<PAGE> 1
SCHEDULE 14A INFORMATION
Proxy Statement Pursuant to Section 14(a) of
the Securities Exchange Act of 1934 (Amendment No. )
Filed by the Registrant [ x ]
Filed by a Party other than the Registrant [ ]
Check the appropriate box:
[ ] Preliminary Proxy Statement
[ ] Confidential, for Use of the Commission Only (as permitted by Rule 14a-6(e)
(2))
[x] Definitive Proxy Statement
[ ] Definitive Additional Materials
[ ] Soliciting Material Pursuant to Section 240.14a-11(c) or Section
240.14a-12
VANSTAR CORPORATION
-------------------
(Name of Registrant as Specified in its Charter)
-------------------
(Name of Person(s) Filing Proxy Statement, if other than the Registrant)
Payment of Filing Fee (Check the appropriate box):
[x] No fee required.
[ ] Fee computed on table below per Exchange Act Rules 14a-6(i)(4) and
0-11
(1) Title of each class of securities to which transaction applies:
(2) Aggregate number of securities to which transaction applies:
(3) Per unit price or other underlying value of transaction computed
pursuant to Exchange Act Rule 0-11 (Set forth the amount on which
the filing fee is calculated and state how it was determined):
(4) Proposed maximum aggregate value of transaction:
(5) Total fee paid:
[ ] Fee paid previously with preliminary materials.
[ ] Check box if any part of the fee is offset as provided by Exchange Act
Rule 0-11(a)(2) and identify the filing for which the
offsetting fee was paid previously. Identify the previous filing by
registration statement number, or the Form or Schedule and the date of
its filing.
(1) Amount Previously Paid:
(2) Form, Schedule or Registration Statement No.:
(3) Filing Party:
(4) Date Filed:
<PAGE> 2
VANSTAR CORPORATION
5964 WEST LAS POSITAS BLVD.
PLEASANTON, CALIFORNIA 94588
---------------------
NOTICE OF ANNUAL MEETING OF STOCKHOLDERS
---------------------
NOTICE IS HEREBY GIVEN that the Annual Meeting of Stockholders (the
"Meeting") of Vanstar Corporation, a Delaware corporation (the "Company"), will
be held at the Waldorf Astoria Hotel, 301 Park Avenue, New York, New York, on
Friday, September 12, 1997, at 11:00 a.m., local time, for the following
purposes:
1. Elect Directors. To consider and vote upon the election of ten
directors to serve until the next Annual Meeting of Stockholders and until
their successors are duly elected and qualified.
2. Ratify Appointment of Auditors. To ratify the appointment of Ernst
& Young, LLP as independent auditors for the Company for the fiscal year
ending April 30, 1998.
3. Other Business. To transact such other business as may properly
come before the Meeting or any adjournments thereof.
Only stockholders of record at the close of business on July 25, 1997, are
entitled to receive notice of and to vote at the Meeting.
By Order of the Board of Directors,
/s/ William Y. TAUSCHER SIG
WILLIAM Y. TAUSCHER
Chairman of the Board
and Chief Executive Officer
Pleasanton, California
August 4, 1997
IT IS IMPORTANT THAT YOUR SHARES BE REPRESENTED AND VOTED AT THE MEETING.
WHETHER OR NOT YOU PLAN TO ATTEND THE MEETING IN PERSON, PLEASE READ THE
ENCLOSED PROXY STATEMENT AND COMPLETE, SIGN, DATE, AND RETURN THE ENCLOSED PROXY
IN THE ENVELOPE PROVIDED.
<PAGE> 3
VANSTAR CORPORATION
PROXY STATEMENT
FOR
ANNUAL MEETING OF STOCKHOLDERS
TO BE HELD ON SEPTEMBER 12, 1997
INTRODUCTION
GENERAL
This Proxy Statement is being furnished to the stockholders of Vanstar
Corporation, a Delaware corporation (the "Company"), in connection with the
solicitation of proxies by the Company's Board of Directors (the "Board") from
holders of the outstanding shares of the Company's common stock, $.001 par value
("Common Stock"), for use at the Annual Meeting of Stockholders of the Company
to be held on Friday, September 12, 1997, at 11:00 a.m., local time, at the
Waldorf Astoria Hotel, 301 Park Avenue, New York, New York, and at any
adjournments thereof (the "Meeting"). The Meeting is being held to consider and
vote upon (1) the election of ten directors to serve until the Company's Annual
Meeting of Stockholders in 1998 and until their successors are duly elected and
qualified and (2) the ratification of the appointment of Ernst & Young, LLP
("Ernst & Young") as independent auditors for the Company for the fiscal year
ending April 30, 1998.
A copy of the Company's Annual Report containing financial statements for
the fiscal year ended April 30, 1997 ("Fiscal Year 1997") is enclosed herewith.
This Proxy Statement is dated August 4, 1997 and is first being mailed to
stockholders on or about August 11, 1997. The mailing address of the Company's
principal executive offices is 5964 West Las Positas Blvd., Pleasanton,
California 94588. The Company's telephone number at such offices is (510)
734-4000.
SOLICITATION AND REVOCABILITY OF PROXIES
All shares represented by duly executed proxies in the form enclosed
herewith that are received in time and not revoked will be voted at the Meeting
as instructed in such proxies. IF NO INSTRUCTIONS ARE GIVEN, THE PERSONS NAMED
IN THE ACCOMPANYING PROXY INTEND TO VOTE "FOR" THE ELECTION OF THE TEN NOMINEES
NAMED HEREIN AS DIRECTORS OF THE COMPANY AND "FOR" THE RATIFICATION OF THE
APPOINTMENT OF ERNST & YOUNG AS INDEPENDENT AUDITORS FOR THE COMPANY FOR THE
FISCAL YEAR ENDING APRIL 30, 1998.
