<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 Section 240.14a-11(c) or Section 240.14a-12
ADVANCE ROSS CORPORATION
- --------------------------------------------------------------------------------
(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] $125 per Exchange Act Rules 0-11(c)(1)(ii), 14a-6(i)(1), 14a-6(i)(2)
or Item 22(a)(2) of Schedule 14A.
[_] $500 per each party to the controversy pursuant to Exchange Act Rule
14a-6(i)(3).
[_] Fee computed on table below per Exchange Act Rules 14a-6(i)(4) 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:
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Notes:
<PAGE>
ADVANCE ROSS CORPORATION
233 SOUTH WACKER DRIVE, SUITE 9700
CHICAGO, ILLINOIS 60606-6502
To the Stockholders of
ADVANCE ROSS CORPORATION:
You are invited to attend the 1995 annual meeting of stockholders of Advance
Ross Corporation which will be held on Monday, June 5, 1995, at 10:00 a.m.,
local time, at the LaSalle Bank Building, Room 1204, 135 South LaSalle Street,
Chicago, Illinois. Accompanying this letter are the official Notice of Meeting
and a Proxy Statement. These items describe the business to be conducted at the
meeting.
At the meeting, the holders of Advance Ross Common Stock will elect two
directors to serve three-year terms expiring at the annual meeting in 1998.
Stockholders will also be asked to ratify the appointment of the independent
auditors for the Company by the Board of Directors for 1995.
We have also enclosed the annual report for Advance Ross for the year ended
December 31, 1994. This report covers financial and other information
concerning the operations of Advance Ross.
If you plan to attend the meeting and are a stockholder of record, please
check your proxy card in the space provided for that purpose. If you plan to
attend the meeting and your shares are held in the name of a broker or other
nominee, please bring a proxy or letter from your broker or other nominee to
the meeting to confirm your ownership of the shares.
Your vote on these matters is important no matter how large your holdings in
the Company's common stock are. We hope you will be able to attend the meeting
in person. Whether you are going to attend in person or not, please vote, date,
sign and mail promptly the enclosed proxy card in the postage prepaid envelope
provided to assure that your shares are represented at the meeting. If you wish
to vote in accordance with the directors' recommendations, you do not have to
mark a choice on the card; all you need to do is date and sign the card and
return it in the envelope provided. If you attend the meeting, you may vote in
person if you wish to do so even though you have sent in your proxy.
Sincerely,
HARVE A. FERRILL
Chairman of the Board and Chief
Executive Officer
Chicago, Illinois
May 4, 1995
<PAGE>
NOTICE OF ANNUAL MEETING
To the Stockholders of
ADVANCE ROSS CORPORATION:
Notice is hereby given that the annual meeting of stockholders of Advance
Ross Corporation will be held at the LaSalle Bank Building, Room 1204, 135
South LaSalle Street, Chicago, Illinois, on Monday, June 5, 1995, at 10:00
a.m., local time, for the following purposes:
(1) To elect two directors to serve until the annual meeting of
stockholders in 1998, and until their respective successors are elected and
qualified;
(2) To ratify the appointment of Deloitte & Touche LLP as independent
auditors for the fiscal year 1995; and
(3) To act upon any other matters which may properly be brought before
the meeting.
The close of business on April 27, 1995, has been fixed by the Board of
Directors as the record date for the determination of stockholders entitled to
notice of, and to vote at, the meeting.
Whether or not you plan on attending the meeting, please vote, date and sign
the enclosed proxy and return it in the enclosed postage prepaid addressed
envelope to Advance Ross Corporation, Midtown Station, P.O. Box 918, New York,
New York 10138-0719. Any stockholder giving a proxy may revoke the proxy at any
time before it is voted by written notice to the Secretary of the Company. If
you attend the meeting, you may, if you wish, withdraw your proxy and vote in
person.
By Order of the Board of Directors
CONSTANCE SCHIRMER
Secretary
Chicago, Illinois
May 4, 1995
ALL STOCKHOLDERS ARE URGED TO ATTEND THE MEETING IN PERSON OR BY PROXY.
WHETHER OR NOT YOU EXPECT TO BE PRESENT AT THE MEETING, PLEASE MARK,
SIGN AND DATE THE ENCLOSED PROXY CARD AND RETURN IT PROMPTLY IN
THE ENCLOSED POSTAGE PREPAID ENVELOPE FURNISHED FOR THAT
PURPOSE.
<PAGE>
ADVANCE ROSS CORPORATION
233 SOUTH WACKER DRIVE, SUITE 9700
CHICAGO, ILLINOIS 60606-6502
----------------
PROXY STATEMENT
----------------
INTRODUCTION
This Proxy Statement is furnished in connection with the solicitation of
proxies on behalf of the Board of Directors of Advance Ross Corporation (the
"Company") for use at the Annual Meeting to be held at the LaSalle Bank
Building, Room 1204, 135 South LaSalle Street, Chicago, Illinois, on Monday,
June 5, 1995, at 10:00 a.m., local time, and any adjournment thereof.
The Annual Meeting will be held for the transaction of business described in
this Proxy Statement and for the transaction of such other business as may
properly come before the meeting. At the date of this Proxy Statement, the only
business which the Board intends to present, or knows that others will present,
is that described in this Proxy Statement.
At the Annual Meeting, the holders of the Company's Common Stock will
consider and vote upon (i) two nominees for election to the Board of Directors
of the Company and (ii) ratification of the Board of Directors' appointment of
independent auditors.
