<PAGE>
SCHEDULE 14A INFORMATION
(RULE 14A-101)
INFORMATION REQUIRED IN PROXY STATEMENT
SCHEDULE 14A INFORMATION
PROXY STATEMENT PURSUANT TO SECTION 14(a) OF THE
SECURITIES EXCHANGE ACT OF 1934
Filed by the Registrant [X]
Filed by a Party other than the Registrant [ ]
Check the appropriate box:
[ ] Preliminary Proxy Statement
[ ] Confidential, For Use of the Commission Only
(as permitted by Rule 14a-6(e)(2))
[X] Definitive Proxy Statement
[ ] Soliciting Material Pursuant to Rule 14a-11(c) or Rule 14a-12
The Cerplex Group, Inc.
- -------------------------------------------------------------------------------
(Name of Registrant as Specified In Its Charter)
Not applicable
- -------------------------------------------------------------------------------
(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:
Not applicable
---------------------------------------------------------------------------
(2) Aggregate number of securities to which transaction applies:
Not applicable
---------------------------------------------------------------------------
(3) Per unit price or other underlying value of transaction computed
pursuant to Exchange Act Rule 0-11:
Not applicable
---------------------------------------------------------------------------
(4) Proposed maximum aggregate value of transaction:
Not applicable
---------------------------------------------------------------------------
2
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(5) Total fee paid:
Not applicable
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[ ] Fee paid previously with preliminary material:
Not applicable
- --------------------------------------------------------------------------------
[ ] Check box if any part of the fee is offset as provided by Exchange Act
Rule 0-11(a)(2) and identify the filing for which the offsetting fee was
paid previously. Identify the previous filing by registration statement
number, or the Form or Schedule and the date of its filing.
(1) Amount Previously Paid:
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(2) Form, Schedule or Registration Statement No.:
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(3) Filing Party:
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(4) Date Filed:
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3
<PAGE>
THE CERPLEX GROUP, INC.
NOTICE OF ANNUAL MEETING OF STOCKHOLDERS
TO BE HELD APRIL 5, 2000
TO THE STOCKHOLDERS OF THE CERPLEX GROUP, INC.
NOTICE IS HEREBY GIVEN that the Annual Meeting of Stockholders of The
Cerplex Group, Inc., a Delaware corporation (the "Company"), will be held on
Tuesday, April 5, 2000, at 2:00 p.m. Pacific Time (the "Annual Meeting") at the
Corporate Headquarters of The Cerplex Group, Inc. located at 111 Pacifica
Avenue, Suite 300, Irvine, California 92618, for the following purposes, as more
fully described in the Proxy Statement accompanying this Notice:
1. To elect four directors of the Company to serve for one-year terms
expiring at the next annual meeting of stockholders or until their
successors are duly elected and qualified;
2. To ratify the appointment of KPMG LLP as the Company's public
accountants and independent auditors for the fiscal year ending
September 30, 2000; and
3. To transact such other business as may properly come before the meeting
or any adjournment or adjournments thereof.
Only stockholders of record at the close of business on February 14, 2000
(the "Record Date"), are entitled to notice of and to vote at the Annual
Meeting. The stock transfer books of the Company will remain open between the
Record Date and the date of the meeting. A list of stockholders entitled to vote
at the Annual Meeting will be available for inspection at the executive offices
of the Company.
All stockholders are cordially invited to attend the meeting in person.
Whether or not you plan to attend, please sign and return the enclosed proxy as
promptly as possible in the envelope enclosed for your convenience. Should you
receive more than one proxy because your shares are registered in different
names and addresses, each proxy should be signed and returned to assure that all
your shares will be voted. You may revoke your proxy at any time prior to the
Annual Meeting. If you attend the Annual Meeting and vote by ballot, your proxy
will be revoked automatically and only your vote at the Annual Meeting will be
counted.
Sincerely,
George L. McTavish
Chief Executive Officer and
Chairman of the Board of Directors
Irvine, California
January 24, 2000
YOUR VOTE IS VERY IMPORTANT, REGARDLESS OF THE NUMBER OF SHARES YOU OWN. PLEASE
READ THE ATTACHED PROXY STATEMENT CAREFULLY, COMPLETE, SIGN AND DATE THE
ENCLOSED PROXY CARD AS PROMPTLY AS POSSIBLE AND RETURN IT IN THE ENCLOSED
ENVELOPE.
4
<PAGE>
THE CERPLEX GROUP, INC.
111 PACIFICA AVENUE SUITE 300
IRVINE, CALIFORNIA 92618
------------------------
PROXY STATEMENT
------------------------
FOR THE ANNUAL MEETING OF STOCKHOLDERS
TO BE HELD ON APRIL 5, 2000
GENERAL
The enclosed proxy (the "Proxy") is solicited on behalf of the Board of
Directors of The Cerplex Group, Inc., a Delaware corporation (the "Company"),
for use at the Annual Meeting of Stockholders to be held on Wednesday, April 5,
2000 (the "Annual Meeting"). The Annual Meeting will be held at 2:00 p.m.