A stockholder may revoke a previously executed proxy at any time prior to
its exercise by (1) properly submitting to the Company a duly executed proxy
bearing a later date, (2) giving written notice of revocation to the Secretary
of the Company, or (3) voting in person at the Meeting. All written notices of
revocation or other communications with respect to revocation of proxies should
be addressed as follows: Vanstar Corporation, 1100 Abernathy Road, Building 500,
Suite 1200, Atlanta, Georgia 30328, Attention: H. Christopher Covington,
Secretary.
RECORD DATE, OUTSTANDING VOTING SECURITIES, AND VOTING REQUIREMENTS
The Common Stock is the only outstanding class of voting securities of the
Company. The record date for determining the holders of Common Stock entitled to
vote at the Meeting is the close of business on July 25, 1997 (the "Record
Date"). As of the Record Date, 42,961,841 shares of Common Stock were
outstanding. Each holder of Common Stock on the Record Date is entitled to cast
one vote per share at the Meeting.
Holders of a majority of the shares entitled to vote must be present at the
Meeting, in person or by proxy, so that a quorum will be present for the
transaction of business. The ten nominees receiving the greatest number of votes
cast by the holders of shares of Common Stock represented and entitled to vote
at the Meeting, at which a quorum must be present, will be elected directors of
the Company. With respect to the election of directors, stockholders may (1)
vote "for" all ten nominees, (2) "withhold" authority to vote for all such
nominees, or (3) withhold authority to vote for any individual nominee or
nominees but vote for all other
<PAGE> 4
nominees. Because directors are elected by a plurality of the votes cast, votes
to withhold authority with respect to one or more nominees will have no effect
on the outcome of the election. Similarly, any "broker nonvotes" (which occur
when shares held by brokers or nominees for beneficial owners are voted on some
matters but not on others) would have no effect on the outcome of the election
of directors, although they would be counted as present for the purposes of
determining the existence of a quorum.
With respect to the ratification of accountants, stockholders may (1) vote
"for," (2) vote "against," or (3) "abstain" from voting on the proposal. Under
the Company's By-laws, the affirmative vote of the holders of a majority of the
shares of Common Stock present at the Meeting, in person or by proxy, is
necessary for the ratification of Ernst & Young as independent auditors for the
Company. Any broker nonvotes with respect to the ratification of accountants
will not be counted as present and entitled to vote on that matter and,
accordingly, would have no effect on its outcome. Abstentions will be counted as
present and entitled to vote and, accordingly, will have the effect of a
negative vote.
ELECTION OF DIRECTORS
At the Meeting, ten persons will be elected to serve as directors until the
Company's next Annual Meeting of Stockholders and until their successors have
been duly elected and qualified as provided in the Company's Restated
Certificate of Incorporation and By-laws. The following persons have been
nominated and, if elected, have consented to serve as directors of the Company.
All nominees are presently members of the Board. Information about each nominee
is set forth below. THE BOARD UNANIMOUSLY RECOMMENDS A VOTE FOR ELECTION OF THE
NOMINEES IDENTIFIED BELOW.
Jay S. Amato became President and Chief Operating Officer in July 1995 and
a director in December 1995. From January 1993 until July 1995, he was Senior
Vice President and President, North America Operations of the Company. From June
1991 until January 1993, Mr. Amato was Senior Vice President, Major Market
Operations of the Company, and from April 1989 until June 1991, he was Vice
President of Business Development of the Company. Mr. Amato previously held
various management positions at The Computer Factory, Inc.
John W. Amerman became a director in June 1996. He has served as Chairman
of Mattel, Inc., a leading toy manufacturer, since 1987. Prior to his
chairmanship with Mattel, Inc., Mr. Amerman served as President of Mattel
International. Before joining Mattel in 1980, he was President of the American
Chicle division of Warner Lambert Corp., a consumer and healthcare products
company. Mr. Amerman is also a member of the board of directors of Unocal
Corporation, a worldwide energy resources company; a member of the board of
directors of Knoll, Inc., an office furniture and systems company; a member of
the Board of Governors of the Hugh O'Brian Youth Foundation; a member of the
Board of Overseers of Dartmouth's Amos Tuck School; and a member of the board of
directors of Phoenix House of California.
Richard H. Bard became a director of the Company in September 1987 and
served as Chairman of the Board from July 1989 to December 1991. He has been a
director and Chief Executive Officer of Optical Security Group, Inc., a
materials technology company, since September 1993, and became President and
Chairman of the Board of that company in April 1995. From July 1989 to December
1991, Mr. Bard served at different times in the capacities of Director,
Chairman, President and Chief Executive Officer of ComputerLand International
Development, Inc. Since 1991, he has also been Chief Executive Officer of Bard &
Co., Inc., a diversified investment management company. From May 1986 until
December 1988, Mr. Bard was Chairman and Chief Executive Officer of CoastAmerica
Corporation, a franchisor of hardware product stores. Prior to that time, he was
President and Chief Operating Officer of FoxMeyer Corporation, which he co-
founded in 1978. Mr. Bard is also a director of Polymedica Industries, Inc., a
manufacturer of healthcare products.
Stephen W. Fillo became a director in September 1987. He has been President
of Fillo & Co., Inc., an independent investment firm, since December 1990. Mr.
Fillo was a Managing Director of E.M. Warburg, Pincus & Co., Inc., a venture
banking and investment counseling firm, from 1981 to 1990.
2
<PAGE> 5
Stewart K.P. Gross became a director in June 1994. He is a Managing
Director of E.M Warburg, Pincus & Co., LLC. Mr. Gross has been with that firm
since July 1987 and has been a Managing Director since January 1993. He is also
a director of BEA Systems, Inc., a software company, and several private
companies.
William H. Janeway became a director in June 1994. He has been a Managing
Director and the head of the Venture Capital High Technology Team since 1988 of
E.M. Warburg, Pincus & Co., Inc. Mr. Janeway is also a director of BEA Systems,
Inc., Ecsoft Group plc, Industri-Matematik International Corp., Maxis, Inc., and
VERITAS Software Corporation, each of which is involved in computer software;
Zilog, Inc., a semiconductor manufacturer; and several private companies.