GENERAL
The close of business on April 27, 1995, has been fixed by the Board of
Directors as the record date for the determination of stockholders entitled to
notice of and to vote at the Annual Meeting. Only holders of the Company's
Common Stock will be entitled to vote at the Annual Meeting. As of the close of
business on April 27, 1995, there were outstanding 3,490,826 shares of the
Company's Common Stock, each of which will be entitled to one vote at the
Annual Meeting. A majority of the outstanding shares of the Company's Common
Stock voting in person or by proxy constitutes a quorum. For Proposal 1
(Election of Directors), the vote of a plurality of the shares of the Company's
Common Stock present at the meeting, in person or by proxy, is required for
election. For Proposal 2 (Ratification of Selection of Independent
Accountants), the vote of a majority of the shares of the Company's Common
Stock present at the meeting, in person or by proxy, is required for approval.
All proxies received by the Company will be voted as specified unless revoked
at any time prior to their submission to the Secretary of the Company. All
abstentions will be treated as shares that are present and entitled to vote for
purposes of determining the presence of a quorum but as not voted for purposes
of determining the approval of any other matter submitted to the stockholders
for a vote. If a broker indicates on the proxy that it does not have
discretionary authority as to certain shares to vote on a particular matter,
those shares will not be considered as present and entitled to vote with
respect to that matter.
The entire cost of the solicitation of proxies will be paid by the Company.
Solicitation will be primarily by mail. However, directors, officers and
employees of the Company may also solicit by telephone or personal contact, but
no such person will be compensated for such solicitation. The Company may
retain a professional proxy solicitation organization to assist in soliciting
proxies to the Annual Meeting at a cost expected not to exceed $4,000 plus
expenses. Banks, brokers and others holding shares, either in their own names
or names of nominees for others, will be reimbursed for out-of-pocket expenses
incurred for sending proxy material to the beneficial owners of such shares.
<PAGE>
The Company's 1994 Annual Report accompanies this Proxy Statement. The Annual
Report contains financial and other information about the Company, but the
Annual Report is not incorporated in this Proxy Statement and is not to be
deemed a part of the proxy soliciting material. Unless otherwise indicated, the
"Company" as used in this Proxy Statement, refers to Advance Ross Corporation,
its predecessors and subsidiaries.
The notice of this meeting, this Proxy Statement, a proxy card, a postage
prepaid envelope and the Company's 1994 Annual Report are being mailed on or
about May 4, 1995, to each stockholder of the Company at such holder's address
of record.
ELECTION OF DIRECTORS
(PROPOSAL NO. 1)
The By-laws of the Company provide that the Board of Directors shall consist
of at least five and no more than 11 directors as may be fixed by the Board of
Directors from time to time. The directors are divided into three classes, as
nearly equal in number as possible, designated Class I, Class II and Class III.
At each Annual Meeting of the stockholders, successors to directors whose terms
of office are scheduled to expire at that Annual Meeting are elected for a
three-year term. At present, there are seven directors of the Company.
The Board of Directors is soliciting proxies for the election of Harve A.
Ferrill (who currently serves as Chief Executive Officer, Chairman of the Board
and a director of the Company) and Roger E. Anderson (who currently serves as a
director of the Company) to serve until the annual election of that class of
directors by stockholders in 1998 and until their successors are elected and
qualified.
The persons so authorized in valid proxies received pursuant to this
solicitation will vote the shares represented by such proxies for the election
of Messrs. Ferrill and Anderson as directors. If for some unexpected reason, a
nominee becomes unavailable for election, the votes will be cast pursuant to
the authority granted by the enclosed proxy for a person that will be
designated by the Board of Directors of the Company.
Information regarding the nominees and current directors is set forth below.
There are no marriage, blood or adoptive relationships among the individuals.
Each current director has served continuously since he was first elected.
Unless otherwise indicated, the employment history of each director is for five
or more years.
2
<PAGE>
<TABLE>
<CAPTION>
SHARES OF
COMMON STOCK
BENEFICIALLY
OWNED AS OF
APRIL 27, 1995
-----------------
VOTING &
INVESTMENT
YEAR TERM YEAR FIRST POWER
OF OFFICE BECAME -----------------
NAME AGE WILL EXPIRE DIRECTOR SOLE SHARED
---- --- ----------- ---------- ------- ------
<S> <C> <C> <C> <C> <C>
NOMINEES
Harve A. Ferrill.................. 62 1998 1976 272,300(3) --
Director. Chief Executive Officer
since July 1991, Chairman of the
Board since October 1992.
President, November 1990 to June
1993. Chairman of the Board of
Directors of GeoWaste
Incorporated (waste management)
since August 1991. President of
Ferrill-Plauche Co., Inc.
(private investment company)
since November 1982. Chairman of
the Board of Directors and Chief
Executive Officer of Efficient
Health Systems, Inc. (health care
cost containment services) from
1984 to 1989. Director of Gaylord
Container Corporation (paper
products). (2)(4)
Roger E. Anderson................. 52 1998 1992 42,448(7) --
Director. Partner of Hamilton
Capital Partners since 1991
(investment banking firm).
Partner of Hamilton Associates
since December 1994. President of
Anderson & Co. (investment
company) from 1988 to 1991.
Director of Wennergren-Williams
AB (outdoor advertising). (5)(6)
OTHER DIRECTORS
Harold E. Guenther................ 67 1997 1994 3,000 --
Director. Senior Vice President
of Kemper Financial Services,
Inc. (financial services) since
1988. Director of Kelly Services,
Inc. (temporary help services).