Pacific Time at the Corporate Headquarters of The Cerplex Group, Inc. located at
111 Pacifica Avenue, Suite 300, Irvine, California 92618. These proxy
solicitation materials will be mailed on or about February 17, 2000, to all
stockholders entitled to vote at the Annual Meeting.
VOTING
The specific proposals to be considered and acted upon at the Annual
Meeting are summarized in the accompanying Notice and are described in more
detail in this Proxy Statement. On January 21, 2000 7,375,913 shares of the
Company's common stock, par value $0.03 per share (the "Common Stock"), were
issued and outstanding and 215,501 shares of the Company's 7% Senior Cumulative
Convertible Preferred Stock, par value $0.01 per share (the "Preferred Stock"),
were issued and outstanding. The record date for determination of stockholders
entitled to notice of and to vote at the Annual Meeting shall be February 14,
2000 (the "Record Date"). Each holder of Common Stock is entitled to one vote
for each share of Common Stock held by such stockholder on the Record Date. Each
holder of Preferred Stock is entitled to one vote, together with the Common
Stock as a single class on each matter duly presented for a vote at the Annual
Meeting, for each share of Common Stock into which the shares of Preferred Stock
of such holder are convertible as of the Record Date. As of January 21, 2000,
the 215,501 shares of Preferred Stock issued and outstanding were convertible
into 8,620,040 shares of Common Stock.
All votes will be tabulated by the inspector of elections appointed for the
meeting, who will separately tabulate affirmative and negative votes,
abstentions and broker non-votes. The presence at the Annual Meeting, in person
or by proxy, of the holders of a majority of the votes entitled to be cast by
the Common Stock and the Preferred Stock will constitute a quorum for the
transaction of business at the Annual Meeting. If a quorum is not present, in
person or by proxy, the Annual Meeting may be adjourned from time to time until
a quorum is obtained. The presence at the Annual Meeting, in person or by proxy,
of investment funds managed by Welsh, Carson, Anderson & Stowe, is sufficient to
constitute a quorum. Abstentions and broker non-votes are counted as present for
purposes of determining the presence or absence of a quorum for the transaction
of business.
The election of directors will be decided by a plurality of the votes
5
<PAGE>
present or represented by proxy and entitled to be cast at the Annual Meeting by
the holders of the Common Stock and the Preferred Stock. Stockholders may not
cumulate votes in the election of directors. In all matters other than the
election of directors, the affirmative vote of a majority of the votes present
or represented by proxy and entitled to be cast at the Annual Meeting by the
holders of the Common Stock and Preferred Stock is required to take stockholder
action. With regard to the election of directors, votes may be cast in favor of
or withheld from each nominee; votes that are withheld will be excluded entirely
from the vote and will have no effect. Abstentions may be specified on all
proposals except the election of directors and will be counted as present for
purposes of determining the existence of a quorum regarding the item on which
the abstention is noted and will also be counted for purposes of determining
whether stockholder approval of that item has been obtained.
If shares are not voted by the broker who is the record holder of the
shares, or if shares are not voted in other circumstances in which proxy
authority is defective or has been withheld with respect to any matter, these
non-voted shares are not deemed to be present or represented for purposes of
determining whether stockholder approval of that matter has been obtained.
PROXIES
If the enclosed form of Proxy is properly signed and returned, the shares
represented thereby will be voted at the Annual Meeting in accordance with the
instructions specified thereon. If the Proxy does not specify how the shares
represented thereby are to be voted, the Proxy will be voted FOR the election of
the directors proposed by the Board of Directors unless the authority to vote
for the election of such directors is withheld. If no contrary instructions are
given, the Proxy will be voted FOR the approval of Proposal 2 described in the
accompanying Notice and this Proxy Statement. You may revoke or change your
Proxy at any time before the Annual Meeting by filing with the Principal
Financial Officer of the Company at the Company's principal executive offices at
111 Pacifica Avenue Suite 300, Irvine, California 92618, a notice of revocation
or another signed Proxy with a later date. You may also revoke your Proxy by
attending the Annual Meeting and voting in person.
SOLICITATION
The Company will bear the entire cost of solicitation, including the
preparation, assembly, printing and mailing of this Proxy Statement, the Proxy
and any additional solicitation materials furnished to the stockholders. Copies
of solicitation materials will be furnished to brokerage houses, fiduciaries and
custodians holding shares in their names that are beneficially owned by others
so that they may forward this solicitation material to such beneficial owners.
In addition, the Company may reimburse such persons for their costs in
forwarding the solicitation materials to such beneficial owners. The original
solicitation of proxies by mail may be supplemented by a solicitation by
telephone, telegram or other means by directors, officers or employees of the
Company. No additional compensation will be paid to these individuals for any
such services. Except as described above, the Company does not presently intend
to solicit proxies other than by mail.
6
<PAGE>
MATTERS TO BE CONSIDERED AT ANNUAL MEETING
PROPOSAL NO. 1
ELECTION OF DIRECTORS
GENERAL
The Board of Directors of the Company currently consists of four members,
all of which are proposed to be re-elected at the Annual Meeting. The directors
elected will serve for one-year terms, expiring at the next annual meeting of
stockholders or until their successors have been duly elected and qualified.
