<PAGE>
INTELLIQUEST INFORMATION GROUP, INC.
NOTICE OF ANNUAL MEETING OF STOCKHOLDERS
TO BE HELD MAY 11, 1999
TO THE STOCKHOLDERS:
NOTICE IS HEREBY GIVEN that the Annual Meeting of Stockholders of
INTELLIQUEST INFORMATION GROUP, INC., a Delaware corporation (the "Company"),
will be held on Tuesday, May 11, 1999 at 10:00 a.m. local time, at the
Company's principal executive offices, 1250 Capital of Texas Hwy. South,
Building One, Austin, Texas 78746, for the following purposes:
1. To elect a Board of Directors to serve until the next Annual Meeting
of Stockholders and until their successors are elected.
2. To ratify the appointment of PricewaterhouseCoopers LLP as independent
public accountants of the Company for the fiscal year ending
December 31, 1999.
3. To transact such other business as may properly come before the meeting
or any adjournment thereof.
The foregoing items of business are more fully described in the Proxy
Statement accompanying this Notice.
The Board of Directors has fixed the close of business on March 26, 1999,
as the record date for the determination of stockholders entitled to notice
of and to vote at this meeting. Only stockholders of record at the close of
business on March 26, 1999, are entitled to notice of and to vote at the
meeting.
All stockholders are cordially invited to attend the meeting in person.
However, to assure your representation at the meeting, you are urged to mark,
sign, date and return the enclosed Proxy as promptly as possible in the
postage prepaid envelope enclosed for that purpose. Any stockholder
attending the meeting may vote in person even if he or she has returned a
Proxy.
Sincerely,
F. S. (Kit) Webster III
SECRETARY
March 26, 1999
YOUR VOTE IS IMPORTANT
IN ORDER TO ASSURE YOUR REPRESENTATION AT THE MEETING,
YOU ARE REQUESTED TO COMPLETE, SIGN AND DATE THE ENCLOSED PROXY
AS PROMPTLY AS POSSIBLE AND RETURN IT IN THE ENCLOSED ENVELOPE.
<PAGE>
INTELLIQUEST INFORMATION GROUP, INC.
PROXY STATEMENT FOR 1998
ANNUAL MEETING OF STOCKHOLDERS
INFORMATION CONCERNING SOLICITATION AND VOTING
GENERAL
The enclosed Proxy is solicited on behalf of the Board of Directors of
INTELLIQUEST INFORMATION GROUP, INC., a Delaware corporation (the "Company"),
for use at the Annual Meeting of Stockholders to be held Tuesday, May 11,
1999, at 10:00 a.m., local time, or at any adjournment thereof, for the
purposes set forth herein and in the accompanying Notice of Annual Meeting of
Stockholders. The Annual Meeting will be held at the Company's principal
executive offices, 1250 Capital of Texas Hwy. South, Building One, Austin,
Texas, 78746. The Company's telephone number at that location is
(512) 329-0808.
These proxy solicitation materials and the Annual Report on Form 10-K for
the year ended December 31, 1998, including financial statements, were first
mailed on or about April 5, 1999, to all stockholders entitled to vote at the
meeting.
RECORD DATE AND PRINCIPAL SHARE OWNERSHIP
Stockholders of record at the close of business on March 26, 1999 (the
"Record Date"), are entitled to notice of and to vote at the meeting. The
Company has one series of Common Shares outstanding, designated Common Stock,
$0.0001 par value. At February 28, 1999, 7,861,210 shares of the Company's
authorized Common Stock were issued and outstanding and held of record by 49
stockholders.
The following table sets forth certain information regarding the
beneficial ownership of Common Stock of the Company (i) as of February 17,
1999 as to each person who is known by the Company to own beneficially more
than 5% of the outstanding shares of Common Stock; (ii) as of March 1, 1999,
as to each director and each nominee for director of the Company, (iii) as of
March 1, 1999, as to each of the executive officers named in the Summary
Compensation Table in "Executive Compensation and Other Matters" below and
(iv) all directors and executive officers as a group.
<PAGE>
<TABLE>
<CAPTION>
FIVE PERCENT OWNERS
DIRECTORS, NUMBER OF SHARES PERCENTAGE OF SHARES
EXECUTIVE OFFICERS BENEFICIALLY OWNED(1) BENEFICIALLY OWNED(%)
- ------------------ --------------------- ---------------------
<S> <C> <C>
Safeco Corporation 1,544,400(2) 19.7
5333 Brooklyn Ave. NE
Seattle, WA 98185
T. Rowe Price & Associates, Inc. 1,068,056(3) 13.6
100 E. Pratt Street
Baltimore, MD 21202
GEOCapital Corp. 992,000 12.6
767 Fifth Ave, 45th Floor
New York, NY 10153
William Blair & Company LLC 795,000(4) 10.1
222 West Adams Street, 34th Floor
Chicago, IL 60606
Wagner Asset Management, LP 761,500(5) 9.7
Wagner Asset Management Ltd.