(5)(6)
Duane R. Kullberg................. 62 1997 1992 2,500 --
Director. Retired. Chief
Executive Officer-Managing
Partner of Arthur Andersen & Co.,
S.C. (accounting and consulting
firm) from 1980 to 1989. Director
of Chicago Board Options Exchange
(financial instruments exchange)
and John Nuveen Company
(municipal securities).
(1)(2)(5)(6)
Thomas J. Peterson................ 64 1996 1985 -- 8,000
Director. Senior Vice President
of Golden Bear International,
Inc. since December 1985 (golf
services, club management and
real estate development). (1)
Herbert S. Wander................. 60 1996 1991 10,000 --
Director. Partner, Katten Muchin
& Zavis (law firm). Director of
Telephone & Data Systems, Inc.
(telecommunications). (1)(2)
Paul G. Yovovich.................. 41 1996 1993 203,200(3) --
Director. President and Chief
Operating Officer since June
1993. President of Central
Telephone Company
(telecommunications) from January
1990 through December 1992. Vice
President of Centel Corporation
(tele-communications) from June
1984 to January 1990. Director of
U.S. Robotics, Inc.
(telecommunications manufacturer)
and Illinois Superconductor
Corporation (superconducting
technologies). (2)
</TABLE>
- --------
(1) Member of Compensation Committee.
(2) Member of Executive Committee.
(3) Includes options to acquire 200,000 shares.
(4) Mr. Ferrill also beneficially owns 12 (.06 percent) shares of 5 percent
cumulative preferred stock of the Company.
(5) Member of Audit Committee.
(6) Member of Nominating Committee.
(7) Includes options to acquire 33,424 shares. Excludes options to acquire
100,270 shares, one-third of which will become exercisable on each of
November 2, 1995, 1996 and 1997. Includes 50 shares held by Mr. Anderson's
son.
As of April 27, 1995, 584,048 shares (13.3 percent) of the Company's Common
Stock were beneficially owned by all directors, nominees and officers of the
Company as a group.
3
<PAGE>
BOARD AND COMMITTEE MEETINGS
During 1994, the Board of Directors held five meetings. All of the directors
attended 75 percent or more of all meetings.
The Executive Committee held no meetings during 1994. The Executive Committee
has the authority to exercise, when the Board of Directors is not in session,
the powers and authority of the Board of Directors in the management of the
business and affairs of the Company, subject to certain limitations as provided
by the Delaware General Corporation Law.
The Audit Committee held one meeting in 1994, at which all members were
present.
The Compensation Committee held four meetings in 1994, at which all members
were present. The Compensation Committee also annually reviews the performance
of the executive officers of the Company and the Board.
At a meeting held on March 14, 1994, the Board of Directors appointed a
Nominating Committee. The principal functions of the Nominating Committee are:
(i) to provide criteria to be used as a guideline in selecting and reviewing
candidates for the Board; (ii) to develop and maintain a list of potential
candidates for the Board; (iii) to provide an indoctrination and education
program for new members of the Board; (iv) together with the Compensation
Committee, to review the performance and contribution of outside members of the
Board; and (v) to determine the need for, and qualification of, any corporate
officer to be a candidate for nomination.
The Nominating Committee will consider individuals recommended by
stockholders of the Company as potential future nominees. The names of such
individuals together with a full statement of their qualifications to serve as
directors of the Company should be submitted to the Nominating Committee in
care of the Secretary of the Company at 233 South Wacker Drive, Suite 9700,
Chicago, Illinois 60606-6502. Duane R. Kullberg is the Chairman of the
Nominating Committee.
COMPENSATION OF DIRECTORS
Each director who is not an employee or a consultant of the Company is paid
$1,250 per month.
OWNERSHIP OF VOTING SECURITIES
PRINCIPAL HOLDERS OF VOTING SECURITIES
As of April 27, 1995, the following persons were known to the Company to be
the beneficial owners of more than 5 percent of the Company's Common Stock:
<TABLE>
<CAPTION>
NUMBER OF SHARES OF
COMMON STOCK PERCENT OF
NAME AND ADDRESS OF BENEFICIAL OWNER BENEFICIALLY OWNED(1) CLASS(2)
------------------------------------ --------------------- ----------
<S> <C> <C>
Allen & Co. Incorporated............... 391,400(3) 8.9%
711 Fifth Avenue
New York, New York 10022
Harve A. Ferrill....................... 272,300(4) 6.2%
233 South Wacker Drive
Suite 9700
Chicago, Illinois 60606
</TABLE>
- --------
(1) As used in this section, the term beneficial ownership with respect to a
security is defined by Rule 13d-3 under the Securities Exchange Act of 1934
as consisting of sole or shared voting power (including the power to vote
or direct the vote) and/or sole or shared investment power (including the
power to dispose or direct the disposition) with respect to the security
through any contract, arrangement, understanding, relationship or
otherwise. Unless otherwise indicated, beneficial ownership consists of
sole voting and investment power.
4
<PAGE>
(2) The number of shares of Common Stock outstanding for calculation of the
Percent of Class includes shares of the Company's Common Stock outstanding
on April 27, 1995, shares issuable under stock options exercisable within
60 days held by executive officers and shares held by, and shares issuable
under a warrant held by, Allen & Co. Incorporated. It does not include
shares held by or for the account of the Company.
(3) The number of shares of the Company's Common Stock beneficially owned was
determined by a review of a Schedule 13D and a Form 4 filed with the
Securities and Exchange Commission which state that Allen & Co.
