<PAGE>
SCHEDULE 14A INFORMATION
Proxy Statement Pursuant to Section 14(a) of
the Securities Exchange Act of 1934 (Amendment No. )
Filed by the Registrant /X/
Filed by a Party other than the Registrant / /
Check the appropriate box:
/ / Preliminary Proxy Statement
/ / Confidential, for Use of the Commission Only (as permitted by Rule
14a-6(e)(2))
/X/ Definitive Proxy Statement
/ / Definitive Additional Materials
/ / Soliciting Material Pursuant to Section240.14a-11(c) or
Section240.14a-12
VARI-LITE INTERNATIONAL, 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:
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(2) Aggregate number of securities to which transaction applies:
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(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:
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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>
January 30, 1998
Dear Stockholder:
You are cordially invited to attend the Annual Meeting of Stockholders of
Vari-Lite International, Inc., a Delaware corporation (the "Company"), to be
held at 10:00 a.m. local time, on Friday, February 27, 1998, at the Company's
offices at 201 Regal Row, Dallas, Texas 75247. At this meeting you will be asked
to:
(i) Elect two Class I directors to serve until the annual meeting of
stockholders to be held in 2001; and
(ii) Transact such other business as may properly come before the meeting or
any adjournment or postponement thereof.
It is important that your shares be represented at the meeting; therefore,
if you do not expect to attend in person, please sign and date the enclosed
proxy and return it in the enclosed envelope at your earliest convenience.
Very truly yours,
H.R. BRUTSCHE III
CHAIRMAN OF THE BOARD
Dallas, Texas
January 30, 1998
<PAGE>
VARI-LITE INTERNATIONAL, INC.
201 REGAL ROW
DALLAS, TEXAS 75247
------------------------
NOTICE OF
ANNUAL MEETING OF STOCKHOLDERS
TO BE HELD FEBRUARY 27, 1998
---------------------
The Annual Meeting of Stockholders of Vari-Lite International, Inc., a
Delaware corporation (the "Company"), will be held at the Company's offices at
201 Regal Row, Dallas, Texas 75247, on Friday, February 27, 1998 at 10:00 a.m.
local time, for the following purposes:
1. To elect two Class I directors to serve until the annual meeting of
stockholders to be held in 2001; and
2. To transact such other business as may properly come before the Annual
Meeting or any adjournment or postponement thereof.
Only stockholders of record at the close of business on January 26, 1998 are
entitled to notice of, and to vote at, the meeting or any adjournments thereof.
A list of stockholders entitled to vote at the meeting will be available at the
meeting for examination by any stockholder.
WHETHER OR NOT YOU PLAN TO ATTEND THE MEETING, IT IS REQUESTED THAT THE
ENCLOSED FORM OF PROXY BE PROPERLY EXECUTED AND PROMPTLY RETURNED TO THE COMPANY
IN THE ENCLOSED ADDRESSED AND STAMPED ENVELOPE. You may revoke the proxy at any
time before the proxy is exercised by delivering written notice of revocation to
the Secretary of the Company, by delivering a subsequently dated proxy or by
attending the meeting and withdrawing the proxy. Please date, sign and return
the enclosed proxy immediately in the stamped envelope provided.
By Order of the Board of Directors
Michael P. Herman,
SECRETARY
Dallas, Texas
January 30, 1998
<PAGE>
VARI-LITE INTERNATIONAL, INC.
201 REGAL ROW
DALLAS, TEXAS 75247
------------------------
PROXY STATEMENT
FOR
ANNUAL MEETING OF STOCKHOLDERS
TO BE HELD FEBRUARY 27, 1998
------------------------
This Proxy Statement is furnished to stockholders of Vari-Lite
International, Inc., a Delaware corporation (the "Company"), in connection with
the solicitation of proxies to be used at the Annual Meeting of Stockholders of
the Company to be held on February 27, 1998 (the "Annual Meeting"). Proxies in
the form enclosed will be voted at the Annual Meeting if properly executed,
returned to the Company before the Annual Meeting and not revoked. Any
stockholder giving such a proxy may revoke it at any time before it is voted by
delivering written notice of revocation to the Secretary of the Company, by
delivering a subsequently dated proxy or by attending the meeting and
withdrawing the proxy. Your attendance at the meeting will not constitute
automatic revocation of the proxy. This Proxy Statement and the enclosed proxy
form are first being sent to stockholders on or about January 30, 1998.
Included with this Proxy Statement are copies of the Company's 1997 Annual
Report. Such Annual Report does not form any part of the proxy solicitation
material.
ACTION TO BE TAKEN AT MEETING
When stockholders have appropriately specified how their proxies should be
voted, the proxies will be voted accordingly. Unless the stockholder otherwise
specifies therein, the accompanying proxy will be voted (i) FOR the election as
Class I directors of the nominees listed under "Election of Directors," and (ii)
at the discretion of the proxy holders, either FOR or AGAINST any other matter
or business that may properly come before the meeting. The Board of Directors
does not know of any such other matter or business.
PERSONS MAKING THE SOLICITATION
The accompanying proxy is being solicited by the Board of Directors of the
Company. The cost of soliciting your proxy will be borne entirely by the Company
and no other person or persons will bear such costs either directly or
indirectly. In addition to the use of the mails, proxies may be solicited by
personal interview, telephone and telegram by directors and regular officers and
employees of the Company.
OUTSTANDING CAPITAL STOCK
The record date for stockholders entitled to notice of, and to vote at, the
Annual Meeting is January 26, 1998. At the close of business on that date the
Company had 7,800,003 shares of Common Stock, $0.10 par value per share ("Common
Stock"), issued and outstanding and entitled to vote at the Annual Meeting.
The following table sets forth, as of January 26, 1998, the number of shares
of Common Stock beneficially owned by (1) each person known by the Company to
own beneficially more than 5% of the outstanding shares of Common Stock, (2)
each director and each nominee for director, (3) the Company's Chief Executive
Officer and each of the Company's four other most highly compensated executive
officers for services rendered for the fiscal year ended September 30, 1997
(collectively, the "Named Executive Officers"), and (4) all directors and
executive officers as a group. Except as otherwise indicated, each of
<PAGE>
the persons named below has sole voting power and investment power with respect
to such Common Stock.
<TABLE>
<CAPTION>
BENEFICIAL OWNERSHIP
-------------------------
NUMBER OF
NAME OF BENEFICIAL OWNER SHARES PERCENTAGE
- ------------------------------------------------------------------------------- ---------- -------------
<S> <C> <C>
H. R. Brutsche III(1).......................................................... 712,358 9.1%
James H. Clark, Jr.(2)(3)...................................................... 614,968 7.9
John D. Maxson(2)(4)........................................................... 700,840 9.0
C. Vincent Prothro............................................................. 5,000 *
John R. Rettberg............................................................... -- --
J. Anthony Smith(5)............................................................ 758,944 9.7
Anthony G. Banks(5)............................................................ 758,936 9.7
Philip D.C. Collins(5)......................................................... 758,940 9.7
Michael J.C.C. Rutherford(5)................................................... 758,936 9.7
Alice Spradley(6).............................................................. 428,926 5.5
Keizo Akimoto.................................................................. 1,000 *
James M. Bornhorst(7).......................................................... 221,636 2.8
T. Clay Powers(8).............................................................. 10,740 *
The Prudential Insurance Company of America(9)................................. 827,900 10.6
David W. Alley(10)............................................................. 36,471 *
All officers and directors as a group (17 persons)(11)......................... 3,112,414 39.9
</TABLE>
- ------------------------
* less than one percent
(1) Includes 45,164 shares held by Brutsche Family Trust, a trust of which
Brown Brothers Harriman & Co. ("BBH") serves as trustee, 810 shares held by
the ESOP for the benefit of Mr. Brutsche and 8,333 shares issuable upon
exercise of stock options exercisable within 60 days. Mr. Brutsche
disclaims beneficial ownership of the shares held by Brutsche Family Trust.
