<PAGE> 1
SCHEDULE 14A
(RULE 14a-101)
INFORMATION REQUIRED IN PROXY STATEMENT
SCHEDULE 14A INFORMATION
PROXY STATEMENT PURSUANT TO SECTION 14(a) OF THE SECURITIES
EXCHANGE ACT OF 1934 (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 Rule 14a-11(c) or Rule 14a-12.
VASCO DATA SECURITY 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.:
- --------------------------------------------------------------------------------
(3) Filing Party:
- --------------------------------------------------------------------------------
(4) Date Filed:
- --------------------------------------------------------------------------------
<PAGE> 2
VASCO DATA SECURITY INTERNATIONAL, INC.
NOTICE OF ANNUAL MEETING OF STOCKHOLDERS
TO BE HELD JUNE 13, 2000
To the Stockholders of
VASCO Data Security International, Inc.:
The Annual Meeting of Stockholders of VASCO Data Security International,
Inc., a Delaware corporation (the "Company"), will be held on Tuesday, June 13,
2000 at 10:00 a.m., local time, at the Chicago Marriott Oakbrook Hotel, 1401
West 22nd Street, Oakbrook, Illinois 60523 for the following purposes, as
described in the Proxy Statement accompanying this Notice:
1. To elect seven (7) individuals to the Company's Board of Directors;
2. To ratify the action of the Board of Directors in appointing KPMG LLP as the
Company's independent auditors for the fiscal year ending December 31, 2000; and
3. To transact such other business as may properly come before the Annual
Meeting.
The Board of Directors has no knowledge of any other business to be
presented or transacted at the meeting.
Only stockholders of record on April 25, 2000 are entitled to notice of and
to vote at the Annual Meeting. Further information as to the matters to be
considered and acted upon at the Annual Meeting can be found in the accompanying
Proxy Statement.
By Order of the Board of Directors,
Forrest D. Laidley
Secretary
May 1, 2000
YOU ARE CORDIALLY INVITED AND URGED TO ATTEND THE ANNUAL MEETING IN PERSON. TO
ASSURE YOUR REPRESENTATION AT THE MEETING, PLEASE SIGN, DATE AND RETURN THE
ENCLOSED PROXY CARD WHETHER OR NOT YOU EXPECT TO ATTEND IN PERSON. STOCKHOLDERS
WHO ATTEND THE MEETING MAY REVOKE THEIR PROXIES AND VOTE IN PERSON IF THEY
DESIRE.
<PAGE> 3
VASCO DATA SECURITY INTERNATIONAL, INC.
1901 SOUTH MEYERS ROAD, SUITE 210
OAKBROOK TERRACE, ILLINOIS 60181
-------------------
PROXY STATEMENT
FOR
ANNUAL MEETING OF STOCKHOLDERS
TO BE HELD JUNE 13, 2000
--------------------
This Proxy Statement is furnished in connection with the solicitation by
the Board of Directors of VASCO Data Security International, Inc., a Delaware
corporation (the "Company"), of proxies for use at the annual meeting of
stockholders of the Company to be held on Tuesday, June 13, 2000 at 10:00 a.m.,
local time, at the Chicago Marriott Oakbrook Hotel, 1401 West 22nd Street,
Oakbrook, Illinois 60523, and at any postponement or adjournment thereof (the
"Annual Meeting"). This Proxy Statement, the foregoing Notice of Annual Meeting
of Stockholders and the accompanying form of proxy are being mailed to
stockholders of the Company commencing on or about May 2, 2000. The mailing
address of the principal executive offices of the Company is 1901 South Meyers
Road, Suite 210, Oakbrook Terrace, Illinois 60181.
The presence in person or by proxy of holders of record of a majority of
the outstanding shares of Company common stock, par value $.001 per share, (the
"Common Stock") is required to constitute a quorum for the transaction of
business at the Annual Meeting.
If the accompanying form of proxy is properly executed and returned, the
shares represented thereby will be voted in accordance with the instructions
specified therein. In the absence of instructions to the contrary, such shares
will be voted "FOR" each of the proposals set forth herein. Any stockholder
executing a proxy has the power to revoke it at any time prior to the voting
thereof on any matter (without, however, affecting any vote taken prior to such
revocation) by delivering written notice to the Secretary of the Company, by
executing another proxy dated as of a later date or by voting in person at the
Annual Meeting.
The date of this Proxy Statement is May 2, 2000.
THE ANNUAL MEETING
MATTERS TO BE CONSIDERED
The Annual Meeting has been called to (i) elect seven (7) individuals to the
Company's Board of Directors; (ii) ratify the action of the Board of Directors
in appointing KPMG LLP as the Company's independent auditors for the fiscal year
ending December 31, 2000; and (iii) transact such other business as may properly
come before the Annual Meeting.
RECORD DATE AND SHARES OUTSTANDING
Holders of record of the Company's Common Stock at the close of business on
April 25, 2000 are entitled to notice of and to vote at the Annual Meeting. As
of April 25, 2000, there were 27,293,951 shares of Common Stock outstanding and
entitled to vote at the Annual Meeting, each such share being entitled to cast
one vote.
