<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:
-----------------------------------------------------------------------
(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.:
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(3) Filing Party:
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(4) Date Filed:
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<PAGE>
[LOGO]
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 26, 1999, at the Company's
offices at 201 Regal Row, Dallas, Texas 75247. A Notice of Annual Meeting, Proxy
Statement and form of proxy card are enclosed. A copy of the Company's 1998
Annual Report is also enclosed. At this meeting you will be asked to:
(i) Elect two Class II directors to serve until the annual meeting of
stockholders to be held in 2002; 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. Whether or
not you expect to attend the meeting in person, however, please sign and date
the enclosed proxy card and return it in the enclosed envelope at your earliest
convenience.
Very truly yours,
/S/ H.R. BRUTSCHE III
H.R. BRUTSCHE III
CHAIRMAN OF THE BOARD
Dallas, Texas
January 19, 1999
<PAGE>
VARI-LITE INTERNATIONAL, INC.
201 REGAL ROW
DALLAS, TEXAS 75247
------------------------
NOTICE OF
ANNUAL MEETING OF STOCKHOLDERS
TO BE HELD FEBRUARY 26, 1999
---------------------
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 26, 1999 at 10:00 a.m.
local time, for the following purposes:
1. To elect two Class II directors to serve until the annual meeting of
stockholders to be held in 2002; 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 12, 1999 are
entitled to notice of, and to vote at, the meeting or any adjournments or
postponements thereof. A list of stockholders entitled to vote at the meeting
will be available at the meeting for examination by any stockholder and at least
10 days prior to the meeting at the office of the Secretary of the Company at
the address listed above.
WHETHER OR NOT YOU PLAN TO ATTEND THE MEETING, PLEASE DATE, EXECUTE AND
PROMPTLY RETURN THE ENCLOSED PROXY CARD 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 card or by attending the
meeting, withdrawing the proxy and voting in person.
By Order of the Board of Directors
/S/ MICHAEL P. HERMAN
Michael P. Herman
SECRETARY
Dallas, Texas
January 19, 1999
<PAGE>
VARI-LITE INTERNATIONAL, INC.
201 REGAL ROW
DALLAS, TEXAS 75247
------------------------
PROXY STATEMENT
FOR
ANNUAL MEETING OF STOCKHOLDERS
TO BE HELD FEBRUARY 26, 1999
---------------------
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 26, 1999 (the "Annual Meeting"). Shares
represented by proxy cards in the form enclosed will be voted at the Annual
Meeting if the proxy card is properly executed, returned to the Company before
the Annual Meeting and not revoked. Any stockholder may revoke a 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 card or
by attending the meeting, withdrawing the proxy and voting in person. Your
attendance at the meeting will not constitute automatic revocation of the proxy.
This Proxy Statement and the enclosed proxy card form are first being sent to
stockholders on or about January 19, 1999.
ACTION TO BE TAKEN AT MEETING
The shares represented by proxy cards will be voted according to the
instructions indicated therein when stockholders have appropriately specified
how their shares represented thereby should be voted. Unless the stockholder
otherwise specifies therein, the shares represented by his proxy card will be
voted (i) FOR the election as Class II 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.
<PAGE>
OUTSTANDING CAPITAL STOCK
The record date for stockholders entitled to notice of, and to vote at, the
Annual Meeting is January 12, 1999. 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 12, 1999, 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 five other most highly compensated executive
officers for services rendered for the fiscal year ended September 30, 1998
(collectively, the "Named Executive Officers"), and (4) all current directors
and executive officers as a group:
<TABLE>
<CAPTION>
BENEFICIAL OWNERSHIP(1)
--------------------------------
NAME OF BENEFICIAL OWNER NUMBER OF SHARES PERCENTAGE
- ----------------------------------------------------------------------------------- ----------------- -------------
<S> <C> <C>
H. R. Brutsche III(2).............................................................. 727,379 9.3%
James H. Clark, Jr.(3)(4).......................................................... 617,368 7.9%
John D. Maxson(3)(5)............................................................... 703,240 9.0%
C. Vincent Prothro(6).............................................................. 5,960 *
John R. Rettberg(7)................................................................ 5,960 *
J. Anthony Smith(8)................................................................ 760,944 9.8%
Anthony G. Banks(8)................................................................ 758,936 9.7%
Philip D.C. Collins(8)............................................................. 758,940 9.7%
Michael J.C.C. Rutherford(8)....................................................... 758,936 9.7%
Alice Spradley(9).................................................................. 428,926 5.5%
James M. Bornhorst(10)............................................................. 221,656 2.8%
Loren J. Haas (11)................................................................. 19,386 *
Michael P. Herman (12)............................................................. 19,459 *
T. Clay Powers(13)................................................................. 10,803 *
The Prudential Insurance Company of America(14).................................... 827,900 10.6%
David W. Alley(15)................................................................. 36,492 *
All current directors and executive officers as a group (18 persons)(16)........... 3,136,196 40.0%
</TABLE>
- ------------------------
* Less than one percent.