Mr. Brutsche's address is 201 Regal Row, Dallas, Texas 75247.
(2) The address of Messrs. Clark and Maxson is 8117 Preston Road, Suite 220,
Dallas, Texas 75225.
(3) Includes 587,389 shares held by Clark Partnership, Ltd., a limited
partnership of which Mr. Clark is the managing general partner, and 3,764
shares held by Mr. Clark's wife. Mr. Clark disclaims beneficial ownership
of the shares owned by his wife.
(4) Includes 50,731 shares held by Peggy Maxson 1996 Irrevocable Trust, a trust
of which BBH serves as trustee. Mr. Maxson disclaims beneficial ownership
of such shares.
(5) The shares beneficially owned by Messrs. Banks, Collins, Rutherford and
Smith include 392,584 shares, 392,584 shares, 392,584 shares and 392,588
shares held by Walbrook Trustees (Jersey) Ltd., Re: G45 ("G45"), Walbrook
Trustees (Jersey) Ltd., Re: G46 ("G46"), Walbrook Trustees (Jersey) Ltd.,
Re: G47 ("G47") and Walbrook Trustees (Jersey) Ltd., Re: G48 ("G48"),
respectively. G45, G46, G47 and G48 are the stockholders of Ashtray Music
Ltd., a United Kingdom limited company. The 292,059 shares held by Ashtray
Music Ltd. are included in the shares owned beneficially by each of Messrs.
Banks, Collins, Rutherford and Smith. Except for 74,293 shares, 74,297
shares, 74,293 shares and 74,297 shares, which are owned by Messrs. Banks,
Collins, Rutherford and Smith, respectively, Messrs. Banks, Collins,
Rutherford and Smith disclaim beneficial ownership of all such shares.
(6) Includes 56,192 shares held by The Walter & Alice Spradley Family Trust,
176,767 shares held by The Walter & Alice Spradley Living Trust--Marital
Trust #1, 56,192 shares held by The Walter & Alice Spradley Living
Trust--Marital Trust #2A and 139,775 shares held by The Walter & Alice
Spradley
2
<PAGE>
Living Trust--Marital Trust #2B. Alice Spradley is the trustee of all of
such trusts. Mrs. Spradley's address is 3131 McKinney Avenue, Suite 490,
Dallas, Texas 75204.
(7) Includes 693 shares held by the ESOP for the benefit of Mr. Bornhorst.
(8) Includes 650 shares held by the ESOP for the benefit of Mr. Powers.
(9) The Prudential Insurance Company of America's address is 751 Broad Street,
Newark, New Jersey 07102-3777.
(10) Prior to his departure in the fiscal year ending September 30, 1998, Mr.
Alley served as Executive Vice President--International Operations of
Vari-Lite. Includes 810 shares held by the ESOP for the benefit of Mr.
Alley.
(11) Includes 5,102 shares held by the ESOP for the benefit of some of such
persons and 8,333 shares issuable upon exercise of stock options
exercisable within 60 days.
QUORUM AND VOTING
The presence in person or by proxy of the holders of a majority of the
outstanding shares of the Common Stock is necessary to constitute a quorum at
the Annual Meeting. Each outstanding share of Common Stock is entitled to one
vote. Abstentions will be included in vote totals and, as such, will have the
same effect on each proposal, other than the election of directors, as a
negative vote. Broker non-votes, if any, will not be included in vote totals
and, as such, will have no effect on any proposal. Cumulative voting is
prohibited in the election of directors. To be elected a director, each nominee
must receive a plurality of all of the votes cast at the Annual Meeting for the
election of directors. All other matters that properly come before the Annual
Meeting must receive the affirmative vote of the holders of a majority of the
shares of Common Stock present in person or by proxy and entitled to vote at the
Annual Meeting.
ELECTION OF DIRECTORS
Two Class I directors are to be elected at the Annual Meeting for a term
expiring at the annual meeting of stockholders to be held in 2001 or until their
respective successors are duly elected and qualified. Set forth below is certain
information concerning the persons nominated for election as directors of the
Company.
THE BOARD OF DIRECTORS RECOMMENDS A VOTE FOR THE ELECTION OF THESE NOMINEES.
CLASS I NOMINEES TO SERVE UNTIL THE ANNUAL MEETING TO BE HELD IN 2001:
JOHN D. MAXSON
John D. Maxson, 57, is one of the founders of the Company and its
subsidiaries and has served as a director of the Company and its subsidiaries
since their inception. Mr. Maxson has served as Chairman of the Board of Showco,
Inc. ("Showco") for approximately 25 years and as Chairman of IGNITION! Creative
Group, Inc. ("Ignition") since its inception in September 1994.
C. VINCENT PROTHRO
C. Vincent Prothro, 55, has been a director of the Company since April 1996.
Mr. Prothro has been Chairman of the Board of Dallas Semiconductor Corporation,
a manufacturer of electronic chips and chip-based subsystems, since 1984 and its
Chief Executive Officer and President since 1989. Mr. Prothro is also a general
partner of Southwest Enterprise Associates, L.P., a venture capital fund. Mr.
Prothro's daughter is married to the son of James H. Clark, Jr.
The present directors of the Company whose terms will expire after 1998 are
as follows:
3
<PAGE>
CLASS II DIRECTORS WHO SERVE UNTIL THE ANNUAL MEETING TO BE HELD IN 1999:
JAMES H. CLARK, JR.
James H. Clark, Jr., 61, has been a director of the Company and its
predecessors since 1978. Mr. Clark serves as Chairman of the Company's Executive
Committee and Audit Committee and is a director of all of the Company's
subsidiaries. Mr. Clark has been the Managing General Partner of Clark
Partnership, Ltd., an investment and venture capital partnership, since 1988,
and serves as Chairman of the Board of Texas Freezer Co. Mr. Clark's son is
married to Mr. Prothro's daughter.
JOHN R. RETTBERG
John R. Rettberg, 60, has been a director of the Company since April 1996
and serves as Chairman of the Company's Compensation Committee and Omnibus
Committee. Mr. Rettberg currently serves as a consultant to the Northrop Grumman
Corporation ("Northrop Grumman"), an advanced technology company operating
primarily in the fields of aircraft and military electronics design, development
and manufacturing. Mr. Rettberg has served in this capacity since his retirement
from Northrop Grumman on January 1, 1995. Mr. Rettberg joined Northrop Grumman
in 1962 and, prior to his retirement, was Corporate Vice President and
Treasurer. Mr. Rettberg is also a director of J.P. Morgan Investment Mgmt., a
manager of mutual funds.