<PAGE> 4
VOTING AND QUORUM
All properly executed, unrevoked proxy cards received by the Secretary of the
Company pursuant to this solicitation prior to the close of voting will be voted
as directed therein. Any stockholder who has given a proxy may revoke it at any
time prior to its use at the Annual Meeting by executing and delivering to the
Secretary of the Company a proxy bearing a later date, by giving a written
notice of revocation to the Secretary of the Company, or by attending the Annual
Meeting and voting in person. Any written notice of revocation or subsequent
proxy should be delivered to VASCO Data Security International, Inc., 1901 South
Meyers Road, Suite 210, Oakbrook Terrace, Illinois 60181, Attention: Secretary,
or hand delivered to the Secretary, before the closing of the polls at the
Annual Meeting.
The holders of a majority of the outstanding shares of Common Stock as of April
25, 2000, present at the Annual Meeting in person or by proxy, will constitute a
quorum for the transaction of business at the Annual Meeting. Assuming the
presence of a quorum, the affirmative vote of a plurality of the votes cast and
entitled to vote in the election at the Annual Meeting will be required for the
election of directors, and the affirmative vote of a majority of the votes cast
and entitled to vote thereon will be required to act on all other matters to
come before the Annual Meeting.
Stockholders may vote in favor of or withhold authority to vote for the nominees
for election as directors listed herein. Similarly, stockholders may vote in
favor of, against or abstain from voting with respect to the proposal to ratify
the appointment of the Company's independent auditors. Directions to withhold
authority, abstentions and broker non-votes (which occur when a nominee holding
shares for a beneficial owner does not vote on a particular proposal because the
nominee does not have discretionary voting power with respect to that item and
has not received instructions from the beneficial owner) will be counted in
determining the presence or absence of a quorum for the transaction of business
at the Annual Meeting. Directions to withhold authority, because directors are
elected by a plurality of votes cast, will have no effect on the election of
directors. Broker non-votes, because they are not considered "votes cast," are
not counted in the vote totals and will have no effect on any proposal scheduled
for consideration at the Annual Meeting. Abstentions will have the effect of a
vote against the proposal being considered.
If a properly executed, unrevoked proxy does not specifically direct the voting
of the shares covered by such proxy, the proxy will be voted (a) FOR the
election of all nominees for election as director as listed herein, (b) FOR the
ratification of the appointment of KPMG LLP as the Company's independent
auditors for the fiscal year ending December 31, 2000, and (c) in accordance
with the judgment of the persons named in the proxy as to such other matters as
may properly come before the Annual Meeting.
ANNUAL REPORT
The Company's annual report to stockholders for the fiscal year ended December
31, 1999 has been included in the mailing of this Proxy Statement. Stockholders
are referred to the report for financial and other information about the
Company, but such report is not incorporated in this Proxy Statement and is not
to be deemed a part of the proxy soliciting material. THE ANNUAL REPORT
INCLUDES, AMONG OTHER INFORMATION, THE COMPANY'S ANNUAL REPORT ON FORM 10-K FOR
THE FISCAL YEAR ENDED DECEMBER 31, 1999; ADDITIONAL COPIES OF THE FORM 10-K WILL
BE PROVIDED TO STOCKHOLDERS WITHOUT CHARGE UPON WRITTEN REQUEST TO VASCO DATA
SECURITY INTERNATIONAL, INC., 1901 SOUTH MEYERS ROAD, SUITE 210, OAKBROOK
TERRACE, ILLINOIS 60181, ATTENTION: SECRETARY.
<PAGE> 5
SECURITY OWNERSHIP OF CERTAIN
BENEFICIAL OWNERS AND MANAGEMENT
The following table sets forth certain information with respect to the
beneficial ownership of Common Stock of the Company as of March 8, 2000 for (i)
each person or entity who is known to the Company to beneficially own five
percent or more of the Company's Common Stock, (ii) each of the Company's
directors, (iii) each of the Named Executive Officers, and (iv) all directors
and executive officers as a group. The persons named in the table have sole
voting and investment power with respect to all shares of Company Common Stock
shown as beneficially owned by them unless otherwise indicated. For purposes of
the table, a person or group of persons is deemed to have beneficial ownership
of any shares as of a given date which such person has the right to acquire
within 60 days after such date.