227 West Monroe Street, Suite 3000
Chicago, IL 60606
Peter Zandan 453,759(6) 5.8
c/o IntelliQuest Information Group, Inc
1250 Capital of Texas Highway
Building One, Suite 600
Austin, TX 78746
Brian Sharples 439,167(7) 5.6
c/o IntelliQuest Information Group, Inc
1250 Capital of Texas Highway
Building One, Suite 600
Austin, TX 78746
Ed Frazier 10,936(8) *
Marianne Grogan 31,546(9) *
Charles Stryker 132,200(10) 1.7
Lee Walker 58,398(11) *
William Wood 63,382(12) *
All directors and executive officers
as a group (7 persons) 1,189,388 14.8
</TABLE>
- -------------------
*Less than 1%
(1) Beneficial ownership is determined in accordance with the rules of the
Securities and Exchange Commission and generally includes voting or
investment power with respect to securities. Shares of Common Stock
subject to options, warrants and convertible notes currently exercisable
or convertible, or exercisable or convertible within 60 days of March 1,
1999, are deemed outstanding for computing the percentage of the person
holding such option, warrant or convertible note but are not outstanding
for computing the percentage of any other person. Except as indicated
by footnote, and subject to community property laws where applicable,
the persons named in the table above have sole voting and investment
power with respect to all shares of Common Stock shown as beneficially
owned by them.
<PAGE>
(2) Includes 839,900 and 454,900 shares of Common Stock held by Safeco
Common Stock Trust and Safeco Resource Series Trust, respectively,
investment companies registered under the Investment Company Act of
1940, to which Safeco Asset Management Co., a subsidiary of Safeco
Corporation, provides investment advice. Also includes 259,600 shares of
Common Stock held by employee benefit plans for which Safeco Corporation
is a plan sponsor. Safeco Corporation disclaims beneficial ownership of
all such shares.
(3) Includes 750,000 shares of Common Stock over which T. Rowe Price New
Horizons Fund, Inc. has sole voting power and 318,056 shares of Common
Stock over which T. Rowe Price Associates, Inc. has sole voting power.
(4) Includes 119,094 shares of Common Stock held by William Blair & Company,
L.L.C. over which William Blair & Company, L.L.C. has sole voting power.
William Blair & Company, L.L.C. disclaims voting power over the
remaining shares of Common Stock.
(5) Acquired on behalf of discretionary clients of Wagner Assent Management.
(6) Includes 3,352 shares of Common Stock held by Mr. Zandan as custodian
for Mr. Zandan's children. Mr. Zandan disclaims beneficial ownership of
all such shares. Includes 8,535 shares issuable pursuant to stock
options exercisable within 60 days of March 1, 1999.
(7) Includes 37,382 shares issuable pursuant to stock options exercisable
within 60 days of March 1, 1999.
(8) Consists of shares issuable pursuant to stock options exercisable within
60 days of March 1, 1999.
(9) Includes 30,172 shares issuable pursuant to stock options exercisable
within 60 days of March 1, 1999.
(10) Includes 44,421 shares issuable pursuant to stock options exercisable
within 60 days of March 1, 1999.
(11) Includes 18,398 shares issuable pursuant to stock options exercisable
within 60 days of March 1, 1999.
(12) Includes 536 shares of Common Stock held by Mr. Wood as custodian for
Mr. Wood's children. Mr. Wood disclaims beneficial ownership of such
shares. Includes 11,873 shares issuable pursuant to stock options
exercisable within 60 days of March 1, 1999.
REVOCABILITY OF PROXIES
Any proxy given pursuant to this solicitation may be revoked by the person
giving it at any time before its use by delivering to the Secretary of the
Company a written notice of revocation or a duly executed proxy bearing a later
date or by attending the meeting and voting in person.
VOTING AND SOLICITATION
Each holder of Common Stock is entitled to one vote for each share held.
This solicitation of proxies is made on behalf of the Company by the
Company. The anticipated cost of this solicitation is approximately $8,500
and all such costs will be borne by the Company. In addition, the Company
may reimburse brokerage firms and other persons representing beneficial
owners of shares for their expenses in forwarding solicitation material to
such beneficial owners. Proxies may also be solicited by certain of the
Company's directors, officers and regular employees, without additional
compensation, personally or by telephone or telefacsimile.
<PAGE>
DEADLINE FOR RECEIPT OF STOCKHOLDER PROPOSALS
Proposals of stockholders of the Company that are intended to be
presented by such stockholders at the Company's 2000 Annual Meeting of
Stockholders must be received by the Company no later than December 7, 1999,
in order that they may be considered for inclusion in the proxy statement and
form of proxy relating to that meeting.
