SCHEDULE 14A
(RULE 14A-101)
INFORMATION REQUIRED IN PROXY STATEMENT
SCHEDULE 14A INFORMATION
PROXY STATEMENT PURSUANT TO SECTION 14(A)
OF THE SECURITIES EXCHANGE ACT OF 1934
[X] Filed by the registrant
[ ] Filed by a party other than the registrant
Check the appropriate box:
[ ] Preliminary proxy statement
[X] Definitive proxy statement
[ ] Definitive additional materials
[ ] Soliciting material pursuant to Rule 14a-11(c) or Rule 14a-2
WALSH INTERNATIONAL INC.
-----------------------------------
(NAME OF REGISTRANT AS SPECIFIED IN CHARTER)
WALSH INTERNATIONAL INC.
-----------------------------------
(NAME OF PERSON(S) FILING THE INFORMATION STATEMENT)
Payment of filing fee (check the appropriate box):
[ ] $125 per Exchange Act Rule 0-11(c)(1)(ii), or 14c-5(g).
[ ] Fee computed on table below per Exchange Rules 14c-5(g) 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:
-------------------------------------------------------------------------
(3) Per unit price or other underlying value of transaction computed pursuant
to Exchange Act Rule 0-11:
-------------------------------------------------------------------------
(4) Proposed maximum aggregate value of transaction:
-------------------------------------------------------------------------
[ ] 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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<PAGE>
[LOGO]
WALSH INTERNATIONAL INC.
105 TERRY DRIVE, SUITE 118
NEWTOWN, PENNSYLVANIA 18940
NOTICE OF ANNUAL MEETING OF STOCKHOLDERS
NOVEMBER 12, 1996
The Annual Meeting of Stockholders of Walsh International Inc. ("Walsh" or
the "Company") will be held at the Princeton Marriott Forrestal Village, 201
Village Boulevard, Princeton, New Jersey 08540, on the 12th day of November,
1996, at 11:00 a.m. (local time), for the following purposes:
1. to elect two directors to the Company's Board of Directors; and
2. to transact such other business as may properly come before the meeting
or any adjournment thereof.
The Board of Directors has fixed the close of business on October 1, 1996
as the record date for the determination of the stockholders of the Company
entitled to notice and to vote at the Annual Meeting of Stockholders. Each share
of the Company's Common Stock is entitled to one vote on all matters presented
at the Annual Meeting.
ALL HOLDERS OF THE COMPANY'S COMMON STOCK (WHETHER THEY EXPECT TO ATTEND
THE ANNUAL MEETING OR NOT) ARE REQUESTED TO COMPLETE, SIGN, DATE AND RETURN
PROMPTLY THE PROXY CARD ENCLOSED WITH THIS NOTICE.
By Order of the Board of Directors
/s/Leonard R. Benjamin
------------------------------
Leonard R. Benjamin
Secretary
October 17, 1996
<PAGE>
WALSH INTERNATIONAL INC.
PROXY STATEMENT
ANNUAL MEETING OF STOCKHOLDERS
NOVEMBER 12, 1996
INTRODUCTION
This Proxy Statement is being furnished to stockholders of record of Walsh
International Inc. ("Walsh" or the "Company") as of October 1, 1996 in
connection with the solicitation by the Board of Directors of Walsh of proxies
for the 1996 Annual Meeting of Stockholders to be held at the Princeton Marriott
Forrestal Village, 201 Village Boulevard, Princeton, New Jersey, 08540, on
November 12, 1996 at 11:00 a.m. (local time), or at any adjournments thereof,
for the purposes stated in the Notice of Annual Meeting. The approximate date of
mailing of this Proxy Statement and enclosed form of proxy to stockholders is
October 17, 1996.
As of the close of business on October 1, 1996, the Company had outstanding
10,487,785 shares of Common Stock, $.01 par value ("Common Stock"). Each share
of Common Stock is entitled to one vote on all matters presented at the Annual
Meeting. The presence, either in person or by properly executed proxy, of the
holders of record of a majority of the issued and outstanding stock entitled to
vote at the Annual Meeting shall constitute a quorum at the Annual Meeting.
If the enclosed proxy is signed and returned, it may, nevertheless, be
revoked at any time prior to the voting thereof at the pleasure of the
stockholder signing it, either by a written notice of revocation received by the
person or persons named therein or by voting the shares covered thereby in
person or by another proxy dated subsequent to the date thereof.
Proxies in the accompanying form will be voted in accordance with the
instructions indicated thereon, and, if no such instructions are indicated, will
be voted in favor of the nominees for election as directors named below and for
the other proposals referred to below.
The vote required for approval of each of the proposals before the
shareholders at the Annual Meeting is specified in the description of such
proposal below. For the purposes of determining whether a proposal has received
the required vote, abstentions will be included in the vote total, with the
result that an abstention will have the same effect as a negative vote. Brokers
who are members of the New York Stock Exchange ("NYSE") and who hold shares in
"street name" for customers have, by NYSE rules, the authority to vote on
certain items in the absence of instructions from their customers, the
beneficial owners of the shares. Under these rules, brokers that do not receive
instructions are entitled to vote on the election of the two nominees for
director.
1. ELECTION OF DIRECTORS
The Company's By-laws provide for a Board of Directors classified into three
classes, each with a term of office of three years, expiring sequentially at
successive annual meetings of stockholders. The entire Board of Directors is
currently comprised of six directors. Two directors will be elected at the 1996
Annual Meeting of Stockholders for terms of three years each and until their
respective successors are elected and shall have qualified or until either
sooner dies, resigns or is removed.