(1) Except as otherwise indicated, each person named above has sole voting power
and investment power with respect to such Common Stock.
(2) Includes 45,164 shares held by Brutsche Family Trust, a trust of which Brown
Brothers Harriman & Co. ("BBH") serves as trustee, 831 shares held by the
Vari-Lite International, Inc. Employees' Stock Ownership Plan ("ESOP") for
the benefit of Mr. Brutsche and 23,333 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.
(3) The address of Messrs. Clark and Maxson is 3738 Oak Lawn, Suite 102, Dallas,
Texas 75219.
(4) Includes 587,389 shares held by Clark Partnership, Ltd., a limited
partnership of which Mr. Clark is the managing general partner, 3,764 shares
held by Mr. Clark's wife and 2,400 shares issuable upon exercise of stock
options exercisable within 60 days. Mr. Clark disclaims beneficial ownership
of the shares owned by his wife.
2
<PAGE>
(5) Includes 50,731 shares held by Peggy Maxson 1996 Irrevocable Trust, a trust
of which BBH serves as trustee, and 2,400 shares issuable upon exercise of
stock options exercisable within 60 days. Mr. Maxson disclaims beneficial
ownership of such shares held by the trust.
(6) Includes 960 shares issuable upon exercise of stock options exercisable
within 60 days.
(7) Includes 960 shares issuable upon exercise of stock options exercisable
within 60 days.
(8) 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. Ashtray Music Ltd. holds 292,059
shares which 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. Of
the shares held by Mr. Smith, 2,000 are issuable upon exercise of stock
options exercisable within 60 days. The address of Messrs. Banks, Collins,
Rutherford and Smith is 25 Ives Street, London SW3 2ND England.
(9) The number of shares is based upon information contained in a Schedule 13G
filed with the Securities and Exchange Commission on February 10, 1998.
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 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.
(10) Includes 713 shares held by the ESOP for the benefit of Mr. Bornhorst.
(11) Includes 568 shares held by the ESOP for the benefit of Mr. Haas.
(12) Includes 641 shares held by the ESOP for the benefit of Mr. Herman.
(13) Includes 713 shares held by the ESOP for the benefit of Mr. Powers.
(14) The number of shares is based upon information contained in a Schedule 13G
filed with the Securities and Exchange Commission on January 9, 1998. The
Prudential Insurance Company of America's address is 751 Broad Street,
Newark, New Jersey 07102-3777.
(15) 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 831 shares held by the ESOP for the benefit of Mr.
Alley.
(16) Includes 5,779 shares held by the ESOP for the benefit of some of such
persons and 32,053 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 Common Stock is necessary to constitute a quorum at the
Annual Meeting. Abstentions and broker non-votes (i.e., shares held by a broker
or nominee which are represented at the meeting, but with respect to which such
broker or nominee is not empowered to vote on a particular proposal) are counted
as shares that are present and entitled to vote for purposes of determining the
presence of a quorum. Abstentions are 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. Abstentions as to the election of directors will not affect the
election of the
3
<PAGE>
candidates receiving a plurality of votes. Broker non-votes are not included in
vote totals and, as such, will have no effect on any proposal. The holders of
outstanding Common Stock are entitled to one vote per share on each matter
submitted to a vote of stockholders. 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 II directors are to be elected at the Annual Meeting for a term
expiring at the annual meeting of stockholders to be held in 2002 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 II NOMINEES TO SERVE UNTIL THE ANNUAL MEETING TO BE HELD IN 2002:
JAMES H. CLARK, JR.
James H. Clark, Jr., 62, 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 the daughter of Mr. C. Vincent Prothro.
JOHN R. RETTBERG
John R. Rettberg, 61, 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.