Incorporated has sole voting power and sole dispositive power with respect
to the shares. Allen & Co. Incorporated reported beneficial ownership of
151,400 shares and warrants to acquire an additional 240,000 shares at an
exercise price of $4.75 per share.
(4) Includes options to acquire 200,000 shares.
VOTING SECURITIES BENEFICIALLY OWNED BY OFFICERS AND DIRECTORS
The following table sets forth, as of April 27, 1995, information with
respect to beneficial ownership of shares of the Company's Common Stock by each
director and nominee, all directors and executive officers as a group, and
percent of class.
<TABLE>
<CAPTION>
NUMBER OF SHARES OF
COMMON STOCK PERCENT OF
NAME OF BENEFICIAL OWNER BENEFICIALLY OWNED(1) CLASS(2)
------------------------ --------------------- ----------
<S> <C> <C>
Roger E. Anderson....... 42,448(3) 1.0%
Harve A. Ferrill........ 272,300(4) 6.2%
Harold E. Guenther...... 3,000 *
Duane R. Kullberg....... 2,500 *
Thomas J. Peterson...... 8,000(5) *
Herbert S. Wander....... 10,000 *
Paul G. Yovovich........ 203,200(4) 4.6%
Harvey E. Campbell...... 42,000(6) *
Randy M. Joseph......... 600(7) *
All directors and
executive officers
as a group (9 persons)
(3)(4)(5)(6)(7)........ 584,048 13.3%
</TABLE>
- --------
*Less than 1 percent of class.
(1) As used in this section, the term beneficial ownership with respect to a
security is defined by Rule 13d-3 under the Securities Exchange Act of 1934
as consisting of sole or shared voting power (including the power to vote
or direct the vote) and/or sole or shared investment power (including the
power to dispose or direct the disposition) with respect to the security
through any contract, arrangement, understanding, relationship or
otherwise. Unless otherwise indicated, beneficial ownership consists of
sole voting and investment power.
(2) The number of shares of Common Stock outstanding for calculation of the
Percent of Class includes shares of the Company's Common Stock outstanding
April 27, 1995, shares issuable under stock options exercisable within 60
days held by executive officers and shares held by, and shares issuable
under a warrant held by, Allen & Co. Incorporated. It does not include
shares held by or for the account of the Company.
5
<PAGE>
(3) Includes options to acquire 33,424 shares. Excludes options to acquire
100,270 shares of the Company's Common Stock, one-third of which will
become exercisable on each of November 2, 1995, 1996 and 1997. Includes 50
shares held by Mr. Anderson's son.
(4) Includes options to acquire 200,000 shares.
(5) Shared voting powers.
(6) Includes options to acquire 40,000 shares. Mr. Campbell retired as
executive officer of the Company on November 30, 1994.
(7) Excludes options to acquire 5,000 shares of the Company's Common Stock, 20
percent of which will become exercisable on November 21, 1995, and each of
the following four anniversaries thereof.
SECTION 16 OF THE SECURITIES EXCHANGE ACT
Section 16 of the Securities Exchange Act of 1934, as amended (the "Act"),
requires the Company's officers, directors and persons who own greater than 10
percent of a registered class of the Company's equity securities to file
reports of ownership and changes in ownership with the Securities and Exchange
Commission. Based solely on a review of the forms it has received and on
written representations from certain reporting persons that no such forms were
required for them, the Company believes that during 1994 all Section 16 filing
requirements applicable to its officers, directors and 10 percent beneficial
owners were complied with by such persons.
EXECUTIVE COMPENSATION
The following table provides information concerning the annual and long-term
compensation of the Company's Chief Executive Officer and the other executive
officers of the Company whose salary and bonus exceeded $100,000 for services
in all capacities to the Company for the fiscal years ended December 31, 1994,
1993 and 1992 (the "Named Officers").
SUMMARY COMPENSATION TABLE
<TABLE>
<CAPTION>
ANNUAL LONG TERM
COMPENSATION COMPENSATION
--------------- ------------
AWARDS
------------
OPTIONS/ ALL OTHER
SALARY BONUS SARS COMPENSATION
NAME AND PRINCIPAL POSITION YEAR ($) ($) (#) ($)
--------------------------- ---- ------- ------- ------------ ------------
<S> <C> <C> <C> <C> <C>
Harve A. Ferrill, Chairman 1994 250,000 412,500 0/0 13,356(1)
and Chief Executive Officer...... 1993 175,000 120,000 0/0 15,831(1)
1992 138,316 0 200,000/0 12,922(1)
Paul G. Yovovich, President 1994 200,000 275,003 0/0 6,869(1)
and Chief Operating Officer(2)... 1993 85,000 80,000 200,000/0 128
Harvey E. Campbell, Executive Vice 1994 110,000 62,498 0/0 8,250(1)
President--
Finance and Treasurer(3) 1993 90,000 61,000 0/0 7,896(1)
1992 78,979 0 50,000/0 6,523
</TABLE>
- --------
(1) Represents contributions by the Company pursuant to its Thrift Savings Plan
managed by Aetna Life Insurance Company and supplemental life insurance
paid by the Company.
(2) Mr. Yovovich joined the Company in June 1993.
(3) Mr. Campbell retired as of November 30, 1994, and was succeeded by Randy M.
Joseph.
6
<PAGE>
OPTION GRANTS IN LAST FISCAL YEAR
No options were granted to the Named Officers during 1994. Options to
purchase 5,000 shares were granted to the Company's new Chief Financial
Officer, Randy M. Joseph, as part of his employment arrangement as provided in
the following Table.