<PAGE>
PROPOSAL ONE
ELECTION OF DIRECTORS
A board of four (4) directors is to be elected at the Annual Meeting of
Stockholders. Unless otherwise instructed, the proxy holders will vote the
proxies received by them for the Company's four (4) nominees named below, all
of whom are presently directors of the Company. In the event that any
nominee of the Company is unable or declines to serve as a director at the
time of the Annual Meeting of Stockholders, the proxies will be voted for any
nominee who shall be designated by the present Board of Directors to fill the
vacancy. The Company is not aware of any nominee who will be unable or will
decline to serve as a director. In the event that additional persons are
nominated for election as directors, the proxy holders intend to vote all
proxies received by them in such a manner as will assure the election of as
many of the nominees listed below as possible, and, in such event, the
specific nominees to be voted for will be determined by the proxy holders.
The term of office for each person elected as a director will continue until
the next Annual Meeting of Stockholders or until a successor has been elected
and qualified.
VOTE REQUIRED
If a quorum is present and voting, the four (4) nominees receiving the
highest number of votes will be elected to the Board of Directors. Votes
withheld from any nominee, abstentions and shares held by brokers that are
present but not voted because the brokers were prohibited from exercising
discretionary authority ("broker non-votes") will be counted for purposes of
determining the presence or absence of a quorum.
NOMINEES
The names of the nominees and certain information about them as of March
26, 1999 are set forth below:
<TABLE>
<CAPTION>
NAME OF NOMINEE AGE POSITION
- --------------- --- --------------------------------------
<S> <C> <C>
Peter Zandan 46 Chairman
Brian Sharples 38 Chief Executive Officer, President and
Director
Lee Walker(1)(2) 57 Director
William Wood(1)(2) 43 Director
</TABLE>
- ------------------------
(1) Member of the Compensation Committee
(2) Member of the Audit Committee
PETER ZANDAN founded the Company and has been Chairman since 1985. Mr.
Zandan was Chief Executive Officer of the Company from 1985 to 1997. Prior
to founding IntelliQuest, he was an industry consultant and lectured at the
University of Texas at Austin from 1985 to 1986. Mr. Zandan received a B.A.
in history from the University of Massachusetts in 1975, and a Ph.D. in
evaluation research and an M.B.A. from the University of Texas at Austin in
1982 and 1983, respectively.
<PAGE>
BRIAN SHARPLES joined IntelliQuest as Senior Vice President in 1990, was
named President in 1991, became a director in 1992 and was named Chief
Executive Officer in 1997. Prior to joining IntelliQuest, he was a
consultant in the high technology practice of Bain & Company, Inc. and Chief
Executive Officer of Practical Productions, Inc., an event-based automotive
distribution business. Mr. Sharples received a B.A. in economics and
mathematics from Colby College in 1982 and an M.B.A. from the Stanford
Graduate School of Business with a concentration in marketing and finance in
1986.
LEE WALKER was elected a director of IntelliQuest in July 1996. Since
1991, he has been a lecturer at the University of Texas Graduate School of
Business. From 1986 to 1991, he was President and Chief Operating Officer of
Dell Computer Corporation, a manufacturer of personal computers. Mr. Walker
is a director of Mobile Telecommunications Technologies Corp., a manufacturer
of mobile telecommunications products. Mr. Walker received a B.S. in Physics
from Texas A&M University in 1965 and an M.B.A. from Harvard University in
1967.
WILLIAM WOOD has served as a director of the Company since May 1993.
Since 1984, Mr. Wood has been a general partner of Austin Ventures, a venture
capital firm. Mr. Wood received an A.B. in history from Brown University in
1978 and an M.B.A. from Harvard University in 1982.
BOARD MEETINGS AND COMMITTEES
The Board of Directors of the Company held a total of 11 meetings during
fiscal 1998, of which two were by unanimous written consent. No director
attended fewer than 75% of the meetings of the Board of Directors and
committees thereof, if any, upon which such director served. The Board of
Directors has a Compensation Committee and an Audit Committee. The Board of
Directors has no nominating committee or any committee performing such
functions.
The Compensation Committee, which consisted of directors Lee Walker and
William Wood, did not meet formally during the fiscal year, but did discuss
compensation issues during regular meetings of the Board of Directors. This
Committee is responsible for determining salaries, incentives and other forms
of compensation for directors and officers of the Company and administers
various incentive compensation and benefit plans.
The Audit Committee, which consisted of directors Lee Walker and William
Wood, held one meeting during fiscal 1998. This Committee is responsible for
overseeing actions taken by the Company's independent auditors and reviews
the Company's internal financial controls.
COMPENSATION COMMITTEE INTERLOCKS AND INSIDER PARTICIPATION
The Compensation Committee consisted of the following directors during
fiscal 1998: Lee Walker and William Wood. The Compensation Committee makes
recommendations to the Board of Directors concerning salaries and incentive
compensation for directors and officers of the Company. Mr. Sharples,
Director and President and Chief Executive Officer of the Company, is not a
member of the Compensation Committee and cannot vote on matters decided by
the Committee. He is invited to participate in some discussions and
decisions regarding salaries and incentive compensation for employees of and
consultants to the Company, except that Mr. Sharples is excluded from
discussions and decisions regarding his own salary and incentive compensation.