The nominees for election have agreed to serve if elected, and management
has no reason to believe that such nominees will be unavailable to serve. In the
event the nominees are unable or decline to serve as directors at the time of
the Annual Meeting, their proxies will be voted for any nominee who may be
designated by the present Board of Directors to fill the vacancy. Unless
otherwise instructed, the proxy holders will vote the proxies received by them
FOR the nominees named below.
Nominations for election to the Board of Directors may be made by the Board
of Directors, a nominating committee appointed by the Board of Directors or by
any stockholder entitled to vote for the election of directors. Nominations made
by stockholders must be made by written notice, certified mail, return-receipt
requested and received by the Secretary of the Company by December 1 of any
calendar year. If, however, less than thirty days' notice of a stockholders'
meeting called for the election of directors is given to stockholders,
nominations by stockholders must be so made and received by the Secretary of the
Company not later than the close of business on the tenth day following the day
on which the notice was mailed. Such notice shall set forth as to each proposed
nominee who is not an incumbent director: (a) the name, age, business address
and, if known, residence address of each nominee proposed in such notice; (b)
the principal occupation or employment of each such nominee; (c) the number of
shares of Common Stock of the Company that are beneficially owned by each such
nominee and the nominating stockholder; and (d) any other information concerning
the nominee that must be disclosed of nominees in proxy solicitations pursuant
to Rule 14(a) of the Securities Exchange Act of 1934, as amended (the "Exchange
Act").
DIRECTOR NOMINEES
George L. McTavish. Mr. McTavish, 58, has been the Chairman and Chief
Executive Officer of the Company since January 1998. From November 1987 through
March 1998, Mr. McTavish was the Chief Executive Officer and Chairman of the
Board of Directors of Comdata Holdings Corporation ("Comdata"). In March 1992,
in connection with the merger of Comdata with Ceridian Corporation, Mr. McTavish
was appointed Executive Vice President of Ceridian Corporation in which capacity
he served until December 1997. He also held the positions of President, Chief
Executive Officer and Chairman of the Board for Hogan Systems from September
1984 through July 1997. During the time from February 1980 through August 1984,
Mr. McTavish served as Senior Vice President, Executive Vice President and Chief
Operating Officer of SEI Corporation.
Thomas E. McInerney. Mr. McInerney, 58, has served as a director of the
Company since March 1996. Since 1987, Mr. McInerney has been a general partner
of Welsh, Carson, Anderson & Stowe and has been a general partner of the
respective sole general partners of its associated limited partnerships. Mr.
McInerney is a director of Centennial Cellular Corp, an independent provider of
wireless communications in the United States and Puerto Rico; SpectraSite
Holdings, Inc., a provider of outsourced antennae site and network services for
the wireless communications and broadcast industries in the United States and
Canada; and several private companies.
7
<PAGE>
Richard H. Stowe. Mr. Stowe, 56, has served as a director of the Company
since March 1996. Mr. Stowe has been a general partner of Welsh, Carson,
Anderson & Stowe and was a general partner of the respective sole general
partners of its associated limited partnerships from 1979 through December 1999.
Mr. Stowe is a senior advisor to Capital Counsel L.L.C. Mr. Stowe is also a
director of New American Healthcare Corporation, which owns non-urban hospitals;
MedQuist Inc., a provider of transcription services to physicians; Health
Management Systems, Inc., a provider of revenue enhancement services for health
care providers and payors; and several other private companies.
Bruce K. Anderson. Mr. Anderson, 59, has served as a director of the
Company since June 1999 at which time, pursuant to the Company's By-Laws, he was
appointed by the Board of Directors to fill a vacancy. Mr. Anderson has been a
general partner of Welsh, Carson, Anderson & Stowe and has been a general
partner of the respective sole general partners of its associated limited
partnerships since 1979. Mr. Anderson is also Chief Executive Officer and
Chairman of the Board of Directors of AMDOCS Ltd., a software and services
company focused on the telephone industry, and a director of several private
companies. Previously, he spent nine years with Automatic Data Processing, Inc.
(ADP), where he was active in both corporate development and general management.
BOARD COMMITTEES AND MEETINGS
The business of the Company is managed under the direction of the Board of
Directors. The Board of Directors met or acted by unanimous written consent four
times during the fiscal year ended September 25, 1999 (the "1999 Fiscal Year").
The Board of Directors has an Audit Committee and a Compensation and Stock
Option Committee. Each director attended or participated in 75% or more of the
aggregate of (i) the total number of meetings of the Board of Directors and (ii)
the total number of meetings held by all committees of the Board of Directors on
which such director served during the 1999 Fiscal Year.
Audit Committee. The Audit Committee currently consists of two directors,
Mr. McInerney and Mr. Anderson, and is empowered to recommend to the Board of
Directors a firm of certified public accountants to conduct audits of the
accountants and affairs of the Company, review accounting objectives and
procedures of the Company and the findings and reports of the independent
certified public accountants, and make such reports and recommendations to the
Board of Directors as it deems appropriate. The Audit Committee met or acted by
unanimous written consent four times during the 1999 Fiscal Year.
Compensation and Stock Option Committee. The Compensation and Stock Option
Committee currently consists of two directors, Mr. Anderson and Mr. McInerney.