CLASS III DIRECTORS WHO SERVE UNTIL THE ANNUAL MEETING TO BE HELD IN 2000:
H.R. BRUTSCHE III
H.R. Brutsche III, 53, is one of the founders of the Company and its
subsidiaries and has served as a director of the Company and its subsidiaries
since their inception. Mr. Brutsche has served as Chairman of the Board,
President and Chief Executive Officer of the Company and its predecessors since
1980. Mr. Brutsche also serves as Chairman of the Board of Vari-Lite Europe
Holdings Limited ("VLEH"), Vari-Lite Europe Ltd. ("Vari-Lite Europe"), Brilliant
Stages Ltd. ("Brilliant Stages") and Theatre Projects Lighting Services Ltd.
("Theatre Projects") and as President and Chief Executive Officer of Vari-Lite,
Inc. ("Vari-Lite") and Irideon, Inc. ("Irideon").
J. ANTHONY SMITH
J. Anthony Smith, 53, has been a director of the Company and its
predecessors since 1981. Mr. Smith also serves as a director of all of the
Company's subsidiaries. Mr. Smith has been the Managing Director of Hit & Run
Music (Publishing) Limited, an international independent music publisher, and
Hit & Run Music Limited, a professional manager of musicians, for over 20 years,
and Ives Street Developments Limited, a property management company, for six
years.
4
<PAGE>
MANAGEMENT
EXECUTIVE OFFICERS
The executive officers and directors of the Company are as follows:
<TABLE>
<CAPTION>
NAME POSITION
- ------------------------------------ ---------------------------------------------------------------------------
<S> <C>
H. R. Brutsche III(1) Chairman of the Board, President and Chief Executive Officer of the Company
Michael P. Herman Vice President--Finance, Chief Financial Officer and Secretary of the
Company
James H. Clark, Jr.(1)(2) Director of the Company
John D. Maxson(1) Director of the Company and Chairman of the Board of Showco and Ignition
J. Anthony Smith(3) Director of the Company
C. Vincent Prothro(2)(3)(4) Director of the Company
John R. Rettberg(2)(3)(4) Director of the Company
Keizo Akimoto President and Representative Director of Vari-Lite Asia, Inc. ("Vari-Lite
Asia")
James P. Bates Vice President--Information Technology and Chief Information Officer of the
Company
James M. Bornhorst Vice President and Chief Science Officer of the Company and Vice
President--Advanced Technology and Director of Vari-Lite
Richard W. Bratcher, Jr. President, Chief Executive Officer and Director of Showco
Brian L. Croft Managing Director of VLEH
Robert V. Dungan Vice President, General Manager and Director of Irideon
Loren J. Haas Executive Vice President--Vari-Lite Production Services of
Vari-Lite
Janis C. Pestinger Vice President--Administration and Assistant Secretary of the Company
T. Clay Powers Vice President--Product Development and Manufacturing of
Vari-Lite and Director of Showco
J. Scott Thompson President, Chief Executive Officer and Director of Ignition
</TABLE>
- ------------------------
(1) Member of the Executive Committee
(2) Member of the Audit Committee
(3) Member of the Compensation Committee
(4) Member of the Omnibus Plan Committee
Information concerning the business experience of Messrs. Brutsche, Clark,
Maxson, Prothro, Rettberg and Smith is provided under the section entitled
"ELECTION OF DIRECTORS."
Michael P. Herman, 55, joined the Company in June 1993 as Vice
President--Finance, Chief Financial Officer, Secretary and Treasurer. In January
1997, Mr. Herman ceased acting as Treasurer of the Company. Mr. Herman also
serves as Vice President--Finance, Chief Financial Officer, Secretary and
Treasurer of Vari-Lite, Irideon, Showco and Ignition. From May 1991 to May 1993,
Mr. Herman was the
5
<PAGE>
Vice President--Finance and Chief Financial Officer of Barry's Cameras, Inc., a
chain of retail camera and video stores.
Keizo Akimoto, 63, joined Vari-Lite Asia at its inception in 1984 and has
been its Representative Director (equivalent of chief executive officer) since
1985 and its President since 1992.
James P. Bates, 51, has been the Vice President--Information Technology and
Chief Information Officer of the Company since September 1996. Prior to that
time since 1989, Mr. Bates held various positions with DSC Communications Corp.,
most recently serving as Director of Applications Systems Implementation.
James M. Bornhorst, 52, has been the Vice President and Chief Science
Officer of the Company and the Vice President--Advanced Technology of Vari-Lite
since October 1995 and a director of Vari-Lite since its inception. Prior to
October 1995, Mr. Bornhorst served as Vice President--Engineering of Vari-Lite
since 1983 and has been employed since 1972 in various other capacities with
Showco and Vari-Lite.
Richard W. Bratcher, Jr., 37, has been the President and Chief Executive
Officer and a director of Showco since July 1996. He served as Vice President
and General Manager of Showco from August 1993 until July 1996 and as its shop
manager from August 1987 until August 1993. Mr. Bratcher has also served in
various other capacities with Showco since 1983.
Brian L. Croft, 59, has been the Managing Director of VLEH and Vari-Lite
Europe since the formation of VLEH and its acquisition of Vari-Lite Europe in
March 1994. From 1989 until its acquisition by the Company in March 1994, Mr.
Croft was the General Manager and a director of Vari-Lite Europe, which was then
an independent VARI*LITE-Registered Trademark- distributor and a subsidiary of
the Samuelson Group plc.
Robert V. Dungan, 45, has served as Vice President and General Manager of
Irideon since its inception in September 1994 and as a director of Irideon since
January 1996. From January 1993 to September 1994, Mr. Dungan served as Vice
President--Products Group of Vari-Lite and served as its Operations Manager from
1988 until January 1993. He has also served in various other capacities with
Vari-Lite since 1983.
Loren J. Haas, 39, has been the Executive Vice President--Vari-Lite
Production Services of Vari-Lite since December 1997. From February 1995 until
December 1997, Mr. Haas was Executive Vice President--North American Operations
of Vari-Lite. Prior to that from October 1992 until February 1995, he was
General Manager--Dallas of Vari-Lite and was its Marketing Manager from December
1990 until October 1992. Mr. Haas has served in various other capacities with
Vari-Lite since 1987.
Janis C. Pestinger, 46, has been Vice President--Administration and
Assistant Secretary of the Company since November 1996 and May 1993,
respectively. Ms. Pestinger also has served as Vice President--Administration of
Vari-Lite since December 1993 and for more than three years prior to that as its
Risk and Benefits Manager. Ms. Pestinger has served in various other positions
with Vari-Lite and Showco since 1979.
T. Clay Powers, 38, has been the Vice President--Product Development and
Manufacturing of Vari-Lite since July 1996. Prior to that he served as the
President and Chief Executive Officer of Showco since April 1992. Mr. Powers
also has served as a director of Showco since December 1990. From January 1991
to April 1992, Mr. Powers served as Vice President and General Manager of Showco
and from January 1990 to January 1991 Mr. Powers served as its Vice
President--Internal Operations. Mr. Powers has served in various other
capacities with Showco since 1982.