OPTION GRANTS IN 1994
<TABLE>
<CAPTION>
POTENTIAL REALIZABLE VALUE AT ASSUMED
ANNUAL RATES OF STOCK PRICE
APPRECIATION FOR OPTION TERM (10
INDIVIDUAL GRANTS YEARS)(1)
- ---------------------------------------------------------------------- -------------------------------------
PERCENT OF TOTAL EXERCISE 5% 10%
OPTIONS GRANTED OR BASE ------------------- -------------------
OPTIONS/ TO EMPLOYEES IN PRICE EXPIRATION PRICE PER AGGREGATE PRICE PER AGGREGATE
NAME SARS FISCAL YEAR ($/SH) DATE SHARE VALUE SHARE VALUE
- ---- -------- ---------------- -------- ---------- --------- --------- --------- ---------
<S> <C> <C> <C> <C> <C> <C> <C> <C>
Randy M. Joseph......... 5,000(2) 100% $20.25 11/21/04 $32.99 $63,700 $52.52 $161,350
</TABLE>
- --------
(1) Potential realizable value is presented net of the option exercise price
but before any federal or state income taxes associated with exercise.
These amounts represent certain assumed rates of appreciation only. Actual
gains, if any, are dependent on the future performance of the Common Stock
and the option holder's continued employment throughout the vesting period.
The amounts reflected in this table may not necessarily be achieved.
(2) These options were granted pursuant to the 1993 Stock Option Plan. 1,000 of
the shares become exercisable on November 21, 1995, and on each of the next
four anniversaries thereof.
1994 YEAR-END OPTION VALUES
The following table provides information regarding the Named Officers'
exercised and unexercised options at December 31, 1994, 350,000 of which were
granted pursuant to the 1992 Stock Option Plan and 105,000 of which were
granted pursuant to the 1993 Stock Option Plan.
1994 YEAR-END OPTION VALUES
<TABLE>
<CAPTION>
NUMBER OF UNEXERCISED VALUE OF UNEXERCISED IN-
OPTIONS AT FISCAL YEAR- THE-MONEY OPTIONS AT
END (#) FISCAL YEAR-END($)
SHARES ACQUIRED VALUE REALIZED ------------------------- -------------------------
NAME ON EXERCISE(#) ($) (1) EXERCISABLE/UNEXERCISABLE EXERCISABLE/UNEXERCISABLE
- ---- --------------- -------------- ------------------------- -------------------------
<S> <C> <C> <C> <C>
Harve A. Ferrill........ 0 0 200,000/0 3,000,000/0(2)
Paul G. Yovovich........ 0 0 200,000/0 2,450,000/0(2)
Harvey E. Campbell...... 5,000 104,375 45,000/0 675,000/0(2)
Randy M. Joseph......... 0 0 0/5,000 0/0(2)
</TABLE>
- --------
(1) An individual, upon exercise of an option, does not receive cash equal to
the amount contained in the Value Realized column of this table. Instead,
the amounts contained in the Value Realized column reflect the increase in
the price of the Company's common stock from the option award date to the
option exercise date. No cash would be realized until shares acquired upon
exercise of an option were sold.
(2) Based upon the $20.00 closing price of the Company's Common Stock on the
Nasdaq National Market on December 31, 1994.
PENSION PLAN
The Company maintains a defined benefit pension plan covering all eligible
employees (those with one year of service and who have attained the age of 21).
7
<PAGE>
The following table sets forth the estimated annual benefits payable upon
retirement under the Company's defined benefit pension plan for specified
compensation and years of service classifications.
PENSION PLAN TABLE (1)
<TABLE>
<CAPTION>
AVERAGE
EARNINGS FOR
LAST FIVE YEARS YEARS OF SERVICE
PRIOR -----------------------------------------------
TO RETIREMENT 10 15 20 25 30 35
- --------------- ------- ------- ------- ------- ------- -------
<S> <C> <C> <C> <C> <C> <C>
$110,000..................... $26,237 $39,355 $39,640 $39,925 $40,210 $40,495
120,000..................... 28,570 42,855 43,140 43,425 43,710 43,995
130,000..................... 30,903 46,355 46,640 46,925 47,210 47,495
140,000..................... 33,237 49,855 50,140 50,425 50,710 50,995
150,000..................... 35,570 53,355 53,640 53,925 54,210 54,495
160,000..................... 37,903 56,855 57,140 57,425 57,710 57,995
170,000..................... 40,237 60,355 60,640 60,925 61,210 61,495
180,000..................... 42,570 63,855 64,140 64,425 64,710 64,995
190,000..................... 44,903 67,355 67,640 67,925 68,210 68,495
200,000..................... 47,237 70,855 71,140 71,425 71,710 71,995
210,000..................... 49,570 74,355 74,640 74,925 75,210 75,495
220,000..................... 51,903 77,855 78,140 78,425 78,710 78,995
230,000..................... 54,237 81,355 81,640 81,925 82,210 82,495
240,000..................... 56,570 84,855 85,140 85,425 85,710 85,995
250,000..................... 58,903 88,355 88,640 88,925 89,210 89,495
260,000..................... 61,237 91,855 92,140 92,425 92,710 92,995
270,000..................... 63,570 95,355 95,640 95,925 96,210 96,495
280,000..................... 65,903 98,855 99,140 99,425 99,710 99,995
290,000..................... 68,237 102,355 102,640 102,925 103,210 103,495
300,000..................... 70,570 105,855 106,140 106,425 106,710 106,995
</TABLE>
- --------
(1) The benefit amounts listed in the table are computed on a straight-life
annuity basis and are not subject to any deductions for Social Security
benefits.
