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
Filed by the Registrant [X]
Filed by a Party other than the Registrant [ ]
Check the appropriate box:
<TABLE>
<CAPTION>
<S> <C>
[ ] Preliminary Proxy Statement [ ] Confidential, For Use of the Commission Only
[X] Definitive Proxy Statement (as permitted by Rule 14a-6(e)(2))
[ ] Definitive Additional Materials
[ ] Soliciting Material Pursuant to Rule 14a-11(c)
or Rule 14a-12
</TABLE>
OPEN PLAN SYSTEMS, INC.
- --------------------------------------------------------------------------------
(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)(1) 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>
OPEN PLAN
SYSTEMS
[LOGO]
April 15, 1998
Dear Shareholder:
You are cordially invited to attend the 1998 Annual Meeting of
Shareholders to be held on Friday, May 15, 1998 at 10:00 a.m. at the Crestar
Bank Auditorium, 919 East Main Street, 4th Floor, Richmond, Virginia 23219. At
the Annual Meeting, you will be asked to elect one director to serve for a
one-year term and two directors each to serve for a three-year term, and to
ratify the appointment of independent auditors for the Company for 1998.
Enclosed with this letter is a formal notice of the Annual Meeting, a Proxy
Statement and a form of proxy.
Whether or not you plan to attend the Annual Meeting, it is important
that your shares be represented and voted. Please complete, sign, date and
return the enclosed proxy promptly using the enclosed postage-paid envelope. The
enclosed proxy, when returned properly executed, will be voted in the manner
directed in the proxy.
We hope you will participate in the Annual Meeting, either in person or
by proxy.
Sincerely,
/s/ Paul A. Covert
Paul A. Covert
` President
. . . . . . . . . . . . . . Remanufactured Workstations . . . . . . . . . . . .
4299 CAROLINA AVENUE, BUILDING C, RICHMOND, VA 23222 *
804.228.5600 / FAX 804.228.5656
<PAGE>
OPEN PLAN SYSTEMS, INC.
4299 Carolina Avenue, Building C
Richmond, Virginia 23222
-------------------
NOTICE OF ANNUAL MEETING OF SHAREHOLDERS
-------------------
The Annual Meeting of Shareholders (the "Annual Meeting") of Open Plan
Systems, Inc. (the "Company") will be held on Friday, May 15, 1998 at 10:00 a.m.
at the Crestar Bank Auditorium, 919 East Main Street, 4th Floor, Richmond,
Virginia 23219, for the following purposes:
1. To elect one director to serve as a Class II director for a term
of one year expiring at the 1999 annual meeting of shareholders;
2. To elect two directors to serve as Class I directors for terms
of three years expiring at the 2001 annual meeting of
shareholders;
3. To consider and act upon a proposal to ratify the appointment of
the firm of Ernst & Young LLP as independent auditors for the
Company for the fiscal year ending December 31, 1998; and
4. To act upon such other matters as may properly come before the
Annual Meeting.
Only holders of shares of Common Stock of record at the close of
business on April 8, 1998, the record date fixed by the Board of Directors of
the Company, are entitled to notice of, and to vote at, the Annual Meeting.
Please sign and promptly mail the enclosed proxy to insure the presence
of a quorum at the Annual Meeting.
By Order of The Board of Directors
/s/ Gary M. Farrell
Gary M. Farrell
Corporate Secretary
April 15, 1998
IMPORTANT
WHETHER OR NOT YOU EXPECT TO ATTEND THE ANNUAL MEETING, PLEASE VOTE,
SIGN, DATE AND RETURN THE ENCLOSED PROXY AS PROMPTLY AS POSSIBLE. IF YOU ATTEND
THE ANNUAL MEETING, YOU MAY VOTE YOUR SHARES IN PERSON, EVEN THOUGH YOU HAVE
PREVIOUSLY SIGNED AND RETURNED YOUR PROXY.
<PAGE>
OPEN PLAN SYSTEMS, INC.
4299 Carolina Avenue, Building C
Richmond, Virginia 23222
PROXY STATEMENT
This Proxy Statement is furnished to holders of Common Stock, no par
value (the "Common Stock"), of Open Plan Systems, Inc. (the "Company"), in
connection with the solicitation of proxies by the Board of Directors of the
Company to be used at the 1998 Annual Meeting of Shareholders (the "Annual
Meeting") to be held on Friday, May 15, 1998 at 10:00 a.m. at the Crestar Bank
Auditorium, 919 East Main Street, 4th Floor, Richmond, Virginia 23219, and any
adjournment thereof.
Any shareholder who executes a proxy has the power to revoke it at any
time by written notice to the Secretary of the Company, by executing a proxy
dated as of a later date, or by voting in person at the Annual Meeting. It is
expected that this Proxy Statement and the enclosed proxy card will be mailed on
or about April 15, 1998 to all shareholders entitled to vote at the Annual
Meeting.
The expense of soliciting proxies for the Annual Meeting will be paid
for by the Company. Proxies are being solicited by mail and may also be
solicited in person or by telephone, telegraph or telefacsimile by directors,
officers and employees of the Company. The Company will reimburse banks,
brokerage firms and other custodians, nominees and fiduciaries for their
reasonable expenses in forwarding proxy materials to the beneficial owners of
shares of the Common Stock. In addition, the Company has retained Corporate
Investor Communications, Inc. to assist it in the solicitation of proxies in
connection with the Annual Meeting at an anticipated cost of $3,500, plus
reimbursement of out-of-pocket expenses.