John R. Oltman became a director of the Company in June 1996. He is the
former Chairman and Chief Executive Officer of SHL Systemhouse, Inc., a provider
of client/server consulting, systems integration, and technology outsourcing.
Before joining SHL Systemhouse, Mr. Oltman was Worldwide Managing Partner for
Integration Services for Andersen Consulting and a member of Andersen's
Worldwide Organization Board of Directors. He joined the Arthur Andersen
Worldwide Organization in 1970 and held a number of positions within that firm,
including Managing Partner for Andersen's Chicago Consulting Group. Mr. Oltman
is also a director of TSW International and IA Corporation, application software
companies.
William Y. Tauscher became Chairman of the Board of the Company in
September 1987 and Chief Executive Officer in September 1988. He was President
from September 1988 to July 1995. Prior to September 1988, Mr. Tauscher was
Chairman of the Board, President and Chief Executive Officer of FoxMeyer
Corporation, a wholesale pharmaceutical distributor and franchisor which he
co-founded in 1978 and a subsidiary of National Intergroup, Inc., a diversified
holding corporation. He is also a director of The Vons Companies, Inc., a
grocery store chain.
John L. Vogelstein became a director in January 1991. He has been President
of E.M. Warburg, Pincus & Co., Inc. since 1994, Vice Chairman of E.M. Warburg,
Pincus & Co., Inc. since 1982, President of E.M. Warburg, Pincus & Co., LLC or
its predecessor since 1980, and a Partner of Warburg, Pincus & Co. since 1971.
Mr. Vogelstein is a director of ADVO, Inc., a direct mail marketing company;
Aegis Group plc, a media buying company; Golden Books Family Entertainment Inc.,
a retailer and publisher of children's books; Journal Register Company, a
newspaper publisher; LCI International, Inc., a long distance telephone carrier;
Mattel, Inc., a toy manufacturer; Value Health, Inc., a managed care company;
and several private companies.
Josh S. Weston became a director of the Company in June 1996. He has served
as Chairman of Automatic Data Processing, a computer services company, since
1985 and was Chief Executive Officer from 1982 to 1986. Mr. Weston is also a
director of Public Service Enterprise Group Inc., an electric and gas utility
company; Olsten Corp., a provider of home health care and temporary staffing
services; and Shared Medical Systems, a provider of health information services.
MEETINGS OF THE BOARD AND COMMITTEES
The Board has established four standing committees. The Executive Committee
is comprised of the Chairman of the Board and the chairmen of each of the Audit,
Compensation and Stock Option, and Finance Committees (currently Messrs.
Tauscher, Oltman, Janeway, and Weston, respectively). The Executive Committee
serves primarily as an advisory committee to the Company's management and the
Board. The Audit Committee is comprised of Messrs. Oltman and Fillo. The Audit
Committee annually recommends to the Board the firm to be engaged as independent
auditors for the Company; reviews the Company's internal accounting procedures
and controls; generally oversees all matters relating to auditing of the
Company; reviews risks and contingent liabilities affecting the Company; and
reviews the Company's financial statements, related press releases, and related
disclosures in the Company's filings with the Securities and Exchange Commission
(the "SEC").
The Compensation and Stock Option Committee is comprised of Messrs.
Janeway, Amerman, and Bard and makes recommendations to the Board with respect
to general compensation and benefit levels, determines compensation and benefits
for the Company's executive officers, and generally administers the Company's
stock option plans. The Finance Committee is comprised of Messrs. Weston and
Janeway. The Finance
3
<PAGE> 6
Committee monitors the Company's financial position and capital structure and
approves the Company's financing plans and programs; generally exercises the
powers of the Board with regard to financing arrangements; reviews and, as
appropriate, recommends changes to the Company's dividend policy; considers
other matters regarding the Company's financial structure; and approves or makes
recommendations regarding business combinations and similar operating
investments.
During Fiscal Year 1997, the Board met eight times and the Audit and
Compensation and Stock Option Committees each met once. The Executive and
Finance Committees held no formal meetings during Fiscal Year 1997. All of the
directors attended at least 75% of the total number of meetings of the Board and
the committees of the Board on which they served, except for Mr. Vogelstein.
SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS,
DIRECTORS, AND MANAGEMENT
The outstanding capital stock of the Company consists of the Common Stock.
The following table sets forth information with respect to the beneficial
ownership of the Common Stock as of June 1, 1997, by (1) each person known by
the Company to own beneficially more than 5% of the outstanding Common Stock,
(2) each of the Company's directors, each executive officer named in the Summary
Compensation Table below (collectively, the "Named Executive Officers"), and (3)
all directors and executive officers of the Company as a group. Except as noted
below, the address of each director and Named Executive Officer is: c/o Vanstar
Corporation, 1100 Abernathy Road, Building 500, Suite 1200, Atlanta, Georgia
30328.
<TABLE>
<CAPTION>
NUMBER OF SHARES
OF COMMON STOCK PERCENTAGE OF
NAME AGE BENEFICIALLY OWNED (1) OUTSTANDING SHARES(1)
- ---- --- ---------------------- ---------------------
<S> <C> <C> <C>
Warburg, Pincus Capital Company, L.P.(2)...... -- 16,482,501 38.4
466 Lexington Avenue
New York, NY 10017
William Y. Tauscher(3)........................ 47 2,607,771 6.0
Jeffrey S. Rubin(4)........................... 53 266,424 *
Richard H. Bard(5)............................ 49 623,528 1.4
Stephen W. Fillo(6)........................... 60 5,000 *
Stewart K.P. Gross(2)(7)...................... 38 16,482,501 38.4
William H. Janeway(2)(7)...................... 54 16,482,501 38.4
John L. Vogelstein(2)(7)...................... 62 16,482,501 38.4
Jay S. Amato(8)............................... 37 223,682 *
Richard N. Anderson(9)........................ 40 34,389 *
Ahmad Manshouri(10)........................... 56 31,606 *
John W. Amerman(11)........................... 65 13,000 *
Josh S. Weston(12)............................ 68 17,000 *
John R. Oltman(11)............................ 52 13,000 *
All Directors and Executive Officers as a
group (20 persons)(7)(13)................... -- 20,386,004 45.8
</TABLE>
- ---------------
* Less than one percent.