The shares represented by proxies returned duly executed will be voted,
unless otherwise specified, in favor of the two nominees for the Board of
Directors named below. If, as a result of circumstances not known or unforeseen,
any of such nominees shall be unavailable to serve as a director, proxies will
be voted for the election of such other person or persons as the Board of
Directors may select. Each nominee for director will be elected by a plurality
of votes cast at the Annual Meeting of Stockholders. Proxies will be voted "for"
the election of the two nominees unless instructions to "withhold" votes are set
forth on the proxy card. Withholding votes will not influence voting results.
Abstentions may not be specified as to the election of directors. THE BOARD OF
DIRECTORS RECOMMENDS THAT STOCKHOLDERS VOTE TO ELECT THE TWO NOMINEES FOR THE
BOARD OF DIRECTORS NAMED BELOW.
<PAGE>
<TABLE>
<CAPTION>
SERVED AS
PRINCIPAL DIRECTOR
NAME OCCUPATION SINCE
- --------------------- -------------------------------------------------------- ------------
<S> <C> <C>
NOMINEES FOR ELECTION AS DIRECTOR
Robert Mander....... President and Chief Operating Officer, Walsh 1996
James W. Stevens.... Retired; formerly Executive Vice President, Prudential 1996
Insurance Company of America
CONTINUING DIRECTORS
Dennis M.J. Turner.. Chief Executive Officer, Source Informatics Inc.; Chief 1988
Executive Officer, Pharmaceutical Marketing Services
Inc.; Chairman of the Board, Walsh
Michael A. Hauck.... Chief Executive Officer, Walsh 1991
Harry C. Groome .... Retired; formerly Chairman, SmithKline Beecham Consumer 1996
Healthcare
Leonard M. Lodish .. Professor, The Wharton School, University of 1996
Pennsylvania
</TABLE>
DIRECTORS AND EXECUTIVE OFFICERS
Set forth below is certain information with respect to each of the nominees
for the office of director, each director whose term of office will continue
after the 1996 Annual Meeting of Stockholders, and each other executive officer
of Walsh:
NOMINEES
ROBERT MANDER, 45, has served as President and Chief Operating Officer of the
Company since April 1996. Prior to that, he served as a Vice President of Walsh
since its inception in May 1988, ultimately having responsibility for the
European and Pacific Rim operations of the Company. From 1974 to 1981, Mr.
Mander was responsible for developing the direct marketing business of one of
the Company's predecessors. From 1981 to 1988, he was responsible for the
predecessor company's non-pharmaceutical business and, ultimately, divestment of
its non-core activities.
JAMES W. STEVENS, 60, has served as a director since April 1996. From 1987
until his retirement in 1995, he was Executive Vice President of Prudential
Insurance Company of America, and also served as Chairman and CEO of Prudential
Asset Management Group. For two years previously he was a Managing Director of
Dillon Reed and Co., Inc. From 1974 until 1985 he was employed at Citicorp,
including as Chairman, Citicorp Venture Capital and Executive Vice President of
the Global Merchant Banking Group. Mr. Stevens is a director of Biogen, Inc. and
Financial Services Aquisition Corp.
CONTINUING DIRECTORS
DENNIS M.J. TURNER, 54, has served as a director of the Company since its
inception and Chairman of the Board since April 1996. He has also been the Chief
Executive Officer of Source Informatics Inc. since it was spun off from Walsh in
April 1996 and has served as a director and Chief Executive Officer of
Pharmaceutical Marketing Services Inc. since its inception in a carve out from
Walsh in 1991. Mr. Turner is a director of International Biotechnology Trust
plc. Mr. Turner's term as director of the Company will expire in 1998.
MICHAEL A. HAUCK, 51, has served as a director of the Company since September
1991, as President and Chief Operating Officer from September 1991 to April 1996
and as Chief Executive Officer since April 1996. Prior to joining Walsh, Mr.
Hauck was Chief Executive of MSAS Cargo International, a subsidiary of Ocean
Group plc, a company operating in 32 countries worldwide. Prior to his ten years
with MSAS, he spent five years with Cory Distribution, most recently as
Marketing Director. Mr. Hauck's term as a director of the Company will expire in
1997.
2
<PAGE>
LEONARD M. LODISH, 53, has served as a director since May 1996. From 1968
to present he has been a professor at the Wharton School, University of
Pennsylvania. Currently, he is the Samuel R. Harrel Professor in the
Marketing Department and the Managing Director of the Wharton Multi-National
Marketing Program. He co-founded Management Decision Systems Inc. in 1967,
which later merged with Information Resources, Inc. Dr. Lodish is a director
of Information Resources, Franklin Electronic Publishers and J&J Snack Foods.
Dr. Lodish's term as a director of the Company will expire in 1997.
HARRY C. GROOME, 59, has served as a director since April 1996. From 1963
through 1996, Mr. Groome was employed by SmithKline Beecham, ultimately as
Chairman, SmithKline Beecham Consumer Healthcare and as an Executive Director of
SmithKline Beecham plc. Previously he held the positions of President,
SmithKline Beecham Clinical Laboratories, Vice President Marketing, SmithKline
and French, and Vice President/Area Director, Latin America. Mr. Groome is a
director of The BOC Group plc. Mr. Groome's term as a director of the Company
will expire in 1998.