On April 8, 1998, the record date for determining those shareholders
entitled to notice of and to vote at the Annual Meeting, there were 4,472,433
shares of Common Stock issued and outstanding. Each outstanding share of Common
Stock is entitled to one vote on all matters to be acted upon at the Annual
Meeting. A majority of the shares of the Common Stock entitled to vote,
represented in person or by proxy, constitutes a quorum for the transaction of
business at the Annual Meeting.
The aggregate number of votes cast by all shareholders present in
person or by proxy at the Annual Meeting will be used to determine whether a
proposal will be approved or adopted. Thus, in the case of the election of
directors and the ratification of the appointment of the independent public
accountants and other matters that may come before the Annual Meeting, the
withholding of votes or abstention from voting on a matter by a shareholder
present in person or by proxy at the Annual Meeting has no effect on the item on
which the shareholder withheld votes or abstained from voting. In addition,
broker "non-votes" will not be included in determining the number of votes cast
on any matter.
The Board of Directors of the Company is not aware of any matters other
than those described in the Proxy Statement that may be presented for action at
the Annual Meeting. However, if other matters do properly come before the Annual
Meeting, the persons named in the enclosed proxy card possess discretionary
authority to vote in accordance with their best judgment with respect to such
other matters.
<PAGE>
PROPOSAL ONE
ELECTION OF DIRECTORS
On February 17, 1998, the Board of Directors increased the number of
directors of the Company from seven (7) to eight (8) by creating a new Class II
directorship. Paul A. Covert, President of the Company, was elected by the Board
of Directors to fill this newly created position on the Board. Thus, one (1)
Class II director is to be elected at the Annual Meeting to serve for a term of
one (1) year expiring on the date of the annual meeting of shareholders in 1999,
and two (2) Class I directors are to be elected at the Annual Meeting each to
serve for a term of three (3) years expiring on the date of the annual meeting
of shareholders in 2001. Five (5) other directors have been elected to terms
that end in either 1999 or 2000, as indicated below.
The following pages set forth certain information concerning the
nominees and incumbent directors whose terms of office will continue after the
Annual Meeting. All of the nominees and incumbent directors were previously
elected by the shareholders, except Paul A. Covert and E. W. Mugford, who will
stand for election for the first time this year.
The election of each nominee for director requires the affirmative vote
of the holders of a plurality of the shares of Common Stock cast in the election
of directors. If the proxy is executed in such manner as not to withhold
authority for the election of any or all of the nominees for directors, then the
persons named in the proxy will vote the shares represented by the proxy for the
election of the three (3) nominees named below. If the proxy indicates that the
shareholder wishes to withhold a vote from one or more nominees for director,
such instructions will be followed by the persons named in the proxy.
Each nominee has consented to being named in the Proxy Statement and
has agreed to serve if elected. The Board of Directors has no reason to believe
that any of the nominees will be unable or unwilling to serve. If, at the time
of the Annual Meeting, any nominee is unable or unwilling to serve as a
director, votes will be cast, pursuant to the enclosed proxy, for such
substitute nominee as may be nominated by the Board of Directors. There are no
current arrangements between any nominee and any other person pursuant to which
a nominee was selected. No family relationships exist among any of the directors
or between any of the directors and executive officers of the Company.
The following information is furnished with respect to each nominee for
director:
Nominee for Election for Term Expiring in 1999 (Class II)
Paul A. Covert, age 34, has been President of the Company since
November 7, 1997. Previously, Mr. Covert had been President of Immaculate Eagle,
Inc., dba TFM Remanufactured Furniture ("TFM"), since its inception in January
1988. TFM became a wholly-owned subsidiary of the Company on October 1, 1996.
Nominees for Election for Terms Expiring in 2001 (Class I)
Gary M. Farrell, age 38, has been Chief Financial Officer of the
Company since June 1993 and Secretary and a member of the Board of Directors
since January 1994. Prior to his employment by the Company, Mr. Farrell was Vice
President and Corporate Audit Manager at Virginia Beach Federal Savings Bank
from April 1992 to May 1993. Mr. Farrell was also employed by NationsBank
Corporation from 1984 to 1992 where he held several positions, including Vice
President and EDP Audit Manager. He is a member of the Executive Committee.
E. W. Mugford, age 62, is President and Chief Executive Officer of
Royal Oldsmobile-Isuzu Inc., a new automobile dealership located in Richmond,
Virginia. Mr. Mugford also is President of Royal Auto Protection Company Ltd.,
an automobile insurance company located in Richmond, Virginia. Mr. Mugford has
held these positions since 1971 and 1990, respectively.
The Board of Directors recommends that the shareholders vote FOR the
nominees set forth above.
2
<PAGE>
Incumbent Directors Whose Terms Expire in 1999
Anthony F. Markel, age 56, is President, Chief Operating Officer and a
director of Markel Corporation, a Richmond, Virginia based publicly held
insurance brokerage company. Mr. Markel has held these positions since 1992. He
is a member of the Executive Committee and the Compensation Committee and has
been a director of the Company since 1989. On April 8, 1998, the Board elected
Mr. Markel as Chairman of the Board.
Theodore L. Chandler, Jr., age 45, is a member and a director of the
law firm of Williams, Mullen, Christian & Dobbins in Richmond, Virginia. Mr.
Chandler is also a director LandAmerica Financial Group, Inc. and Hilb, Rogal &
Hamilton Company. He is a member of the Compensation Committee and the Audit
Committee and has been a director of the Company since 1996.