(1) Under applicable SEC rules, a person is deemed to be a "beneficial owner"
of a security if the person has or shares voting or investment power with
respect to that security, or if the person has a right to acquire
beneficial ownership within 60 days. Under those rules, more than one
person may be deemed to be a beneficial owner of the same securities, and a
person may be deemed to be a beneficial owner of securities as to which he
disclaims beneficial ownership. Except as indicated in other notes to this
table, the Company believes that the beneficial owners named in the table
had sole voting and investment power with respect to all shares of Common
Stock reflected in the table, subject to applicable community property
laws.
(2) The sole general partner of Warburg, Pincus Capital Company, L.P. ("WPCC")
is Warburg, Pincus & Co., a New York general partnership ("WP"). E.M.
Warburg Pincus & Co., LLC ("EMW") manages WPCC. The members of EMW are
substantially the same as the partners of WP. Lionel I. Pincus is the
4
<PAGE> 7
managing partner of WP and the managing member of EMW and may be deemed to
control both WP and EMW. WP, as the sole general partner of WPCC, has a 20%
interest in the profits of WPCC. Number of shares includes 113,056 shares
subject to options granted to Jeffrey S. Rubin and included in Mr. Rubin's
beneficial ownership figure.
(3) Includes 612,461 shares that may be acquired upon exercise of options.
(4) Includes 263,056 shares that may be acquired upon exercise of options.
(5) Includes 367,434 shares that may be acquired upon exercise of options. Also
includes 45,596 shares of Common Stock owned by the Bard Family Foundation,
of which Mr. Bard is President, and as to which Mr. Bard disclaims
beneficial ownership.
(6) Consists of 5,000 shares that may be acquired upon exercise of options.
Pursuant to an arrangement between WP and Mr. Fillo, Mr. Fillo has an
indirect pecuniary interest in the Common Stock owned by WPCC. Mr. Fillo
disclaims beneficial ownership of all such Common Stock.
(7) Messrs. Gross, Janeway, and Vogelstein, directors of the Company, are
Managing Directors of EMW and general partners of WP. All of the shares
indicated as owned by Messrs. Gross, Janeway, and Vogelstein are owned
beneficially by WPCC and are included because of the affiliation of such
persons with WPCC. Messrs. Gross, Janeway, and Vogelstein disclaim
beneficial ownership of these shares.
(8) Includes 220,000 shares that may be acquired upon exercise of options.
(9) Includes 31,020 shares that may be acquired upon exercise of options.
(10) Includes 29,000 shares that may be acquired upon exercise of options.
(11) Consists of 13,000 shares that may be acquired upon exercise of options.
(12) Includes 13,000 shares that may be acquired upon exercise of options.
(13) Includes 1,619,012 shares that may be acquired upon exercise of options.
EXECUTIVE COMPENSATION
SUMMARY COMPENSATION TABLE
The following table sets forth certain information concerning compensation
of the Company's Chief Executive Officer and each of the Company's four other
most highly compensated executive officers for Fiscal Year 1997.
<TABLE>
<CAPTION>
LONG-TERM
COMPENSATION
----------------
ANNUAL COMPENSATION AWARDS
----------------------------------------- ----------------
SECURITIES
OTHER ANNUAL UNDERLYING ALL OTHER
NAME AND PRINCIPAL POSITION YEAR SALARY ($) BONUS ($) COMPENSATION ($) OPTIONS/SARS (#) COMPENSATION ($)
- --------------------------- ---- ---------- --------- ---------------- ---------------- ----------------
<S> <C> <C> <C> <C> <C> <C>
William Y. Tauscher........ 1995 550,008 30,000 -- 325,000(1) 87,634(2)
Chairman of the Board 1996 550,008 550,008 1,187,434(1) 1,566(3)
and Chief Executive
Officer 1997 579,170 -- -- 1,390(3)
Jay S. Amato............... 1995 256,245 25,000 -- 47,726(1) 1,014(3)
President and Chief 1996 312,498 312,293 -- 300,000(1) 2,094(4)
Operating Officer 1997 368,332 150,000(5) $82,378(6) 100,000(1) 6,653(7)
Jeffrey S. Rubin........... 1995 -- -- -- -- --
Vice Chairman of the 1996 243,756 242,424 250,000(1) 1,944(3)
Board and Chief Financial 1997 341,672 -- -- 820(3)
Officer(8)
Ahmad Manshouri............ 1995 204,006 20,000 -- 15,000(1) 768(3)
Senior Vice President and 1996 242,834 194,142 75,000(1) 3,921(3)
General Manager
Operations 1997 255,336 -- 35,000(1) 3,670(9)
Richard N. Anderson........ 1995 182,508 20,000 1,940(10) 15,000(1) 1,669(11)
Senior Vice President
Sales 1996 219,168 175,258 -- 85,100(1) 2,105(12)
1997 248,336 -- 35,000(1) 3,809(13)
</TABLE>
- ---------------
(1) These shares are subject to purchase upon exercise of stock options granted
under the Company's stock option plans.
(footnotes continued on following page)
5
<PAGE> 8
(2) Comprised of $86,074 of forgiveness of interest on a promissory note
payable to the Company and $1,560 of premiums for insurance policies for
which such person is the beneficiary.