<PAGE>
RELATED TRANSACTIONS
In January 1998, the Company purchased certain of the assets, subject to
certain of the liabilities, of Information Technology Forum, Inc. ("ITF").
As consideration for the purchase of ITF's assets, the Company issued 67,532
shares of Common Stock and paid $150,000 cash to ITF. At the time of the
transaction, Charles Stryker was a Director of the Company and was ITF's sole
stockholder. As a result of the transaction, Mr. Stryker became an executive
officer of the Company and is currently President of the Company's IQ2.net
operations.
<PAGE>
PROPOSAL TWO
RATIFICATION OF APPOINTMENT OF INDEPENDENT PUBLIC ACCOUNTANTS
The Board of Directors has selected PricewaterhouseCoopers LLP,
independent public accountants, to audit the financial statements of the
Company for the fiscal year ending December 31, 1999, and recommends that
stockholders vote for ratification of such appointment. In the event of a
negative vote on ratification, the Board of Directors will reconsider its
selection.
Price Waterhouse LLP, a predecessor to PricewaterhouseCoopers, has
audited the Company's financial statements annually since 1992.
Representatives of PricewaterhouseCoopers LLP are expected to be present at
the meeting with the opportunity to make a statement if they desire to do so
and are expected to be available to respond to appropriate questions.
REQUIRED VOTE
The affirmative vote of the holders of a majority of the shares of the
Company's Common Stock voting in person or by proxy on this proposal at the
annual meeting is required to approve the appointment of the independent
auditors. Abstaining shares and broker non-votes will be counted for the
purpose of determining the presence or absence of a quorum. However, an
abstaining vote shall be counted as a "No" vote, and broker non-votes will
reduce the absolute number (but not the percentage) of affirmative votes
needed for approval.
THE BOARD OF DIRECTORS UNANIMOUSLY RECOMMENDS A VOTE "FOR" THE
RATIFICATION OF THE APPOINTMENT OF PRICEWATERHOUSECOOPERS LLP AS INDEPENDENT
PUBLIC ACCOUNTANTS.
<PAGE>
EXECUTIVE COMPENSATION AND OTHER MATTERS
EXECUTIVE COMPENSATION
The following table sets forth the compensation earned by the Company's
Chief Executive Officer and the Company's four other most-highly compensated
executive officers (collectively, the "Named Executive Officers") for
services rendered in all capacities to the Company during the years ended
December 31, 1996, 1997 and 1998:
SUMMARY COMPENSATION TABLE
<TABLE>
<CAPTION>
SECURITIES ALL OTHER
UNDERLYING COMPENSATION
NAME AND PRINCIPAL POSITION YEAR SALARY ($) BONUS ($) OPTIONS (#)(1) ($) (2)
- --------------------------- ---- ---------- --------- -------------- -------
<S> <C> <C> <C> <C> <C>
Peter Zandan 1998 177,887 0 50,000 7,102
Chairman (3) 1997 223,539 0 54,250 7,506
1996 213,772 0 30,000 9,645
Brian Sharples 1998 250,000 0 50,000 7,393
Chief Executive Officer, 1997 233,539 0 51,250 7,398
President, and Director (4) 1996 218,772 0 30,000 11,143
Ed Frazier 1998 184,615 75,000 75,000 764
Chief Operating Officer (4) 1997 0 0 0 0
1996 0 0 0 0
Marianne Grogan 1998 150,769 20,000 55,000 497
President, Research Operations 1997 173,874 0 7,253 331
1996 131,875 5,000 2,000 612
Charles Stryker 1998 197,692 0 146,250 432
President, IQ2.net 1997 0 0 0 0
Operations (5) 1996 0 0 0 0
</TABLE>
- -----------------------
(1) The Company did not grant any restricted stock awards or stock
appreciation rights or make any long-term incentive plan payouts during
1996, 1997, or 1998.
(2) Includes automobile allowances, life insurance premiums and miscellaneous
other income.
(3) Mr. Zandan served as Chief Executive Officer during 1997.
(4) Mr. Frazier became an executive officer of the Company in 1998. Mr. Frazier
has an employment agreement with the Company which, among other things,
specifies one year's severance in the event he is terminated for other
than business reasons. Mr. Frazier's bonus in 1998 was a signing bonus.
(5) Mr. Stryker became an executive officer of the Company in 1998 and was a
Director of the Company during parts of 1997 and 1998. Mr. Stryker has
an employment agreement with the Company which, among other things,
specifies one year's severance in the event he is terminated for other
than business reasons.