The committee is empowered to establish and revise the compensation paid to all
executive officers of the Company and has complete authority to (a) construe,
interpret, and administer the provisions of the Company's 1998 Stock Option and
Restricted Stock Purchase Plan (the "Plan") and the provisions of the option
agreements granted thereunder; (b) select the key employees, consultants, and
directors to whom awards are granted, the number of options, the number of
shares of Common Stock with respect to each option, the exercise price or prices
of each option, the vesting and exercise period of each option, whether an
option may be exercised as to less than all of the Company's Common Stock
subject to the option, and such other terms and conditions of each option, if
any, that are not inconsistent with the provisions of the Plan; (c) prescribe,
amend, and rescind rules and regulations pertaining to the Plan; and (d) make
all other determinations necessary or advisable for their implementation and
administration. The Compensation and Stock Option Committee met or acted by
unanimous written consent four times during the 1999 Fiscal Year.
8
<PAGE>
The Company's Board of Directors does not have a standing nominating
committee or any other committee performing a similar function. The function
customarily attributable to a nominating committee is performed by the Company's
Board of Directors as a whole.
DIRECTOR COMPENSATION
During the 1999 Fiscal Year, the Company did not pay any fees or grant any
stock options to any directors for serving on the Board of Directors. All
directors are entitled to reimbursement for expenses incurred for attendance at
each meeting.
For years prior to the 1998 Fiscal Year, each non-employee director
received $2,500 for each quarter that such person served as a director of the
Company, and was automatically granted nonqualified stock options to purchase
25,000 shares of the Company's Common Stock upon election to the Board of
Directors and options to purchase 5,000 shares of the Company's Common Stock on
the date of each annual meeting of the Company's stockholders when such
non-employee director had served on the Board of Directors for the immediately
preceding 181 consecutive days, had agreed to serve as a director upon such
re-election and was re-elected to the Board of Directors. This compensation of
non-employee directors was suspended for the 1998 Fiscal Year, but the Board of
Directors may re-examine the issue and may reinstate a program for automatic
option grants and/or cash fees to non-employee directors in order to attract and
retain qualified directors.
RECOMMENDATION OF THE BOARD OF DIRECTORS
The Board of Directors recommends that the stockholders vote FOR the
election of the nominees listed above.
PROPOSAL NO. 2
RATIFICATION OF INDEPENDENT AUDITORS
The Board of Directors of the Company has appointed the firm of KPMG LLP,
independent public auditors for the Company for the fiscal year ending September
30, 2000, and is asking the stockholders to ratify this appointment. The
affirmative vote of a majority of the shares represented and voting at the
Annual Meeting is required to ratify the selection of KPMG LLP.
In the event the stockholders fail to ratify the appointment, the Board of
Directors will reconsider its selection. Even if the selection is ratified, the
Board of Directors in its discretion may direct the appointment of a different
independent auditing firm at any time during the year if the Board of Directors
believes that such a change would be in the best interests of the Company and
its stockholders.
A representative of KPMG LLP is expected to be present at the Annual
Meeting, will have the opportunity to make a statement if he or she desires to
do so, and will be available to respond to appropriate questions.
9
<PAGE>
RECOMMENDATION OF THE BOARD OF DIRECTORS
The Board of Directors recommends that the stockholders vote FOR the
ratification of the selection of KPMG LLP to serve as the Company's independent
public auditors for the fiscal year ending September 30, 2000.
OTHER MATTERS
The Company knows of no other matters that will be presented for
consideration at the Annual Meeting. If any other matters properly come before
the Annual Meeting, it is the intention of the persons named in the enclosed
form of Proxy to vote the shares they represent as the Board of Directors may
recommend. Discretionary authority with respect to such other matters is granted
by the execution of the enclosed Proxy.
OWNERSHIP OF SECURITIES
The following table sets forth, as of December 15, 1999, certain
information known to the Company with respect to the beneficial ownership of the
Company's Common Stock by (i) all persons who, to the knowledge of the Company,
are beneficial owners of five percent (5%) or more of the Company's Common
Stock, (ii) each director and nominee for director, (iii) the Named Executive
Officers in the Summary Compensation Table of the Executive Compensation and
Other Information section of this Proxy Statement and (iv) all current directors
and executive officers as a group. Unless otherwise indicated, each of the
stockholders has sole voting and investment power with respect to the shares
beneficially owned, subject to community property laws, where applicable. The
number of shares in the table gives effect to the one-for-ten reverse stock
split, approved at the Special Meeting of Stockholders on October 5, 1998, in
which each ten shares of the Company's Common Stock were converted into one
share of the Company's Common Stock.
PERCENTAGE
SHARES OF SHARES
BENEFICIALLY BENEFICIALLY
BENEFICIAL OWNER OWNED(1) OWNED(1)
---------------- ------------- ------------
WCAS Capital Partners II, L.P.
320 Park Avenue, Suite 2500
New York, NY 10022-6815.................... 1,449,017(2) 16.66%
Welsh, Carson, Anderson & Stowe VII, L.P.
320 Park Avenue, Suite 2500
New York, NY 10022-6815.................... 9,407,442(3) 67.00
WCAS Information Partners, L.P.