Incumbent Directors Whose Terms Expire in 2000
Stan A. Fischer, age 57, has been a director of the Company since
founding the Company in 1989. Mr. Fischer was President of the Company from 1989
until November 7, 1997, and was Chairman of the Board of the Company from 1989
until April 8, 1998. From 1986 to 1989, Mr. Fischer was Sales Manager of
Chasen's Business Interiors, Inc., a marketer of new office furniture and
furnishings in Richmond, Virginia. Prior to this, Mr. Fischer was employed by
Xerox Corporation for over ten years in a variety of sales and management
positions. He is a member of the Executive Committee.
Troy A. Peery, Jr., age 51, is President and Chief Operating Officer
and a director of Heilig Meyers Co., a national retailer of home furniture and
furnishings headquartered in Richmond, Virginia. Mr. Peery has held this
position since 1985. Mr. Peery currently serves on the Board of Directors of
Galeski Optical Co. and S&K Famous Brands, Inc. He is a member of the
Compensation Committee and the Audit Committee and has been a director of the
Company since 1989.
Robert F. Mizell, age 41, is a Senior Vice President and a director of
Davenport & Company LLC, where he directs the firm's Corporate Finance
Department. Prior to joining Davenport in 1988, Mr. Mizell was a partner with
the accounting firm of KPMG Peat Marwick. Mr. Mizell is also a director of
Manorhouse Retirement Centers, Inc. and Security Filter Products Co., Inc. He is
a member of the Executive Committee, the Compensation Committee and the Audit
Committee and has been a director of the Company since 1996.
Executive Officers
Information with respect to Paul A. Covert, President, and Gary M.
Farrell, Chief Financial Officer and Secretary, is set forth above. Information
with respect to the remaining executive officers of the Company is as follows:
Todd A. Thomann, age 36, has been Executive Vice President of the
Company since December 1, 1997. Mr. Thomann became an executive officer of the
Company on January 14, 1998. Mr. Thomann had been Vice-President of TFM since
its inception in January 1988. TFM became a wholly-owned subsidiary of the
Company on October 1, 1996.
Robert E. O'Neil, Jr., age 48, has been Vice President - National
Accounts of the Company since December 1, 1997. Mr. O'Neil was previously Vice
President - Sales of the Company from November 18, 1996 to November 30, 1997.
Mr. O'Neil became an executive officer of the Company on February 17, 1997.
Prior to his employment with the Company, Mr. O'Neil served as Vice President -
Sales with Superior Chaircraft Corporation from September 1994 to November 1996,
and was a manager for Steelcase, Inc. from October 1977 to September 1994.
Neil F. Suffa, age 33, has been Corporate Controller of the Company
since December 2, 1996. Mr. Suffa became an executive officer of the Company on
February 17, 1997. From July 1994 to December 1996, Mr. Suffa was Senior
Accounting and Reporting Accountant with James River Corporation, and from July
1986 to July 1994 was employed as Audit Manager with Deloitte & Touche LLP. Mr.
Suffa also served as Chief Financial Officer of SAGA Systems, an independent
service provider of access to the
3
<PAGE>
Internet, from May 1996 to October 1996, and served on the Board of Directors of
that company until April 1997.
Section 16(a) Beneficial Ownership Reporting Compliance
Section 16(a) of the Securities Exchange Act of 1934, as amended,
requires the Company's directors and executive officers and persons who
beneficially own more than 10% of the Company's Common Stock to file initial
reports of ownership and reports of changes in ownership of Common Stock with
the Securities and Exchange Commission. Such persons are required by Commission
regulation to furnish the Company with copies of all Section 16(a) forms they
file.
To the Company's knowledge, based solely upon a review of the copies of
such reports furnished to the Company, the Company believes that, except as
disclosed below, all applicable Section 16(a) filing requirements were satisfied
for events and transactions that occurred in 1997. Paul A. Covert filed one late
report on Form 3 in 1997. The Form 3 incorrectly reported the number of shares
of Common Stock owned by Mr. Covert and did not include disclosure regarding
options granted to him on October 21, 1996 and August 12, 1997 under the
Company's 1996 Stock Incentive Plan. However, the correct number of shares held
by Mr. Covert was subsequently disclosed on an amended Form 3 filed on or about
January 14, 1998 and the options held by Mr. Covert were reported on a Form 5
filed on or about February 13, 1998. In addition, Troy A. Peery, Jr. filed one
late report on Form 4 in 1997 disclosing one transaction that was not reported
on a timely basis; Anthony F. Markel filed one late report on Form 4 in 1997
disclosing two transactions that were not reported on a timely basis; and Robert
F. Mizell filed one late report on Form 4 in 1997 disclosing one transaction
that was not reported on a timely basis, which was subsequently amended to
correctly state the number of shares of Common Stock owned by Mr. Mizell.
Security Ownership of Management
The following table sets forth certain information with respect to the
beneficial ownership of shares of the Company's Common Stock as of March 25,
1998, by each director of the Company, by those executive officers named in the
Summary Compensation Table set forth under the caption "Executive Compensation"
below, and by all of the directors and executive officers as a group.