(6) F. S. (Kit) Webster III consulted with the Company from October 1, 1998,
and was appointed Senior Vice President, Finance, Chief Financial Officer,
and Secretary on January 1, 1999. Mr. Webster has an employment agreement
with the Company which, among other things, specifies a signing bonus of
$10,000; an initial annual salary of $185,000; and one year's severance
in the event he is terminated for other than business reasons.
<PAGE>
OPTION GRANTS DURING FISCAL 1998
The following table provides information with respect to stock option
grants in fiscal 1998 to the Named Executive Officers.
OPTION GRANTS IN FISCAL 1998
<TABLE>
<CAPTION>
Individual Grants (1) Potential Realizable
--------------------------------------------------- Value at Assumed
% of Total Annual Rates of
Number of Options Stock Price
Securities Granted to Appreciation for
Underlying Employees in Exercise Option Term ($)(5)
Options Fiscal Year Price(3) Expiration --------------------
Name Granted (%)(1,2) ($/Sh) Date(4) 5% 10%
- ---- ------- -------- ------ ------- -- ---
<S> <C> <C> <C> <C> <C> <C>
Peter Zandan 50,000(6) 6.3 5.00 10/16/08 53,887 116,025
Brian Sharples 50,000(7) 6.3 5.00 10/16/08 53,887 116,025
Ed Frazier 75,000(8) 9.5 5.00 10/16/08 80,815 174,038
Marianne Grogan 55,000(9) 7.0 5.00 10/16/08 59,264 127,628
Charles Stryker 146,250(10) 18.5 5.00 10/16/08 157,589 339,373
</TABLE>
- -------------------
(1) The Company granted options to employees to purchase 776,863 shares of
Common Stock during fiscal 1998.
(2) Certain stock options were repriced in February 1998 and essentially all
stock options were repriced in October 1998. A repricing is a
cancellation of an existing option and an issuance of a new option. The
figures set forth in the table, above, reflect the status of options as
repriced. Mr. Zandan was awarded options for 50,000 shares at an
exercise price of $9.25 per share prior to repricing; Mr Sharples was
awarded options for 50,000 shares at an exercise price of $9.25 per
share prior to repricing; Mr. Frazier was awarded options for 75,000
shares at an exercise price of $9.00 per share prior to repricing; Ms.
Grogan was awarded options for 55,000 shares at an exercise price of
$12.00 per share prior to repricing; and Mr. Styker was awarded options
for 120,000, 25,000, and 1,250 shares at exercise prices of $10.00,
$18.00, and $7.50 per share, respectively, prior to repricing. All
options awarded prior to 1998 were also repriced in October 1998.
Unless otherwise noted, all options set forth above are exercisable in
equal monthly installments over a four year period.
(3) The exercise price may be paid in cash or check.
(4) An option may terminate before its expiration date if the optionee's
status as an employee is terminated or upon the optionee's death or
disability.
(5) The 5% and 10% assumed annual compound rates of stock price appreciation
are mandated by the rules of the Securities and Exchange Commission and
do not represent the Company's estimate or projection of future prices
of its Common Stock.
(6) Mr. Zandan's option to purchase 50,000 shares vests and is exercisable
six years from the date of grant, upon the condition that Mr. Zandan
will have been a consultant by the Company during that time;
alternatively, 50% of the options are exercisable in the event that the
closing market price of the Company's stock exceeds $15 per share for 30
consecutive trading days, and the remaining 50% are exercisable in the
event that the closing market price of the Company's stock exceeds $30
per share for 30 consecutive trading days. Vesting of all options held
by Mr. Zandan accelerates upon a change of control of the Company.
(7) Mr. Sharples' option to purchase 50,000 shares vests and is exercisable
six years from the date of grant, upon the condition that Mr. Sharples
will have been employed by the Company during that time; alternatively,
50% of the options are exercisable in the event that the closing market
price of the Company's stock exceeds $15 per share for 30 consecutive
trading days, and the remaining 50% are exercisable in the event that
the closing market price of the Company's stock exceeds $30 per share
for 30 consecutive trading days. Vesting of all options held by Mr.
Sharples accelerates upon a change of control of the Company.
<PAGE>
(8) Mr. Frazier's option to purchase 75,000 shares vests and is exercisable
in equal installments over a four year period. Vesting of all options
held by Mr. Frazier accelerates upon a change of control of the Company.
On December 11, 1998, Mr. Frazier was awarded options to purchase
25,000 shares, effective January 4, 1999; such options vest and are
exercisable in equal installments over a four year period.
(9) Ms. Grogan's option to purchase 55,000 shares vests and is exercisable
in equal installments over a four year period. Vesting of all options
held by Ms. Grogan accelerates upon a change of control of the Company.
(10) Mr. Stryker's option to purchase 146,250 shares vests and is exercisable
in equal installments over a four year period. Vesting of all options
held by Mr. Stryker accelerates upon a change of control of the Company.
OPTION EXERCISES AND HOLDINGS
The following table sets forth information concerning exercise of stock
options for the fiscal year ended December 31, 1998, with respect to each Named
Executive Officer, and the value of unexercised options at the end of fiscal
1998.