<TABLE>
<CAPTION>
AMOUNT AND
NATURE OF
NAME AND ADDRESS CLASS OF BENEFICIAL PERCENT OF
OF BENEFICIAL OWNER STOCK OWNERSHIP(1) CLASS
------------------- ----- ------------ -----
<S> <C> <C> <C>
DIRECTORS AND NAMED EXECUTIVE OFFICERS
T. Kendall Hunt Common 10,081,225(2) 37.5%
1901 S. Meyers Road
Suite 210
Oakbrook Terrace, IL 60181
Forrest D. Laidley Common 642,883(3) 2.4%
185 Milwaukee Avenue, Suite 240
Lincolnshire, IL 60069
Michael P. Cullinane Common 16,000 *
1815 S. Meyers Road
Oakbrook Terrace, IL 60181
Christian Dumolin Common 857,143(4) 3.2%-
Ter Bede Business Center
B-8500 Kortrijk, Belgium
Pol Hauspie Common 1,936,572(5) 7.2%
St. Krispijnstraat 7
B-8900 Ieper, Belgium
Mario R. Houthooft Common 543,783 2.0%
Koningin Astridlaan 164
B-1780 Wemmel Belgium
Michael A. Mulshine Common 204,000(6) *
2517 Route 35, Suite D-201
Manasquan, New Jersey 08736
</TABLE>
<PAGE> 6
<TABLE>
<S> <C> <C> <C>
Jan Valcke Common 13,500 *
Koningin Astridlaan 164
B-1780 Wemmel Belgium
Jonathan Chinitz Common 940,101(7) 3.5%
3 Wingate Lane
Acton, Massachusetts 01720
All Executive Officers and Directors Common 15,235,207 56.7%
as a Group (9 Persons)
</TABLE>
(1) The number of shares beneficially owned by each director and executive
officer is determined under rules promulgated by the Securities and Exchange
Commission, and the information is not necessarily indicative of beneficial
ownership for any other purpose. Under such rules, beneficial ownership includes
any shares as to which the individual has sole or shared voting power or
investment power and also any shares which the individual has the right to
acquire within 60 days after April 23, 1999 through the exercise of any stock
option or other right. The inclusion herein of such shares, however, does not
constitute an admission that the named stockholder is a direct or indirect
beneficial owner of such shares. Unless otherwise indicated, each person or
entity named in the table has sole voting power and investment power (or shares
such power with his or her spouse) with respect to all shares of capital stock
listed as owned by such person or entity.
(2) Includes 200,000 shares held in the T. Kendall Hunt Charitable Remainder
Trust and 1,111,300 shares held by Barbara J. Hunt, Mr. Hunt's spouse, as to
which shares Mr. Hunt disclaims beneficial ownership.
(3) Includes 250,000 shares held by Mr. Laidley and his spouse as joint tenants.
(4) Includes 857,143 shares held by Trust Capital Technology NV/SA, an entity of
which Mr. Dumolin is the chief executive officer. Mr. Dumolin disclaims
beneficial ownership of all of these shares.
(5) Includes 1,928,572 shares held by L&H Investment Company, an entity
indirectly, partially owned by Mr. Hauspie. Mr. Hauspie disclaims beneficial
ownership of all of these shares.
(6) Includes 153,000 shares held by Carol J. Mulshine, Mr. Mulshine's spouse as
to which Mr. Mulshine disclaims beneficial ownership of 151,500.
(7) Includes 469,949 shares held by the Chinitz/Fries Irrevocable Trust, the
beneficiaries of which are Mr. Chinitz's children and the trustee of which is
Mr. Chinitz's spouse.
<PAGE> 7
PROPOSAL I
ELECTION OF DIRECTORS
The Company's Bylaws, as amended (the "Bylaws"), set the number of directors of
the Company at not less than four nor more than twenty, which number may be
changed from time to time by the Board of Directors. The Board of Directors
increased the number of directors of the Company to seven (7) by a Consent of
Directors, effective January 27, 1999. All of the directors of the Company will
be elected at the Company's Annual Meeting of Stockholders and will hold office
until their respective successors have been duly elected and qualified, or until
their earlier resignation or removal.
The Board of Directors has nominated the following individuals for election as
directors of the Company at the Annual Meeting: Michael P. Cullinane, Christian
Dumolin, Pol Hauspie, Mario R. Houthooft, T. Kendall Hunt, Forrest D. Laidley
and Michael A. Mulshine, each of whom is a current director of the Company.
While the Board of Directors does not contemplate that any nominee for election
as a director will not be able to serve, if any of the nominees for election
shall be unable to or for good cause will not serve as a director, the persons
listed in the enclosed proxy shall vote such proxy, if properly executed and
returned and unrevoked, for such other person or persons as shall be recommended
by the Board of Directors or the Board of Directors may, in its discretion,
reduce the number of directors to be elected. The affirmative vote of a
plurality of the votes cast and entitled to vote at the Annual Meeting is
required for the election of directors. THE BOARD OF DIRECTORS RECOMMENDS THAT
THE STOCKHOLDERS VOTE "FOR" EACH OF THE NOMINEES LISTED HEREIN.
The name of and certain information regarding each nominee for election as a
director of the Company at the Annual Meeting appears below.
T. KENDALL "KEN" HUNT -- Mr. Hunt is Chairman of the Board and Executive Vice
President. He served as our Chief Executive Officer through June 16, 1999. He
has been a director since July 1997. He served since 1990 as Chairman and
President of our predecessor. Mr. Hunt received a B.B.A. from the University of
Miami, Miami, Florida and an M.B.A. from Pepperdine University, Malibu,
California. Mr. Hunt is 57 years old.
MICHAEL P. CULLINANE -- Mr. Cullinane has been a director since April 10, 1998.
He is the Chairman of our Compensation Committee and a member of our Audit
Committee. Mr. Cullinane is currently the Executive Vice President and Chief
Financial Officer of divine interVentures, inc. From 1988 to June 1999 he served
as Executive Vice President, Chief Financial Officer and treasurer of PLATINUM
Technology, Inc. PLATINUM Technology provides software products and consulting
services that help Global IT organizations manage and improve their IT
infrastructure, which consists of data, systems, and applications. Mr. Cullinane
is a director of PLATINUM Entertainment, Inc. and Made 2 Manage Systems, Inc.
and Interactive Intelligence, Inc., all of which are public companies. Mr.