<TABLE>
<CAPTION>
Amount and Nature of Beneficial Ownership (1)
-------------------------------------------------------
Acquirable Within Percent of
Name Common Stock 60 Days (2) Class (3)
- ---- ------------ ----------- ---------
<S> <C> <C> <C>
Stan A. Fischer 1,125,870 9,375 25.4%
Gary M. Farrell (4) 17,889 9,375 *
Paul A. Covert (5) 43,750 4,687 1.1
Robert E. O'Neil, Jr. 3,000 9,375 *
Troy A. Peery, Jr. 84,376 2,000 1.9
Anthony F. Markel 167,378 2,000 3.8
Theodore L. Chandler, Jr. 15,000 2,000 *
Robert F. Mizell 13,000 2,000 *
C.T. Hill 1,000 2,000 *
All directors and executive
officers as a group (11
persons) 1,516,313 49,061 35.0%
</TABLE>
____________
* Percentage of ownership is less than 1% of the outstanding shares of Common
Stock of the Company.
(1) Beneficial ownership has been determined in accordance with the provisions
of Rule 13d-3 under the Securities Exchange Act of 1934, as amended, under
which, in general, a person is deemed to be a beneficial owner of a
security if he has or shares the power to vote or direct the voting of the
security or the power to dispose or direct the disposition of the security,
or if he has the right to acquire beneficial
4
<PAGE>
ownership of the security within 60 days. Each shareholder set forth in the
table possesses sole voting and investment power with respect to the number
of shares of Common Stock held by him.
(2) Represents shares of Common Stock that can be purchased upon the exercise
of vested stock options granted under a Company stock option plan.
(3) Percentages for shares beneficially owned are based on 4,472,433 shares of
Common Stock issued and outstanding at March 25, 1998 and includes shares
acquirable within 60 days.
(4) Includes 15,000 shares pledged by Mr. Farrell to a commercial bank as
security for a loan to acquire such shares.
(5) Includes 43,750 shares related to the purchase of TFM by the Company held
in escrow by a commercial bank for Mr. Covert until October 1, 1998.
Security Ownership of Certain Beneficial Owners
The persons, groups or other entities known by the Company to be
beneficial owners of more than 5% of the outstanding Common Stock of the Company
as of March 25, 1998 are set forth in the following table:
<TABLE>
<CAPTION>
Name and Address Number of Shares Percent of
of Beneficial Owner Beneficially Owned (1) Class (2)
- ------------------- ---------------------- ---------
<S> <C> <C>
Stan A. Fischer 1,135,245 25.4%
c/o Open Plan Systems, Inc.
4299 Carolina Avenue
Building C
Richmond, Virginia 23222
SAFECO Corporation and SAFECO Asset
Management Company, SAFECO Plaza, 331,900 (3) 7.42%
Seattle, Washington 98185
SAFECO Common Stock Trust SAFECO Plaza,
Seattle, Washington 98185 244,500 (3) 5.47%
</TABLE>
____________
(1) Beneficial ownership has been determined in accordance with the provisions
of Rule 13d-3 under the Securities Exchange Act of 1934, as amended, under
which, in general, a person is deemed to be a beneficial owner of a
security if he has or shares the power to vote or direct the voting of the
security or the power to dispose or direct the disposition of the security,
or if he has the right to acquire beneficial ownership of the security
within 60 days.
(2) Percentages for shares beneficially owned are based on 4,472,433 shares of
Common Stock issued and outstanding at March 25, 1998.
(3) In an amendment to a Schedule 13G jointly filed with the Securities and
Exchange Commission on February 10, 1998, SAFECO Corporation and its
subsidiary, SAFECO Asset Management Company, reported beneficial ownership
as of that date of 331,900 shares of the Common Stock of the Company for
which it shares voting and dispositive power. The Schedule 13G reports that
the shares identified therein are owned beneficially by registered
investment companies for which SAFECO Asset Management Company serves as
investment advisor, and includes the 244,500 shares reported in the joint
Schedule 13G as beneficially owned by SAFECO Common Stock Trust.
5
<PAGE>
Committees of the Board of Directors
The standing committees of the Board of Directors are the Executive
Committee, the Compensation Committee and the Audit Committee. There is no
nominating committee. The functions and membership of the standing committees
and the number of such committee meetings held during the last fiscal year are
as follows:
Executive Committee. The Executive Committee is authorized to perform
all duties and exercise all powers of the Board of Directors in the management
of the business and affairs of the Company when the Board is not in session,
except those duties and powers that are required by law to be performed or
exercised by the Board of Directors as a whole. The current members of the
Executive Committee are Stan A. Fischer, Chairman, and Gary M. Farrell, Anthony
F. Markel, Robert F. Mizell and C.T. Hill. The Executive Committee held no
meetings in 1997.
Audit Committee. The Audit Committee makes recommendations concerning
the engagement of the Company's independent public accountants, reviews with the
independent public accountants the plans and results of the audit engagement,
approves professional services provided by the independent public accountants,
reviews the independence of the independent public accountants, considers the
range of audit and non-audit fees and reviews the adequacy of the Company's
internal accounting controls. The current members of the Audit Committee are
C.T. Hill, Chairman, and Troy A. Peery, Jr., Theodore L. Chandler, Jr. and
Robert F. Mizell. The Audit Committee held three meetings in 1997.
Compensation Committee. The Compensation Committee determines
compensation for the Company's directors and executive officers and administers
the Company's stock option plans. The responsibilities of the Compensation
Committee are discussed further below under "Compensation Committee Report on
Executive Compensation." The current members of the Compensation Committee are
Troy A. Peery, Jr., Chairman, and Theodore L. Chandler, Jr., Robert F. Mizell
and Anthony F. Markel. The Compensation Committee held four meetings in 1997.
During the fiscal year ended December 31, 1997, there were eight
meetings of the Board of Directors. All directors except C.T. Hill attended 75%
or more of the total aggregate number of meetings of the Board of Directors and
of the committees on which they served. Mr. Hill attended 72.7% of the meetings
of the Board of Directors and of the committee on which he served.