(3) Comprised of premiums for insurance policies for which such person is the
beneficiary.
(4) Comprised of $1,500 matching contributions made to the Company's 401(k)
plan for the benefit of such person and $594 of premiums for insurance
policies for which such person is the beneficiary.
(5) Includes reimbursement of relocation expenses.
(6) Comprised of reimbursement for the payment of taxes on the amount reported
as bonus for Fiscal Year 1997.
(7) Comprised of a $5,769 matching contribution to the Company's 401(k) plan
for the benefit of such person and $884 of premiums for insurance policies
for which such person is the beneficiary.
(8) Mr. Rubin resigned from this position as of June 25, 1997.
(9) Comprised of a $3,057 matching contribution to the Company's 401(k) plan
for the benefit of such person and $613 of premiums for insurance policies
for which such person is the beneficiary.
(10) Comprised of relocation expenses.
(11) Comprised of a $967 matching contribution made to the Company's 401(k) plan
for the benefit of such person and $702 of premiums for insurance policies
for which such person is the beneficiary.
(12) Comprised of a $1,500 matching contribution made to the Company's 401(k)
plan for the benefit of such person and $605 of premiums for insurance
policies for which such person is the beneficiary.
(13) Comprised of a $3,213 matching contribution made to the Company's 401(k)
plan for the benefit of such person and $596 of premiums for insurance
policies for which such person is the beneficiary.
OPTION/SAR GRANTS IN LAST FISCAL YEAR
The following table sets forth certain information regarding stock options
granted to each Named Executive Officer during Fiscal Year 1997 pursuant to the
Company's stock option plans.
<TABLE>
<CAPTION>
INDIVIDUAL GRANTS POTENTIAL REALIZABLE
-------------------------------------------------------------------- VALUE AT ASSUMED
NUMBER OF PERCENT OF TOTAL ANNUAL RATES OF STOCK
SECURITIES OPTIONS/SARS PRICE APPRECIATION FOR
UNDERLYING GRANTED TO OPTION TERM ($)(1)
OPTIONS/SARS EMPLOYEES IN EXERCISE OR BASE ----------------------
NAME GRANTED (#) FISCAL YEAR PRICE ($/SH) EXPIRATION DATE 5%($) 10%($)
- ---- ------------ ---------------- ---------------- --------------- -------- ----------
<S> <C> <C> <C> <C> <C> <C>
William Y. Tauscher.. -- -- -- -- -- --
Jay S. Amato......... 100,000(2) 6.8% 15.00 07/26/06 943,342 2,390,614
Jeffrey S. Rubin..... -- -- -- -- -- --
Ahmad Manshouri...... 35,000(2) 2.4% 15.00 07/26/06 330,170 838,715
Richard N. Anderson.. 35,000(3) 2.4% 15.00 07/26/06 330,170 838,715
</TABLE>
- ---------------
(1) Potential realizable value is based on the assumption that the price of the
Common Stock appreciates at the annual rate shown, compounded annually, from
the date of grant until the end of the 10-year option term. The values are
calculated in accordance with SEC rules and do not reflect the Company's
estimate of future stock price appreciation.
(2) The options vest in 20% increments on the grant date and each of May 1,
1997, 1998, 1999, and 2000, subject to acceleration in the event of certain
"corporate transactions" (as defined in the applicable stock option plan).
(3) The options vest in 20% increments on the grant date and each of May 1,
1997, 1998, 1999, and 2000, subject to acceleration in the event of
termination within six months of certain "changes of control" (as defined in
the applicable stock option plan).
6
<PAGE> 9
AGGREGATED OPTION/SAR EXERCISES IN LAST FISCAL YEAR AND FISCAL YEAR-END
OPTION/SAR VALUES
The following table sets forth certain information regarding exercises of
Company options during Fiscal Year 1997 and total options held at the end of
Fiscal Year 1997 by the Named Executive Officers.
<TABLE>
<CAPTION>
NUMBER OF SECURITIES
UNDERLYING UNEXERCISED VALUE OF UNEXERCISED IN-THE-
OPTIONS/SARS MONEY OPTIONS/SARS AT
SHARES AT FISCAL YEAR-END (#) FISCAL YEAR-END ($)
ACQUIRED ON VALUE ------------------------- -----------------------------
NAME EXERCISE (#) REALIZED ($) EXERCISABLE/UNEXERCISABLE EXERCISABLE/UNEXERCISABLE(1)
- ---- ------------ ------------ ------------------------- -----------------------------
<S> <C> <C> <C> <C>
William Y. Tauscher.. -- -- 474,974/712,460 1,203,011/1,804,513
Jay S. Amato......... -- -- 140,000/240,000 525,000/787,500
Jeffrey S. Rubin..... -- -- 100,000/150,000 437,500/656,250
Ahmad Manshouri...... 30,000 676,560 7,000/73,000 0/196,875
Richard N. Anderson.. 48,940 718,851 7,000/79,060 0/223,388
</TABLE>
- ---------------
(1) Represents the difference between the closing price of the Common Stock on
the New York Stock Exchange on April 30, 1997 and the exercise price of the
options.
COMPENSATION AND STOCK OPTION COMMITTEE INTERLOCKS AND INSIDER PARTICIPATION
The Compensation and Stock Option Committee makes recommendations to the
full Board with respect to general compensation and benefit levels, determines
compensation and benefits for the Company's executive officers, and generally
administers the Company's stock option plans. The Compensation and Stock Option
Committee is comprised of Messrs. Janeway, Amerman, and Bard. None of those
individuals is, or was during Fiscal Year 1997, an officer or employee of the
Company or any of its subsidiaries; however, Mr. Bard was formerly an officer of
a subsidiary of the Company.
