 2003. For the year and a half
prior, Mr. Gumber owned and operated RWG and Associates, L.L.C., a company
providing supply chain consulting services. From April 2001 to October 2001, he
was Director, Material Planning and Logistics for Visteon Corporation. He was
Supply Director for the Interior/Exterior Systems Division of Visteon from the
middle of 1999 through April 2001.
HEIDI K. HAGLE, 36, Vice President of Human Resources. Ms. Hagle has been
with TechTeam since 1996, when she was a Senior Human Resource Generalist. She
became Director of Human Resources in May 1999. In May 2002, Ms. Hagle was
promoted to Vice President.
JAMES M. HOEN, 38, Vice President of Sales and Marketing North America. Mr.
Hoen started with TechTeam in 1997. During his employment, he has been an
Account Development Manager, National Account Manager, Global Account Manager,
and Director of Global Account Management. He was appointed Vice President of
Sales in August 2001. In September 2003, he became Vice President of Sales and
Marketing North America.
4
DENNIS J. KELLY, 45, President of TechTeam Government Solutions, Inc.
(formerly known as Digital Support Corporation). Mr. Kelly joined TechTeam in
November 2005. From January 2004 through November 2005, Mr. Kelly was the Senior
Vice President of Corporate Communications for Anteon Corporation. In this role
he was responsible for all external corporate relations including investor,
government, public, and media relations. From October 2002 to December 2003, Mr.
Kelly was the Senior Vice President for Business Development at Anteon, and from
September 1999 to October 2002, he was the Group Vice President for Anteon's
Information Technology Center.
MARC J. LICHTMAN, 38, Vice President of Accounting Operations and Chief
Accounting Officer. Mr. Lichtman joined TechTeam in December 2003 as Global
Corporate Controller and was promoted to Vice President and Chief Accounting
Officer in August 2004. From June 2002 through April 2003, he served as a
principal with Ernst & Young LLP in their Assurance and Advisory Business
Services Practice. From August 1989 through June 2002, Mr. Lichtman served in
various positions with Arthur Andersen LLP in their Assurance and Business
Advisory Practice, and was promoted to Partner in September 2001.
CHRISTOPH A. NEUT, 39, Vice President Sales and Marketing Europe, Middle
East, and Africa. Mr. Neut has been with TechTeam's Belgian subsidiary, TechTeam
Global NV/SA, since 1996, when he was responsible for business development in
Europe. In 1998, he became General Manager for TechTeam Global NV/SA. In 2000,
he became Director of Sales Europe. In August 2001, he became Vice President
Europe. He assumed his current responsibilities in September 2003.
JEFFERY J. RUFFINI, 45, Vice President of Operations North America. Mr.
Ruffini has been with TechTeam since 1990. From 1997 through 1998, he was Vice
President of Corporate Services. He became Vice President of Operations in 1998.
He assumed his current responsibilities in September 2003.
MICHAEL A. SOSIN, 46, Vice President, General Counsel, and Secretary. Mr.
Sosin joined TechTeam in July 1998 as General Counsel and Secretary. He was
appointed a Vice President in May 2003.
AUDIT COMMITTEE
The Company has an Audit Committee comprised of Gregory C. Smith (Chairman),
Wallace D. Riley, and Richard R. Widgren. The Audit Committee assists the Board
in fulfilling its responsibilities for general oversight of the integrity of
TechTeam's financial statements, the independent auditors' qualifications and
independence, and risk assessment and risk management. Among other things, the
Audit Committee prepares the Report of the Audit Committee for inclusion in the
annual proxy statement; annually reviews the Audit Committee charter and the
committee's performance; appoints, evaluates, and determines the compensation of
TechTeam's independent auditors; reviews and approves the scope of the annual
audit, the audit fee, and the financial statements; reviews TechTeam's
disclosure controls and procedures, internal controls, and corporate policies
with respect to financial information; oversees investigations into complaints
concerning financial matters; and reviews other risks that may have a
significant impact on TechTeam's financial statements. The Audit Committee works
closely with management as well as TechTeam's independent auditors. The Audit
Committee has the authority to obtain advice and assistance from, and receive
appropriate funding from TechTeam for, outside legal, accounting or other
advisors as the Audit Committee deems necessary to carry out its duties.