The annual pension benefits of a participant in the Company's defined benefit
pension plan are the sum of: (i) $57 multiplied by the number of years of
service completed; and (ii) 2 1/3 percent of the participant's average annual
base wages for the five years prior to retirement multiplied by the number of
years of service completed (not exceeding 15 such years).
The estimated number of years of service credited to the Named Officers under
the pension plan and their current compensation covered by the plan is four
years and $250,000 for Mr. Ferrill and one year and $200,000 for Mr. Yovovich.
EMPLOYMENT AGREEMENTS
The Company is party to employment agreements with Messrs. Ferrill, Yovovich
and Joseph. The Compensation Committee of the Company's Board of Directors has
established, effective January 1, 1994, the base annual salaries paid to
Messrs. Ferrill and Yovovich at $250,000 and $200,000, respectively. Mr.
Joseph's annual salary was set at $110,000 as part of his becoming Chief
Financial Officer of the Company. The salaries of Messrs. Ferrill, Yovovich and
Joseph may be further increased by the Compensation Committee.
The employment agreements of Messrs. Ferrill and Yovovich each specify that
the date upon which the term of their employment with the Company ("Employment
Period") is deemed to have ended depends upon the reason for their termination.
Each of the employment agreements provide that if the Company discharges
8
<PAGE>
the executive other than "for cause" or by reason of his disability, or if the
executive resigns because the Company has reduced his salary or changed his
duties or because a change in circumstances affecting management prevents him
from exercising his authorities or powers, then the Employment Period will be
deemed, for purposes of the below-described severance payment, to have
continued until the third anniversary of the date of such termination. In these
circumstances, the executive will be entitled to receive from the Company,
within 60 days after such discharge or resignation, a lump-sum severance
payment equal to the salary payments he would have received, and the pension
benefits he would have accrued, during the remainder of the Employment Period.
Pursuant to each of the employment agreements with Messrs. Ferrill and
Yovovich, if the executive resigns for any reason other than those listed
above, his Employment Period will be deemed to have ended 30 days after the
date on which the executive notified the Company of such resignation. If the
Company discharges the executive "for cause", the Employment Period will
terminate immediately upon notice. In neither of these instances will the
executive be entitled to receive severance payments. If the Company discharges
the executive by reason of his disability, the executive will receive salary
payments through the first anniversary of the commencement of the disability.
If the executive should die during the Employment Period or while receiving
such disability payments, his surviving spouse or estate will be paid a lump
sum equal to the executive's annual salary (less the amount of any disability
payments made).
The terms of Mr. Joseph's employment agreement specify that if by July 21,
1995, his employment is terminated by the Company other than for cause, he
shall be paid six months' salary plus an amount to provide health care
insurance for one year. If after July 21, 1995, his employment is terminated by
the Company other than for cause, or if by July 21, 1995, his employment is
terminated other than for cause by a change in control, he shall be paid one
year's salary plus an amount to provide health insurance for one year.
On March 14, 1994, the Compensation Committee approved a supplemental
retirement benefit for Mr. Ferrill in the amount of $125,000 payable annually
as a single life annuity beginning on the date on which Mr. Ferrill attains at
least the age of 65. This amount would be reduced by benefits payable from the
Company's defined benefit pension plan and from its defined contribution plan
based upon the Company's contributions.
CERTAIN TRANSACTIONS
Pursuant to a consulting agreement, Hamilton Capital Partners, one of the
partners of which is Roger E. Anderson, a director, was entitled to a minimum
fee of $100,000 in 1994 and an additional fee calculated pursuant to a formula
based on the return on equity of Europe Tax-Free Shopping Ltd. ("ETS") (offset
by the minimum fee payment). In 1994, the amount of the additional fee earned
was $334,152. The agreement ran through December 31, 1994, and was not
extended. The terms of the agreement specify that since the agreement was not
extended, the Company will be obligated to pay Hamilton Capital Partners an
amount in both 1995 and 1996 pursuant to a formula based on ETS's return on
equity.
William W. Staudt served as a director of the Company until he resigned on
December 31, 1994. Mr. Staudt is a partner with Hamilton Capital Partners. At
the time of his resignation, the Company entered into a joint venture with him
to develop a trade-related promotion business.
COMPENSATION COMMITTEE INTERLOCKS AND INSIDER PARTICIPATION
Herbert S. Wander, a director of the Company, is a professional corporate
member of Katten Muchin & Zavis, a law firm. Katten Muchin & Zavis has
provided, and will continue to provide, legal services to the Company.
9
<PAGE>
COMPENSATION COMMITTEE REPORT
In March 1993, the Company established a Compensation Committee to adopt a
compensation policy and set of goals that will attract, retain and incentivize
the executive officers of the Company with a view to enhancing stockholder
value. The Compensation Committee has adopted an executive compensation policy
that is intended to maintain for the Company a small cadre of highly qualified
and professional executives that are motivated to increase shareholder value.
During 1994, the Compensation Committee reviewed the performance of the
Company's executive officers, particularly their role in expanding ETS,
overseeing the ETS operations and implementing strategic planning for the
Company and ETS.
Salary
Based on its review of the performance of the Company's Chief Executive
Officer, Chief Operating Officer and Chief Financial Officer--Messrs. Ferrill,
Yovovich and Campbell--the Compensation Committee set the 1994 annual salaries
for these officers at $250,000 for Mr. Ferrill, $200,000 for Mr. Yovovich and
$110,000 for Mr. Campbell. To supplement the annual salaries and to incentivize
the executive officers, the Compensation Committee also adopted a 1994
Performance Bonus Plan ("1994 Bonus Plan") as described below. Mr. Yovovich was
elected President, Chief Operating Officer and a Director of the Company on
June 15, 1993.