AGGREGATED OPTION EXERCISES IN FISCAL 1998
AND FISCAL YEAR-END OPTION VALUES
<TABLE>
<CAPTION>
Number of Securities Value of
Underlying Unexercised Unexercised In-the-Money
Shares Options at FY-End Options at FY-End (2)
Acquired on Value --------------------------- -----------------------------
Name Exercise (#) Realized ($)(1) Exercisable Unexercisable Exercisable Unexercisable
- ---- ------------ --------------- ----------- ------------- ----------- -------------
<S> <C> <C> <C> <C> <C> <C>
Peter Zandan 36,071 49,598 0 98,179 0 171,183
Brian Sharples 0 0 33,205 98,045 58,109 171,579
Ed Frazier 0 0 3,124 43,876 54,467 76,783
Marianne Grogan 0 0 25,879 49,371 45,288 86,399
Charles Stryker 0 0 34,153 118,097 59,766 206,670
</TABLE>
- ------------------
(1) Calculated by determining the difference between the fair market value
at the date of exercise of the securities underlying the option and
the exercise price of the option.
(2) Calculated by determining the difference between the fair market value,
at December 31, 1998, of the securities underlying the option and the
exercise price of the option.
LIMITATION OF LIABILITY AND INDEMNIFICATION
Matters Pursuant to the Delaware General Corporation Law ("Delaware Law"),
the Company has adopted provisions in its Certificate of Incorporation which
limit the personal liability of its directors to the maximum extent permitted by
Delaware Law. Delaware Law provides that directors of a company will not be
personally liable for monetary damages for breach of their fiduciary duties as
directors, except for liability (i) for any breach of their duty of loyalty to
the Company or its stockholders, (ii) for acts or omissions not in good faith or
which involve intentional misconduct or a knowing violation of law, (iii) for
unlawful payments or dividends or unlawful stock repurchases or redemption as
provided in Section 174 of Delaware Law or (iv) for transactions from which the
director derived an improper personal benefit.
The Company's Bylaws provide that the Company shall indemnify its
officers and directors and may indemnify its employees and other agents to
the fullest extent provided by Delaware law, including those circumstances
where indemnification would otherwise be discretionary under Delaware law.
The Company believes that indemnification under its Bylaws covers at least
negligence on the part of the indemnified parties. The Bylaws authorize the
use of indemnification agreements and the Company has entered into such
agreements with each of its directors and officers.
<PAGE>
The Company carries officer and director liability insurance with respect
to certain matters, including matters arising under the Securities Act.
At present, there is no pending litigation or proceeding involving a
director or officer, employee or agent of the Company where indemnification
will be required or permitted. The Company is not aware of any threatened
litigation or proceeding which may result in a claim for such
indemnification.
COMPENSATION OF DIRECTORS
The Company's directors do not receive any cash compensation for service
on the Board of Directors or any committee thereof, but directors may be
reimbursed for reasonable expenses incurred in connection with attendance at
Board and committee meetings.
Non-employee directors are entitled to participate in the Company's 1996
Director Option Plan (the "Director Plan"). The Director Plan was adopted by
the Board of Directors and approved by the stockholders in February 1996, and
amended by the Board of Directors in August 1996. A total of 100,000 shares
of Common Stock has been reserved for issuance under the Director Plan,
options to purchase 99,750 of which were issued and outstanding as of
December 31, 1998. The Director Plan provides that each non-employee director
shall be granted, at the discretion of the Board of Directors, a nonstatutory
option to purchase shares of Common Stock (the "First Option") upon the date
such non-employee director first becomes a director (other than an employee
director who ceases to be an employee but remains a director). In addition,
each non-employee director who has been a non-employee director for longer
than six months will annually be granted, at the discretion of the Board of
Directors, a nonstatutory option to purchase shares of Common Stock (a
"Subsequent Option"). Each non-employee director will be eligible to receive
a Subsequent Option, regardless of whether such non-employee director was
eligible to receive a First Option. Each First Option and Subsequent Option
will have a term expiring on the earlier of the tenth anniversary of the date
of grant or twelve months after the date on which the optionee ends his
service as a director. The vesting terms of both the First Option and the
Subsequent Option shall be at the discretion of the Board of Directors. The
exercise price of a director option will be 100% of the fair market value per
share of the Company's Common Stock on the date of the grant of the option.
The exercise price of a director option granted to a director who owns more
than 10% of the voting power of all classes of the Company's outstanding
capital stock must be equal to at least 110% of the fair market value of the
Common Stock on the date of grant. In 1998 the Director Plan was amended to
provide, among other things, for accelerated vesting of options proportional
to the number of the Company's shares owned by a Director, to encourage stock
ownership in the Company.