Directors' Compensation
Each non-employee director of the Company will receive an annual
retainer of $5,000 payable quarterly, a fee of $1,000 for each Board meeting
attended and a fee of $500 for each committee meeting attended. Each director
will also be reimbursed for certain expenses incurred in connection with
attendance at Board and committee meetings.
Effective June 5, 1996, the Company adopted the 1996 Stock Option Plan
for Non-Employee Directors (the "Outside Directors' Plan"). The maximum
aggregate number of shares of Common Stock that may be issued pursuant to the
Outside Directors' Plan is 25,000. The Outside Directors' Plan is administered
by the Compensation Committee of the Board of Directors of the Company, and will
terminate following the annual meeting of shareholders in 2000.
Under the Outside Directors' Plan, each non-employee director of the
Company serving on the Board of Directors receives an option to purchase 1,000
shares of Common Stock on the first business day following each annual meeting
of shareholders. The exercise price of stock options granted under the Outside
Directors' Plan is equal to the fair market value of the Common Stock on the
date of grant. Each option is granted for a term of ten years and is first
exercisable on the date which is six months from the date of grant of the
option. Options granted under the Outside Directors' Plan may be exercised in
whole or in part at any time upon payment by the optionee of the exercise price
in cash or by surrendering previously-owned shares of Common Stock to the
Company with a fair market value not less than the exercise price. In addition,
the Company will cooperate in a cashless exercise of an option upon the request
of a participant.
6
<PAGE>
COMPENSATION COMMITTEE REPORT
ON EXECUTIVE COMPENSATION
The Company's compensation policies applicable to its executive
officers are administered by the Compensation Committee of the Board of
Directors. The Compensation Committee determines the salaries of the Company's
senior management and reviews and approves annual management incentive programs
and executive benefits for senior management. It also administers the 1996 Stock
Incentive Plan (the "Incentive Plan") and the Outside Directors' Plan. The
Committee also reviews any significant changes in the Company's 401(k) plan. All
decisions by the Compensation Committee relating to the compensation of the
Company's senior management are reported to the full Board.
This report of the Compensation Committee primarily addresses the
Company's compensation policies in effect for 1997.
Executive Compensation Policies
The Compensation Committee's executive compensation policies are
designed to provide competitive levels of compensation that integrate pay with
the Company's annual and long-term performance goals, recognize individual
initiative and achievements, and assist the Company in attracting and retaining
highly qualified executives. They provide for competitive base salaries which
reflect individual performance and level of responsibility; annual performance
bonus opportunities payable in cash upon the attainment of pre-established
financial and operating performance goals, and long-term, stock-based incentive
opportunities under the Incentive Plan to further align the financial interests
of management with those of the Company's shareholders.
The Compensation Committee believes that the combination of base
salary, annual performance bonus awards and long-term equity participation
provides the appropriate framework to implement the Company's
pay-for-performance policy. For 1997, bonus incentives were based on attainment
of established goals for earnings per share and pre-tax profit.
The Compensation Committee has determined to annually, or more
frequently, review the Company's executive compensation program.
Base Salaries
Factors considered by the Compensation Committee in determining base
salaries for executive officers in 1997 included personal performance of the
executive officer in light of individual levels of responsibility, the overall
performance and profitability of the Company during the preceding year, economic
trends that may be affecting the Company, and the competitiveness of the
executive officer's salary with the salaries of executive officers in comparable
positions at companies of comparable size or operational characteristics. Each
factor is weighed by the Board of Directors in a subjective analysis of the
appropriate level of compensation for that executive officer.
Because the Company's executive compensation program stresses incentive
opportunities linked to financial and operating performance, base salaries for
senior management for 1997 were set at approximately the median for comparable
positions at comparable companies. Adjustments made to executive base salaries
were effective January 28, 1997. Mr. Fischer's base salary was increased by
$10,000 to $160,000 after a thorough review and evaluation by the Committee of
Mr. Fischer's personal performance in light of his management responsibilities,
the level of profitability of the Company during 1997, and the Committee's
review of the compensation of chief executive officers at comparable companies.
Mr. Fischer stepped down as President on November 7, 1997, and Paul A. Covert
was elected President. Mr. Fischer remained the Chairman of the Board until
April 8, 1998.
Annual Incentives
The executive officers named in the Summary Compensation Table also
were participants in the 1997 Incentive Bonus Plan (the "Bonus Plan"). The Bonus
Plan provides that incentive bonuses may be paid to executive officers if
certain earnings per share and pre-tax profit goals were met by the Company in
7
<PAGE>
1997. If the Company's earnings per share increased by less than 10% over the
previous year, an officer received no bonus award for this performance criteria.
The same standard applies to the Company's pre-tax profits and is determined
separately from the earnings calculation. In the event that the Company's
earnings per share or pre-tax profits increased by 10% or more over the previous
year, then the level of performance of each component was converted into a
percentage of the officer's salary as a bonus.
For 1997, there were three categories of officers under the Bonus Plan
with differing percentages assigned to each category and to differing levels of
performance within each category. If the Company's performance in earnings per
share and pre-tax profits exceeded the specified target percentage by more than
10%, then selected executive officers were entitled to an additional bonus for
outstanding performance. Based on the Bonus Plan criteria, no bonuses were
awarded under the Bonus Plan. However, Mr. Farrell received a discretionary
bonus of $5,000 for 1997.