The present directors of the Company whose terms will expire after 1999 are
as follows:
CLASS III DIRECTORS WHO SERVE UNTIL THE ANNUAL MEETING TO BE HELD IN 2000:
H.R. BRUTSCHE III
H.R. Brutsche III, 54, 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, Ltd. ("VLEH"), Vari-Lite Production Services, Ltd. ("Vari-Lite
Europe") and Brilliant Stages Ltd. ("Brilliant Stages") and as President and
Chief Executive Officer of Vari-Lite, Inc. ("Vari-Lite").
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
4
<PAGE>
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 more than five years.
CLASS I DIRECTORS WHO SERVE UNTIL THE ANNUAL MEETING TO BE HELD IN 2001:
JOHN D. MAXSON
John D. Maxson, 58, 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 more than 25 years and as Chairman of IGNITION! Creative
Group, Inc. ("Ignition") since its inception in September 1994.
C. VINCENT PROTHRO
C. Vincent Prothro, 56, 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 Mr. Clark's son.
5
<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 Chairman of the Board, President and Chief Executive Officer of the Company
James H. Clark, Jr. Director of the Company
John D. Maxson Director of the Company and Chairman of the Board of Showco and Ignition
J. Anthony Smith Director of the Company
C. Vincent Prothro Director of the Company
John R. Rettberg Director 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
Bert H. F. De Haes General Manager of Vari-Lite Europe and Director of Vari-Lite Europe
International, BV
Loren J. Haas Executive Vice President-Vari-Lite Production Services of Vari-Lite
Michael P. Herman Vice President-Finance, Chief Financial Officer and Secretary of the Company
Tracy E. Key Vice President and Controller of International Operations of the Company
Fuminori Kobayashi President and Representative Director of Vari-Lite Asia, Inc. ("Vari-Lite
Asia")
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
Jerome L. Trojan Vice President-Corporate Development and Treasurer of the Company
</TABLE>
Information concerning the business experience of Messrs. Brutsche, Clark,
Maxson, Prothro, Rettberg and Smith is provided under "Election of Directors."
James M. Bornhorst, 53, 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., 38, 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, 60, 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.
Bert H.F. De Haes, 37, has served as General Manager of Vari-Lite Europe and
a director of Vari-Lite Europe International, BV since March 1998. From 1995 to
1997, Mr. De Haes served as Managing
6
<PAGE>
Director of D&D Entertainment Techniques Holding in Brussels, Belgium, a
provider of integrated solutions for the entertainment industry. He was Managing
Director of CommTech in Vilvoorde, Belgium (a set design and construction
company) from 1989 to 1995 and Managing Director of Pittoors Video Team in
Mechelen, Belgium (a provider of post-production services for broadcast and
industrial video) from 1982 to 1989.
Loren J. Haas, 40, 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.
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, Showco and Ignition. From May 1991 to May 1993, Mr.
Herman was the Vice President-Finance and Chief Financial Officer of Barry's
Cameras, Inc., a chain of retail camera and video stores.
Tracy E. Key, 37, has served as Vice-President and Controller of
International Operations of the Company since April 1998. From January 1997 to
April 1998, Ms. Key served as Controller of International Operations of the
Company. Prior to January 1997, Ms. Key served as Manager of Financial Planning
and Reporting of the Company since August 1993. From June 1990 to August 1993,
Ms. Key served in various financial positions within the Corporate and
International Divisions of Occidental Chemical Corp., a division of Occidental
Petroleum Corporation.
Fuminori Kobayashi, 56, has served as Representative Director (the
equivalent of chief executive officer) of Vari-Lite Asia since July 1998 and as
its President since October 1998. Mr. Kobayashi previously served as a Vice
President of Vari-Lite Asia since August 1997. From 1996 to June 1997, Mr.
Kobayashi served as General Manager to the Managing Director of the
International Marketing Division of Kenwood Corporation ("Kenwood"), and from
April 1994 to 1996 served as Kenwood's General Manager of the International
Logistics Department in Japan. Kenwood specializes in home and car audio
products, test and measuring equipment and telephone and communications
equipment. From September 1989 to March 1994, Mr. Kobayashi was the President
and Representative Director of Kenwood Electronics France S.A., a wholly owned
subsidiary of Kenwood in Japan.
Janis C. Pestinger, 47, 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, 39, 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, 46, 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.