320 Park Avenue, Suite 2500
New York, NY 10022-6815.................... 125,264(4) 1.68
DLJ Capital Corporation
277 Park Avenue
New York, NY 10172......................... 991,688(5) 13.44
Sprout Growth II, L.P.
277 Park Avenue
New York, NY 10172......................... 900,053 12.20
George L. McTavish+*......................... 243,733(6) 3.20
Thomas E. McInerney+......................... 10,805,736(7) 69.78
Richard H. Stowe+............................ 40,610(8) **
10
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Bruce K. Anderson+........................... 10,834,105(9) 69.87
Philip E. Pietrowski (former officer)*....... -- **
Richard A. Alston*........................... 54,926(10) **
Steven L. Korby (former officer)*............ -- **
Crispin D. Crosswy*.......................... 54,926(11) **
Richard C. Gallagher*........................ 54,926(12) **
All directors and executive officers as
a group (9 persons)......................... 11,324,029(13) 70.86
- ----------------
+ Director
* Named Executive Officer
** Less than one percent
(1) Percentage ownership is based on 7,375,919 shares of Common Stock
outstanding on December 15, 1999. Shares of Common Stock that were not
outstanding but that could be acquired through the exercise of stock
options or warrants, or the conversion of shares of Preferred Stock that
are now or will become exercisable or convertible within 60 days of
December 15, 1999 are deemed outstanding for the purpose of computing the
percentage of outstanding shares of Common Stock beneficially owned by the
person or group holding such options, warrants or shares of Preferred
Stock, but are not deemed outstanding for the purpose of computing the
percentage of outstanding shares of Common Stock beneficially owned by any
other person.
(2) Includes (i) 1,320,000 shares of Common Stock issuable upon conversion of
33,000 shares of the Company's convertible Preferred Stock and (ii) 7,575
shares of Common Stock issuable upon the exercise of immediately
exercisable warrants.
(3) Includes (i) 6,664,680 shares of Common Stock issuable upon conversion of
166,617 shares of the Company's convertible Preferred Stock and (ii)
215,215 shares of Common Stock issuable upon the exercise of immediately
exercisable warrants.
(4) Includes 90,960 shares of Common Stock issuable upon conversion of 2,274
shares of the Company's convertible Preferred Stock.
(5) Includes 900,053 shares beneficially owned by Sprout Growth II, L.P. DLJ
Capital Corporation, as the managing general partner of Sprout Growth II,
L.P., may be deemed to share voting and dispositive power with respect to
these shares. DLJ Capital Corporation disclaims beneficial ownership of
these shares except to the extent of its direct and indirect partnership
interests in Sprout Growth II, L.P.
(6) Includes (i) 100,000 shares of Common Stock issuable upon conversion of
2,500 shares of Preferred Stock and (ii) 143,733 shares of Common Stock
issuable upon exercise of options that are currently exercisable or will
become exercisable within 60 days of December 15, 1999.
(7) Includes (i) 3,000 shares of Common Stock issuable upon exercise of options
that are currently exercisable or will become exercisable within 60 days of
December 15, 1999, (ii) 31,800 shares of Common Stock issuable upon
conversion of 795 shares of the Company's convertible Preferred Stock,
(iii) 1,449,017 shares of Common Stock beneficially owned by WCAS Capital
Partners II, L.P. (see footnote (2) above), (iv) 9,407,442 shares of Common
Stock beneficially owned by Welsh, Carson, Anderson & Stowe VII, L.P. (see
11
<PAGE>
footnote (3) above), and (v) 125,264 shares of Common Stock beneficially
owned by WCAS Information Partners, L.P. (see footnote (4) above). Mr.
McInerney is a general partner of the respective sole general partners of
each of WCAS Capital Partners II, L.P., Welsh, Carson, Anderson & Stowe
VII, L.P. and WCAS Information Partners, L.P. and may be deemed to
beneficially own the shares of Common Stock, convertible Preferred Stock
and warrants owned by such partnerships.
(8) Includes (i) 3,000 shares of Common Stock issuable upon exercise of options
that are currently exercisable or will become exercisable within 60 days of
December 15, 1999 and (ii) 27,320 shares of Common Stock issuable upon
conversion of 683 shares of the Company's convertible Preferred Stock. As
of January 1, 1999, Mr. Stowe was no longer a general partner of the sole
general partner of Welsh, Carson, Anderson & Stowe VII, L.P. or of Welsh,
Carson, Anderson & Stowe Capital Partners II, L.P. and the number of shares
shown as beneficially owned by him does not include shares owned by such
partnerships.
(9) Includes (i) 54,600 shares of Common Stock issuable upon conversion of
1,365 shares of the Company's convertible Preferred Stock,(ii) 1,449,017
shares of Common Stock beneficially owned by WCAS Capital Partners II, L.P.
(see footnote (2) above), (iii) 9,407,442 shares of Common Stock
beneficially owned by Welsh, Carson, Anderson & Stowe VII, L.P. (see
footnote (3) above), and (iv) 125,264 shares of Common Stock beneficially
owned by WCAS Information Partners, L.P. (see footnote (4) above). Mr.