Long-Term Incentives
The Committee administers the Incentive Plan under which it has granted
options to purchase shares of the Company's Common Stock to key executives. The
primary objective of issuing stock options is to encourage significant
investment in stock ownership by management and to provide long-term financial
rewards linked directly to market performance of the Company's stock. The
Committee believes that significant ownership of stock by senior management is
the best way to align the interests of management and the shareholders, and the
Company's stock incentive program is effectively designed to further this
objective.
Effective August 12, 1997, the Committee granted stock options (the
"1997 Options") to various executives, including the executive officers named in
the Summary Compensation Table. The Committee granted Mr. Fischer a 1997 Option
to acquire 12,500 shares of Common Stock. In determining the number of shares to
be subject to the options granted to Mr. Fischer, the Committee evaluated Mr.
Fischer's overall compensation package relative to that of other chief
executives at comparable companies. With respect to the allocation of available
options among other executive officers and employees, the Committee is of the
view that, as a person's level of responsibility increases, greater portions of
his or her total compensation should be linked to the long-term performance of
the Company's Common Stock and return to its shareholders.
The exercise price of the 1997 Options is based on the average of the
high and low trading prices of the Common Stock on the day of grant. The 1997
Options became vested and exercisable over four years in annual increments of
25% commencing on February 12, 1998 and expire seven years from the date of
grant. An earlier expiration date may apply in the event of an optionee's
termination of employment, retirement, death or disability.
Tax Considerations
The Omnibus Budget Reconciliation Act of 1993 ("OBRA") established
certain criteria for the tax deductibility of compensation in excess of $1
million paid to the Company's executive officers. The Company is not in danger
of losing deductions under OBRA. The Committee will carefully consider any plan
or compensation arrangement that would result in the disallowance of
compensation deductions. The Committee will use its best judgment in such cases,
taking all factors into account, including the materiality of any deductions
that may be lost. To date, the Committee has not adopted a policy that dictates
its decision in such a situation.
Submitted By the Compensation Committee of the Board of Directors
Troy A. Peery, Jr., Chairman
Robert F. Mizell
Theodore L. Chandler, Jr.
Anthony F. Markel
8
<PAGE>
EXECUTIVE COMPENSATION AND OTHER INFORMATION
Executive Compensation
The following table sets forth, for the fiscal years ended December 31,
1997, 1996 and 1995, the compensation paid by the Company to the Company's
President and each of its four other most highly paid executive officers in all
capacities in which they served:
Summary Compensation Table
<TABLE>
<CAPTION>
Long Term
Compensation
Annual Compensation Awards
------------------------------------------------ ------
Securities
Name and Other Annual Underlying All Other
Principal Position Year Salary Bonus Compensation (1) Options (#) Compensation (2)
- ------------------ ---- ------ ----- ---------------- ----------- ----------------
<S> <C> <C> <C> <C> <C> <C>
Stan A. Fischer 1997 $159,231 $ - $ - 12,500 $100,489
Chairman of Board 1996 150,000 36,000 145,515 (3) 12,500 100,510
1995 125,000 40,000 - - 116,348
Paul A. Covert (4) 1997 96,923 - - 6,250 200
President 1996 24,230 15,000 - 6,250 50
1995 - - - - -
Gary M. Farrell (5) 1997 99,808 5,000 - 12,500 2,994
Chief Financial Officer 1996 85,000 19,000 - 12,500 2,550
and Secretary 1995 65,000 20,000 - - 1,950
Robert O'Neil, Jr. (6) 1997 121,346 - - 12,500 -
Vice President - National 1996 20,167 - - 12,500 -
Accounts 1995 - - - - -
</TABLE>
___________
(1) Except as otherwise indicated, the dollar value of perquisites and other
personal benefits did not exceed the lesser of $50,000 or 10% of the total
amount of salary and bonus reported for each officer during the years
shown.
(2) "All Other Compensation" includes the following for the fiscal year ended
December 31, 1997: (a) employer contributions of $4,306, $2,994, $200 and
$0 for Mr. Fischer, Mr. Farrell, Mr. Covert and Mr. O'Neil, respectively,
to the Company's 401(k) Plan to match 1997 elective deferral contributions
made by each to such Plan; and (b) compensation of $96,183 for Mr. Fischer
attributable to life insurance premiums paid by the Company in 1997 on life
insurance policies to fund certain stock purchase obligations to Mr.
Fischer. See "Transactions with Management."
(3) Includes a $32,341 payment to Mr. Fischer to permit the payment of accrued
interest on prior tax loans, a $28,115 payment to permit the payment of
accrued interest on a real estate loan to Mr. Fischer, a $83,775 payment to
Mr. Fischer to permit the payment of expenses incurred by him in connection
with certain property owned by Mr. Fischer, and $1,284 relating to an
automobile allowance.
(4) Mr. Covert was employed by the Company in October 1996 following the
acquisition of TFM. Amounts shown for 1996 are for the period from October
1996 to December 31, 1996.
(5) Although no bonuses were awarded under the Bonus Plan in 1997, Mr. Farrell
was awarded a discretionary bonus.
(6) Mr. O'Neil was employed by the Company commencing in November 1996. Amounts
shown for 1996 are for the period from November 1996 to December 31, 1996.
The executive officers of the Company participate in other benefit
plans provided to all full-time employees of the Company who meet eligibility
requirements, including group health, dental, disability and life insurance.