Cullinane received a B.B.A. from the University of Notre Dame, South Bend,
Indiana. Mr. Cullinane is 50 years old.
CHRISTIAN DUMOLIN -- Mr. Dumolin has been a director since April 23, 1999. He is
a member of our Audit Committee. Mr. Dumolin is President and CEO of Koceram
NV/SA since 1980. Koceram is a producer of building products, developing
business through several subsidiaries, including Koramic Building Products NV/SA
and TrustCapital NV/SA, both of which are quoted on the Brussels' (Belgium)
Stock Exchange. In addition, Koceram is involved in financial activities
(development and venture
<PAGE> 8
capital) and real estate activities. Mr. Dumolin is also a member of the Council
of Regency of the National Bank of Belgium. Mr. Dumolin is 54 years old.
POL HAUSPIE -- Mr. Hauspie has been a director since January 27, 1999. Mr.
Hauspie, is a co-founder of Lernout & Hauspie Speech Products NV/SA and has
served as a Managing Director, President, Co-Chairman of the Board and
Co-Chairman in the office of the Chief Executive since its incorporation. In
1977 Mr. Hauspie founded HPP Computer Center, a developer and marketer of
software for accountants and financial advisors, and served as its president
until its sale in 1987 to finance the start-up of Lernout & Hauspie Speech
Products NV/SA. Mr. Hauspie also serves on the board of several private
companies and Excalibur Technologies Corporation, a public company. Mr. Hauspie
received an accounting degree from the University Sint Aloysius in Brussels,
Belgium. Mr. Hauspie is 47 years old.
MARIO R. HOUTHOOFT -- Mr. Houthooft serves as our Chief Executive Officer,
President and a Director. Mr. Houthooft was elected to our Board of Directors as
of April 10, 1998. From 1992 until joining us, he served in various management
positions with Lintel Security. Prior thereto, he was with Cryptech Company,
which he founded, from 1985 where he served in various positions. Mr. Houthooft
received a degree in Electrical Engineering from University of Ghent, Ghent,
Belgium. Mr. Houthooft is 46 years old.
FORREST D. LAIDLEY -- Mr. Laidley is our Secretary and has been a director since
July 1997. He has been involved with us and our predecessors for certain periods
since 1984 in similar capacities. He is currently a partner in the law firm of
Tressler, Soderstrom, Maloney & Priess and prior to that was a partner in the
law firm of Laidley & Porter (and predecessor firm) in Libertyville, Illinois
since 1985. He serves on the Advisory Council on Main Street Libertyville and is
a director of Harris Bank Libertyville, an Illinois chartered banking
institution, and is President and sole stockholder of Forrest Properties, Inc.,
an Illinois real estate development corporation. Mr. Laidley received a B.A. in
History from Yale University, New Haven, Connecticut and a J.D. from DePaul
University, Chicago, Illinois. Mr. Laidley is 54 years old.
MICHAEL A. MULSHINE -- Mr. Mulshine has been a director since July 1997. He
served since 1992 as a director of our predecessor. He is a member of our Audit
Committee and Compensation Committee. He is, and since 1977 has been, a
principal of Osprey Partners, a management consulting firm. Since 1985 he has
been a director and Secretary of SEDONA Corporation, a developer and marketer of
enterprise scale Internet solutions. Mr. Mulshine received a B.S. in Electrical
Engineering from Newark College of Engineering, Newark, New Jersey. Mr. Mulshine
is 59 years old.
COMMITTEES AND MEETINGS OF THE BOARD OF DIRECTORS
The Board of Directors of the Company met four times during 1999. In addition,
the Board of Directors took action by unanimous written consent one time during
1999. The Board of Directors presently has two standing committees -- an Audit
Committee and a Compensation Committee. During 1999, the Compensation Committee
met two times and took action one time by written consent and the Audit
Committee met one time.
The Audit Committee recommends the Company's independent auditors and consults
with them regarding the scope, timing and results of their audit and the
Company's internal accounting controls. Further, the Audit Committee reviews
related party transactions in accordance with the rules promulgated by the
National Association of Securities Dealers, Inc. The members of the Audit
Committee for 1999 were: Michael P. Cullinane, Christian Dumolin and Michael A.
Mulshine.
The Compensation Committee reviews and sets the salaries and incentive
compensation for the executive officers, the directors and other key personnel
of the Company. The Compensation Committee also administers the Company's stock
option plan. In its capacity as administrator of the Company's stock option
plan, the Compensation Committee has authority to grant stock options and
determine the terms
<PAGE> 9
thereof. The members of the Compensation Committee for 1999 were: Michael P.
Cullinane, Pol Hauspie and Forrest D. Laidley.
Messrs. Hunt, Houthooft, Laidley and Mulshine each attended all of the meetings
of the Company's Board of Directors during 1999. Mr. Cullinane attended three of
the meetings held during 1999, Mr. Dumolin attended two of the three meeting
held during the period for which he was a director and Mr. Hauspie attended one
of the meetings held during 1999.