Anderson is a general partner of the respective sole general partners of
each of WCAS Capital Partners II, L.P., Welsh, Carson, Anderson & Stowe
VII, L.P. and WCAS Information Partners, L.P. and may be deemed to
beneficially own the shares of Common Stock, convertible Preferred Stock
and warrants owned by such partnerships.
(10) Includes 54,926 shares of the Company's Common Stock issuable upon exercise
of options that are currently exercisable or will become exercisable within
60 days of December 15, 1999.
(11) Includes 54,926 shares of the Company's Common Stock issuable upon exercise
of options that are currently exercisable or will become exercisable within
60 days of December 15, 1999.
(12) Includes 54,926 shares of the Company's Common Stock issuable upon exercise
of options that are currently exercisable or will become exercisable within
60 days of December 15, 1999.
(13) This number reflects the stock ownership of the Named Executive Officers
and directors, and incorporates the shares and options referenced in
footnotes (6) through (12) above.
EXECUTIVE COMPENSATION AND OTHER INFORMATION
SUMMARY OF CASH AND CERTAIN OTHER COMPENSATION
The following table provides certain summary information concerning the
compensation earned by the Company's Chief Executive Officer and each of the
other most highly compensated executive officers of the Company whose salary and
bonus for the 1999 Fiscal Year was in excess of $100,000 for services rendered
in all capacities to the Company and its subsidiaries. The listed individuals
shall be hereinafter referred to as the "Named Executive Officers."
12
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SUMMARY COMPENSATION TABLE
<TABLE>
<CAPTION>
LONG-TERM
COMPENSATION
ANNUAL COMPENSATION AWARDS
-------------------- ------------------
NAME AND FISCAL SALARY BONUS SECURITIES UNDER- ALL OTHER
PRINCIPAL POSITION YEAR ($) ($) LYING OPTIONS (#) COMPENSATION ($)
------------------ ------ ------- -------- ------------------ ----------------
<S> <C> <C> <C> <C> <C>
George L. McTavish............ 1999 202,891 -- 560,000 183(2)
Chairman of the Board and 1998 218,631(1) -- -- 72(2)
Chief Executive Officer
Richard A. Alston............. 1999 154,039(3) -- 314,000 123(2)
President and Chief Operating
Officer
Steven L. Korby............... 1999 159,852(4) -- 54,926 90(2)
Executive Vice 1998 218,631(4) 72(2)
President and Chief
Financial Officer
Philip E. Pietrowski.......... 1999 277,172(5) -- 54,926 9,782(6)
Senior Vice President of 1998 236,754(7) 84,000 -- 223(2)
Corporate Business 1997 212,941(7) -- 20,333(8) 466(2)
Development and Alliances
Richard C. Gallagher, Jr...... 1999 136,288 20,000 214,000 183(2)
Senior Vice President 1998 112,450(10) 50,000(10) -- 72(2)
of Marketing and Sales
Crispin D. Crosswy 1999 223,662(11) 118,000(11) 214,000 183(2)
Senior Vice President of
Parts Division
</TABLE>
- ----------------
(1) Mr. McTavish has been the Chief Executive Officer of the Company since
January 1998 and served as a consultant to the Company prior to that. The
1998 figures for his 1998 compensation include $194,234 in salary and
$26,000 in consulting fees.
(2) Reflects payments of term life insurance premiums.
(3) Mr. Alston was Executive Vice President and Chief Financial Officer of the
Company from February 1999 through June 1999, and President and Chief
Operating Officer of the Company from June 1999 to the present. The figures
provided for Mr. Alston reflect his employment from February 1999 until the
end of the 1999 Fiscal Year.
(4) Mr. Korby served as a consultant to the Company from January 1998 through
April 1998, and was the Executive Vice President and Chief Financial
Officer of the Company from May 1998 until his employment ended in March
1999. The figures for his 1998 compensation include $114,231 in salary and
$104,000 in consulting fees.
(5) Mr. Pietrowski was the Senior Vice President of North American Repair
Operations from May 1998 through March 1999, and Senior Vice President of
Corporate Business Development and Alliances from April 1999 until his
employment ended in August 1999.
(6) Mr. Pietrowski received severance pay of $9,615 and $167 in life insurance
premiums.
(7) Prior to May 1998, when the Company acquired Old Cerplex, Mr. Pietrowski
was employed by Old Cerplex. Figures prior to May 1998 reflect Mr.
Pietrowski's compensation at Old Cerplex.
13
<PAGE>
(8) These option shares were granted on March 21, 1997 in connection with Old
Cerplex's option cancellation/regrant program.
(9) These option shares were cancelled on March 21, 1997 in connection with Old
Cerplex's option cancellation/regrant program.
(10) The figures provided for Mr. Gallagher reflect his employment from February
1998 until the end of the 1998 Fiscal Year.
(11) Mr. Crosswy has been the Senior Vice President of Management Services since
October 1999 and was previously the President of the Company's Parts
Division from October 1998 until October 1999. The figures provided for Mr.
Crosswy reflect his employment from October 1998 through the end of the
1999 Fiscal Year.
INFORMATION REGARDING NAMED EXECUTIVE OFFICERS
George L. McTavish. Information regarding Mr. McTavish appears previously
in this Proxy Statement under the section regarding nominees for election to the
Board of Directors.