7
<PAGE>
Jerome L. Trojan, 33, has served as Vice President-Corporate Development of
the Company since April 1998 and Treasurer of the Company since January 1997.
Prior to that, he served as Manager-Financial Analysis since joining the Company
in May 1995. From November 1993 to May 1995, Mr. Trojan served as the Manager of
Financial Analysis and Accounting for Heartland Capital Partners, LLP, a private
venture capital fund. From January 1989 to October 1993, Mr. Trojan served in
various positions with Deloitte & Touche LLP, including Audit Manager
immediately prior to his departure.
8
<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, 1998 for
services rendered to the Company during each of the three fiscal years then
ended.
SUMMARY COMPENSATION TABLE
<TABLE>
<CAPTION>
ANNUAL COMPENSATION
------------------------------------------
FISCAL OTHER ANNUAL ALL OTHER
NAME AND PRINCIPAL POSITION YEAR SALARY($) BONUS($) COMPENSATION($) COMPENSATION($)
- ------------------------------------------------ ----------- ----------- ----------- ---------------- ----------------
<S> <C> <C> <C> <C> <C>
H.R. Brutsche III............................... 1998 $ 507,763 -- $ 167,000(1) $ 49,574(2)
Chairman of the Board, Chief Executive 1997 $ 466,014 $ 51,864 $ 167,000(1) $ 48,180(2)
Officer and President of the Company 1996 $ 433,008 $ 48,713 $ 167,000(1) $ 45,259(2)
James M. Bornhorst.............................. 1998 $ 166,258 -- -- $ 6,793(3)
Vice President and Chief Science 1997 $ 154,995 $ 10,464 -- $ 6,637(3)
Officer of the Company and Vice 1996 $ 136,299 $ 9,449 -- $ 6,374(3)
President-Advanced Technology of Vari-Lite
T. Clay Powers.................................. 1998 $ 161,310 -- -- $ 6,505(4)
Vice President-Product Development 1997 $ 150,000 $ 26,250 -- $ 6,222(4)
and Manufacturing of Vari-Lite 1996 $ 127,267 $ 10,500 -- $ 6,849(4)
Loren J. Haas................................... 1998 $ 158,281 -- -- $ 6,182(5)
Executive Vice President-Vari-Lite 1997 $ 123,445 $ 24,075 -- $ 5,286(5)
Production Services of Vari-Lite 1996 $ 107,559 $ 7,473 -- $ 4,746(5)
Michael P. Herman............................... 1998 $ 139,489 -- -- $ 5,912(6)
Vice President-Finance, Chief Financial 1997 $ 129,693 $ 19,672 -- $ 5,667(6)
Officer and Secretary of the Company 1996 $ 122,028 $ 8,775 -- $ 4,630(6)
David W. Alley(7)............................... 1998 $ 195,030 -- -- $ 3,485(8)
1997 $ 163,506 $ 10,209 -- $ 6,787(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--Director Compensation."
(2) These amounts include $3,727, $3,542 and $3,292 in the fiscal years ended
September 30, 1998, 1997, and 1996, respectively, which were paid on behalf
of Mr. Brutsche for the Policies (as hereinafter defined) pursuant to the
Split-Dollar Agreements (as hereinafter defined); $22,525, $22,525 and
$20,725 for a term life insurance policy maintained on the life of Mr.
Brutsche for fiscal 1998, fiscal 1997 and fiscal 1996, respectively;
$15,685, $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 fiscal 1998, fiscal 1997 and fiscal 1996,
respectively; $5,000, $4,610 and $4,620 which were contributed by the
Company on behalf of Mr. Brutsche to the Company's 401(k) plan in fiscal
1998, fiscal 1997 and fiscal 1996, respectively; and $2,637 (estimated),
$2,637 and $2,805 worth of Common Stock held in the ESOP which was allocated
to Mr. Brutsche in fiscal 1998, fiscal 1997 and fiscal 1996, respectively.
See "Executive Compensation-- Employment Agreements."
(3) These amounts include $4,156, $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, 1998, 1997 and 1996, respectively, and
$2,637(estimated), $2,637 and $2,618 worth of Common Stock held in the ESOP
which was allocated to Mr. Bornhorst in fiscal 1998, fiscal 1997 and fiscal
1996, respectively.