9
<PAGE>
Stock Options
The following table contains information concerning grants of stock
options to each of the executive officers named in the Summary Compensation
Table during the fiscal year ended December 31, 1997 under the Company's 1996
Stock Incentive Plan:
Option Grants In Last Fiscal Year
(Individual Grants)
<TABLE>
<CAPTION>
Number of Percent of Total
Securities Options Granted
Underlying Options to Employees in Exercise or Base Expiration
Name Granted (1) Fiscal Year Price ($/Sh) (2) Date (3)
- ---- ----------- ----------- ---------------- --------
<S> <C> <C> <C> <C>
Stan A. Fischer 12,500 14.8% $5.97 8/12/04
Paul A. Covert 6,250 7.4 5.97 8/12/04
Gary M. Farrell 12,500 14.8 5.97 8/12/04
Robert E. O'Neil, Jr. 12,500 14.8 5.97 8/12/04
</TABLE>
__________
(1) The options become vested and exercisable over four years in annual
increments of 25% commencing on February 12, 1998. The options listed in
the table were granted on August 12, 1997.
(2) The exercise price for the options listed in the table was the average of
the high and low trading prices of the Common Stock on the date of grant.
The exercise price may be paid in cash, in shares of Common Stock of the
Company valued at fair market value on the date of exercise, or pursuant to
a cashless exercise procedure under which the optionee provides irrevocable
instructions to a brokerage firm to sell the purchased shares and to remit
to the Company, out of the sale proceeds, an amount equal to the exercise
price plus all required withholding and other deductions.
(3) The options listed in the table expire seven years from the date of grant.
An earlier expiration date may apply in the event of the optionee's
termination of employment, retirement, death or disability.
Option Exercises and Holdings
None of the executive officers named in the Summary Compensation Table
exercised options during the fiscal year ended December 31, 1997. The following
table sets forth information with respect to the value of all unexercised stock
options held by such officers as of the end of the fiscal year:
<TABLE>
<CAPTION>
Fiscal Year End Option Values
Number of Securities Value of Unexercised In-the-
Underlying Unexercised Money Options at Fiscal Year
Options at Fiscal Year End (1) End (2)
------------------------------ ------------------------------
Name Exercisable Unexerciseable Exercisable Unexerciseable
- ---- ------------ -------------- ----------- --------------
<S> <C> <C> <C> <C>
Stan A. Fischer 3,125 21,875 $0 $0
Paul A. Covert 1,562 10,938 0 0
Gary M. Farrell 3,125 21,875 0 0
Robert E. O'Neil, Jr. 1,562 10,938 0 0
</TABLE>
10
<PAGE>
______________
(1) The options become vested and exercisable over four years in annual
increments of 25% commencing on April 21, 1997 and February 12, 1998.
(2) The value of the unexercised options at fiscal year end is calculated by
determining the difference between the fair market value of the Common
Stock on December 31, 1997 and the exercise price of such options. The
average of the high and low sales prices the Common Stock of the Company on
December 31, 1997, as reported by The Nasdaq National Market, was $3.03.
All of the options identified in the table had an exercise price that was
higher than $3.03 on December 31, 1997, and therefore all of the options
were out-of-the money on that date.
Transactions With Management
The Company has made a separate agreement with Stan A. Fischer to
purchase upon his death, up to all, but not less than one-half, of the shares of
Common Stock owned by him at the time of his death. In order to fund its
purchase obligation under the agreement, the Company owns and is the beneficiary
of a life insurance policy in aggregate face amounts of $3,000,000 on the life
of Mr. Fischer. The purchase price for the shares will be the fair market value
of the shares on the date of death. The Company's purchase obligation under the
agreement is limited to the face amount of the policy. In 1997, the Company paid
premiums of $96,183 on the policy for Mr. Fischer.
On October 1, 1996, pursuant to the terms of that certain Stock
Purchase Agreement dated September 24, 1996 between the Company and TFM (the
"Purchase Agreement"), the Company acquired all of the outstanding Common Stock
of TFM from its shareholders, Paul A. Covert and Todd A. Thomann. Messrs. Covert
and Thomann currently serve as President and Executive Vice President,
respectively, of the Company. Consideration for the acquisition consisted of
cash and 87,500 shares of the Company's Common Stock valued at $15 per share.
Under the terms of the Purchase Agreement, the 87,500 shares of the Company's
Common Stock are to be held in escrow until October 1, 1998 as security for
indemnification obligations of Messrs. Covert and Thomann. Also pursuant to the
Purchase Agreement, if the closing sales price of the Company's Common Stock on
October 1, 1998 is less than $15 per share (subject to certain adjustments), the
Company will make a cash payment to Messrs. Covert and Thomann equal to the
difference between the closing sales price on that date and $15, multiplied by
the 87,500 shares of Common Stock.
Certain Business Relationships
Robert F. Mizell, a Senior Vice President of Davenport & Company LLC,
is a director of the Company. Davenport & Company LLC has provided financial
advisory services to the Company during the past twelve months at fees that are
customary for such services.
Theodore L. Chandler, Jr., a member and a director of the firm of
Williams, Mullen, Christian & Dobbins, is a director of the Company. Williams,
Mullen, Christian & Dobbins serves as counsel to the Company.
Anthony F. Markel, President, Chief Operating Officer and a director of
Markel Corporation, is Chairman of the Board and a director of the Company.
Shand Morahand Company, a wholly owned subsidiary of the Markel Corporation, has
provided directors and officers insurance to the Company during the past twelve
months at fees that are customary for such services.