Richard A. Alston. Mr. Alston, 44, has been the President and Chief
Operating Officer of the Company since June 1999 and was previously the
Executive Vice President and Chief Financial Officer from February 1999 until
June 1999. From December 1997 through November 1998 Mr. Alston was the Chief
Financial Officer and from November 1998 until December 1998 was the Executive
Vice President of Corporate Development of Compass International Services
Corporation. From December 1994 to March 1997, Mr. Alston served as the
Executive Vice President - Finance and Corporate Development at National
Processing, Inc., the nation's second largest credit card processing company.
From 1991 to 1994, Mr. Alston was the President of Alston Associates which
provided strategic and operations consulting services to Fortune 500 clients.
From 1986 to 1991, Mr. Alston was a Senior Vice President at Sealy, Inc. where
he oversaw the implementation of new manufacturing and financial systems
throughout the Company and was responsible for the Company's international
licensing activities and contract sales.
Steven L. Korby. Mr. Korby, 53, was the Executive Vice President and Chief
Financial Officer of the Company from May 1998 until he left the Company in
March 1999. From October 1997 through April 1998, Mr. Korby was engaged in
various consulting assignments, including with the Company. From March 1995
through September 1997, Mr. Korby served as Executive Vice President and Chief
Financial Officer of Greyhound Lines, Inc., the only nationwide inter-city bus
company. From August 1990 through August 1994, Mr. Korby was the Executive Vice
President and Chief Financial Officer of Neodata Corporation, a privately-held
provider of direct marketing support services. From September 1994 through
February 1995, Mr. Korby was engaged in various consulting assignments.
Philip E. Pietrowski. Mr. Pietrowski, 53, was the Senior Vice
President-North American Operations of the Company from April 1998 until he left
the Company in August 1999. Mr. Pietrowski was the President of Old Cerplex's
North American Operations from February 1997 until April 1998. Mr. Pietrowski
joined Old Cerplex in October 1995 as Vice President of Logistics and was Senior
Vice President of North American Operations from February 1996 until February
1997. Mr. Pietrowski spent 24 years at Digital Equipment Corporation in
Massachusetts, holding various senior level positions. The last position he held
with Digital Equipment was Corporate Multivendor Services Business Manager,
where Mr. Pietrowski was responsible for worldwide service logistics, repair,
information systems and administration.
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<PAGE>
Richard C. Gallagher, Jr. Mr. Gallagher, 37, has been the Senior Vice
President of Sales and Marketing of the Company since March 1999 and was
previously the Senior Vice President of Marketing and Corporate Development from
February 1998 through March 1999. From May 1997 through February 1998, Mr.
Gallagher was the Chief Executive Officer and President of Strategic Holdings
USA, Inc. (which was formerly known as Strategic Mortgage Services, Inc.). From
October 1993 until May 1997 Mr. Gallagher was Vice President of Mergers and
Acquisitions of Strategic Mortgage Services, Inc., a provider of information
services to the mortgage finance industry.
Crispin D. Crosswy. Mr. Crosswy, 52, has been the Senior Vice President of
Management Services since October 1999 and was previously the President of the
Americas Parts Division from October 1998 until October 1999. Mr. Crosswy also
serves as the Company's Chief Information Officer. From August 1997 to October
1998 Mr. Crosswy served as the Executive Vice President and Chief Information
Officer of First Data Information Management Group. From July 1995 to August
1997, Mr. Crosswy served as the Senior Vice President of Comdata Corporation.
From 1992 to 1997, Mr. Crosswy served as the Executive Vice President of Infonet
Services Corporation. Prior to that Mr. Crosswy held executive level positions
with TRW, Computer Sciences Corporation and Sprint.
STOCK OPTIONS AND STOCK APPRECIATION RIGHTS
The following table provides information with respect to the Named
Executive Officers concerning grants of options during the 1999 Fiscal Year.
OPTION/SAR GRANTS IN LAST FISCAL YEAR
<TABLE>
<CAPTION>
POTENTIAL REALIZABLE
VALUE AT ASSUMED ANNUAL
RATES OF STOCK PRICE
APPRECIATION FOR
INDIVIDUAL GRANTS OPTION TERM
- --------------------------------------------------------------------------- ----------------------------
NUMBER PERCENT OF
OF TOTAL OPTIONS/
SECURITIES SARS GRANTED EXERCISE
UNDERLYING TO EMPLOYEES OR
NAME AND OPTIONS/SARS IN FISCAL BASE EXPIRATION 5% 10%
PRINCIPAL POSITION GRANTED YEAR PRICE DATE ($) ($)
------------------ ------------- -------------- --------- ----------- --- ---
<S> <C> <C> <C> <C> <C> <C>
George L. McTavish............ 560,000 19.9% $0.875 January, 2009 $245,000 $490,000
Chairman of the Board and
Chief Executive Officer
Richard A. Alston............. 214,000 7.6% $1.062 February, 2009 $113,634 $227,268
President and Chief Operating 100,000 3.4% $0.437 June, 2009 $ 21,850 $ 43,700
Officer
Steven L. Korby............... 214,000 7.6% $0.875 January, 2009 $ 93,625 $187,250
Executive Vice
President and Chief
Financial Officer
Philip E. Pietrowski.......... 214,000 7.6% $0.875 January, 2009 $ 93,625 $187,250
Senior Vice President of
Corporate Business
Development and Alliances
Richard C. Gallagher, Jr...... 214,000 7.6% $0.875 January, 2009 $ 93,625 $187,250
Senior Vice President
of Marketing and Sales
Crispin D. Crosswy 214,000 7.6% $0.875 January, 2009 $ 93,625 $187,250
Senior Vice President of
Management Services
</TABLE>
15
<PAGE>
AGGREGATED OPTION/SAR EXERCISES AND FISCAL YEAR-END VALUES
The following table provides information with respect to the Named
Executive Officers concerning options held as of September 25, 1999. No options
were exercised during the 1999 Fiscal Year by any of the Named Executive
Officers.