The Compensation Committee has established the 1995 annual salaries for
Messrs. Ferrill and Yovovich at the same rate as they received in 1994. Mr.
Campbell retired on November 30, 1994, and was succeeded by Randy M. Joseph.
Under Mr. Joseph's negotiated employment arrangement, he will receive a 1995
salary of $110,000.
Bonus
The Compensation Committee adopted the 1994 Bonus Plan to motivate the
Company's executive officers to earn additional compensation if the established
performance goals were achieved and also in recognition of the significantly
increased responsibilities of the executive officers as a result of the ETS
acquisition. The performance standards were established by the Compensation
Committee based upon the experience of its members and their subjective
judgment that such standards would provide incentive to the executive officers;
if the goals were achieved, the stockholders would be benefitted significantly;
and that the bonus compensation to be earned would be appropriate in view of
the value that would accrue to the Company's stockholders. The 1994 Bonus Plan
was based solely upon increases in earnings per share (calculated after bonus
accrual but before extraordinary or one-time unusual items) achieved in 1994 as
compared to 1993. No Bonus would be payable unless there was a 10 percent
increase in earnings per share and the Bonus Pool was set at a maximum of
$750,000.
The Compensation Committee has adopted a similar Performance Bonus Plan for
1995 ("1995 Bonus Plan"); no payments will be made under the 1995 Bonus Plan
unless a 5 percent increase in earnings per share is achieved in 1995 over the
earnings per share achieved in 1994; the 1995 Bonus Plan is also capped at
$750,000. Because of the changes in the European Union that took place January
1, 1995, and because of the unusually outstanding performance achieved by the
Company in 1994, the Compensation Committee does not anticipate that the
bonuses paid under the 1995 Bonus Plan will be as high as those paid under the
1994 Bonus Plan.
The Compensation Committee believes that compensation paid pursuant to the
1995 Bonus Plan to be tax deductible to the Company pursuant to Section 162(m)
of the Internal Revenue Code ("Section 162(m)") since the aggregate bonus
payments that can be made to all of the Company's three executive officers
cannot exceed $750,000 and none of the executive officers can earn cash
compensation in 1995 that would be subject to the Section 162(m) limitation.
Section 162(m) provides that compensation paid to any of the Company's three
executive officers in excess of $1 million cannot be deducted by the Company
for federal income tax
10
<PAGE>
purposes unless, in general, such compensation is performance based, is
established by an independent committee of directors, is objective and the plan
or agreement providing for such performance based compensation has been
approved in advance by stockholders.
Stock Options
No stock options were granted Messrs. Ferrill, Yovovich or Campbell during
1993 or 1994 except as part of Mr. Yovovich's negotiated employment agreement,
under which he was granted in 1993 ten-year options to purchase a total of
200,000 shares of the Company's Common Stock, 100,000 at an exercise price of
$7.50 per share and 100,000 at $8.00 per share, which were the fair market
values of the Company's Common Stock on the dates of the grants. Mr. Joseph was
granted ten-year options to purchase 5,000 shares of the Company's Common Stock
at an exercise price of $20.25 per share as part of his becoming Chief
Financial Officer of the Company. The Compensation Committee has under
consideration the granting of stock options to the three executive officers
during 1995.
Based on regulations proposed by the Internal Revenue Service under Section
162(m), the Compensation Committee believes any compensation deemed earned by
the Company's executive officers upon exercise of any of the outstanding stock
options will be deductible by the Company under Section 162(m).
1994/1995 Compensation Committee
Thomas J. Peterson
Duane R. Kullberg
Herbert S. Wander, Chairman
11
<PAGE>
PERFORMANCE GRAPH
The following graph shows a five year comparison of cumulative total returns
for the Company, the Russell 2000 Index and the Russell 2000 Financial Services
Group. The comparison assumes $100 was invested on December 31, 1989, in the
Company's Common Stock, in the Russell 2000 Index and in the Russell 2000
Financial Services Group and assumes the reinvestment of all dividends, if any.
[GRAPH APPEARS HERE]
<TABLE>
<S> <C> <C> <C> <C> <C> <C>
1989 1990 1991 1992 1993 1994
-----------------------------------------------------------------------
. Advance Ross Corporation 100.00 102.47 92.59 155.56 367.90 395.06
-----------------------------------------------------------------------
(D) Russell 2000 Index 100.00 80.49 117.56 139.21 165.52 162.51
-----------------------------------------------------------------------
[_] Russell 2000 Financial
Services 100.00 72.60 119.98 177.63 218.34 219.69
</TABLE>
RATIFICATION OF SELECTION OF INDEPENDENT AUDITORS
(PROPOSAL NO. 2)
The Board of Directors has appointed Deloitte & Touche LLP as independent
auditors for the Company for the fiscal year ending December 31, 1995. This
appointment is conditioned upon the ratification of the appointment by an
affirmative vote of a majority of the outstanding shares of the Company's
Common Stock voting in person or by proxy at the Annual Meeting. If the
appointment is not so approved, the Board of Directors of the Company will
reconsider its selection of independent auditors. A representative of Deloitte
& Touche LLP will be present at the meeting and will have an opportunity to
make a statement if he or she so desires and will be available to respond to
questions.