OTHER EXECUTIVE OFFICERS
Walsh's executive officers, in addition to Michael A. Hauck and Robert
Mander, are as follows:
MARTYN D. WILLIAMS, 45, has served as Vice President and Chief Financial
Officer of Walsh since June 1993. He joined the Company in June 1988 and served
as Group Chief Accountant from that date. He was appointed Vice President and
Chief Accounting Officer in January 1992. Prior to joining Walsh, Mr. Williams,
who is a chartered accountant, served with VG Instruments plc, a manufacturer of
scientific instruments.
LEONARD R. BENJAMIN, 47, has served as Vice President, General Counsel and
Secretary of the Company since April 1996. He joined Walsh in April 1994 as
Associate General Counsel. From 1990 to 1994 he was employed by FoxMeyer
Corporation, initially as Vice President and Division Counsel and later as Vice
President and General Counsel. From 1984 to 1990, he was Assistant General
Counsel of Alcon Laboratories Inc.
THE SPIN-OFF; RESIGNATION OF CERTAIN DIRECTORS
The Company spun off a significant part of its operations (the "Spin-Off")
concurrent with the initial public offering of its Common Stock on April 16,
1996. Six of the Company's directors resigned in connection with the Spin-Off
and Mr. Mander was elected to fill one of the vacancies created as of the
Spin-Off. In late April and early May, 1996, Messrs. Stevens and Groome and Dr.
Lodish were elected as independent directors. The Company anticipates having a
seven-member Board of Directors in the future and is continuing to search for
another qualified independent director, although no specific designee has been
identified at this time.
COMMITTEES
During fiscal 1996, the Board of Directors of the Company held four meetings,
one of which took place in the period following the Spin-Off. The only standing
committees of the Board of Directors are the Audit Committee and the
Organization and Compensation Committee, both of which were reconstituted after
the Spin-Off. The current members of the Audit Committee are Mr. Stevens
(Chairman) and Dr. Lodish. The Audit Committee periodically consults with the
Company's management and independent public accountants on financial matters,
including the Company's internal financial controls and procedures. The Audit
Committee held two meetings in fiscal 1996, one of which took place in the
period following the Spin-Off. The current members of the Organization and
Compensation Committee are Mr. Groome (Chairman), Dr. Lodish and Mr. Turner. The
Organization and Compensation Committee reviews the performance and approves the
compensation, including the granting of stock options, of corporate officers of
the Company. The Organization and Compensation Committee held two meetings in
fiscal 1996, none of which took place in the period following the Spin-Off.
Directors that are not employees of the Company are compensated for their
services at an annual rate of $10,000 and are reimbursed for their expenses.
Pursuant to the Company's Directors' Deferred Fee Program, such directors are
eligible to elect to have the payment of all or any portion of their
3
<PAGE>
annual fees deferred and treated as "phantom equity." Any fees so deferred are
treated as if invested in Common Stock on the date the deferred payment would
have been made, and will be cashed out at the fair market value of the Common
Stock when the electing director leaves the Board of Directors. All directors
may participate in Company's Restated Stock Option Plan and Restricted Stock
Purchase Plan. Non-employee directors are also eligible for the Company's
Non-Employee Director Stock Option Plan.
COMMON STOCK OWNERSHIP OF CERTAIN BENEFICIAL OWNERS
To the Company's knowledge, the only persons or groups that may be deemed to
own beneficially 5% or more of the Company's outstanding Common Stock as of
October 1, 1996 are the following:
SHARES
BENEFICIALLY PERCENT
NAME AND ADDRESS OWNED OF CLASS
- ----------------------------------------- -------------- -----------
Welsh, Carson, Anderson & Stowe V, L.P. . 1,259,239 (1) 12.0%
Welsh, Carson, Anderson & Stowe IV, L.P.
320 Park Avenue, Suite 2500
New York, New York 10022................. 964,505 (1) 9.2
Crown Advisors Ltd.
The Lincoln Building, Suite 3405
60 East 42nd Street
New York, New York 10165................. 531,360 (2) 5.1
Rohit M. Desai
Desai Capital Management Incorporated
540 Madison Avenue
New York, New York 10022................. 743,125 (3) 7.1
- ----------
(1) Does not include an additional 320,403 shares of Common Stock owned by
other investment partnerships affiliated with Welsh, Carson, Anderson &
Stowe.
(2) Represents shares owned by Crown Associates, A Limited Partnership and
Crown Associates II, A Limited Partnership.
(3) Represents shares owned by Equity-Linked Investors, L.P. ("ELI-I") and
Equity-Linked Investors-II ("ELI-II"). Rohit M. Desai is the managing
general partner of the general partner of each of ELI-I and ELI-II. Mr.
Desai is also the sole stockholder, chairman of the board and president of
Desai Capital Management Incorporated ("DCMI"). DCMI acts as investment
advisor to ELI-I and ELI-II and, pursuant to investment advisory agreements
between DCMI and each such partnership, DCMI has the power to vote and
dispose of such shares. DCMI and Mr. Desai each disclaims beneficial
ownership of such shares.
4
<PAGE>
COMMON STOCK OWNERSHIP OF MANAGEMENT
The following table sets forth certain information regarding beneficial
ownership of the Company's Common Stock as of October 1, 1996 by (i) each of the
Company's directors, (ii) each of the Company's executive officers named in the
Summary Compensation Table below and (iii) the Company's executive officers and
directors as a group. Except as otherwise indicated, each nominee named in the
table has sole voting and investment power with respect to the shares shown as
beneficially owned by him.