Independence/Financial Expertise. All members of the Audit Committee are
independent directors according to standards adopted by NASDAQ, as they are
non-affiliated and receive no compensation from the Company, except as
directors. The Board has determined Richard R. Widgren qualifies as an "audit
committee financial expert" as defined by Item 401(h) of Regulation S-K of the
Securities Exchange Act of 1934, as amended.
SECTION 16(A) BENEFICIAL OWNERSHIP REPORTING COMPLIANCE
Based upon a review of the filings with the Securities and Exchange Commission
and written representations that no other reports were required, we believe that
all of our directors and executive officers complied with the reporting
requirements of Section 16(a) of the Securities Exchange Act of 1934, during
fiscal 2005 except one Form 4 was filed late by each Larry W. Granger, Robert W.
Gumber, Heidi K. Hagle, James M. Hoen, Marc J. Lichtman, David W. Morgan,
Jeffery J. Ruffini, and Michael A. Sosin on January 3, 2006, to report stock
options granted on December 13, 2005.
5
CODE OF ETHICS
The Company has adopted a code of ethics that applies to all of its directors,
officers (including its chief executive officer, chief operating officer, chief
financial officer, controller and any other person performing similar
functions), and employees. The Code of Business Conduct is also available on our
website at www.techteam.com/investor/corpgov.html.
ITEM 11. EXECUTIVE COMPENSATION
The following table sets forth certain information concerning compensation for
2005, 2004, and 2003 awarded to, paid to, or earned by TechTeam's Chief
Executive Officer and each of the other four most highly compensated executive
officers of TechTeam as of December 31, 2005.
SUMMARY COMPENSATION TABLE
LONG-TERM COMPENSATION
-----------------------
ANNUAL COMPENSATION RESTRICTED SECURITIES
-------------------------- STOCK UNDERLYING ALL OTHER
NAME AND BONUS AWARDS OPTIONS # COMPENSATION
PRINCIPAL POSITION YEAR SALARY (2) (5) (3) (6)
------------------ ---- -------- -------- ---------- ---------- ------------
William F. Coyro, Jr. (1) 2005 $348,462 $ 73,292 $105,930 -- $26,289
President and Chief 2004 329,365 218,592 136,620 40,000 21,734
Executive Officer 2003 320,269 75,000 -- 75,000 21,608
Larry W. Granger 2005 $234,231 $ 53,145 $ 60,188 10,000 $ 6,655
Chief Operating Officer 2004 225,000 132,480 56,250 25,000 --
2003 165,577 -- -- 30,000 --
Robert W. Gumber 2005 $210,769 $ 47,586 $ 42,800 10,000 $95,031
Vice President of Operations 2004 187,692 110,891 36,000 15,000 35,193
EMEA 2003 34,615 -- -- 21,000 6,440
James M. Hoen 2005 $206,154 $ 43,738 $ 42,800 10,000 $ 7,266
Vice President of Sales 2004 199,615 117,760 55,200 15,000 612
and Marketing North America 2003 192,500 25,000 -- 15,000 3,160
Christoph A. Neut (4) 2005 $205,356 $ 47,440 $ 43,513 10,000 $30,661
Vice President of Sales 2004 224,220 113,033 57,780 15,000 16,136
and Marketing EMEA 2003 203,120 24,600 -- 15,000 13,146
(1) Dr. Coyro was removed as President and Chief Executive Officer on February
3, 2006. William C. Brown became President and Chief Executive Officer on
February 16, 2006.
(2) Amounts reported in this column for 2004 and 2005 are for bonuses earned
for performance under the Company's Annual Incentive Plan during 2004 and
2005, but were not paid until 2005 and 2006, respectively.