(4) These amounts include $4,033, $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, 1998, 1997 and 1996, respectively, and
$2,472 (estimated), $2,472 and $2,618 worth of Common Stock held in the ESOP
which was allocated to Mr. Powers in fiscal 1998, fiscal 1997 and fiscal
1996, respectively.
9
<PAGE>
(5) These amounts include $3,957, $3,061 and $2,689 which were contributed by
the Company on behalf of Mr. Haas to the Company's 401(k) plan in the fiscal
years ended September 30, 1998, 1997 and 1996, respectively, and $2,225
(estimated), $2,225 and $2,057 worth of Common Stock held in the ESOP which
was allocated to Mr. Haas in fiscal 1998, fiscal 1997 and fiscal 1996,
respectively.
(6) These amounts include $3,487, $3,242 and $2,292 which were contributed by
the Company on behalf of Mr. Herman to the Company's 401(k) plan in the
fiscal years ended September 30, 1998, 1997 and 1996, respectively, and
$2,425 (estimated), $2,425 and $2,338 worth of Common Stock held in the ESOP
which was allocated to Mr. Herman in fiscal 1998, fiscal 1997 and fiscal
1996, respectively.
(7) Mr. Alley's employment with the Company terminated during the fiscal year
ended September 30, 1998. Prior to his departure, Mr. Alley served as
Executive Vice President-International Operations of Vari-Lite.
(8) These amounts include $849, $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, 1998, 1997 and 1996, respectively, and $0, $2,637
and $2,805 worth of Common Stock held in the ESOP which was allocated to Mr.
Alley in fiscal 1998, fiscal 1997 and fiscal 1996, respectively.
SUMMARY OF OPTION GRANTS
The following table provides certain summary information concerning grants
of options to the Named Executive Officers of the Company during the 1998 fiscal
year:
<TABLE>
<CAPTION>
NUMBER OF
SECURITIES % OF TOTAL
UNDERLYING OPTIONS GRANTED EXERCISE GRANT DATE
OPTIONS TO EMPLOYEES IN PRICE PER EXPIRATION PRESENT
NAME GRANTED(#) FISCAL YEAR SHARE($) DATE VALUE $(1)
- ----------------------------------------------- ----------- --------------- ------------- ----------- ----------
<S> <C> <C> <C> <C> <C>
H.R. Brutsche III.............................. 41,665 7.87% $ 13.20 10/15/02 $ 169,018
33,335 6.30% $ 12.00 10/15/07 $ 150,491
James M. Bornhorst............................. 25,000 4.72% $ 12.00 10/15/07 $ 112,863
T. Clay Powers................................. 25,000 4.72% $ 12.00 10/15/07 $ 112,863
Loren J. Haas.................................. 25,000 4.72% $ 12.00 10/15/07 $ 112,863
Michael P. Herman.............................. 21,000 3.97% $ 12.00 10/15/07 $ 94,805
David W. Alley(2).............................. 20,000 3.78% $ 12.00 10/15/07 $ 90,290
</TABLE>
- ------------------------
(1) The grant date present value was determined using a Black-Scholes option
pricing model with the following assumptions: dividend yield of zero;
volatility of 30%; risk-free interest rate of 6%; and expected life of five
years.
(2) Mr. Alley's employment with the Company terminated during the fiscal year
ended September 30, 1998. As a result, as of September 30, 1998, all of the
options granted to Mr. Alley had been forfeited.
10
<PAGE>
TEN-YEAR OPTION REPRICING
The following table sets forth information with respect to the Named
Executive Officers concerning option repricing, which was effected after the end
of fiscal 1998.
<TABLE>
<CAPTION>
LENGTH OF
SECURITIES ORIGINAL
UNDERLYING MARKET PRICE EXERCISE OPTION TERM
NUMBER OF OF STOCK AT PRICE AT TIME REMAINING AT
OPTIONS TIME OF OF REPRICING DATE OF
REPRICED OR REPRICING OR OR AMENDMENT NEW EXERCISE REPRICING OR
NAME DATE AMENDED (#) AMENDMENT ($) ($) PRICE($) AMENDMENT
- ----------------------------- --------- ------------- ------------- ------------- ------------- -------------
<S> <C> <C> <C> <C> <C> <C>
H.R. Brutsche III............ -- -- -- -- -- --
James M. Bornhorst........... 11/02/98 25,000 $ 3.75 $ 12.00 $ 3.75 9 years
T. Clay Powers............... 11/02/98 25,000 $ 3.75 $ 12.00 $ 3.75 9 years
Loren J. Haas................ 11/02/98 25,000 $ 3.75 $ 12.00 $ 3.75 9 years
Michael P. Herman............ 11/02/98 21,000 $ 3.75 $ 12.00 $ 3.75 9 years
</TABLE>
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 I.R. Sub, Inc. (formerly known as Irideon, Inc.) and $3,000
annually plus $62.50 per meeting for serving as a director of Brilliant Stages.