SHARES
BENEFICIALLY PERCENT
NAME OWNED OF CLASS
------------------ -------------- ----------
Michael A. Hauck................................ 56,386 (1) *
Dennis M.J. Turner.............................. 157,277 (2) 1.5%
Robert Mander................................... 203,693 (3) 1.9%
Martyn D. Williams.............................. 12,601 (4) *
Leonard R. Benjamin............................. 1,350 (5) *
James W. Stevens................................ 6,000 *
Harry C. Groome................................. -- *
Leonard M. Lodish............................... 4,000 (6) *
All executive officers and directors as a group
(8 persons)..................................... 441,307 (7) 4.2%
- ----------
* less than 1%
(1) Includes options to purchase 35,000 shares granted pursuant to the
Company's Restated Stock Option and Restricted Stock Purchase Plan (the
"Stock Plan") that are exercisable on or before December 16, 1996.
(2) Includes options to purchase 95,750 shares granted pursuant to the Stock
Plan that are exercisable on or before December 15, 1996. Does not include
6,883 shares owned by immediate family members of Mr. Turner as to which
Mr. Turner may be deemed to be the beneficial owner. His share total does
not include 363,743 shares owned by Medicom Investments Limited, an
investment company part of which is owned by a trust administered for the
benefit of the family of Mr. Turner, or 6,883 shares owned by the immediate
family members of Mr. Turner. Mr. Turner may be deemed the beneficial owner
of all such shares.
(3) Includes (i) 158,256 shares held by Reredos Corporation as trustee for the
benefit of Mr. Mander and (ii) options to purchase 22,815 shares granted
pursuant to the Stock Plan that are exercisable on or before December 16,
1996.
(4) Includes options to purchase 9,850 shares granted pursuant to the Stock
Plan that are exercisable on or before December 16, 1996.
(5) Includes options to purchase 1,150 shares granted pursuant to the Stock
Plan that are exercisable on or before December 16, 1996.
(6) Includes options to purchase 4,000 shares granted pursuant to the Stock
Plan that are exercisable on or before December 16, 1996.
(7) Includes options to purchase an aggregate 441,307 shares granted pursuant
to the Stock Plan that are exercisable on or before December 16, 1996.
5
<PAGE>
CERTAIN TRANSACTIONS
TRANSITIONAL SHARED SERVICE ARRANGEMENTS WITH CERTAIN EXECUTIVE OFFICERS
The Company and Source Informatics Inc. ("Source"), the business spun off to
Walsh stockholders on April 16, 1996, entered into certain transitional service
arrangements relating to the provision of management services. The Chief
Financial Officer and the General Counsel of Walsh will, for a transitional
period of approximately six months after the Spin-Off, provide certain services
to Source. In addition, the Chief Executive Officer of Walsh is made available
to Source as a consultant on a limited basis from time to time. Such officers
provide services to Source only to the extent not inconsistent with their duties
to the Company, with the Company's requirement that these officers devote at
least 80% of their business time to Walsh. The Chief Executive Officer of
Source, who served as Chief Executive Officer of Walsh prior to the Spin-Off, is
made available as a consultant to Walsh from time to time, not to exceed 20% of
his business time.
REPAYMENT OF DEBENTURES
The Company used approximately $14.7 million of the net proceeds of its
initial public offering to repay its subordinated debentures due March 31, 1997.
An investment partnership affiliated with Welsh, Carson, Anderson & Stowe held
$13,063,695 of such debentures. Substantially all the remaining debentures were
held by other stockholders of the Company.
AGREEMENTS WITH FORMER HOLDERS OF SERIES A CONVERTIBLE PREFERRED STOCK
The Company entered into an agreement with the holders of its Series A
Convertible Preferred Stock providing, among other things, that each outstanding
share of Series A Convertible Preferred Stock was to be converted into a number
of shares of Common Stock determined in accordance with the initial public
offering price per share of Common Stock. With the initial public offering price
being $12.00 per share, the outstanding shares of Series A Convertible Preferred
Stock were converted into an aggregate 1,486,252 shares of Common Stock. Of that
number, 743,125 shares were, at the time of the initial public offering, held by
Equity-Linked Investors, L.P. ("ELI") and Equity-Linked Investors-II ("ELI-II"),
both of which are controlled by Rohit M. Desai. So long as ELI and ELI-II hold,
in the aggregate, 50% of the Common Stock held by them upon consummation of the
offering, such stockholders together are entitled to have one representative
attend all meetings of the Company's Board of Directors as a non-voting
observer.
Certain covenants of the Preferred Stock Purchase Agreements, under which the
holders of the Series A Convertible Preferred Stock acquired such stock, remain
in effect. These include provisions prohibiting the Company from proceeding with
a program of acquisition of its Common Stock, or initiating a corporate
reorganization or recapitalization or undertaking a consolidation or merger or
taking other actions that would have the effect of reducing substantially or
eliminating the public market for the Common Stock or causing a delisting of the
Common Stock from The Nasdaq National Market or any national securities exchange
on which the Common Stock is then listed; provided that the Company may take
action that results in the acquisition by the Company or a third party of all
the outstanding shares of Common Stock so long as in connection with such
transaction all holders of shares of Common Stock have the right to receive the
same securities or other property. In addition, the former holders of Series A
Convertible Preferred Stock have the right to require the Company to register
the shares of Common Stock obtained by them upon the conversion referred to
above on two separate occasions and the "piggyback" right to have shares of
Common Stock held by them included in certain other registrations effected by
the Company.