(3) Comprised of stock options granted under TechTeam's 2004 Incentive Stock
and Awards Plan for 2004 and 2005 and TechTeam's 1990 Nonqualified Stock
Option Plan for 2003.
(4) Mr. Neut's 2005 compensation is reported in U.S. dollars based upon the
prevailing exchange rate from euros to U.S. dollars on March 20, 2005 of
$1.22 per euro. His 2004 compensation is reported in U.S. dollars based
upon the prevailing exchange rate from euros to U.S. dollars on March 21,
2005 of $1.32 per euro. His 2003 compensation is reported in U.S. dollars
based upon the prevailing exchange rate from euros to U.S. dollars on March
19, 2004 of $1.23 per euro.
6
(5) The named executive officers also earned a restricted stock award pursuant
to the Company's Long Term Incentive Plan during 2005. The restricted stock
was awarded on March 15, 2006 based upon a stock price of $10.45. Dr. Coyro
and Messrs. Granger, Gumber, Hoen, and Neut received 10,137, 5,760, 4,096,
4,096, and 4,378 shares of restricted stock, respectively. These shares of
restricted stock vest five years after the date of grant, and dividends, if
any, will be paid on these shares. At the end of 2005, Dr. Coyro and
Messrs. Granger, Gumber, Hoen, and Neut owned restricted stock valued at
$120,972, $68,732, $43,989, $48,873, and $51,165, respectively.
(6) For the named executive officers, this column includes the following
payments by TechTeam in the years indicated.
401(K) TERM LIFE HEALTH BELGIAN
COMPANY INSURANCE INSURANCE EXPATRIATE BENEFITS
NAME YEAR MATCH PAYMENT PREMIUMS EXPENSES (A) (B) TOTAL
---- ---- ------- --------- --------- ------------ -------- -------
William F. Coyro, Jr. 2005 $ 5,404 $2,423 $18,462 n/a n/a $26,289
2004 173 860 20,701 n/a n/a 21,734
2003 4,415 806 16,387 n/a n/a 21,608
Larry W. Granger 2005 $ 4,221 $2,434 n/a n/a n/a $ 6,655
2004 n/a n/a n/a n/a n/a n/a
2003 n/a n/a n/a n/a n/a n/a
Robert W. Gumber 2005 $ 4,216 n/a n/a $90,815 n/a $95,031
2004 462 n/a n/a 34,731 n/a 35,193
2003 -0- n/a n/a 6,440 n/a 6,440
Christoph A. Neut 2004 $7,703 (c) n/a $ 135 n/a $22,823 $30,661
2004 11,694(c) n/a 137 n/a 4,305 16,136
2003 9,024(c) n/a 122 n/a 4,000 13,146
James M. Hoen 2005 $ 4,217 $3,049 n/a n/a n/a $ 7,266
2004 462 150 n/a n/a n/a 612
2003 3,045 115 n/a n/a n/a 3,160
(a) Mr. Gumber is a citizen of the United States working in Belgium. As part of
his employment arrangement, starting in November 2003, TechTeam pays for
his automobile, housing, certain travel expenses, and, as of October 2005,
a monthly expense stipend, and reimburses him for incremental taxes due to
the United States as a result of his expatriate status.
(b) Includes amounts paid for benefits particular to TechTeam's subsidiary in
Belgium, TechTeam Global NV/SA, including luncheon vouchers, representation
allowances, and payments for an automobile.
(c) Represents the amount paid by TechTeam Global NV/SA toward a retirement
plan for Mr. Neut.
7
OPTION GRANTS AND EXERCISES
The following tables set forth information with respect to grants of stock
options during the year ended December 31, 2005 to the individuals named in the
Summary Compensation Table above.