J. Scott Thompson, 45, has served as President and Chief Executive Officer
of Ignition since October 1994 and as a director of Ignition and its predecessor
since January 1992. Prior to October 1994, Mr. Thompson was a Vice President of
Showco since 1987 and served in various capacities with Showco since 1978.
6
<PAGE>
EXECUTIVE COMPENSATION
SUMMARY COMPENSATION TABLE
The following table summarizes the compensation paid to the Company's Named
Executive Officers as of the end of the fiscal year ended September 30, 1997 for
services rendered to the Company during the fiscal years ended September 30,
1997 and 1996.
SUMMARY COMPENSATION TABLE
<TABLE>
<CAPTION>
ANNUAL COMPENSATION
---------------------- OTHER ANNUAL ALL OTHER
NAME AND PRINCIPAL POSITION FISCAL YEAR SALARY($) BONUS($) COMPENSATION COMPENSATION($)
- ------------------------------------------------- ----------- --------- ----------- ------------- -----------------
<S> <C> <C> <C> <C> <C>
H.R. Brutsche III,............................... 1997 466,014 51,864 167,000(1) 48,348(2)
Chairman of the Board, Chief Executive Officer 1996 433,008 48,713 167,000(1) 45,259(2)
and President of the Company
Keizo Akimoto,................................... 1997 181,343(3) 18,564(3) -- 2,805(4)
Representative Director of Vari-Lite Asia 1996 199,737(3) 19,495(3) -- 2,805(4)
James M. Bornhorst,.............................. 1997 154,995 10,464 -- 6,618(5)
Vice President and Chief Science Officer of the 1996 136,299 9,449 -- 6,374(5)
Company and Vice President-- Advanced
Technology of Vari-Lite
T. Clay Powers,.................................. 1997 150,000 26,250 -- 6,368(6)
Vice President-Product Development and 1996 127,267 10,500 -- 6,849(6)
Manufacturing of Vari-Lite
David Alley (7).................................. 1997 163,506 10,209 -- 6,955(8)
1996 154,500 11,513 -- 6,660(8)
</TABLE>
- ------------------------
(1) These amounts were paid to Mr. Brutsche pursuant to the Deferred
Compensation Agreement (as hereinafter defined). See "Executive
Compensation--Directors Compensation."
(2) These amounts include $3,542 and $22,525 and $3,292 and $20,725 which were
paid on behalf of Mr. Brutsche for the Policies (as hereinafter defined)
pursuant to the Split-Dollar Agreements (as hereinafter defined) and for a
term life insurance policy, respectively, maintained on the life of Mr.
Brutsche for the fiscal years ended September 30, 1997 and 1996,
respectively; $14,866 and $13,817 which were paid to reimburse Mr. Brutsche
for taxable income incurred with respect to the premiums paid on his behalf
on the term life insurance policy in the fiscal years ended September 30,
1997 and 1996, respectively; $4,610 and $4,620 which were contributed by the
Company on behalf of Mr. Brutsche to the Company's 401(k) plan in the fiscal
years ended September 30, 1997 and 1996, respectively; and $2,805 and $2,805
worth of Common Stock held in the ESOP which was allocated to Mr. Brutsche
in the fiscal years ended September 30, 1997 and 1996, respectively. See
"Executive Compensation--Employment Agreements."
(3) Calculated by applying the conversion rate of Japanese yen to U.S. dollars
based on the exchange rate in effect at the end of each month during the
fiscal years presented.
(4) These amounts were contributed by the Company on behalf of Mr. Akimoto to
the Equivalence Plan (as hereinafter defined).
(5) These amounts include $4,000 and $3,756 which were contributed by the
Company on behalf of Mr. Bornhorst to the Company's 401(k) plan in the
fiscal years ended September 30, 1997 and 1996, respectively, and $2,618 and
$2,618 worth of Common Stock held in the ESOP which was allocated to Mr.
Bornhorst in the fiscal years ended September 30, 1997 and 1996,
respectively.
7
<PAGE>
(6) These amounts include $3,750 and $4,231 which were contributed by the
Company on behalf of Mr. Powers to the Company's 401(k) plan in the fiscal
years ended September 30, 1997 and 1996, respectively, and $2,618 and $2,618
worth of Common Stock held in the ESOP which was allocated to Mr. Powers in
the fiscal years ended September 30, 1997 and 1996, respectively.
(7) Prior to his departure during the fiscal year ending September 30, 1998, Mr.
Alley served as Executive Vice President--International Operations of
Vari-Lite.
(8) These amounts include $4,150 and $3,855 which were contributed by the
Company on behalf of Mr. Alley to the Company's 401(k) plan in the fiscal
years ended September 30, 1997 and 1996, respectively, and $2,805 and $2,805
worth of Common Stock held in the ESOP which was allocated to Mr. Alley in
the fiscal years ended September 30, 1997 and 1996, respectively.
DIRECTOR COMPENSATION
Each director who is not an employee of the Company or any of its
subsidiaries is paid an annual fee of $20,000, plus $1,000 for each meeting of
the Board of Directors or a Committee of the Board of Directors attended. The
Company also pays all transportation and lodging costs for directors to attend
meetings of the Board of Directors and its Committees. Each of Messrs. Clark,
Maxson and Smith also receives $10,000 annually plus $250 per meeting for
serving as a director of Vari-Lite, $5,000 annually plus $62.50 per meeting for
serving as a director of VLEH, $4,000 annually plus $125 per meeting for serving
as a director of Showco, $4,000 annually plus $62.50 per meeting for serving as
a director of each of Vari-Lite Europe and Theatre Projects, $3,000 annually
plus $125 per meeting for serving as a director of each of Vari-Lite Asia,
Ignition and Irideon and $3,000 annually plus $62.50 per meeting for serving as
a director of Brilliant Stages.
As of July 1, 1995, the Company entered into a Deferred Compensation
Agreement ("Deferred Compensation Agreement") with each of Messrs. Brutsche,
Clark, Maxson and Smith pursuant to which each of them receives $167,000
annually for six years, payable monthly. Also, as of March 31, 1994, the
Company, Vari-Lite and Showco entered into Compensation Continuation Agreements
with each of Messrs. Brutsche, Clark and Maxson pursuant to which the Company,
Vari-Lite and Showco each agreed to continue paying for 60 days after the death
of any such individual the cash compensation that the deceased was receiving
from the companies at the time of his death.
Each of Messrs. Clark, Maxson and Smith (each a "Consultant") also has
entered into a Consulting Agreement with the Company, dated as of July 1, 1995,
providing that the Consultant will be available to provide consulting services
to the Company in consideration for the Company's payment to the Consultant of
an annual consulting fee. Pursuant to their Consulting Agreements, Messrs. Clark
and Maxson each receives an annual consulting fee of $100,000, payable monthly,
and Mr. Smith receives an annual consulting fee of $20,000, payable monthly.