COMPENSATION COMMITTEE REPORT ON EXECUTIVE COMPENSATION
During the fiscal year ended December 31, 1998, the Compensation
Committee of the Board of Directors was comprised of two non-employee
directors. The Compensation Committee is responsible for setting
compensation levels for the Company's executive officers and for overseeing
the administration of certain of the Company's stock option plans. In making
compensation decisions, it has been the practice of the Compensation
Committee to meet with the Company's chief executive officer, as appropriate.
All decisions by the Compensation Committee are reviewed by the entire Board
of Directors.
The Compensation Committee believes that executive officer compensation
should be closely aligned with the performance of the Company on both a
short-term and long-term basis and that such compensation should assist the
Company in attracting and retaining key executives critical to its long-term
success. To that end, the Compensation Committee's policy is that the
compensation package for executive officers should consist of three
components: (i) an annual base salary; (ii) the potential to earn incentive
bonuses each fiscal year, the amount of which is dependent on the Company's
overall performance, and (iii) stock option awards designed to align
stockholder interests with those of management by providing long-term
incentives for the Company's key employees. The Compensation Committee has
determined that total direct compensation (base salary, incentive bonus, and
stock option awards) should be at levels commensurate with total direct
compensation paid by comparable companies to their officers, and it is again
the intent of the Compensation
<PAGE>
Committee to set total direct compensation for fiscal 1999 at levels
commensurate with total direct compensation paid by comparable companies to
their officers.
Base salary is based upon the responsibilities of the particular executive
officers targeted at the median of comparable companies and is reviewed on an
annual basis.
Incentive bonuses represent an opportunity for each executive officer to
earn additional annual cash compensation in an amount reflective of such
officer's accomplishments. Any such bonuses are generally determined and
awarded by the Compensation Committee shortly after the end of each fiscal
year. No incentive bonus payments were made for fiscal 1997. Shortly after
the end of fiscal 1998, the Compensation Committee will review each officer's
accomplishments and make bonus determinations.
The long-term performance based compensation of executive officers takes
the form of option awards under the Company's 1996 Stock Option Plan. The
Compensation Committee believes that equity-based compensation ensures that
the Company's executive officers have a continuing stake in the long-term
success of the Company. All options granted by the Company have been granted
with an exercise price equal to the market price of the Company's Common
Stock on the date of grant and, accordingly, have value only if the Company's
stock price increases after such date. In granting options under the 1996
Stock Option Plan, the Committee takes into account each executive's
responsibilities, relative position in the Company, and past grants. For
fiscal 1998, Mr. Zandan was granted options to purchase 50,000 shares of
Common Stock at fair market value as of the date of the grant. For fiscal
1998, Mr. Sharples was granted options to purchase an aggregate of 50,000
shares of Common Stock at fair market value as of the date of the grant.
LEE WALKER
WILLIAM WOOD
PREFERRED SHARE PURCHASE RIGHT
On October 16, 1998, the Board of Directors declared a dividend
distribution of one Preferred Share Purchase Right on each outstanding share
of IntelliQuest Common Stock. Subject to limited exceptions, the Rights will
be exercisable if a person or group acquires 20% or more of the Company's
Common Stock or announces a tender offer for 20% or more of the Common Stock.
Under certain circumstances, each Right will entitle stockholders to buy
one-hundredth of a share of newly created Series A Junior Participating
Preferred Stock of the Company at an exercise price of $40.00. The
IntelliQuest Board of Directors will be entitled to redeem the Rights at
$.001 per Right at any time before a person has acquired 20% or more of the
outstanding Common Stock.
The Rights are intended to enable all IntelliQuest stockholders to realize
the long-term value of their investment in the Company. They do not prevent a
takeover, but should encourage anyone seeking to acquire the Company to
negotiate with the Board of Directors prior to attempting a takeover. The
Rights are designed to assure that all IntelliQuest stockholders receive fair
and equal treatment in the event of any proposed takeover of the Company and to
guard against partial tender offers, open market accumulations and other abusive
tactics to gain control of IntelliQuest without paying all stockholders a
control premium.
If a person becomes an Acquiring Person, each Right will entitle its holder
to purchase, at the Right's then-current exercise price, a number of Common
Shares of IntelliQuest having a market value at that time of twice the Right's
exercise price. Rights held by the Acquiring Person will become void and will
not be exercisable to purchase shares at the bargain purchase price. An
Acquiring Person is defined as a person who acquires 20% or more of the
outstanding Common Stock of IntelliQuest. If IntelliQuest is acquired in a
merger or other business combination transaction which has not been approved by
the Board of Directors, each Right will entitle its holder to purchase, at the
Right's then-current exercise price, a number of the acquiring company's common
shares having a market value at that time of twice the Right's exercise price.
The Rights will expire in ten years.