On October 16, 1997, pursuant to the Vari-Lite International, Inc. 1997
Omnibus Plan (the "Omnibus Plan"), options to purchase 12,000 shares of Common
Stock were granted to each of Messrs. Clark and Maxson, options to purchase
10,000 shares were granted to Mr. Smith and options to purchase 4,800 shares
were granted to each of Messrs. Prothro and Rettberg. The exercise price each of
these options was $12.00 per share. The options vest in five equal annual
installments of 20%, commencing with the first anniversary of the date of grant.
Any options to be granted to non-employees directors under the Omnibus Plan must
be granted by the entire Board of Directors.
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. Effective November 2, 1998, each of the
Deferred Compensation Agreements was amended to reduce the monthly payment due
thereunder beginning on January 1, 1999 to an amount equal to one-half of the
original monthly payment and to extend the period during which the payments are
due and owing from July 1, 2001 to December 31, 2003. 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
11
<PAGE>
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
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 Vari-Lite International, Inc.
Annual Incentive Plan (the "Annual Incentive Plan"). 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
12
<PAGE>
those provided for under the Employment Agreement, Mr. Brutsche is eligible to
receive certain other benefits. See "Executive Compensation--Director
Compensation."
COMPENSATION COMMITTEE INTERLOCKS AND INSIDER PARTICIPATION
During the fiscal year ended September 30, 1998, 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. Effective November 2, 1998, the
Deferred Compensation Agreement was amended to reduce the monthly payment due
thereunder beginning on January 1, 1999 to an amount equal to one-half of the
original monthly payment and to extend the period during which the payments are
due and owing from July 1, 2001 to December 31, 2003.
REPORT OF THE COMPENSATION COMMITTEE AND OMNIBUS COMMITTEE ON EXECUTIVE
COMPENSATION
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. Options granted under the Company's Omnibus Plan are also 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 $507,763 during the fiscal year ended September 30, 1998 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. Effective November
2, 1998, the Deferred Compensation Agreement was amended to reduce the monthly
payment due thereunder beginning on January 1, 1999 to an amount equal to
one-half of the original monthly payment and to extend the period during which
the payments are due and owing from July 1, 2001 to December 31, 2003.
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 or in the discretion of the Omnibus Committee, 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.
In order to link executive compensation to the enhancement of stockholder
value and to satisfy the desire of the Compensation Committee and Omnibus
Committee to insure the retention of key senior
13
<PAGE>
executives, during the fiscal year ending September 30, 1998, the Omnibus
Committee approved a repricing program of the options previously granted under
the Omnibus Plan to all optionees other than Mr. Brutsche and the directors of
the Company. The repricing of outstanding options was approved by the Omnibus
Committee in recognition of the fact that the Company's stock price had dropped
to a level significantly below the exercise prices of options granted less than
12 months earlier. The Omnibus Committee determined the decrease was to some
extent industry-related, but in any case reflected the Company's surprisingly
poor operating results in fiscal 1998. The Omnibus Committee believed it to be
important to the Company's long-term success to ensure that the options
previously granted provided a meaningful opportunity to the option holders to
realize a financial reward if they are successful in enhancing stockholder value
by helping to restore the market price of the Common Stock to its prior levels.
Accordingly, on November 2, 1998, the Omnibus Committee approved new exercise
prices of $3.75 per share (the market value of the Common Stock on the date the
stock options were repriced) with respect to options granted to employees (other
than Mr. Brutsche) prior to the repricing date. As a condition to the repricing
of the options, the option holders agreed not to exercise their options for one
year.
The Compensation Committee and Omnibus Committee believe that the Annual
Incentive Plan, ESOP, the Vari-Lite International, Inc. Employees' Stock
Equivalence Plan and Omnibus Plan enable 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
a portion of the compensation of its executives on achievement of defined
Company goals and improved stock price performance will properly motivate
management and lead to increased profitability.