Each Consulting Agreement has an initial term of three years with an automatic
extension of one year for each completed year of service by the Consultant
thereunder and may be terminated in the event of death, upon permanent
disability, for cause (as defined in the Consulting Agreement) or upon the
occurrence of a change of control (as defined in the Consulting Agreement). If a
Consulting Agreement is terminated without cause, because of permanent
disability or through an action by the Company that constitutes constructive
termination, or as a result of a change of control, the Consultant will receive
the full consulting fee he would have received through the remainder of the
three-year term.
In addition, each of Messrs. Brutsche, Clark and Maxson is eligible to
receive benefits under one or more life insurance policies (collectively
"Policies" and individually "Policy") pursuant to split-dollar agreements (the
"Split-Dollar Agreements") with the Company. The Split-Dollar Agreements each
provides for sharing the costs and benefits of the Policy between the Company
and Mr. Brutsche, Mr. Clark or Mr. Maxson, as the case may be. The Company pays
the entire premium on each Policy to the insurer. An irrevocable trust created
or an individual designated by Mr. Brutsche, Mr. Clark or Mr. Maxson, as the
case may be, who is the owner of the Policy (the "Owner") reimburses the Company
8
<PAGE>
for the portion of the premium attributable to the death benefit protection of
each Policy (the "P.S. 58 Cost"). The Company pays the amount of the P.S. 58
Cost to Mr. Brutsche, Mr. Clark or Mr. Maxson, as the case may be, as additional
compensation and such person then gifts such amount to the Owner to use to
reimburse the Company. Except under certain circumstances, upon the termination
of each Split-Dollar Agreement, the Company will be reimbursed for the premiums
it has paid under the Policy that is subject to such Split-Dollar Agreement. All
of the Split-Dollar Agreements utilize the collateral assignment method to
secure the Company's right to repayment of the premiums it has paid under the
Policies. Under this method, the Owner owns the Policy, and a collateral
assignment (establishing the Company's right to such premium reimbursement from
the cash surrender value or death benefits payable under the Policies) is filed
with the insurer. The Owner has the right to designate the beneficiaries of the
Policies and may borrow and make withdrawals from the cash surrender value, to
the extent such cash surrender value exceeds the amount of premiums owed to the
Company. The Owner may cancel or surrender the Policies at any time, subject to
any applicable obligation to repay the premiums paid by the Company.
EMPLOYMENT AGREEMENT
As of July 1, 1995, the Company entered into an Employment Agreement (the
"Employment Agreement") with H. R. Brutsche III, Chairman of the Board,
President and Chief Executive Officer of the Company. The initial term of the
Employment Agreement is for five years, with an automatic extension of one year
for each completed year of service by Mr. Brutsche thereunder. Pursuant to the
Employment Agreement, Mr. Brutsche receives an annual salary of $433,000,
subject to annual review by the Compensation Committee, which may increase but
not reduce his annual salary, and is eligible to receive an annual bonus,
long-term incentive compensation and deferred compensation in accordance with
plans established for officers and directors of the Company. Mr. Brutsche is
also entitled to receive various life, medical and disability insurance
benefits. Mr. Brutsche may be terminated in the event of his death or permanent
disability, for cause (as defined in the Employment Agreement) or upon the
occurrence of a change of control (as defined in the Employment Agreement). If
Mr. Brutsche is terminated because of his death, his estate will receive his
salary through the end of the month in which his death occurs plus the prorated
portion of any bonus due to him pursuant to the Annual Incentive Plan (as
hereinafter defined). If Mr. Brutsche is terminated because of his permanent
disability, Mr. Brutsche will continue to receive his base salary through the
remainder of the five-year term of the Employment Agreement, less any disability
benefits he receives. If Mr. Brutsche is terminated without cause, through an
action by the Company that constitutes constructive termination (as defined in
the Employment Agreement) or as the result of a change of control, the Company
is obligated to continue to pay Mr. Brutsche his base salary in effect at the
time of termination through the remainder of the five-year term. In addition to
those provided for under the Employment Agreement, Mr. Brutsche is eligible to
receive certain other benefits. See "Executive Compensation--Director
Compensation."
EMPLOYEE BENEFIT PLANS
OMNIBUS PLAN. In August 1997, the Company adopted the Vari-Lite
International, Inc. 1997 Omnibus Plan (the "Omnibus Plan") to attract and retain
qualified employees and non-employee directors. An aggregate of 800,000 shares
of Common Stock, subject to adjustment for stock splits, stock dividends and
certain other types of reclassifications, has been authorized for issuance upon
exercise of options or as bonus stock. In addition, stock appreciation rights
("SARs"), phantom stock, dividend equivalents or restricted or performance
awards ("Awards") may be granted under the Omnibus Plan. The Omnibus Committee
administers the Omnibus Plan and determines to whom Awards are to be granted and
the terms and conditions, including the number of shares and the period of
exercisability thereof. Awards may be granted to officers, management, other key
employees and to non-employee directors of the Company or any of its present or
future subsidiaries as determined by the Omnibus Committee, provided that any
options to be granted to non-employee directors who are members of the Omnibus
Committee must be granted by the entire Board of Directors of the Company.
9
<PAGE>
The Omnibus Plan authorizes the grant or issuance of both nonqualified stock
options and incentive stock options, with the terms of each such option set
forth in separate agreements. The Omnibus Plan requires that the exercise price
for each stock option must be not less than 100% of the fair market value of the
Common Stock at the time the option is granted. No incentive stock option,
however, may be granted to either a non-employee director or to an employee who
owns more than 10% of the total combined voting power of all classes of
outstanding stock of the Company unless the option price is at least 110% of the
fair market value of the Common Stock at the date of grant. The fair market
value of stock options that may be granted to an employee in any calendar year
is not limited, but no employee may be granted incentive stock options that
first become exercisable during a calendar year to purchase Common Stock with an
aggregate fair market value (determined at the time of grant) in excess of
$100,000. In addition, no grantee may be granted more than an aggregate of
800,000 shares of Common Stock, subject to adjustment for stock splits, stock
dividends and certain other types of reclassifications. SARs may be granted
separately or in tandem with the grant of an option. Any performance awards may
be denominated or payable in cash, Common Stock, other securities or other
Awards and shall confer on the holder thereof the right to receive payments
based upon the achievement of such performance goals and for such periods as the
Omnibus Committee may establish. Bonus stock may be sold to the grantees at
various prices (but not below par value) and made subject to such restrictions
as may be determined by the Omnibus Committee. The Omnibus Committee may grant
other Awards that provide the grantee with the right to purchase Common Stock or
that are valued by reference to the fair market value of the Common Stock
including, but not limited to, phantom securities or dividend equivalents.
The exercise or purchase price for all options, restricted stock and other
rights to acquire Common Stock, together with any applicable tax required to be
withheld, may be paid in cash or, at the discretion of the Omnibus Committee,
with shares of Common Stock owned by the grantee (or issuable upon exercise of
the option), execution of a promissory note by the grantee or with other lawful
consideration.