COMPENSATION AND STOCK OPTION COMMITTEE REPORT ON EXECUTIVE COMPENSATION
The Company's executive compensation program is administered by the
Compensation and Stock Option Committee of the Board (the "Compensation
Committee"). The Compensation Committee believes that the Company's current
executive compensation program has been designed and administered in a manner
consistent with the Company's strategic business objectives and provides
incentives for attainment of those objectives. As such, the compensation program
requires a substantial portion of executive officers' compensation to be tied to
the profitability of the Company. Additionally, tying a portion of compensation
to the Company's stock performance enables the Company to align employee
interests more closely with those of its stockholders.
COMPONENTS OF EXECUTIVE COMPENSATION
The executive compensation program consists of two components: (1) annual
compensation, consisting of base salary and annual incentives, and (2) long-term
incentives. Annual compensation is designed to be competitive with pay of
comparison companies within the Company's industry for similar jobs when target
levels of Company performance are achieved. The target levels of annual
compensation and long-term incentives are based on published industry surveys
and proxy reports of comparison companies. Long-term incentive compensation is
achieved through grants of stock options. Guidelines are established for the
number of stock option shares that may be granted at various levels of jobs.
Determination of the number of stock option shares set in those guidelines is
based on the competitive level of stock option grants for those various levels
of jobs reported in the surveys of comparison companies. In Fiscal Year 1997,
the Compensation Committee reviewed industry surveys of compensation levels for
executive officers within the comparison companies for which data is available,
including some of the companies included in the Standard & Poor's Technology
Sector Index, which is included in the cumulative total return graph that
follows this report.
7
<PAGE> 10
ANNUAL COMPENSATION
Base salary is intended to provide an annual salary at a level consistent
with the individual's position and contributions. Any increases in base salary
that are approved by the Compensation Committee generally are awarded following
year-end, based on a subjective review of the results of individual performance
and contributions to the achievement of the Company's objectives, and after
consideration of the level of competitive annual compensation of the comparison
companies. Base salary increases for executive officers shown in the Summary
Compensation Table above, granted during Fiscal Year 1997, reflect both
recognition of individual performance and contributions, and adjustments to
competitive levels.
Annual incentives for executives are determined under the Company's
Management Incentive Plan ("MIP"). Participants include all officers and certain
management employees. The MIP creates a direct link between pay and Company
results by establishing an earnings per share ("EPS") goal for the fiscal year
and predicating incentive opportunity on Company achievement relative to that
goal. The MIP reflects the Compensation Committee's view that a meaningful
portion of annual compensation should be "at risk" for executive officers. Under
the MIP, if minimum levels of performance are not met, no award will be earned,
and the participant will lose the amount at risk. Opportunities to earn up to
two times the target award level under the MIP are established for specified
levels of above goal performance. For Fiscal Year 1997, EPS results were below
minimum established levels for payment relative to the annual EPS goal and no
annual incentives were earned or paid to any officers, including the CEO.
LONG-TERM INCENTIVES
Long-term incentives focus management's attention on the Company's future
by relating executive pay directly to the Company's long-term performance over a
number of years through grants of stock options. Stock options provide
executives with the opportunity to buy and maintain an equity interest in the
Company and to share in the appreciation of the value of the Common Stock. The
Compensation Committee believes that stock options result in (1) enhancing the
Company's ability to retain, for an extended period of time, those individuals
who are key to the creation of stockholder value and (2) linking the
compensation of executives to the gain to stockholders through appreciation in
the market price of the Common Stock.
The Company has three stock option plans (collectively, the "Option
Plans"), each of which provides for the issuance of incentive stock options
("ISOs"), stock options that are non-qualified for Federal Income tax purposes
("NQSOs), and stock appreciation rights ("SARs"). Under the Option Plans, the
exercise price of an ISO may not be less than 100% of the fair market value of
the Common Stock at the time of grant. The exercise price of NQSOs is determined
by the Compensation Committee at the time of such grant. Options granted under
the Option Plans typically vest in equal annual installments over a four- or
five-year period.
Following the competitive guidelines established for the number of stock
option shares that may be granted at various levels of jobs, management
subjectively assesses individual performance and contributions toward long-term
success of the business when recommending to the Compensation Committee for
approval the specific numbers of shares for grant to executive officers. As a
result, the actual number of shares subject to options that are granted may be
equal to, above, or below the guideline.
Long-term compensation also is achieved through the Company's Employee
Stock Purchase Plan (the "ESPP"), which allows participants to purchase Common
Stock through regular payroll deductions. The ESPP, which is intended to qualify
as an "employee stock purchase plan" under section 423 of the Internal Revenue
Code of 1986, as amended (the "Code"), is open to voluntary participation by all
full-time and part-time employees who work more than 20 hours per week.
COMPANY POLICY ON QUALIFYING COMPENSATION
Section 162(m) of the Code generally limits to one million dollars the
annual compensation that may be deducted by the Company for any of its five
highest-paid executive officers, subject to certain exceptions. The Compensation
Committee plans to address in the future the issue of qualifying compensation
under Section 162(m) of the Code.
8
<PAGE> 11
CEO COMPENSATION
The Compensation Committee determines the compensation of the Company's
Chief Executive Officer in substantially the same manner as the compensation for
other executive officers. Mr. Tauscher's annual base salary was increased on
October 1, 1997 by $50,000. The increase reflects both a subjective review of
the results of individual performance and contributions to the achievement of
the Company's objectives, and consideration of the level of competitive annual
compensation paid to chief executive officers of comparison companies, as
described above. Mr. Tauscher's increase followed a period of several years
where his base salary did not advance beyond the level established in August
1991.
For Fiscal Year 1997, Mr. Tauscher received no annual incentive payment,
which accounts for one-third of his annual compensation opportunity at target
under the MIP. The EPS goal under the MIP was not achieved for the full fiscal
year; therefore, no payments were earned or paid.
During Fiscal Year 1997, Mr. Tauscher received no stock options. Although
eligible to receive a grant, due to the limited number of remaining shares
available at the time for the first grant of stock options to other eligible
employees, Mr. Tauscher recommended to the Compensation Committee that he not be
granted stock options in order to ensure that enough shares were available for
grants to the other employees. The Compensation Committee followed his
recommendation.