<PAGE>
PERFORMANCE GRAPH
Set forth below is a line graph comparing the annual percentage change in
the cumulative return to the stockholders of the Company's Common Stock with
the cumulative return of (i) the Nasdaq U.S. Index and (ii) a peer group, the
Hambrecht & Quist Technology Index, consisting of approximately 275
companies, for the period commencing January 1, 1998, and ending on December 31,
1998. The information contained in the performance graph shall not be
deemed to be "soliciting material" or to be "filed" with the Securities and
Exchange Commission, nor shall such information be incorporated by reference
into any future filing under the Securities Act or Exchange Act, except to
the extent that the Company specifically incorporates it by reference into
such filing.
COMPARISON OF 33 MONTH CUMULATIVE TOTAL RETURN*
AMONG INTELLIQUEST INFORMATION GROUP, INC., THE NASDAQ STOCK MARKET (U.S.)
INDEX AND THE HAMBRECHT & QUIST TECHNOLOGY INDEX
[GRAPH]
* $100 INVESTED ON 3/22/96 IN STOCK OR INDEX - INCLUDING REINVESTMENT OF
DIVIDENDS. FISCAL YEAR ENDING DECEMBER 31.
COMPLIANCE WITH SECTION 16(a) OF THE EXCHANGE ACT
Section 16(a) of the Securities Exchange Act of 1934 (the "Exchange Act")
requires the Company's executive officers and directors, and persons who own
more than ten percent of a registered class of the Company's equity
securities to file reports of ownership and changes in ownership with the
Securities and Exchange Commission ("SEC") and the National Association of
Securities Dealers, Inc. Executive officers, directors and greater than ten
percent stockholders are required by SEC regulation to furnish the Company
with copies of all Section 16(a) forms they file. Based solely in its review
of the copies of such forms received by it, or written representations from
certain reporting persons, the Company believes that, during fiscal 1997, all
filing requirements applicable to its executive officers and directors were
complied with, except that Mr. Frazier filed a Form 3 late due to retroactive
award of options, and Mr. Zandan and Mr. Sharples each filed a Form 3 late.
<PAGE>
OTHER MATTERS
The Company knows of no other matters to be submitted at the meeting. If
any other matters properly come before the meeting, it is the intention of
the persons named in the enclosed form of Proxy to vote the shares they
represent as the Board of Directors may recommend.
THE BOARD OF DIRECTORS
Dated: March 26, 1999
<PAGE>
PROXY
INTELLIQUEST INFORMATION GROUP, INC.
PROXY FOR ANNUAL MEETING OF STOCKHOLDERS
THIS PROXY IS SOLICITED ON BEHALF OF THE BOARD OF DIRECTORS
The undersigned stockholder of IntelliQuest Information Group, Inc., a
Delaware corporation (the "Company"), hereby acknowledges receipt of the Notice
of Annual Meeting of Stockholders and Proxy Statement, each dated March 26,
1999, and hereby appoints F. S. (Kit) Webster III and Brian Sharples, and each
of them, proxies, with full power of substitution, to represent the undersigned
and to vote as designated on the reverse side, all shares of Company Common
Stock that the undersigned is entitled to vote at the Annual Meeting of
Stockholders of the Company to be held on May 11, 1999 at 10:00 a.m., Central
Standard Time, at the Company's principal executive offices at 1250 Capital of
Texas Hwy. South, Building One, Austin, Texas, 78746, and at any adjournment
thereof.
THE SHARES REPRESENTED BY THIS PROXY WILL BE VOTED AS SPECIFIED. IF NO
SPECIFICATION IS INDICATED, THE SHARES REPRESENTED BY THIS PROXY WILL BE VOTED
FOR EACH OF THE PROPOSALS ON THE REVERSE SIDE HEREOF AND FOR SUCH OTHER MATTERS
AS MAY PROPERLY COME BEFORE THE MEETING AS THE PROXIES DEEM ADVISABLE.
CONTINUED AND TO BE SIGNED ON REVERSE SIDE
<PAGE>
/X/ PLEASE MARK VOTES AS IN THIS EXAMPLE.
A vote FOR the following proposals, proposed by IntelliQuest Information
Group, Inc. (the "Company"), is recommended by the Board of Directors.
1. Election of four Directors.
Nominees: Peter Zandan, Brian Sharples, Lee Walker and William Wood.
FOR ALL NOMINEES / / WITHHELD FROM ALL NOMINEES / / ______________
FOR ALL NOMINEES EXCEPT AS NOTED ABOVE
2. Proposal to ratify the appointment of PricewaterhouseCoopers LLP as
independent public accountants of the Company for the fiscal year ending
December 31, 1999.
FOR / / AGAINST / / ABSTAIN / /
3. To vote or otherwise represent the shares on any and all such other business
which may properly come before the meeting or any adjournment thereof,
according to their discretion and in their discretion.
Please sign exactly as your name
appears on your stock certificate.
If the stock is held by joint
tenants or as community property,
both should sign. Executors,
administrators, trustees,
guardians, attorneys and corporate
officers should insert their
titles.
Signature: ______ Date: __________
Signature: ______ Date: __________