COMPLIANCE WITH SECTION 16(A) OF THE SECURITIES EXCHANGE ACT
To the Company's knowledge, all statements of beneficial ownership required
to be filed with the Securities and Exchange Commission in fiscal 1996 were
timely filed.
6
<PAGE>
EXECUTIVE COMPENSATION
The following table sets forth certain compensation information as to the
Chief Executive Officer, the former Chief Executive Officer and the three other
highest paid executive officers of the Company for the fiscal years ended June
30, 1996 and 1995:
SUMMARY COMPENSATION TABLE
<TABLE>
<CAPTION>
LONG-TERM
COMPENSATION
ANNUAL COMPENSATION AWARDS
--------------------- ----------
(g)
(a) SECURITIES (h)
NAME AND (b) (c) (d) UNDERLYING ALL OTHER
PRINCIPAL POSITION YEAR SALARY BONUS OPTIONS (#) COMPENSATION
------------------ ---- ------ ----- ----------- ------------
<S> <C> <C> <C> <C> <C>
Michael A. Hauck .................................. 1996 $260,914 $167,981 55,000 $ 64,479(2)
Chief Executive Officer(1) 1995 $248,436 $141,510 5,000 $ 63,260(3)
Dennis M. J. Turner ............................... 1996 $352,500 $ 75,000 60,000 $ 88,741(5)
Chairman of the Board(4) 1995 $335,000 $155,250 -- $ 72,278(6)
Robert Mander ..................................... 1996 $176,893 $ 77,500 43,750 $107,341(8)
President and Chief Operating Officer(7) 1995 $170,289 $ 66,382 3,750 $109,689(9)
Martyn D. Williams ................................ 1996 $155,000 $ 81,375 25,500 $ 31,902(10)
Vice President and Chief Financial Officer 1995 $151,050 $ 66,780 3,125 $ 31,085(11)
Leonard R. Benjamin ............................... 1996 $152,500 $ 37,500 8,250 $ 17,201(13)
Vice President, General Counsel and Secretary(12) 1995 $140,000 $ 30,600 -- $ 29,314(14)
</TABLE>
- ----------
(1) Mr. Hauck was elected Chief Executive Officer as of the Spin-Off. For
fiscal year 1995 and for fiscal year 1996 until the Spin-Off, he held the
position of President and Chief Operating Officer.
(2) Includes a $22,320 car allowance, $39,137 of contributions to individual's
pension plan, $1,550 paid by the Company for life insurance premiums, and
$1,472 for health insurance premiums.
(3) Includes a $22,896 car allowance, $37,264 of contributions to individual's
pension plan, $1,510 paid by the Company for health insurance premiums, and
$1,590 paid by the Company for life insurance premiums.
(4) Mr. Turner was Chief Executive Officer for fiscal year 1995 and for fiscal
year 1996 until the Spin-Off. He resigned effective upon the Spin-Off and
now serves as Chairman of the Board. Of his salary and other compensation,
approximately 60% prior to the Spin-Off and approximately 80% after the
Spin-Off was in respect of services rendered to other companies affiliated
with the Company.
(5) Includes a $28,440 car allowance, $52,875 of contributions to individual's
pension plan, $5,925 paid by the Company for life insurance premiums, and
$1,501 paid by the Company for health insurance premiums. Over 60% of such
amounts are in respect of services rendered to other companies affiliated
with the Company.
(6) Includes a $28,440 car allowance, $36,403 of contributions to individual's
pension plan, $5,925 paid by the Company for life insurance premiums, and
$1,510 paid by the Company for health insurance premiums. Over 60% of such
amounts are in respect of services rendered to other companies affiliated
with the Company.
(7) Mr. Mander was elected President and Chief Operating Officer as of the
Spin-Off. For fiscal year 1995 and for fiscal year 1996 until the Spin-Off,
he held the position of Vice President -- European and Pacific Rim
Operations.
(8) Includes a $27,900 car allowance, $25,543 of contributions to individual's
pension plan, $1,472 paid by the Company for health insurance premiums, a
$34,026 overseas cost-of-living allowance, and an $18,400 housing
allowance.
(9) Includes a $28,620 car allowance, $25,543 of contributions to individual's
pension plan, $1,510 paid by the Company for health insurance premiums,
$1,590 paid by the Company for life insurance premiums, a $34,026 overseas
cost-of-living allowance, and $18,400 housing allowance. The cost-of-living
and housing allowances were paid in Belgian francs and such amounts have
been translated to U.S. dollars at the rate of BEF 28.5 = $1.00,
<PAGE>
the exchange rate in effect as of June 30, 1995.
(10) Includes an $11,830 car allowance, $17,050 of contributions paid to
individual's pension fund, $1,550 paid by the Company for life insurance
premiums, and $1,472 paid by the Company for health insurance premiums.
(11) Includes an $11,830 car allowance, $16,155 of contributions to the
individual's pension plan, $1,510 paid by the Company for health insurance
premiums, and $1,590 paid by the Company for life insurance premiums.
(12) Mr. Benjamin was elected Vice President and General Counsel as of the
Spin-Off. For fiscal year 1995 and for fiscal year 1996 until the Spin-Off,
he held the position of Associate General Counsel.