William H. Janeway
John W. Amerman
Richard H. Bard
COMPENSATION OF DIRECTORS
Directors who are full-time employees of the Company receive no additional
compensation for services rendered as members of the Board or committees
thereof. Directors who are not full-time employees of the Company receive
reimbursement of out-of-pocket expenses for attendance at Board meetings. All
directors who are not full-time employees of the Company, other than those
directors affiliated with EMW, receive an annual fee of $20,000 and a meeting
fee of $1,000 per meeting attended. Each director who receives a $20,000 annual
fee may elect to forego the $20,000 annual payment and instead receive options
to purchase 5,000 shares of Common Stock.
9
<PAGE> 12
COMPARISON OF CUMULATIVE TOTAL RETURNS
The following graph compares the cumulative total stockholder returns for
the Common Stock, the Standard & Poor's 500 Index ("S&P 500") and the Standard &
Poor's Technology Sector Index (formerly the High Tech Composite Index) ("S&P
Technology Sector") for the period from March 11, 1996 (the date on which the
Common Stock began trading on the New York Stock Exchange) through June 30,
1997. The following comparison assumes the investment on March 11, 1996, of $100
in the Common Stock and on February 29, 1996 in each of the foregoing indices
and assumes the reinvestment of all dividends. The Company has paid no
dividends. The data in the graph has been provided by Research Ltd. The total
stockholder returns shown in the graph are included in response to SEC
requirements and are not intended to forecast or be indicative of future
performance.
<TABLE>
<CAPTION>
Measurement Period Vanstar S & P Technology
(Fiscal Year Covered) Corporation S & P 500 Sector
<S> <C> <C> <C>
3/11/96 100 100 100
4/30/96 136 102 105
7/31/96 158 101 100
10/31/96 239 112 116
1/31/97 148 125 147
4/30/97 74 128 145
</TABLE>
LEGAL PROCEEDINGS
On July 3, 1997, a trust claiming to have purchased shares of Common Stock
filed suit in Superior Court of the State of California, County of Santa Clara,
against, among other defendants, the Company, WPCC and certain of its
affiliates, and the following current directors and executive officers of the
Company: Richard Bard, William Tauscher, Jay Amato, Richard Anderson, Chris
Laney, Ahmad Manshouri, Stewart Gross, William Janeway, and John Vogelstein. The
plaintiff also seeks class action status under California law and purports to
represent a class of purchasers of the Common Stock between March 11, 1996 and
January 23, 1997. In its original complaint, the plaintiff purports to state
three causes of action under California law, alleging generally, among other
things, that the defendants made false or misleading statements or concealed
information regarding the Company and that the plaintiff, as a holder of Common
Stock, suffered damage as a result thereof. The plaintiff seeks compensatory and
punitive damages in an unspecified amount, together with other relief. The suit
is entitled David T. O'Neal Trust, Dated 4/1/77, v. Vanstar Corporation, et al.,
Case No. CV767266. The Company believes that the plaintiff's allegations are
without merit and intends to defend the suit vigorously.
10
<PAGE> 13
CERTAIN TRANSACTIONS
Jeffrey Rubin resigned from his position as Vice Chairman and Chief
Financial Officer of the Company in June 1997 and ceased his employment with the
Company in July 1997. In connection with the termination of his employment, Mr.
Rubin entered into a Separation Agreement with the Company. The Separation
Agreement generally provides that the Company will retain Mr. Rubin as a
consultant for two years in exchange for compensation of $5,000 per year. In
addition, the outstanding options to purchase shares of Common Stock granted by
the Company to Mr. Rubin will continue to vest in accordance with their terms.
Pursuant to the Separation Agreement, the Company also is obligated to enter
into an Acquisition Services Agreement (the "Services Agreement") with Covington
& Associates ("C&A"), an investment banking firm with whom Mr. Rubin is
affiliated. Under the proposed Services Agreement, the Company would retain C&A
to identify for the Company potential acquisition candidates which satisfy
certain criteria specified by the Company, and to make its personnel available
to assist the Company in negotiating the terms of acquisitions. In exchange, the
Company would pay C&A a nonrefundable retainer of $500,000 and generally would
pay an additional fee if an acquisition candidate presented by C&A is ultimately
acquired by the Company. The additional fee would range from $150,000 to
potentially more than $825,000, depending upon the purchase price paid for the
acquired business. The Services Agreement is expected to have a two-year term.
From time to time the Company has made loans to officers in connection with
relocation of those officers required as a result of their employment with the
Company. In July 1997, the Company made loans in the original principal amount
of $100,000 to each of H. Christopher Covington and Kauko Aronaho, executive
officers of the Company. Each of those loans bears interest at an annual rate of
7.6%. Principal and interest on the loans are generally due within 30 days of
receipt of the officer's first bonus payment from the Company or, in the case of
Mr. Covington, if earlier, upon the first anniversary of the loan.
RATIFICATION OF SELECTION OF AUDITORS
The Board has selected the firm of Ernst & Young to serve as independent
auditors for the Company for the fiscal year ending April 30, 1998. Ernst &
Young has served as the Company's auditors since 1989. It is expected that a
representative of Ernst & Young will be present at the Meeting and will be
available to make a statement (if he or she desires to do so) and to respond to
appropriate questions at the Meeting. If the stockholders do not ratify the
selection of Ernst & Young, the Board may consider selection of other
independent auditors, but no assurances can be made that the Board will do so or
that any other independent auditors would be willing to serve. The vote of a
majority of the shares of Common Stock represented in person or by proxy at the
Meeting is required to ratify the selection of auditors. THE BOARD UNANIMOUSLY
RECOMMENDS A VOTE FOR RATIFICATION OF THE APPOINTMENT OF ERNST & YOUNG AS
INDEPENDENT AUDITORS FOR THE COMPANY FOR THE FISCAL YEAR ENDING APRIL 30, 1998.