A stockholder of the Company may nominate persons for election to the Board of
Directors if the stockholder submits such nomination, together with certain
related information required by the Company's By-Laws, in writing so as to be
received by the Secretary of the Company not less than 60 nor more than 90 days
prior to the date of the annual meeting of stockholders at which the nomination
is to be made.
COMPENSATION OF DIRECTORS
Our directors are reimbursed for expenses incurred in connection with their
attendance at periodic Board meetings. Directors receive no cash compensation
for their services; however, non-employee directors are eligible to receive
stock option grants from time to time. In 1999 the non-employee directors,
Messrs. Laidley, Hauspie, Cullinane and Mulshine, each received options to
purchase 8,000 shares of common stock at an exercise price of $3.125 per share,
and in February 2000, Messrs. Laidley, Hauspie, Cullinane, Mulshine and Dumolin
each received options to purchase 8,000 shares of common stock, at an exercise
price of $8.875 per share.
COMPENSATION COMMITTEE INTERLOCKS AND INSIDER PARTICIPATION
For 1999, our Compensation Committee was comprised of Messrs. Laidley, Cullinane
and Mulshine. Forrest D. Laidley serves as a Director and our Secretary. Mr.
Laidley was a partner in the law firm of Laidley & Porter which has performed
various legal services for us since our inception. Mr. Laidley and his former
partners have made equity investments in us from time to time through various
private placements and are currently stockholders and warrant holders. Mr.
Laidley's current firm, Tressler, Soderstrom, Maloney & Priess, is currently
performing legal services for us. Mr. Laidley's services currently are and have
been on a noncompensation basis, although his firm is compensated for services
rendered to us by attorneys other than Mr. Laidley. Mr. Laidley's firm was paid
approximately $2,750 during the year ended December 31, 1999.
SECTION 16(a) BENEFICIAL OWNERSHIP COMPLIANCE
Section 16(a) of the Exchange Act requires the Company's directors and executive
officers, and persons who beneficially own more than 10% of a registered class
of the Company's equity securities, to file reports of ownership and changes in
ownership with the Commission and The Nasdaq Stock Market, Inc. Directors,
executive officers and beneficial owners of more than 10% of the outstanding
shares of Common Stock are required by Commission regulations to furnish the
Company with copies of all Section 16(a) forms that they file. Based solely on
review of the copies of such forms or written representations that no reports
under Section 16(a) were required, the Company believes that for the year period
ended December 31, 1999, all of its directors, executive officers and greater
than 10% beneficial owners complied with Section 16(a) filing requirements
applicable to them.
<PAGE> 10
EXECUTIVE COMPENSATION
The following table sets forth all compensation awarded to, earned by, or paid
for services rendered to the Company and its subsidiaries in all capacities
during the three years ended December 31, 1997, 1998 and 1999 for our Chief
Executive Officer and President, Executive Vice President and the general
managers of our Intellisoft and Identisoft divisions, who are the only executive
officers of the Company and its subsidiaries whose salary and bonus for such
year exceeded $100,000 (collectively, "Named Executive Officers").
SUMMARY COMPENSATION TABLE
<TABLE>
<CAPTION>
Long-Term
Annual Compensation Compensation Awards All Other
Name and ------------------- Securities Underlying Compensation
Principal Position Year Salary ($) Bonus Options/SARs (#) ($)
------------------ ---- ---------- ----- ---------------- ---
<S> <C> <C> <C> <C> <C>
T. Kendall Hunt(1) 1999 165,000 -0- 30,000 -0-
Executive Vice President 1998 155,000 -0- -0-
and Chairman of the Board 1997 150,000 -0- 125,000 -0-
Mario R. Houthooft(2) 1999 165,000 -0- 430,000 -0-
Chief Executive Officer,
President and Director
Jan Valcke(3) 1999 142,800 -0- 115,000 -0-
General Manager
Jonathan Chinitz(4) 1999 32,692 -0- 10,000 3,000
General Manager
</TABLE>
(1) Mr. Hunt resigned as our President and Chief Executive Officer on June 16,
1999.
(2) Mr. Houthooft was appointed as our President and Chief Executive Officer on
June 16, 1999.
(3) Mr. Valcke was appointed General Manager of our IdentiSoft division on
December 28, 1999.
(4) Mr. Chinitz joined us on October 6, 1999 and was appointed General Manager
of our IntelliSoft division on December 28, 1999.
<PAGE> 11
OPTION GRANTS IN LAST FISCAL YEAR
The following table sets forth all options granted to the Named Executive
Officers during 1999.
<TABLE>
<CAPTION>
Potential Realizable
Percent of Value at Assumed
Number of Total Annual Rates
Securities Options Of Stock
Underlying Granted to Exercise Price Appreciation
Options Employees in Price Expiration For Option Term (4)
Name Granted Fiscal Year ($/Sh) Date 5% ($) 10% ($)
---- ------- ----------- ------ ----- ------ -------
<S> <C> <C> <C> <C> <C> <C>
T. Kendall Hunt 30,000(1) 2.6%- 3.13- 1/11/09- 59,053- 149,652-
Mario R. Houthooft 30,000(1) 2.6% 3.13 1/11/09 59,053 149,652
200,000(2) 17.6% 3.00 11/18/09 377,337 377,337
200,000(3) 17.6% 3.00 11/18/09 377,337 377,337
Jan Valcke 10,000(1) 0.9% 3.13 1/11/09 19,684 49,884
5,000(1) 0.4% 2.94 8/18/09 9,245 23,428
100,000(2) 8.8% 3.00 11/18/09 188,668 478,123
Jonathan Chinitz 10,000(1) 0.9% 3.59 10/6/09 22,577 57,215
</TABLE>
(1) Options vest in five equal installments beginning on the anniversary date of
grant.