The dates on which options or other Awards first become exercisable and on
which they expire will be set forth in individual stock options or other
agreements setting forth the terms of the Awards. Such agreements may provide
that options and other Awards expire upon termination of the grantee's status as
an employee or director or for any other reason and may provide that such
options continue to be exercisable following the grantee's death or disability
by the grantee's estate or by the person who acquired the right to exercise the
option by bequest or inheritance, or by the grantee or his representative in the
event of the grantee's disability, provided the option is exercised prior to the
earlier of the date of its expiration or six months after the date of the
grantee's death or disability. In the event of a change of control (as defined
in the Omnibus Plan) of the Company, all Awards that have not expired will
become fully and immediately vested and exercisable and may be exercised for the
remaining term of such Awards.
No Award may be assigned or transferred by the grantee, except by will or
the laws of intestate succession, although shares of Common Stock issued under
the Omnibus Plan may be transferred if all applicable restrictions have lapsed.
Amendments of the Omnibus Plan to change the class of persons eligible to be
granted Awards or increase the number of shares as to which options or bonus
stock may be granted (except for adjustments resulting from stock splits and the
like) require the approval of the Company's stockholders. In all other respects
the Omnibus Plan can be amended, modified, suspended or terminated by the
Omnibus Committee, unless such action would otherwise require stockholder
approval as a matter of applicable law, regulation or rule. Amendments of the
Omnibus Plan may not, without the consent of the grantee, affect such grantee's
rights under an Award previously granted, unless the Award itself otherwise
expressly so provides. The Omnibus Plan terminates 10 years from the date of its
adoption by the Company's Board of Directors.
On October 16, 1997, options to purchase 552,400 shares (20,000 shares of
which have subsequently been forfeited) of Common Stock were granted, with
exercise prices ranging from $12.00 to $13.20 per share, to directors, officers,
employees and Named Executive Officers of the Company, including options
10
<PAGE>
to purchase 75,000, 15,000, 25,000, 25,000, 12,000, 12,000, 10,000, 4,800 and
4,800 shares of Common Stock granted to Messrs. Brutsche, Akimoto, Bornhorst,
Powers, Clark, Maxson, Smith, Prothro and Rettberg, respectively. Subsequent to
October 16, 1997, the Company granted additional options to purchase 11,600
shares of Common Stock with an exercise price of $11.88 per share to certain
other employees of the Company.
ESOP. The Company adopted the Vari-Lite International, Inc. Employees'
Stock Ownership Plan (the "ESOP"), effective as of January 1, 1995, for the
benefit of its employees and the employees of its participating subsidiaries
(the Company and its participating subsidiaries are referred to herein as the
"Employers") who are at least 21 years of age, have completed at least one "year
of service" (as defined in the ESOP) and are actively contributing to the
Company's 401(k) plan. The ESOP is intended to be an eligible individual account
stock bonus plan that qualifies under Section 401(a) of the Internal Revenue
Code of 1986, as amended (the "Code"), and, subject to certain maximum
provisions, allocates the Employers' discretionary contributions to each
participating employee according to the ratio of such employee's total
compensation to the aggregate amount of compensation received by all
participants in the ESOP. The term "compensation" includes base salary paid
during a plan year and cafeteria deferrals under Section 125 of the Code, but
does not include reimbursements or other expenses, allowances, fringe benefits
(cash or non-cash), moving expenses, deferred compensation, welfare benefits,
bonuses, overtime pay or amounts deferred under a salary deferral arrangement
under Section 401(k) of the Code.
The Company intends, but is not required, to make annual contributions to
the ESOP in the form of nonelective contributions and qualified matching
contributions (as each is defined in the ESOP) consisting of shares of Common
Stock, cash or a combination thereof. The ESOP provides for full distributions
of employee account balances for normal and late retirements, disability and
death and distributions of vested portions of employee accounts upon a
separation of service (as defined in the ESOP). Generally, a participant's
benefits under the ESOP will become vested 20% per year commencing upon
completion of three years of service and be fully vested upon completion of
seven years of service.
The assets of the ESOP are held by Overton Bank and Trust, N.A., as trustee
of The Vari-Lite International, Inc. Employees' Stock Ownership Trust, which
Trust is intended to be exempt from taxation under Section 501(a) of the Code.
The Company acts as Plan Administrator of the ESOP.
EQUIVALENCE PLAN. The Company adopted The Vari-Lite International, Inc.
Employees' Stock Equivalence Plan (the "Equivalence Plan"), effective as of
January 1, 1995, for the benefit of certain employees of subsidiaries of the
Company domiciled outside of the United States who are at least 21 years of age
and have completed at least one "year of service" (as defined in the Equivalence
Plan). The Equivalence Plan is intended to be a nonqualified employee retirement
plan known as a phantom stock plan under United States tax laws. Employees
participating in the Equivalence Plan are eligible to receive stock equivalence
units ("Units") credited to their accounts along with the contractual right to
receive the cash value of such Units in the future. No shares of stock will be
distributed under the Equivalence Plan. The value of each Unit is equal to the
fair market value of one share of Common Stock on the date such Unit is credited
to a participant's account. Upon conversion of the Units in accordance with the
terms of the Equivalence Plan, participants shall be entitled to receive, for
each Unit converted, an amount equal to the fair market value of one share of
Common Stock on the date of conversion. A holder of Units shall not have any
dividend or voting rights or any other rights as a stockholder of the Company,
unless otherwise provided by the Board of Directors of the Company.
The number of Units awarded under the Equivalence Plan, if any, will be
determined each year by the Compensation Committee. The Company's awards of
Units under the Equivalence Plan shall be made, subject to certain maximum
provisions, according to the ratio of each eligible employee's total
compensation to the amount of total compensation received by all participants in
the Equivalence Plan. The Equivalence Plan provides for full distributions of
employee account balances upon the retirement, disability or death of an
employee and distributions of vested percentages of employee accounts upon
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<PAGE>
termination of employment for any other reason. Generally, a participant's
benefits under the Equivalence Plan will fully vest upon his or her completion
of seven years of service.
The Company established an irrevocable grantor trust within the meaning of
the Code (commonly referred to as a rabbi trust) to provide funding for benefit
payments from the Equivalence Plan. Although an employer's contributions to the
rabbi trust are generally irrevocable, the assets placed in the trust must
remain subject to the claims of the employers' creditors. The rabbi trust
provides the participants in the Equivalence Plan with additional security that
they will receive benefits in the event of a change in the management of the
Company.
The assets of the Equivalence Plan are held by Bank of Butterfield
International (Cayman) Ltd., as trustee of The Vari-Lite International, Inc.
Equivalence Plan Trust, and the Company acts as Plan Administrator.