(13) Includes a $7,560 car allowance, $3,005 of contributions to the
individual's 401(k), $576 paid by the Company for life insurance premiums,
and $6,060 paid by the Company for health insurance and dental insurance
premiums.
(14) Includes a $7,560 car allowance and $21,754 paid by the Company for
relocation expenses.
7
<PAGE>
OPTION/SAR GRANTS IN LAST FISCAL YEAR
The following table sets forth certain information concerning grants of stock
options, stock appreciation rights and phantom stock units awarded to the named
executive officers during the fiscal year ended June 30, 1996:
<TABLE>
<CAPTION>
POTENTIAL REALIZABLE
VALUE AT
ASSUMED ANNUAL RATES
OF STOCK
PRICE APPRECIATION
INDIVIDUAL GRANTS FOR OPTION TERM
- ------------------------------------------------------------------------------ ---------------------
PERCENT OF
NUMBER OF TOTAL
SECURITIES OPTIONS/
UNDERLYING SARS GRANTED EXERCISE OR
OPTION/SARS TO EMPLOYEES BASE PRICE EXPIRATION
NAME GRANTED IN FISCAL YEAR ($/SH) DATE 5% ($) 10% ($)
(a) (b) (c) (d) (e) (f) (g)
- ------------------- ------------- ---------------- ------------- ------------ ---------- ----------
<S> <C> <C> <C> <C> <C> <C>
Michael A. Hauck .. 5,000 $ 7.42 11/15/05 $ 35,994 $ 76,045
50,000 17.54% $12.00 4/16/06 $145,890 $576,886
Dennis M.J.
Turner............. 10,000 $ 7.42 11/15/05 $ 71,988 $152,089
50,000 18.59% $12.00 4/16/06 $145,890 $576,886
Robert Mander...... 3,750 $ 7.42 11/15/05 $ 26,996 $ 57,033
40,000 13.55% $12.00 4/16/06 $116,712 $461,509
Martyn D.
Williams........... 3,000 $ 7.42 11/15/05 $ 21,597 $ 45,627
22,500 7.9 % $12.00 4/16/06 $ 65,650 $259,599
Leonard R.
Benjamin........... 750 $ 7.42 11/15/05 $ 5,399 $ 11,407
7,500 2.55% $12.00 4/16/06 $ 21,883 $ 86,533
</TABLE>
FISCAL YEAR END OPTION VALUES
The following table sets forth the number and value of outstanding options
held by the named executive officers as of June 30, 1996:
(a) (b) (c)
- ------------------------------ --------------- ----------------------
NUMBER OF
SECURITIES VALUE OF
UNDERLYING UNEXERCISED
UNEXERCISED IN-THE-MONEY
OPTIONS AT OPTIONS AT
FISCAL YEAR END FISCAL YEAR END
--------------- ----------------------
EXERCISABLE/ EXERCISABLE/
NAME UNEXERCISABLE UNEXERCISABLE
---- ------------- -------------
Michael A. Hauck .............. 29,750/62,750 $ 76,102.50/$51,777.50
Dennis M.J. Turner............. 81,250/75,000 $242,275.00/$72,487.50
Robert Mander.................. 16,750/52,000 $ 49,125.00/$27,092.50
Martyn D. Williams............. 5,500/32,750 $ 23,722.50/$27,887.50
Leonard R. Benjamin............ 500/ 9,500 $ 2,890.00/ $5,707.50
The market value of the Company's Common Stock as of the close of business on
October 1, 1996, as reflected by the closing price of the Common Stock on The
Nasdaq National Market, was $8.875 per share.
EMPLOYMENT AGREEMENTS
Each of the Company's executive officers have employment agreements in
substantially similar form, which became effective as of the Spin-Off. Each such
agreement provides that the Company will employ the executive for an indefinite
term. Except in the case of Mr. Hauck, the agreements provide that the
executive's employment is terminable by the Company at any time upon twelve
months notice, and by the employee at any time upon six months notice. Mr.
Hauck's employment is terminable by the Company at any time upon twenty-four
months notice and by him at any time upon twelve months notice. Each executive's
employment may also be terminated by the Company for cause. If an execu-
8
<PAGE>
tive's employment is terminated by the Company other than for cause, any
unvested options granted to the executive under the Company's Restated Stock
Option and Restricted Stock Purchase Plan will vest as of the effective date of
such termination. In addition to the foregoing, the Company may terminate the
employment of Mr. Benjamin at its absolute discretion by paying him a lump sum
equal to his annual salary in effect immediately before such termination. Each
employment agreement also contains a covenant by the executive not to compete
with the Company for a term of twelve months (twenty-four months in the case of
Mr. Hauck) after the last active day of his employment with the Company.
Each employment agreement specifies the executive's initial base salary. In
addition, each executive is entitled to receive a bonus based upon certain
performance criteria established by the Board of Directors. If 100% of targeted
performance is achieved, the executive will receive a bonus equal to a specified
percentage of his then-current annual salary. Mr. Hauck's initial base salary is
pounds sterling170,000 (approximately $263,500) annually, with bonus targeted at
50% of then-current annual salary. Mr. Mander's base salary is pounds
sterling130,000 (approximately $201,500), with a 40% targeted bonus. Mr.
Williams' base salary is pounds sterling100,000 (approximately $155,000), with a
35% targeted bonus. (Pounds sterling have been translated into U.S. dollars at
the rate of pounds sterling1.00 = $1.55, the exchange rate in effect as of
October 1, 1996.) Mr. Benjamin's base salary is $165,000, with a 25% targeted
bonus. Salaries and bonuses are to be reviewed from time to time by the Board of
Directors and may be increased, at the discretion of the Board, in accordance
with that review.