OPTION GRANTS IN 2005
POTENTIAL
REALIZABLE VALUE
PERCENT OF AT ASSUMED
TOTAL ANNUAL RATES
NUMBER OF OPTIONS OF STOCK PRICE
SHARES OF GRANTED TO APPRECIATION FOR
UNDERLYING EMPLOYEES EXPIRATION OPTION TERM (2)
OPTIONS IN FISCAL EXERCISE DATE ------------------
NAME GRANTED (1) YEAR PRICE (MM/DD/YR) 5% 10%
---- ----------- ---------- -------- ---------- ------- --------
William F. Coyro, Jr. -- -- N/A N/A $ -- $ --
Larry W. Granger 10,000 1.76% $9.83 12/13/15 $61,820 $156,665
Robert W. Gumber 10,000 1.76% $9.83 12/13/15 $61,820 $156,665
James M. Hoen 10,000 1.76% $9.83 12/13/15 $61,820 $156,665
Christoph A. Neut 10,000 1.76% $9.83 12/13/15 $61,820 $156,665
(1) All of the options reflected in the table were granted under TechTeam's
2004 Incentive Stock Award Plan. Option exercise prices are at market price
on the date of grant. These options were vested immediately, but any stock
acquired from the exercise of the options is restricted for two years
following the date of the grant.
(2) Assumes rates of common stock price appreciation that are prescribed by the
SEC and does not reflect TechTeam's estimates or projection of future
common stock price.
AGGREGATE OPTION EXERCISES IN 2005 AND YEAR-END VALUE TABLE
EXERCISABLE UNEXERCISABLE
NUMBER OF NUMBER OF VALUE OF UNEXERCISED
SHARES UNEXERCISED UNEXERCISED IN-THE-MONEY OPTIONS AT
ACQUIRED OPTIONS AT OPTIONS AT DECEMBER 31, 2005
ON VALUE DECEMBER 31, DECEMBER 31, ---------------------------
NAME EXERCISE REALIZED 2005 2005 EXERCISABLE UNEXERCISABLE
---- -------- -------- ------------ ------------- ----------- -------------
William F. Coyro, Jr. 40,000 $150,500 115,000 -- $224,500 $ --
Larry W. Granger 10,000 $ 79,200 60,000 10,000 $112,400 $41,800
Robert W. Gumber 7,000 $ 35,700 32,000 7,000 $ 47,960 $29,260
James M. Hoen 16,500 $136,625 35,000 9,000 $ 49,910 $45,525
Christoph A. Neut 19,000 $163,455 34,000 9,000 $ 63,325 $45,525
8
EMPLOYMENT CONTRACTS AND CHANGE OF CONTROL AGREEMENTS
On May 25, 2005, Dr. Coyro entered into a three-year employment agreement and
non-competition agreement (the "Agreement") with TechTeam that provides for his
employment as President and Chief Executive Officer of the Company. The
Agreement was executed on May 25, 2005 and provides for a base annual salary of
$360,000 per annum. The Agreement also provides that Dr. Coyro is entitled to
bonuses under the Company's Annual Incentive Plan and Long Term Incentive Plan.
Under the Agreement, Dr. Coyro is entitled to receive an individual medical
insurance policy, as well as other benefits made available to other employees
and management of TechTeam. In the event of a change of control, he would be
entitled to payment of salary and other benefits for the longer of (a) one year
or (b) the remaining term of the Agreement. The Agreement also provides certain
covenants by Dr. Coyro not to compete with TechTeam during the term of the
Agreement and for two years thereafter. On November 4, 2005, the Company
announced that the Board had engaged a search firm to find a replacement for Dr.
Coyro. On February 3, 2006, the Board removed Dr. Coyro from his role as
President and Chief Executive Officer. On April 26, 2006, the Board terminated
the Agreement for cause.
Christoph Neut, Vice President of Sales and Marketing for Europe, Middle East,
and Africa, is an employee of TechTeam Global NV/SA, the Company's Belgian
subsidiary. Mr. Neut has an employment contract with TechTeam Global NV/SA that
is similar in material aspects to the employment contracts for other employees
of TechTeam Global NV/SA.