ANNUAL INCENTIVE PLAN. On June 13, 1995, the Company adopted the Vari-Lite
International, Inc. Annual Incentive Plan (the "Annual Incentive Plan"),
effective October 1, 1994, to provide annual bonuses to eligible employees. The
Annual Incentive Plan was amended and restated effective October 1, 1997. Any
full-time employee who is employed by the Company or one of its subsidiaries
(approved by the Omnibus Committee) on March 31 of a year shall be considered an
eligible employee for that year. For purposes of the Annual Incentive Plan, an
employee is considered a full-time employee (i) if he is scheduled to work a
minimum of 30 hours per week throughout the year and (ii) in the case of an
individual who is an employee of the Company or a United States subsidiary of
the Company, he is entitled to coverage under the Showco/Vari-Lite Welfare
Benefit Plan. Bonus amounts for a year may be granted based on predetermined
targets ("formula derived awards") or in the discretion of the Omnibus Committee
("discretionary awards"), or a combination of both. The targets for each year
are established by the Omnibus Committee and may be based solely on the
Company's attaining its operating income goal for that year (as established by
the Omnibus Committee) or may be based in part on the level of attainment by the
Company of that operating income goal and in part on the level of attainment of
performance measures established by the Omnibus Committee for that year based on
subsidiary, department, team or individual performance, or a combination thereof
as determined by the Omnibus Committee. The relative weight placed on each
performance measure by the Omnibus Committee may vary for each eligible employee
based on his position with the Company, or its subsidiaries, departments or
teams. Each year each eligible employee shall have the opportunity to earn a
specified percentage of his base salary (excluding any bonus, commission or
overtime) for that year as a formula derived award. The range of percentage of
base salary that a participant may earn as a formula derived award is specified
in the Annual Incentive Plan and is determined by each eligible employee's level
of responsibility and potential impact on the Company's performance. With
respect to years that commenced prior to October 1, 1997, no eligible employee
shall be deemed to have earned a formula derived award for a year unless the
Company attains the threshold level (specified in the Annual Incentive Plan) of
operating income established for that year. Discretionary awards are not
limited.
The Company shall make payment of all bonus amounts for a year, if any, to
each eligible employee in cash no later than 90 days after the end of that year
(the "Payout Date"). Unless an eligible employee's full-time employment
terminates due to death, total disability or retirement at or after age 65, the
employee must be employed by the Company or one of its subsidiaries as a
full-time employee on the Payout Date for a year to be entitled to receive
payment of his bonus, if any, for that year. If an eligible employee becomes
eligible after the first day of the year or dies, retires at or after age 65 or
becomes totally disabled during the year, after being employed by the Company
for at least six months during that year, the bonus amount, if any, payable to
him for that year shall be prorated to reflect the actual length of his service
with the Company and its subsidiaries during that year.
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<PAGE>
COMPENSATION COMMITTEE INTERLOCKS AND INSIDER PARTICIPATION
During the fiscal year ended September 30, 1997, the Compensation Committee
of the Board of Directors of the Company consisted of Messrs. Smith, Prothro and
Rettberg. Each of Messrs. Prothro and Rettberg is an independent director.
Mr. Smith has entered into a Consulting Agreement with the Company, dated as
of July 1, 1995, providing that Mr. Smith will be available to provide
consulting services to the Company in consideration for the Company's payment to
Mr. Smith of an annual consulting fee of $20,000, payable monthly. The
Consulting Agreement has an initial term of three years with an automatic
extension of one year for each completed year of service by Mr. Smith thereunder
and may be terminated in the event of death, upon permanent disability, for
cause (as defined in the Consulting Agreement) or upon the occurrence of a
change of control (as defined in the Consulting Agreement). If the Consulting
Agreement is terminated without cause, because of permanent disability or
through an action by the Company that constitutes constructive termination, or
as a result of a change of control, Mr. Smith will receive the full consulting
fee he would have received through the remainder of the three-year term.
Mr. Smith has also entered into the Deferred Compensation Agreement with the
Company, dated as of July 1, 1995, pursuant to which he receives $167,000
annually for six years, payable monthly.
REPORT OF THE COMPENSATION COMMITTEE AND OMNIBUS COMMITTEE
The principal elements of compensation provided to the executive officers of
the Company, including Mr. H.R. Brutsche III, the Chairman of the Board,
President and Chief Executive Officer of the Company, historically have
consisted of a base salary, supplemented with the opportunity to earn a bonus
under the Company's Annual Incentive Plan if performance exceeds targeted
levels. In the fiscal years subsequent to the fiscal year ended September 30,
1997, option grants under the Company's Omnibus Plan will also be utilized as a
component of compensation.
Mr. Brutsche is entitled to receive a minimum annual salary of $433,000
pursuant to the Employment Agreement. Subject to this minimum, Mr. Brutsche's
base salary rate may be increased at the discretion of the Board of Directors
based upon such factors as the Board of Directors deems appropriate. Mr.
Brutsche was paid $466,000 during the fiscal year ended September 30, 1997 as
base salary. In addition, Mr. Brutsche receives additional annual compensation
of $167,000 pursuant to the terms of the Deferred Compensation Agreement,
certain other benefits under the Split-Dollar Agreement, contributions under the
ESOP and payment of term life insurance policies on his life.
The Annual Incentive Plan is administered by the Omnibus Committee. Bonus
amounts for a year may be granted to eligible employees of the Company based on
predetermined targets ("formula derived awards") or in the discretion of the
Omnibus Committee ("discretionary awards"), or a combination of both. Bonuses
are generally awarded to eligible employees based on a combination of the
Company achieving its defined operating income goals and the eligible employee's
individual performance.
The Compensation Committee and Omnibus Committee believe that this
performance-based bonus program, along with the ESOP, Equivalence Plan and
Omnibus Plan, enables the Company to provide total compensation to its
management group comparable to rates paid by other companies. The Compensation
Committee and Omnibus Committee believe that basing bonuses on achievement of
defined Company goals will properly motivate management and improve the
Company's performance which should lead to increased profitability.
The Company will not be subject to Section 162(m) of the Internal Revenue
Code of 1986, as amended ("Section 162(m)"), until 2001 because the Common Stock
did not become publicly traded until October 16, 1997. At such time, to the
extent that the Company's compensation plans can be exempt from Section 162(m),
the Company will institute procedures necessary to ensure the deductibility of
executive compensation under Section 162(m).
13
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This report is submitted by the members of the Compensation Committee and
Omnibus Committee.
<TABLE>
<CAPTION>
COMPENSATION COMMITTEE OMNIBUS COMMITTEE
<S> <C>
J. Anthony Smith C. Vincent Prothro
C. Vincent Prothro John R. Rettberg
John R. Rettberg
</TABLE>
STOCK PERFORMANCE CHART
The Company's initial public offering of its Common Stock did not occur
until the fiscal year ending September 30, 1998. Therefore, no performance chart
is required or included in this Proxy Statement.
BOARD MEETINGS, COMMITTEES AND ATTENDANCE
The Board of Directors of the Company met four times during the fiscal year
ended September 30, 1997. Each director attended at least 75% of the called
meetings. The Board of Directors currently has appointed four committees, the
Executive Committee, the Audit Committee, the Compensation Committee and the
Omnibus Committee.
EXECUTIVE COMMITTEE
The Executive Committee is composed of Messrs. Clark, Maxson and Brutsche,
with Mr. Clark serving as Chairman. The Executive Committee has the authority,
between meetings of the Board of Directors, to take all actions with respect to
the management of the Company's business that require action by the Board of
Directors, except with respect to certain specified matters that by law must be
approved by the entire Board. The Executive Committee met 10 times during the
fiscal year ended September 30, 1997.
AUDIT COMMITTEE
The Audit Committee is composed of Messrs. Clark, Prothro and Rettberg, with
Mr. Clark serving as Chairman. The Audit Committee is responsible for (a)
reviewing the scope of, and the fees for, the annual audit, (b) reviewing with
the independent auditors the Company's accounting practices and policies, (c)
reviewing with the independent auditors their final report, (d) reviewing with
internal and independent auditors overall accounting and financial controls and
(e) being available to the independent auditors for consultation purposes. The
Audit Committee met one time during the fiscal year ended September 30, 1997.