(2) Options vest in four equal installments beginning on January 1, 2001.
(3) Options vest on the earlier of November 18, 2006 or, in 50,000 share
increments based on the stock price achieving the following levels: - 50,000
shares when the stock price is above $10.00 per share for 30 consecutive trading
days; - 50,000 shares when the stock price is above $20.00 per share for 30
consecutive trading days; - 50,000 shares when the stock price is above $30.00
per share for 30 consecutive trading days; and - 50,000 shares when the stock
price is above $40.00 per share for 30 consecutive trading days.
(4) The potential realizable value amounts shown illustrate the values that
might be realized upon exercise immediately prior to the expiration of their
term using five percent and ten percent appreciation rates as required to be
used in this table by the Securities and Exchange Commission, compounded
annually, and are not intended to forecast possible future appreciation, if any,
of our stock price. Additionally, these values do not take into consideration
the provisions of the options providing for nontransferability or termination of
the options following termination of employment. Therefore, the actual values
realized may be greater or less than the potential realizable values set forth
in the table.
<PAGE> 12
YEAR-END OPTION VALUES
The following table sets forth the aggregate value as of December 31, 1999 of
unexercised stock options held by the Named Executive Officers. The Named
Executive Officers did not exercise any stock options during 1999 and the
relevant columns have therefore been omitted.
<TABLE>
<CAPTION>
Number of Securities Value (1) of Unexercised
Underlying Unexercised In-the-Money Options
Options at Fiscal Year-End At Fiscal Year End ($)
-------------------------- ----------------------
Name Exercisable Unexercisable Exercisable Unexercisable
---- ----------- ------------- ----------- -------------
<C> <C> <C> <C> <C>
T. Kendall Hunt 99,750 55,250 410,205 245,195
Mario R. Houthooft 157,000 448,000 514,280 2,202,320
Jan Valcke 13,500 120,250 51,835 591,115
Jonathan Chinitz - 10,000 - 44,700
</TABLE>
(1) Market value of underlying securities is based on the average of the bid and
asked price per share ($8.06) of the Company's Common Stock as reported on the
NASD Electronic Bulletin Board on December 31, 1999 minus the exercise price.
CERTAIN TRANSACTIONS
Transaction with Named Executive Officer. On October 6, 1999, we acquired all of
the capital stock of IntelliSoft Corp. for 1,812,078 shares of our common stock
plus $751,575 to acquire the capital stock interests of IntelliSoft Corp.
dissenters, which represented 9.4% of the outstanding capital stock of
IntelliSoft Corp. Prior to the merger IntelliSoft was owned, in part, by
Jonathan Chinitz, the General Manager of our IntelliSoft Division. In connection
with the transaction, Mr. Chinitz received 470,152 shares of our common stock at
a market price of $4.00.
The Report of the Compensation Committee on Executive Compensation shall not be
deemed incorporated by reference by any general statement incorporating by
reference this Proxy Statement or any portion hereof into any filing under the
Securities Act of 1933, as amended, or the Securities Exchange Act of 1934, as
amended (the "Exchange Act"), and shall not otherwise be deemed filed under such
acts.
REPORT OF THE COMPENSATION COMMITTEE ON EXECUTIVE COMPENSATION
OVERVIEW
The Board of Directors of the Company established a Compensation Committee in
March of 1998. For 1999, the Compensation Committee consisted of Messrs.
Cullinane, Hauspie and Laidley, none of whom is employed by the Company, and
none of whom has any "interlocking" relationships as defined for proxy statement
disclosure purposes. For 1999, the members of the Compensation Committee will be
the same.
The Compensation Committee is responsible for determining the compensation for
the Company's officers and employees, subject to the right of the Committee to
delegate to the Company's Chief Executive Officer the fixing of salaries below
certain levels designated by the Committee. The Compensation Committee also
administers the Company's Amended and Restated 1997 Stock Option
<PAGE> 13
Plan ("Amended and Restated Option Plan") and the Executive Incentive
Compensation Plan ("Incentive Plan"), including the designation of which
officers, key employees and directors shall receive options under the Option
Plan and the amount, terms, pricing, and vesting provisions of options granted
pursuant to the Option Plan.
EXECUTIVE COMPENSATION PHILOSOPHY
The Company operates in the competitive technology industry and views its
ability to attract and retain highly qualified and dedicated executives and key
employees as a critical component of its future success. The Company strives to
maintain an entrepreneurial atmosphere and to maintain a low cost operating
structure. Consequently, the Company employs a combination of salary, bonuses
and stock options to reward and provide incentive its executives and key
employees.