COMPENSATION COMMITTEE INTERLOCKS AND INSIDER PARTICIPATION
The members of the Organization and Compensation Committee of the Board of
Directors are currently Dr. Lodish and Messrs. Groome and Turner. Prior to the
Spin-Off, the members of the Organization and Compensation Committee were
Messrs. James G. Andress, Patrick J. Welsh and L. John Wilkerson, all of whom
resigned their directorships as of the Spin-Off. The Organization and
Compensation Committee reviews the performance and approves the compensation,
including, the granting of stock options, of corporate officers of the Company.
Mr. Turner was the Company's Chief Executive Officer until the Spin-Off, and
currently serves as Chairman of the Board and as a consultant to the Company
under the Support Services Agreement between the Company and Source.
9
<PAGE>
REPORT OF THE COMPENSATION COMMITTEE OF THE BOARD OF DIRECTORS
The Organization and Compensation Committee (the "Committee") was
comprised, prior to the Spin-Off, of Patrick J. Welsh, James G. Andress and L.
John Wilkerson. Messrs. Welsh, Andress and Wilkerson resigned their
directorships as of the Spin-Off, and the Committee was reconstituted after the
Spin-Off. Its current members are Dr. Lodish and Messrs. Groome and Turner. The
Committee reviews the performances and approves the compensation (including
bonuses) of the Company's executive officers and makes recommendations to the
Board of Directors regarding grants to them under the Company's Restated Stock
Option and Restricted Stock Purchase Plan (the "Stock Plan").
The Committee's recommendations are based on the Company's policy of relating
individual compensation to the performance of the Company and each executive
officer's contribution to the Company's success in attaining its goals. In
addition, the Committee looks at the compensation packages of executive officers
of similarly situated companies in order to ensure that the Company is providing
competitive levels of compensation to its management and remains capable of
attracting and retaining qualified executives.
BASE SALARY
The base salary and bonus of the Chairman of the Board are determined and
paid by Source Informatics and his services are provided to the Company pursuant
to the transitional services arrangement described under "Certain Transactions."
In reviewing the other executive officer's salaries, the Committee considered
three factors: individual performance, market parity and changes in
responsibilities. In assessing market parity, the Company targets to pay base
salaries that are, overall, at or above the median of base salaries for similar
positions with similarly situated companies.
BONUSES
The Committee, in its discretion, authorizes the payment of bonuses to the
executive officers of the Company, which are related to the achievement of
Company and individual objectives. An executive's performance is measured
against short-term goals, such as the financial performance of the Company in
the current year, and long-term objectives relating to the growth and strategic
development of the business. In determining bonuses for fiscal 1996, the
Committee recognized that the financial goals for the Company, including
substantial increases in revenues and positive earnings per share and operating
profit, had been significantly exceeded and that the initial public offering had
been successfully completed, and awarded bonus payments in line with these
results. In particular, the bonus awarded to the Company's Chief Financial
Officer for fiscal 1996 reflected his substantial contribution to the success of
the initial public offering.
STOCK OPTIONS
All executive officers of the Company participate in the Company's Stock
Plan. The Stock Plan's primary purpose is to offer an incentive to contribute to
the achievement of the long-term performance goals of the Company. Stock options
have been granted only at the fair market value on the grant date, which is
intended to reward grantees only to the extent of price appreciation of the
Common Stock. Option grants for executive officers are determined by using a
target based upon the approximate aggregate fair market value of the underlying
stock on the grant date as a percentage of salary. Annual grants toward this
target are based on an assessment of an executive officer's contribution to the
development of the business and the officer's individual performance. The
structure set for this plan is to grant up to 10% of the Common Stock of the
Company over a five-year period to executive officers and other key personnel.
At the time of the Company's initial public offering, the Committee
considered it appropriate to grant the executive officers a one-time special
grant to give them significant incentive in driving the performance of the
Company forward. At this award, the Chairman and Chief Executive Officer were
each awarded options to purchase 50,000 shares, the Chief Operating Officer was
awarded options to purchase 40,000 shares, the Chief Financial Officer was
awarded options to purchase 22,500 shares and the General Counsel was awarded
options to purchase 7,500 shares.
10
<PAGE>
PENSION PLAN
The Committee has reviewed over previous years the appropriateness of having
a senior executive pension plan for certain executive officers and established a
plan to fund pensionable service after January 1, 1991. Under the plan, the
Company has made annual contributions of 15% of salary to the pension plans of
each of the Chairman and the Chief Executive Officer. The Chief Operating
Officer and the Chief Financial Officer have separate pension arrangements. The
General Counsel participates in the Company's U.S. 401(k) plan.
CHIEF EXECUTIVE OFFICER COMPENSATION
Mr. Hauck's annual base salary as Chief Executive Officer has been set, in
his employment contract, at $263,000. The Committee believes that this salary is
comparable to that of chief executive officers of the other businesses reviewed.
Mr. Turner's fiscal 1996 base salary of $352,500 was somewhat higher, reflecting
the greater size of the Company and his responsibilities as Chief Executive
Officer prior to the Spin-Off. Mr. Turner received a $75,000 bonus for fiscal
1996, reflecting the achievement of performance targets for the year and the
completion of the initial public offering. Mr. Hauck's employment contract calls
for a bonus of 50% of his base salary if 100% of performance criteria have been
met. Mr. Hauck was paid a bonus of $167,981 for fiscal 1996. This bonus amount
reflects the Committee's assessment of Mr. Hauck's contribution, both as
President and Chief Operating Officer and later as Chief Executive Officer, to
the Company's exceeding its performance targets for fiscal 1996 and successfully
completing the initial public offering.