COMPENSATION COMMITTEE
The Compensation Committee is composed of Messrs. Smith, Prothro and
Rettberg, with Mr. Rettberg serving as Chairman. With the exception of granting
awards under the Omnibus Plan and Annual Incentive Plan, the Compensation
Committee determines the compensation of the officers of the Company and
performs other similar functions. The Compensation Committee met one time during
the fiscal year ended September 30, 1997.
OMNIBUS COMMITTEE
The Omnibus committee is composed of Messrs. Prothro and Rettberg, with Mr.
Rettberg serving as Chairman. The Omnibus Committee administers the Omnibus Plan
and the Annual Incentive Plan, including the determination of eligibility and
the granting of awards under such plans. The Omnibus Committee did not meet
during the fiscal year ended September 30, 1997.
SECTION 16 REQUIREMENTS
Section 16(a) of the Securities and Exchange Act of 1934 requires the
Company's officers and directors and persons who own more than 10% of the Common
Stock or securities convertible into or
14
<PAGE>
exercisable for Common Stock, to file with the Securities and Exchange
Commission reports of ownership and reports of changes in ownership in the
Common Stock, securities convertible into or exercisable for Common Stock and
any other equity securities of the Company. Since the Company's initial public
offering of its Common Stock did not occur until the fiscal year ending
September 30, 1998, no Section 16(a) reports were required to be filed during
the fiscal year ended September 30, 1997.
TRANSACTIONS WITH DIRECTORS, OFFICERS AND AFFILIATES
During the fiscal year ended September 30, 1997, Philip D.C. Collins, who
beneficially owns more than five percent of the Common Stock of the Company,
paid the Company, $2.6 million for the rental of automated lighting products and
other services for use in his concert tours. Hit & Run Music Limited, a
corporation owned by J. Anthony Smith, manages Mr. Collins. The Company believes
that the terms of the above transactions were at least as favorable to the
Company as those which could have been obtained in an arm's length transaction
with an unaffiliated third party.
In addition, certain directors of the Company receive deferred compensation
and consulting payments. See "Executive Compensation--Compensation of
Directors."
RELATIONSHIP WITH INDEPENDENT AUDITORS
Deloitte & Touche LLP served as the independent auditors of the Company for
the fiscal year ended September 30, 1997. A representative of Deloitte & Touche
LLP is expected to be present at the Annual Meeting and will have the
opportunity to make a statement. The representative will be available to answer
appropriate stockholder questions.
STOCKHOLDERS' PROPOSALS
Stockholders must submit their proposals to the Secretary of the Company on
or before October 2, 1998 for consideration at the Company's next Annual
Meeting.
MISCELLANEOUS
The Board of Directors knows of no business other than that set forth above
to be transacted at the Annual Meeting. If other matters requiring a vote of the
stockholders arise, the persons designated as proxies will vote the shares of
Common Stock represented by the proxies in accordance with their judgment on
such matters.
The information contained in the Proxy Statement relating to the occupations
and security holdings of the directors and officers of the Company and their
transactions with the Company is based upon information received from the
individual directors and officers. All information relating to any beneficial
owner of more than 5% of the Company's Common Stock is based upon information
contained in reports filed by such owner with the Securities and Exchange
Commission.
By Order of the Board of Directors
Michael P. Herman,
SECRETARY
Dallas, Texas
January 30, 1998
15
<PAGE>
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PROXY
VARI-LITE INTERNATIONAL, INC.
PROXY FOR ANNUAL MEETING OF STOCKHOLDERS FEBRUARY 27, 1998
THIS PROXY IS SOLICITED ON BEHALF OF THE BOARD OF DIRECTORS
The undersigned (i) acknowledges receipt of the Notice dated January 30,
1998, of the Annual Meeting of Stockholders of Vari-Lite International, Inc.,
a Delaware corporation (the "Company"), to be held on February 27, 1998, at
10:00 a.m., local time, at the offices of the Company at 201 Regal Row,
Dallas, Texas 75247, and the Proxy Statement in connection therewith; and
(ii) appoints H.R. Brutsche III and Michael P. Herman, and each of them, the
undersigned's proxies with full power of substitution, for and in the name,
place and stead of the undersigned, to vote upon and act with respect to all
of the shares of Common Stock of the Company standing in the name of the
undersigned on January 26, 1998, or with respect to which the undersigned is
entitled to vote and act, at the meeting and at any postponements or
adjournments thereof, and the undersigned directs that this proxy be voted as
set forth on the reverse.
If more than one of the proxies named herein shall be present in person or
by substitute at the meeting or at any postponements or adjournments thereof,
both of the proxies so present and voting, either in person or by substitute,
shall exercise all of the powers hereby given.
THIS PROXY WHEN PROPERLY EXECUTED WILL BE VOTED IN THE MANNER DIRECTED. IF
NO DIRECTION IS MADE, THIS PROXY WILL BE VOTED FOR ITEMS 1 AND 2.
(CONTINUED AND TO BE SIGNED ON REVERSE SIDE)
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- FOLD AND DETACH HERE -
<PAGE>
- -------------------------------------------------------------------------------
THE UNDERSIGNED HEREBY REVOKES ANY PROXY OR PROXIES PLEASE MARK
HERETOFORE GIVEN TO VOTE UPON OR ACT WITH RESPECT TO YOUR VOTES AS /X/
SUCH COMMON STOCK AND HEREBY RATIFIES AND CONFIRMS ALL INDICATED IN
THAT THE PROXIES, THEIR SUBSTITUTES OR ANY OF THEM MAY THIS EXAMPLE
LAWFULLY DO BY VIRTUE HEREOF.
1. Proposal to elect two Class I directors to serve until the annual meeting
of stockholders to be held in 2001 or until their respective successors are
elected and qualified.
<TABLE>
<S> <C> <C>
FOR all nominees WITHHOLD Nominees: C. Vincent Prothro and John D. Maxson
listed to the right AUTHORITY
(except as marked to vote for all nominees (INSTRUCTION: To withhold authority to vote
to the contrary) listed to the right for any individual nominee, write that nominee's
name on the line below.)
/ / / /
--------------------------------------------------
</TABLE>
2. In the discretion of the proxies, on any Please date this proxy and sign
other matters that may properly come your name exactly as it appears
before the meeting or any postponements hereon. Where there is more
or adjournments thereof. than one owner, each should
sign. When signing as an
FOR AGAINST ABSTAIN attorney, administrator,
/ / / / / / executor, guardian or trustee,
please add your title as such.
If executed by a corporation,
the proxy should be signed by a
duly authorized officer.
Please mark, sign, date and
return your proxy promptly in
the enclosed envelope whether
or not you plan to attend the
Meeting. No postage is required.
You may nevertheless vote in
person if you do attend.
Dated , 1998
-----------------
------------------------------
Signature of Stockholder
------------------------------
Signature of Stockholder
------------------------------
Title, if applicable
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- FOLD AND DETACH HERE -