SECTION 16(A) BENEFICIAL OWNERSHIP REPORTING COMPLIANCE
Section 16(a) of the Securities Exchange Act of 1934, as amended, generally
requires the Company's executive officers and directors and persons who are
beneficial owners of more than ten percent of the Common Stock to file reports
of ownership and changes in ownership of the Company's equity securities with
the SEC. Based upon a review of the copies of forms furnished to the Company and
upon written representations from certain reporting persons, the Company
believes that during Fiscal Year 1997, all filing requirements applicable to its
executive officers, directors, and greater-than-ten-percent stockholders were
complied with, except that director Richard Bard failed to file one required
Form 4 to report three transactions (which transactions were subsequently
reported on a Form 5 that was timely filed); and directors John Amerman, John
Oltman, and Josh Weston each filed his initial Form 3 late.
11
<PAGE> 14
STOCKHOLDER PROPOSALS FOR 1998 ANNUAL MEETING
In accordance with SEC rules, proposals by stockholders intended to be
presented at the Company's 1998 Annual Meeting of Stockholders must be received
at the Company's principal executive offices on or before April 7, 1998 in order
to be included in the proxy materials relating to the 1998 Annual Meeting of
Stockholders. In order to curtail controversy as to the date on which a proposal
was received by the Company, it is suggested that proponents submit their
proposals by certified mail, return receipt requested. Any such proposal must
also meet the other requirements of the rules of the SEC relating to stockholder
proposals.
OTHER INFORMATION
PROXY SOLICITATION
The Company will bear the cost of soliciting proxies for the Meeting. In
addition to the solicitation of stockholders of record by mail, telephone, or
personal contact, the Company contacts brokers, dealers, banks, or voting
trustees or their nominees, who can be identified as record holders of Common
Stock. Such holders, after inquiry by the Company, provide information
concerning quantities of proxy materials and Annual Reports needed to supply
such materials to beneficial owners, and the Company reimburses them for the
expense of mailing proxy materials and Annual Reports to those persons.
MISCELLANEOUS
The Board does not know of any other matter that is expected to be
presented for consideration at the Meeting. If other matters properly come
before the Meeting, however, the persons named in the accompanying proxy (each
of whom is an officer of the Company) will vote thereon in accordance with their
best judgment.
THE COMPANY WILL PROVIDE WITHOUT CHARGE (OTHER THAN FOR EXHIBITS) TO EACH
PERSON BEING SOLICITED BY THIS PROXY STATEMENT, UPON WRITTEN REQUEST, A COPY OF
THE COMPANY'S ANNUAL REPORT ON FORM 10-K FOR FISCAL YEAR 1997, INCLUDING
FINANCIAL STATEMENTS AND SCHEDULES THERETO, AS FILED WITH THE SEC. REQUESTS
SHOULD BE DIRECTED TO VANSTAR CORPORATION, 1100 ABERNATHY ROAD, BUILDING 500,
SUITE 1200, ATLANTA, GEORGIA 30328, ATTENTION: INVESTOR RELATIONS.
12
<PAGE> 15
APPENDIX
PROXY
VANSTAR CORPORATION
PROXY SOLICITED BY THE BOARD OF DIRECTORS FOR THE
ANNUAL MEETING OF STOCKHOLDERS TO BE HELD ON SEPTEMBER 12, 1997
The undersigned hereby appoints Kauko Aronaho and H. Christopher Covington, and
either of them, with individual power of substitution, proxies to vote all
shares of Common Stock of Vanstar Corporation (the "Company") that the
undersigned may be entitled to vote at the Annual Meeting of Stockholders of
the Company to be held at the Waldorf Astoria Hotel, 301 Park Avenue, New York,
New York, on September 12, 1997, at 11:00 a.m., local time, and any
adjournments thereof.
SAID PROXIES WILL VOTE ON THE PROPOSALS SET FORTH IN THE NOTICE OF ANNUAL
MEETING AND PROXY STATEMENT AS SPECIFIED ON THE REVERSE SIDE OF THIS CARD AND
ARE AUTHORIZED TO VOTE IN THEIR DISCRETION AS TO ANY OTHER BUSINESS THAT MAY
COME PROPERLY BEFORE THE MEETING. IF A VOTE IS NOT SPECIFIED, SAID PROXIES WILL
VOTE IN FAVOR OF PROPOSALS 1 AND 2.
PLEASE MARK, SIGN, AND DATE THIS PROXY ON THE REVERSE SIDE
AND RETURN PROMPTLY IN THE ENVELOPE PROVIDED
[Perforation here]
FOLD AND DETACH HERE
<PAGE> 16
Please mark
your votes as /X/
indicated in
this example
THE BOARD OF DIRECTORS RECOMMENDS A VOTE FOR
PROPOSALS 1 AND 2. FOR WITHHOLD
1. ELECTION OF DIRECTORS / / / /
Nominees:
Jay S. Amato William H. Janeway
John W. Amerman John R. Oltman
Richard H. Bard William Y. Tauscher
Steven W. Fillo John L. Vogelstein
Stewart K.P. Gross Josh S. Weston
Instruction: To withhold authority to vote for
any individual nominee(s), list name(s) below.
- -------------------------------------------------------------------------------
- -------------------------------------------------------------------------------
FOR AGAINST ABSTAIN
2. RATIFICATION OF THE APPOINTMENT
OF ERNST & YOUNG, LLP AS / / / / / /
INDEPENDENT AUDITORS
Signature(s)_______________________________________________________Date________
NOTE: Please sign exactly as name appears hereon. Joint owners should each
sign. When signing as attorney, executor, administrator, trustee, or guardian,
please give full title as such.
[Perforation here]
FOLD AND DETACH HERE