On September 29, 2005, the Company entered into an employment contract with
Robert W. Gumber, Vice President of Operations Europe, Middle East, and Africa.
The contract provides that, from October 1, 2005 through December 31, 2006, Mr.
Gumber will be employed as an expatriate in Belgium in the role of Vice
President of Operations EMEA. Under the terms of the contract, Mr. Gumber will
earn a base salary of $225,000 and will participate in the Company's Annual
Incentive Plan. As an expatriate, the Company will also pay additional
compensation $5,000 per month for his expatriate services, as well as other
benefits standard with expatriate service, including a housing allowance that is
not to exceed 4,000 euros per month. Until December 31, 2006, Mr. Gumber can be
terminated only for cause as defined in the agreement.
Effective March 17, 2004, all executive officers of TechTeam have entered into
Employment Agreements Relating to Change of Control with TechTeam. These
agreements provide these executives, in the event of their involuntary
termination after a change-in-control, with (i) payments by TechTeam of 100% of
his/her base annual salary, (ii) accelerated vesting of all unvested options to
purchase common stock of TechTeam, (iii) employee benefits for an one-year
period, and (iv) one year of company-paid outplacement services. "Change of
Control" is defined in the agreement as (1) the sale of (a) all then outstanding
shares of common stock of TechTeam or (b) 51% of outstanding voting securities
of TechTeam entitled to vote generally in the election of the directors; or (2)
the consummation of the sale or other disposition of all or substantially all of
the assets or operations of TechTeam.
COMPENSATION COMMITTEE INTERLOCKS AND INSIDER PARTICIPATION
During 2005, the Compensation Committee was comprised solely of non-employee
directors. No member of the Compensation Committee was an officer or employee of
TechTeam or any of its subsidiaries during 2005. None of the executive officers
of TechTeam has served on the board of directors or on the compensation
committees of any other entity of whose officers have served either on the Board
of Directors or on the Compensation Committee of TechTeam.
9
DIRECTOR COMPENSATION
The following table provides information on TechTeam's compensation and
reimbursement practices from June 1, 2005 through the end of fiscal 2005 for
non-employee directors.
Monthly retainer $3,000
Additional monthly retainer for service as Chairman of the Board $6,000
Additional monthly retainer for the Chair of the Audit Committee and $2,000
the Chair of the Compensation Committee
Fee for each committee meeting attended $1,000
Additional fee for each committee meeting chaired $1,000
Stock awards 100 shares per Board
meeting attended
Annual stock option award on last business day of February 10,000
Reimbursement for expenses attendant to Board membership Yes
Prior to June 1, 2005, the monthly retainer per director was $1,500 and fees
related to committees were $600 per committee meeting and $600 per committee
meeting chaired. The stock awards and stock option awards were granted under the
Company's 1996 Non-Employee Director Stock Plan, which expired on December 31,
2005. Accordingly, effective January 1, 2006, the Directors no longer receive
common stock as payment for attendance at meetings or an annual option grant
under this plan. Stock options have an exercise price equal to the fair market
value of a share of common stock on the date of the grant as determined by the
closing price of the stock on the last business day in February. William F.
Coyro, Jr., the Company's President and Chief Executive Officer during 2005, did
not receive any compensation in his role as a Director.
ITEM 12. STOCK OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT AND RELATED
STOCKHOLDER MATTERS
The following table shows, as of April 10, 2006, how many shares of our common
stock are beneficially owed by (i) any person who have reported or are known by
TechTeam to be the beneficial owner of more than 5% of our common stock, (ii)
each director and nominee for director, and (iii) named executive officers
included in the Summary Compensation Table included in this proxy statement. The
information for Kern Capital Management, LLC, Dimensional Fund Advisors, Inc.,
Costa Brava Partnership III, Janus Capital Management, LLC, and Diker GP, LLC is
based upon their Schedule 13G filings in February 2006. The information for
Ramius Capital Group, LLC is based upon its Schedule 13G filing of April 10,
2006. There were approximately 10,105,000 shares of TechTeam's common stock
outstanding on this date.