Because the Common Stock did not become publicly traded until October 16,
1997, the Omnibus Plan and the Annual Incentive Plan will not be subject to
Section 162(m) of the Internal Revenue Code of 1986, as amended, until the
Company's annual meeting of stockholders in 2001 or such earlier time as a
material modification is made to these compensation plans. At such time, to the
extent that these compensation plans can be exempt from Section 162(m), the
Company will determine if it is necessary to institute procedures to permit the
exemption.
<TABLE>
<CAPTION>
COMPENSATION OMNIBUS
COMMITTEE COMMITTEE
<S> <C>
J. Anthony Smith C. Vincent Prothro
C. Vincent Prothro John R. Rettberg
John R. Rettberg
</TABLE>
In accordance with the rules and regulations of the Securities and Exchange
Commission, the foregoing report of the Compensation Committee and Omnibus
Committee and the performance graph appearing below shall not be deemed to be
"soliciting material" or to be "filed" with the Securities and Exchange
Commission or subject to Regulations 14A or 14C of the Securities Exchange Act
of 1934 (the "Exchange Act") or to the liabilities of Section 18 of the Exchange
Act and shall not be deemed to be incorporated by reference into any filing
under the Securities Act of 1933 or the Exchange Act, notwithstanding any
general incorporation by reference of this Proxy Statement into any other filed
document.
14
<PAGE>
STOCK PERFORMANCE GRAPH
The following graph compares the cumulative total stockholder return of the
Common Stock for the period from October 16, 1997, the date of the Company's
initial public offering, to September 30, 1998, with the cumulative total return
of the Russell 2000 Index and the Standard & Poor's Entertainment Index from
September 30, 1997 to September 30, 1998. The graph assumes an investment of
$100.00 on October 16, 1997 or September 30, 1997, respectively, and assumes
reinvestment of dividends.
EDGAR REPRESENTATION OF DATA POINTS USED IN PRINTED GRAPHIC
<TABLE>
<CAPTION>
VARI-LITE INTERNATIONAL, INC. RUSSELL 2000 S & P ENTERTAINMENT
<S> <C> <C> <C>
10/16/97 100 100 100
9/30/98 22.92 82.55 126.91
</TABLE>
15
<PAGE>
BOARD MEETINGS, COMMITTEES AND ATTENDANCE
The Board of Directors of the Company met four times during the fiscal year
ended September 30, 1998. Each director attended at least 75% of the called
meetings of the Board of Directors and all committees of the Board of Directors
on which he served. 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 11 times during the
fiscal year ended September 30, 1998 and took action on one additional occasion
by unanimous written consent.
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, 1998.
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 two times
during the fiscal year ended September 30, 1998.
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 met four times
during the fiscal year ended September 30, 1998 and took action on three
additional occasions by unanimous written consent.
SECTION 16(A) BENEFICIAL OWNERSHIP REPORTING COMPLIANCE
Section 16(a) of the Exchange Act requires the Company's executive officers
and directors and persons who own more than ten percent of the equity securities
of the Company to file with the Securities and Exchange Commission reports of
ownership and reports of changes in ownership in the equity and derivative
securities of the Company. Based solely on its review of copies of such reports
received or written representations from such officers, directors and persons
who own more than ten percent of the equity of the Company, the Company believes
that all Section 16(a) filing requirements applicable to such individuals were
complied with during the fiscal year ending September 30, 1998.
16
<PAGE>
TRANSACTIONS WITH DIRECTORS, OFFICERS AND AFFILIATES
During the fiscal year ended September 30, 1998, Philip D.C. Collins, who
beneficially owns more than five percent of the Common Stock of the Company paid
$819,000 and the musical group Genesis, of which Anthony G. Banks and Michael J.
C. C. Rutherford are members, paid $1,484,000 to the Company 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 and Genesis. 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--Director Compensation."