1999 CHIEF EXECUTIVE OFFICER COMPENSATION
The Compensation Committee believes that the Company compensated Mr. Houthooft,
the Chief Executive Officer of the Company, below the market value for his
services in 1999. Mr. Houthooft's cash compensation was set at this level to
provide an example for the balance of the Company's management team. Given this
and the relative performance of the Company during 1999, the Compensation
Committee of the Company believes that Mr. Houthooft's compensation is
appropriate.
1999 COMPENSATION OF OTHER EXECUTIVE OFFICERS
Although the Company strove to maintain a low cost operating structure, its
Compensation Committee aimed to set other executives' and key employees'
salaries at a competitive level. The base salary for each executive officer is
set on the basis of personal performance and the salary level in effect for
comparable positions at companies that compete for executive talent.
At last year's Annual Meeting of Stockholder, the stockholders approved the
Amended and Restated Option Plan. The Amended and Restated Option Plan was
designed to serve as a performance incentive to encourage the Company's
executives, key employees and others to acquire or increase a proprietary
interest in the success of the Company. The Compensation Committee believes
that, over a period of time, the Company's share performance will, to a great
extent, reflect executive and key employee performance.
The Amended and Restated Option Plan provides that options may be granted at the
discretion of the Compensation Committee, in such amounts and subject to such
conditions as the Compensation Committee may determine in accordance with the
terms thereof. Options granted to employees are priced at market, are generally
fully vested after five years and expire at the end of ten years.
The Compensation Committee previously adopted an Executive Incentive
Compensation Plan, which covers the Company's eligible executives and key
employees (each a "participant"), with such eligibility determined at the end of
each year at the sole discretion of the Compensation Committee. Awards are based
on prior year operating results, such results being subject to audit by the
Company's independent accountants, and are distributed following the completion
of such audit.
The Incentive Plan allows for the creation of a cash pool ("Pool") in the amount
of 10% of the Company's annual pre-tax earnings. Fifty percent (50%) of the Pool
is awarded to the participants based on each participant's earned salary as a
percentage of all participants' salaries. The remaining fifty percent (50%) is
awarded at the sole discretion of the Compensation Committee. Based on this
formula, no awards were made under the Incentive Plan during 1999.
Awards, in whole or in part, may be offered in the form of shares of the
Company's Common Stock or cash at the sole discretion of the Compensation
Committee and the Compensation Committee also may
<PAGE> 14
elect to delegate the choice of cash or stock to the individual participants. To
the extent that shares of stock are awarded in lieu of cash, the number of
shares is based on the market value of the Company's Common Stock on the date
the award is determined, and are taxable to the participant in the year the
award is granted. Such shares are restricted and cannot be sold or transferred
except pursuant to registration under the Securities Act or an exemption from
such registration.
Respectfully submitted,
Forrest D. Laidley, Chairman
Michael P. Cullinane
Michael A. Mulshine
<PAGE> 15
STOCK PERFORMANCE GRAPH
The Company's Common Stock commenced trading on the NASD Electronic
Bulletin Board on March 28, 1998. On April 7, 2000, the Common Stock commenced
trading on the Nasdaq National Market. The Stock Performance Graph below
compares the cumulative total return through December 31, 1999, assuming
reinvestment of dividends, by an investor who invested $100.00 on March 28, 1998
in each of (i) the Common Stock, (ii) the Russell 2000 index and (iii) a
comparable industry index selected by the Company as described below. The stock
price performance shown on the graph below is not necessarily indicative of
future price performance.
[INSERT PERFORMANCE GRAPH]
3/23/98 12/31/98 12/31/99
VASCO DATA SECURITY INTERNATIONAL, INC. 100.00 59.40 159.38
SIC CODE INDEX 100.00 167.36 358.96
RUSSELL 2000 INDEX 100.00 88.31 105.62
PEER GROUP INDEX 100.00 79.24 172.47
The Peer Group reflected above is made up of the following companies: Axent
Technologies, Inc., Netegrity Inc., RSA Security Inc. and Secure Computing. In
the Company's proxy statement for the 1999 Annual Meeting of Stockholders, the
performance of the Common Stock was compared against that of a group of entities
with a common SIC Code rather than a group of the Company's peers. The Company
elected to use a Peer Group comparison in the graph set forth above because it
believes that it is a more accurate basis for comparison.
PROPOSAL II
RATIFICATION OF INDEPENDENT AUDITORS
The Board of Directors has selected KPMG LLP as the independent auditors of
the Company's books and records for the fiscal year ending December 31, 2000 and
has determined that it would be desirable to ask the stockholders to ratify this
appointment at the Annual Meeting.
KPMG LLP served as independent auditors of the Company's books and records for
the fiscal year ended December 31, 1999 and has acted as auditors for the
Company (and its predecessor, VASCO Corp.) since the 1994 fiscal year.
Representatives of KPMG LLP are expected to be present at the Annual Meeting
with the opportunity to make a statement if they desire to do so and are
expected to be available to respond to appropriate questions.
THE BOARD OF DIRECTORS RECOMMENDS A VOTE "FOR" RATIFICATION OF THE APPOINTMENT
OF KPMG LLP AS INDEPENDENT AUDITORS OF THE COMPANY'S BOOKS AND RECORDS FOR THE
FISCAL YEAR ENDING DECEMBER 31, 2000.