10
NUMBER OF SHARES PERCENTAGE OF
BENEFICIALLY ACQUIRABLE WITHIN OUTSTANDING
NAME OWNED (1) 60 DAYS COMMON STOCK (1)
---- ---------------- ----------------- ----------------
Ramius Capital Group, LLC 992,887 -- 9.8%
666 Third Avenue, 26th Floor
New York, New York 10017
Kern Capital Management, LLC 920,700 -- 9.1
114 West 47th Street, Suite 1926
New York, NY 10036
Costa Brava Partnership III L.P 873,943 -- 8.7
68 Harvard Street, 3rd Floor,
Brookline, MA 02445
Dimensional Fund Advisors, Inc. 732,734 -- 7.3
1299 Ocean Avenue, 11th Floor
Santa Monica, CA 90401
Janus Capital Management, LLC 644,992 -- 6.4
151 Detroit Street
Denver, CO 80206
Diker GP, LLC 583,408 -- 5.8
745 Fifth Avenue, Suite 1409
New York, NY 10151
William C. Brown 25,000 50,000 **
Kim A. Cooper 20,825 90,000 1.1
William F. Coyro, Jr. 164,372 95,000 2.6
G. Ted Derwa 4,900 30,000 **
Larry W. Granger 23,050 45,000 **
Robert W. Gumber 17,965 22,000 **
James M. Hoen 14,204 37,500 **
Christoph A. Neut 9,255 39,000 **
Wallace D. Riley 62,200 90,000 1.5
Gregory C. Smith 36,600 40,000 **
Richard G. Somerlott 43,019 100,000 1.4
Richard R. Widgren 1,350 -- **
Current directors and named executive
officers as a group (12 persons) 10.5%
** Less than 1%.
(1) The number of shares shown includes shares that are individually or jointly
owned, as well as shares over which the individual has either sole or
shared investment or voting authority. For the purpose of computing the
percentage of the outstanding shares owned by a stockholder, shares subject
to such exercise are deemed to be outstanding securities of the class owned
by that stockholder but are not deemed to be outstanding for the purpose of
computing the percentage owned by any other person.
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EQUITY COMPENSATION PLAN INFORMATION
-------------------------------------------------------------------------
(A) (B) (C)
----------------------- -------------------- ------------------------
NUMBER OF SECURITIES
REMAINING AVAILABLE FOR
NUMBER OF SECURITIES FUTURE ISSUANCE UNDER
TO BE ISSUED UPON WEIGHTED-AVERAGE EQUITY COMPENSATION
EXERCISE OF OUTSTANDING EXERCISE PRICE OF PLANS (EXCLUDING
OPTIONS, WARRANTS OUTSTANDING OPTIONS, SECURITIES
PLAN CATEGORY AND RIGHTS (1) WARRANTS AND RIGHTS REFLECTED IN COLUMN (A))
------------- ----------------------- -------------------- ------------------------
Equity compensation plans approved
by security holders .............. 1,181,300 $9.89 313,075
Equity compensation plans not
approved by security holders ..... 221,670 $6.83 --
--------- ----- -------
Total ............................... 1,402,970 $9.41 313,075
========= ===== =======
(1) Represents options to purchase shares of the Company's common stock.
Equity compensation plans not approved by security holders consists solely of
the 1990 Nonqualified Stock Option Plan ("1990 Plan"). Information regarding the
material features of the 1990 Plan is described in "Note 8 to the Consolidated
Financial Statements" contained in "Item 8 -- Financial Statements and
Supplementary Data" and are incorporated herein by reference.