The Board of Directors recommends that stockholders vote FOR the ratification
of Deloitte & Touche LLP as independent auditors for 1995.
12
<PAGE>
FUTURE STOCKHOLDER PROPOSALS
Stockholders should note that in order to be considered (i) for inclusion in
the Proxy Statement for the 1996 Annual Meeting of Stockholders or (ii) at such
1996 Annual Meeting, stockholder proposals must be received by the Company no
later than February 23, 1996.
----------------
The solicitation of proxies in the form which accompanies this Proxy
Statement is made on behalf of the Board of Directors of the Company. Proxies
in such form will confer discretionary authority with respect to any other
matters which may properly be brought before the meeting.
The Annual Meeting of Stockholders will be held for the transaction of
business described above and for the transaction of such other business as may
properly come before the meeting. At the date of this Proxy Statement, the only
business which management intends to present, or knows that others will
present, is that described in this Proxy Statement. If other matters properly
come before the meeting, the Proxies, in their discretion, are authorized to
vote upon such other business.
By order of the Board
Harve A. Ferrill
Chairman of the Board and Chief
Executive Officer
Dated: May 4, 1995
13
<PAGE>
ADVANCE ROSS CORPORATION
PROXY FOR 1995 ANNUAL MEETING
THIS PROXY IS SOLICITED ON BEHALF OF THE
BOARD OF DIRECTORS OF ADVANCE ROSS CORPORATION
TO VOTE AT THE ANNUAL MEETING IN ACCORDANCE WITH THE RECOMMENDATIONS OF THE
BOARD OF DIRECTORS OF ADVANCE ROSS CORPORATION, SIGN AND DATE THE REVERSE SIDE
OF THIS CARD WITHOUT CHECKING ANY BOX.
The undersigned holder of Common Stock, par value $.01 per share, of Advance
Ross Corporation (the "Company") hereby appoints Harve A. Ferrill and Randy M.
Joseph, or either of them, with full power of substitution in each, as proxies
to cast all votes which the undersigned stockholder is entitled to cast at the
annual meeting of stockholders (the "Annual Meeting") to be held on Monday,
June 5, 1995, at 10:00 a.m., local time, at the LaSalle Bank Building, Room
1204, 135 S. LaSalle Street, Chicago, Illinois, and at any adjournments
thereof, upon the following matters. The undersigned stockholder hereby revokes
any proxy or proxies heretofore given.
THIS PROXY WILL BE VOTED AS DIRECTED HEREIN BY THE UNDERSIGNED STOCKHOLDER.
UNLESS CONTRARY DIRECTION IS GIVEN, THIS PROXY WILL BE VOTED FOR PROPOSALS 1
AND 2 AND IN ACCORDANCE WITH THE DETERMINATION OF THE BOARD OF DIRECTORS AS TO
OTHER MATTERS. THE UNDERSIGNED STOCKHOLDER MAY REVOKE THIS PROXY AT ANY TIME
BEFORE IT IS VOTED BY DELIVERING TO THE CORPORATE SECRETARY OF THE COMPANY
EITHER A WRITTEN REVOCATION OF THE PROXY OR A DULY EXECUTED PROXY BEARING A
LATER DATE, OR BY APPEARING AT THE ANNUAL MEETING AND VOTING IN PERSON. THE
UNDERSIGNED STOCKHOLDER HEREBY ACKNOWLEDGES RECEIPT OF THE NOTICE OF ANNUAL
MEETING OF STOCKHOLDERS AND PROXY STATEMENT.
(Continued and to be signed on the reverse side.)
- --------------------------------------------------------------------------------
. FOLD AND DETACH HERE .
<PAGE>
--------------------------------
I PLAN TO ATTEND THE MEETING
[_]
--------------------------------
1. Election of Directors.
FOR all nominees WITHHOLD
listed to the right AUTHORITY to
(except as marked vote for all nominees
to the contrary) listed to the right
[_] [_]
(INSTRUCTION: To withhold authority to vote for any individual nominee, strike
a line through the nominee's name in the list below.)
Harve A. Ferrill Roger E. Anderson
If a nominee becomes unavailable for election or unable to serve as a director,
the votes will be cast for a person that will be designated by the Board of
Directors of the Company.
2. Ratification of the appointment of Deloitte & Touche LLP as the independent
public auditors of the Company.
For Against Abstain
[_] [_] [_]
3. In their discretion, the proxies are authorized to vote upon such other
business as may properly come before the Annual Meeting, or any adjournments
thereof.
Please date and sign exactly as the name
appears hereon. Each executor, administrator,
trustee, guardian, attorney-in-fact and other
fiduciary should sign and indicate his or her
full title. Only one signature is required in
the case of stock ownership in the name of two
or more persons, but all should sign if
possible.
Date:
------------------------------------------
-----------------------------------------------
Signature of Stockholder(s) or
Authorized Representative(s)
PLEASE SIGN, DATE AND RETURN THIS CARD PROMPTLY USING THE ENCLOSED POSTAGE
PREPAID ENVELOPE.
IF YOU RECEIVE MORE THAN ONE PROXY CARD, PLEASE SIGN AND
RETURN ALL CARDS IN THE ENCLOSED POSTAGE PREPAID ENVELOPE.
PLEASE MARK YOUR CHOICE LIKE THIS [_] IN BLUE OR BLACK INK
- --------------------------------------------------------------------------------
"PLEASE MARK INSIDE BLUE BOXES SO THAT DATA PROCESSING EQUIPMENT WILL RECORD
YOUR VOTES"
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
. FOLD AND DETACH HERE .