HARRY C. GROOME
LEONARD M. LODISH
DENNIS M.J. TURNER
11
<PAGE>
STOCK PERFORMANCE GRAPHS
The following graphs compare the cumulative total stockholder returns, over
the periods presented, on the Company's Common Stock, the Nasdaq U.S. Index and
the Nasdaq Computer & Data Processing Index whose operations include sales and
marketing information systems. The fiscal year-end values of each investment are
based on share price appreciation plus reinvested dividends, and assume an
initial investment of $100.
As indicated in the charts, the market price of the Company's Common Stock
(adjusted for stock splits and dividends) has decreased from $12.00 on April 16,
1996, the time of the Company's initial public offering of Common Stock, to
$9.25 on June 28, 1996. This represents stock price depreciation of
approximately 23% in the two and one-half months since the initial public
offering.
CUMULATIVE TOTAL RETURNS SINCE THE COMPANY'S
INITIAL PUBLIC OFFERING
#############################################################################
IMAGE OMITTED
PERFORMANCE GRAPH APPEARS HERE
#############################################################################
<TABLE>
<CAPTION>
<S> <C> <C> <C> <C> <C> <C>
4/16/96 4/30/96 5/16/96 5/31/96 6/14/96 6/28/96
--------- --------- --------- --------- --------- ---------
WALSH.................. $ 100.00 $ 103.13 $ 102.08 $ 125.00 $ 113.54 $ 77.08
NASDAQ U.S. INDEX...... $ 100.00 $ 105.92 $ 110.96 $ 110.80 $ 108.23 $ 105.80
NASDAQ COMPUTER & DATA
PROCESSING INDEX....... $ 100.00 $ 108.69 $ 113.79 $ 112.28 $ 110.05 $ 108.26
</TABLE>
The above report of the Organization and Compensation Committee and the Stock
Performance Graph will not be deemed to be soliciting material or to be filed
with or incorporated by reference into any filing by the Company under the
Securities Act of 1933 or the Securities Exchange Act of 1934 (the "Exchange
Act"), except to the extent that the Company specifically incorporates such
report or graph by reference.
12
<PAGE>
* * *
GENERAL
OTHER MATTERS
The Board of Directors does not know of any matters that are to be presented
at the Annual Meeting other than those stated in the Notice of Annual Meeting
and referred to in this Proxy Statement. If any other matters should properly
come before the Meeting, it is intended that the proxies in the accompanying
form will be voted as the persons named therein may determine in their
discretion.
The Company's Annual Report to Stockholders for the fiscal year ended June
30, 1996 was mailed to stockholders on or about October 17, 1996.
SOLICITATION OF PROXIES
The cost of solicitation of proxies in the accompanying form will be borne by
the Company, including expenses in connection with preparing and mailing this
Proxy Statement. In addition to solicitation of proxies by mail, directors,
officers and employees of the Company (who will receive no additional
compensation therefor) may solicit the return of proxies by telephone, telegram
or personal interview. Arrangements have also been made with brokerage houses
and other custodians, nominees and fiduciaries for the forwarding of
solicitation material to the beneficial owners of stock held of record by such
persons, and the Company will reimburse them for reasonable out-of-pocket
expenses incurred by them in connection therewith.
Each holder of the Company's Common Stock who does not expect to be present
at the Annual Meeting or who plans to attend but who does not wish to vote in
person is urged to fill in, date and sign the proxy and return it promptly in
the enclosed return envelope.
STOCKHOLDER PROPOSALS
If any stockholder of the Company intends to present a proposal for
consideration at the 1997 Annual Meeting of Stockholders and desires to have
such proposal included in the proxy statement and form of proxy distributed by
the Board of Directors with respect to such meeting, such proposal must be
received at the Company's principal executive offices, 105 Terry Drive, Suite
118, Newtown, Pennsylvania 18940, Attention: Secretary, not later than June 19,
1997.
ANNUAL REPORT ON FORM 10-K
A COPY OF THE COMPANY'S ANNUAL REPORT ON FORM 10-K FOR THE FISCAL YEAR ENDED
JUNE 30, 1996, FILED BY THE COMPANY WITH THE SECURITIES AND EXCHANGE COMMISSION,
WITHOUT EXHIBITS, WILL BE FURNISHED WITHOUT CHARGE TO ANY PERSON REQUESTING A
COPY THEREOF IN WRITING AND STATING THAT SUCH PERSON IS A BENEFICIAL HOLDER OF
SHARES OF COMMON STOCK OF THE COMPANY ON THE RECORD DATE FOR THE ANNUAL MEETING
OF STOCKHOLDERS. REQUESTS AND INQUIRIES SHOULD BE ADDRESSED TO WALSH
INTERNATIONAL INC., 105 TERRY DRIVE, SUITE 118, NEWTOWN, PENNSYLVANIA 18940,
ATTENTION: LEONARD R. BENJAMIN, VICE PRESIDENT AND GENERAL COUNSEL.
By Order of the Board of Directors
/s/ Leonard R. Benjamin
-------------------------------
Leonard R. Benjamin
Secretary
13