ITEM 13. CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS
The Company and a major customer are engaged in a pilot program testing software
that is intended to evaluate and motivate help desk agents. The software is
owned by an affiliate of Kim A. Cooper, the Chairman of the Board of the
Company. The pilot program involves personnel of the Company but no significant
out-of-pocket expense to the Company. If the pilot program is successful, the
Company may negotiate a contract with the Chairman's affiliate for use of the
software.
ITEM 14. PRINCIPAL ACCOUNTING FEES AND SERVICES
Ernst & Young LLP ("Ernst & Young"), or its predecessors, have audited our
consolidated financial statements since TechTeam became a public company in
1987. As our independent auditors, Ernst & Young will audit our consolidated
financial statements for fiscal 2006 and perform audit-related services in
connection with various accounting and financial reporting matters. Ernst &
Young also performs for TechTeam certain non-audit services that are permitted
under the Sarbanes-Oxley Act of 2002 and related rules of the SEC. The Audit
Committee has determined that the provision of audit-related and permitted
non-audit services provided by Ernst & Young is compatible with maintaining
Ernst & Young's independence pursuant to the auditor independence rule of the
SEC.
FEES OF ERNST & YOUNG FOR 2005
The aggregate fees for professional services by Ernst & Young in 2005 and 2004
were as follows:
TYPE OF FEES 2005 2004
------------ ------ ----
($ in thousands)
Audit Fees............... $1,042 $402
Audit-Related Fees....... 22 49
Tax Fees................. 154 111
------ ----
Total.................... $1,218 $562
====== ====
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In the above table, in accordance with SEC definitions and rules, "audit fees"
are fees for professional services for the audit of the Company's consolidated
financial statements included in Form 10-K and review of financial statements
included in Form 10-Qs, or for services that are normally provided by the
independent auditor in connection with statutory and regulatory filings;
"audit-related fees" are fees for assurance and related services that are
reasonably related to the performance of the audit of the Company's financial
statements such as audits of employee benefit plans, accounting consultation,
and pre-acquisition financial due diligence; and "tax fees" are fees for tax
compliance and tax planning and consulting, including expatriate tax services.
PRE-APPROVAL POLICIES AND PROCEDURES
All audit and non-audit services to be performed by the Company's independent
auditor must be approved in advance by the Audit Committee. As permitted by the
SEC's rules, the Audit Committee adopted a policy that provides for pre-approval
by the Audit Committee of specifically defined audit, non-audit, and tax-related
services. Unless the specific service has been previously pre-approved with
respect to that year, the Audit Committee must approve the permitted service
before the independent auditor is engage to perform it. The Audit Committee has
delegated to the Chairman of the Audit Committee authority to approve permitted
services provided that the Chairman reports any decisions to the Committee at
its next scheduled meeting.
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SIGNATURES
Pursuant to the requirements of Section 13 or 15(d) of the Securities Exchange
Act of 1934, the registrant has duly caused this report to be signed on its
behalf by the undersigned, thereunto duly authorized.
TECHTEAM GLOBAL, INC.
Date: May 1, 2006 By: /s/ William C. Brown William C. Brown
------------------------------ President, Chief Executive Officer,
and Director (Principal Executive
Officer)
By: /s/ Marc J. Lichtman Marc J. Lichtman
------------------------------ Chief Accounting Officer (Principal
Financial Officer and Principal
Accounting Officer)
Pursuant to the requirements of the Securities Exchange Act of 1934, this report
has been signed by the following persons in the capacities indicated on May 1,
2006.
/s/ Kim A. Cooper Director
-------------------------------------
Kim A. Cooper
Director
-------------------------------------
William F. Coyro, Jr.
/s/ G. Ted Derwa Director
-------------------------------------
G. Ted Derwa
/s/ Wallace D. Riley Director
-------------------------------------
Wallace D. Riley
/s/ Gregory C. Smith Director
-------------------------------------
Gregory C. Smith
/s/ Richard G. Somerlott Director
-------------------------------------
Richard G. Somerlott
/s/ Richard R. Widgren Director
-------------------------------------
Richard R. Widgren
14