The affirmative vote of the majority of the votes cast and entitled to vote at
the Annual Meeting is required for ratification of the appointment of KPMG LLP
as described herein. No determination has been made as to what action the Board
of Directors would take if the appointment is not ratified.
<PAGE> 16
PROCEDURE FOR SUBMITTING STOCKHOLDER PROPOSALS
Pursuant to Rule 14a-8 under the Exchange Act, stockholders may present proper
proposals for consideration at and for inclusion in the Company's proxy
statement relating to the next annual meeting of stockholders by submitting
their proposals to the Company in a timely manner. In order to be considered for
inclusion in the proxy statement and proxy relating to the Company's 2001 annual
meeting of stockholders, stockholder proposals must be received by the Company
at its principal executive offices not later than January 31, 2001 and must
otherwise comply with the requirements of Rule 14a-8.
PROXY SOLICITATION
Proxies will be solicited by mail. Proxies may also be solicited by directors,
officers and a small number of regular employees of the Company personally or by
mail, telephone or telegraph, but such persons will not be specially compensated
for such services. Brokerage houses, custodians, nominees and fiduciaries will
be requested to forward the soliciting material to the beneficial owners of
Common Stock held of record by such persons, and the Company will reimburse them
for their expenses in doing so. The full cost of the preparation and mailing of
the Proxy Statement and accompanying materials and the related proxy
solicitations will be borne by the Company.
OTHER MATTERS
Management does not intend to present, and does not have any reason to believe
that others will present, any item of business at the Annual Meeting other than
those specifically set forth in the notice of the Annual Meeting. However, if
other matters are properly presented for a vote at the Annual Meeting, the
persons named in the enclosed proxy and acting thereunder will have discretion
to vote on those matters in accordance with their judgment to the same extent as
the person who signed the proxy would be entitled to vote.
<PAGE> 17
VASCO DATA SECURITY INTERNATIONAL, INC.
ANNUAL MEETING OF STOCKHOLDERS--JUNE 13, 2000
THIS PROXY IS SOLICITED ON BEHALF OF THE BOARD OF DIRECTORS
The undersigned hereby appoints T. Kendall Hunt and Mario Houthooft,
and each of them individually, with full power of substitution, proxy to vote
all the shares of common stock of VASCO Data Security International, Inc., a
Delaware corporation, that the undersigned may be entitled to vote at the Annual
Meeting of Stockholders to be held on June 13, 2000 and at any adjournment
thereof, as designated for the items set forth on the reverse side hereof and in
the Notice of Annual Meeting of Stockholders and the Proxy Statement dated May
2, 2000.
IF PROPERLY EXECUTED, THIS PROXY WILL BE VOTED AS SPECIFIED HEREIN OR,
IF NOT SPECIFIED, WILL BE VOTED FOR THE PROPOSAL IN ITEM 2 WHICH IS DESCRIBED IN
THE ACCOMPANYING PROXY STATEMENT AND FOR THE ELECTION AS DIRECTORS OF THE
NOMINEES NAMED IN ITEM 1. IN THEIR DISCRETION, THE PROXIES ARE AUTHORIZED TO
VOTE UPON SUCH OTHER BUSINESS AS MAY PROPERLY COME BEFORE THE MEETING OR ANY
ADJOURNMENT THEREOF. AT THIS TIME, MANAGEMENT KNOWS OF NO SUCH OTHER BUSINESS.
SEE REVERSE SIDE
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<PAGE> 18
VASCO DATA SECURITY INTERNATIONAL, INC.
PLEASE MARK VOTE IN OVAL IN THE FOLLOWING MANNER USING DARK INK [X]
<TABLE>
<S> <C> <C>
[ ]
THE BOARD OF DIRECTORS RECOMMENDS A VOTE FOR THE ELECTION OF THE
DIRECTORS SET FORTH BELOW AND FOR THE PROPOSAL IN ITEM 2.
1. Election of Directors FOR all nominees listed below WITHHOLD AUTHORITY to vote for
[ ] all nominees listed below [ ]
NOMINEES: T. Kendall Hunt, Michael P. Culinane, Christian Dumolin, Pol Hauspie, Mario R. Houthooft, Forrest D.
Laidley and Michael A. Mulshine.
INSTRUCTION: TO WITHHOLD AUTHORITY TO VOTE FOR ANY INDIVIDUAL NOMINEE, WRITE THE NOMINEE'S NAME IN THE SPACE
PROVIDED BELOW:
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2. Proposal to approve the appointment of KMPG LLP as independent accountants of FOR AGAINST ABSTAIN
the Company for the fiscal year ended December 31, 2000. [ ] [ ] [ ]
Dated: , 2000
--------------------------------------------------
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Signature
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Signature (if held jointly)
IMPORTANT: Please date and sign exactly as the name appears herein
and return this proxy in the enclosed envelope. Persons signing as
executors, administrators, trustees, etc. should so indicate. If
shares are held jointly, each joint owner should sign. In the case
of a corporation or partnership, the full name of the organization
should be used and the signature should be that of a duly
authorized officer or partner.
PLEASE MARK, DATE, SIGN AND RETURN PROMPTLY, IN THE ENCLOSED ENVELOPE.
</TABLE>
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