11
<PAGE>
PROPOSAL TWO
APPOINTMENT OF INDEPENDENT PUBLIC ACCOUNTANTS
The Board of Directors has appointed, subject to shareholder approval,
the firm of Ernst & Young LLP as independent public accountants to audit the
consolidated financial statements of the Company for the fiscal year ending
December 31, 1998. A majority of the votes cast by holders of the Common Stock
is required for the ratification of the appointment of the independent public
accountants.
Representatives of Ernst & Young LLP are expected to be present at the
Annual Meeting and will have an opportunity to make a statement if they desire
to do so and will be available to respond to appropriate questions.
The Board of Directors recommends that the shareholders vote FOR the
appointment of Ernst & Young LLP as independent public accountants for the
fiscal year ending December 31, 1998.
PROPOSALS FOR 1999 ANNUAL MEETING
Under the regulations of the Securities and Exchange Commission, any
shareholder desiring to make a proposal to be acted upon at the 1999 annual
meeting of shareholders must cause such proposal to be received, in proper form,
at the Company's principal executive offices at 4299 Carolina Avenue, Building
C, Richmond, Virginia 23222, Attention: Gary M. Farrell, Secretary, no later
than December 16, 1998, in order for the proposal to be considered for inclusion
in the Company's Proxy Statement for that meeting. The Company presently
anticipates holding the 1999 annual meeting of shareholders in May 1999.
The Company's Bylaws also prescribe the procedure a shareholder must
follow to nominate directors or to bring other business before shareholders'
meetings. For a shareholder to nominate a candidate for director at the 1999
annual meeting of shareholders, notice of nomination must be received by the
Secretary of the Company not less than 60 days and not more than 90 days prior
to the first anniversary date of the 1998 annual meeting. The notice must
describe various matters regarding the nominee and the shareholder giving the
notice. For a shareholder to bring other business before the 1999 annual meeting
of shareholders, notice must be received by the Secretary of the Company not
less than 60 days and not more than 90 days prior to the first anniversary date
of the 1998 annual meeting. The notice must include a description of the
proposed business, the reasons therefor, and other specified matters. Any
shareholder may obtain a copy of the Company's Bylaws, without charge, upon
written request to the Secretary of the Company.
OTHER MATTERS
THE COMPANY'S ANNUAL REPORT FOR THE FISCAL YEAR ENDED DECEMBER 31,
1997, INCLUDING FINANCIAL STATEMENTS, IS BEING MAILED TO SHAREHOLDERS WITH THIS
PROXY STATEMENT. A COPY OF THE COMPANY'S ANNUAL REPORT ON FORM 10-K FOR 1997
FILED WITH THE COMMISSION, EXCLUDING EXHIBITS, MAY BE OBTAINED WITHOUT CHARGE BY
WRITING TO GARY M. FARRELL, SECRETARY OF THE COMPANY, WHOSE ADDRESS IS 4299
CAROLINA AVENUE, BUILDING C, RICHMOND, VIRGINIA 23222.
12
<PAGE>
OPEN PLAN SYSTEMS, INC.
Proxy Solicited on Behalf of the Board of Directors
The undersigned hereby appoints Robert F. Mizell and Theodore
L. Chandler, Jr., jointly and severally, as proxies, with full power to
act alone, and with full power of substitution, to represent the
undersigned and to vote, as designated on the reverse, all shares of
Common Stock which the undersigned would be entitled to vote at the
Annual Meeting of Shareholders of Open Plan Systems, Inc., a Virginia
corporation (the "Corporation"), to be held on Friday, May 15, 1998, at
10:00 a.m., local time, or any adjournments thereof, for the following
purposes:
(PLEASE DATE AND SIGN ON REVERSE SIDE)
<PAGE>
Please Detach and Mail in the Envelope Provided
- --------------------------------------------------------------------------------
A |X| Please mark your
votes as in this
example using
dark ink only.
<TABLE>
<CAPTION>
<S> <C>
FOR nominees WITHHOLD
listed at right AUTHORITY to
(except as written vote
on for all nominees
the line below) listed
at right FOR AGAINST ABSTAIN
_ _ _
_ _ 2. To ratify the appointment |_| |_| |_|
1. To elect as |_| |_| NOMINEES: Term Expires of Ernst & Young LLP as
directors the ------------- independent auditors for
three persons in 1999: the Corporation for the
listed as -------- fiscal year ending
nominees at right: Paul A. Covert December 31, 1998.
(INSTRUCTION: To withhold authority to vote Terms Expire 3. In their discretion, the proxies are authorized to
for any individual nominee listed at right, ------------ vote upon any other business that may properly come
write that nominee's name on the space in 2001: before the meeting, or any adjournment thereof.
provided below.) --------
Gary M. Farrell
E. W. Mugford
_______________________________________ THIS PROXY, WHEN PROPERLY EXECUTED, WILL BE VOTED IN
THE MANNER DIRECTED HEREIN BY THE SHAREHOLDER. IF NO
DIRECTION IS GIVEN, THIS PROXY WILL BE VOTED FOR ALL
NOMINEES LISTED IN ITEM 1 AND FOR ITEM 2.
PLEASE MARK, SIGN, DATE AND RETURN PROMPTLY
</TABLE>
<TABLE>
<CAPTION>
<S> <C> <C>
_____________________________________________ _____________________________________________ Dated: _______________, 1998
Signature of Shareholder Signature of Co-owner (if applicable)
</TABLE>
Note: (If signing as Attorney, Administrator, Executor, Guardian or Trustee,
please add your title as such.)
- --------------------------------------------------------------------------------