RELATIONSHIP WITH INDEPENDENT AUDITORS
Deloitte & Touche LLP served as the independent auditors of the Company for
the fiscal year ended September 30, 1998. 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
Any stockholder who may wish to present a proposal for consideration at the
2000 annual meeting of stockholders must submit the proposal in writing to the
Secretary of the Company at the address shown on the first page of this Proxy
Statement not later than September 22, 1999. That proposal must comply with
Section 8 of Article II of the Company's By-Laws and, if it is to be included in
the Company's proxy materials, Rule 14a-8 under the Exchange Act. The By-Laws
permit the Board of Directors or the presiding officer of the 2000 annual
meeting of stockholders to reject any proposal submitted for that meeting after
September 22, 1999 or that otherwise does not comply with the By-Laws. It is
likely that an untimely or noncomplying proposal will be rejected. If, however,
an untimely or noncomplying proposal is not rejected, then (subject to Rule
14a-4 under the Exchange Act) the persons named as proxies in the proxy cards
solicited by the Board of Directors for that meeting will be entitled to vote
the shares represented by the proxy cards held by them regarding that proposal
in their discretion, if properly raised at the 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 on such matters will vote
the shares of Common Stock represented by the proxies in accordance with their
best judgment and Rule 14a-4 under the Exchange Act.
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 five percent of the Company's Common Stock is based upon
information contained in reports filed by such owner with the Securities and
Exchange Commission.
The Annual Report to Stockholders of the Company for the fiscal year ended
September 30, 1998, which includes financial statements and accompanies this
Proxy Statement, does not form any part of the materials for the solicitation of
proxies.
THE COMPANY HAS PROVIDED WITHOUT CHARGE TO EACH PERSON WHOSE PROXY IS
SOLICITED HEREBY A COPY OF THE COMPANY'S 1998 ANNUAL REPORT TO STOCKHOLDERS,
WHICH INCLUDES A COPY OF THE COMPANY ANNUAL REPORT ON FORM 10-K
17
<PAGE>
FOR THE FISCAL YEAR ENDED SEPTEMBER 30, 1998. EXHIBITS TO THE FORM 10-K ARE
AVAILABLE UPON REQUEST AT A REASONABLE CHARGE TO COVER THE COMPANY'S COST IN
PROVIDING SUCH EXHIBITS OR ON THE INTERNET AT HTTP://WWW.SEC.GOV. ADDITIONAL
COPIES OF THE 1998 ANNUAL REPORT TO STOCKHOLDERS MAY BE OBTAINED WITHOUT CHARGE
BY ANY PERSON WHOSE PROXY IS SOLICITED HEREBY UPON WRITTEN REQUEST TO CORPORATE
SECRETARY, VARI-LITE INTERNATIONAL, INC., 201 REGAL ROW, DALLAS, TEXAS 75247.
By Order of the Board of Directors
/S/ MICHAEL P. HERMAN
Michael P. Herman
SECRETARY
Dallas, Texas
January 19, 1998
18
<PAGE>
VARI-LITE INTERNATIONAL, INC.
The undersigned (i) acknowledges receipt of the Notice dated January 19,
1999, of the Annual Meeting of Stockholders of Vari-Lite International, Inc., a
Delaware corporation (the "Company"), to be held on February 26, 1999, 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 12,
1999, 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 THE REVERSE SIDE)
- -------------------------------------------------------------------------------
FOLD AND DETACH HERE
<PAGE>
THE UNDERSIGNED HEREBY REVOKES ANY PROXY OR PROXIES Please mark /X/
HERETOFORE GIVEN TO VOTE UPON OR ACT WITH RESPECT TO your votes as
SUCH COMMON STOCK AND HEREBY RATIFIES AND CONFIRMS indicated in
ALL THAT THE PROXIES, THEIR SUBSTITUTES, OR ANY OF this example
THEM MAY LAWFULLY DO BY VIRTUE HEREOF.
1. Proposal to elect two Class II directors to serve until the annual meeting
of stockholders to be held in 2002 or until their respective successors are
elected and qualified.
FOR all nominees WITHHOLD Nominees: James H.
listed to the right AUTHORITY Clark, Jr. and John R.
(except as marked to vote for all nominees Rettberg
to the contrary) listed to the right
/ / / /
(INSTRUCTION: To withhold authority to vote for any individual nominee, write
that nominee's name on the line below.)
- -------------------------------------------------------------------------------
2. In the discretion of the proxies on any other matters that may properly
come before the meeting or any postponements or adjournments thereof.
FOR AGAINST ABSTAIN
/ / / / / /
Please date this proxy and sign your name exactly as it appears hereon. Where
there is more than one owner, each should sign. When signing as an 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: ____________________________, 1999
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Signature of Stockholder
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Signature of Stockholder
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Title, if applicable
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FOLD AND DETACH HERE