AGGREGATED OPTION/SAR EXERCISED IN LAST FISCAL YEAR
AND FY-END OPTION/SAR VALUES
<TABLE>
<CAPTION>
VALUE OF UNEXERCISED
NUMBER OF UNEXERCISED IN-THE-MONEY OPTIONS/
OPTIONS/SARS AT FY-END (#) SARS AT FY-END ($)
-------------------------- --------------------------
NAME EXERCISABLE UNEXERCISABLE EXERCISABLE UNEXERCISABLE
---- ----------- ------------- ----------- -------------
<S> <C> <C> <C> <C>
George L. McTavish.............................. 143,733 416,267 $24,708 $71,556
Philip E. Pietrowski............................ 66,405 159,074 $ 9,442 $27,345
Richard C. Gallagher............................ 54,926 159,074 $ 9,442 $27,345
Richard A. Alston............................... 54,926 259,074 $ -- $60,990
Crispin D. Crosswy.............................. 54,926 159,074 $ 9,442 $27,345
Steven L. Korby................................. 54,926 159,074 $ 9,442 $27,345
</TABLE>
EMPLOYMENT CONTRACTS, TERMINATION OF EMPLOYMENT AND CHANGE IN CONTROL
ARRANGEMENTS
The following information summarizes any employment agreements and
termination agreements entered into between the Company and any of the Named
Executive Officers of the Company.
Mr. Alston has a termination agreement which provides for a lump sum
payment equal to 18 months base salary as severance for termination for reasons
other than cause. Mr. Crosswy has a termination agreement which provides for six
months continuation of pay as severance for termination for reasons other than
cause.
COMPENSATION AND STOCK OPTION COMMITTEE INTERLOCKS AND INSIDER PARTICIPATION
The Compensation and Stock Option Committee of the Company's Board of
Directors currently consists of Mr. Anderson and Mr. McInerney. None of these
individuals was an officer or employee of the Company at any time during the
1999 Fiscal Year or at any other time.
No current executive officer of the Company has ever served as a member of
the board of directors or compensation committee of any other entity that has or
has had one or more executive officers serving as a member of the Company's
Board of Directors or Compensation and Stock Option Committee.
BOARD COMPENSATION AND STOCK OPTION COMMITTEE REPORT ON EXECUTIVE COMPENSATION
The Compensation and Stock Option Committee has responsibility for
determining compensation for the Company's executive officers, setting overall
compensation policy for the Company, and administering the Company's Plan,
including authority regarding the selection of award recipients and the size and
16
<PAGE>
terms of all option grants under the Plan. The Chief Executive Officer of the
Company makes annual compensation recommendations for the Company's executive
officers to the Compensation and Stock Option Committee.
The Compensation and Stock Option Committee believes that the Company must
attract and retain superior executives. During the 1999 Fiscal Year, the Company
focused on assembling and retaining a qualified senior management team. The
compensation levels for the Company's executive officers were determined by the
Compensation and Stock Option Committee based on a variety of subjective
elements, including each executive officer's compensation history, experience in
rendering services to the Company and individual talents. With respect to Mr.
McTavish, the Company's Chief Executive Officer and the Chairman of the Board of
Directors, the Compensation and Stock Option Committee established an annual
base salary of $75,000 for him.
Submitted by the Compensation and Stock Option Committee of the Company's
Board of Directors.
COMPENSATION AND STOCK OPTION
COMMITTEE
Bruce K. Anderson
Thomas E. McInerney
STOCK PERFORMANCE GRAPH
The graph shows a comparison of the five-year cumulative total stockholder
returns for the Company, the S&P 500 Composite Index and an index of peer
companies selected by the Company for the period since September 30, 1994.
Companies in the peer group are as follows: Bell Microproducts, Benchmark
Electronics, Inc., Genicom Corp., IEC Electronics Corp., Jabil Circuits, Inc.,
Jaco Electronics, Inc., Nu Horizons Electronics Corp., PC Service Source, Inc.,
Plexus Corp., Richardson Electronics, Ltd. The comparison assumes $100 was
invested on September 30, 1994 in the Company's Common Stock and in each of the
two indices and assumes reinvestment of dividends.
Notwithstanding anything to the contrary set forth in any of the Company's
previous filings made under the Securities Act of 1933, as amended, or the
Securities Exchange Act of 1934, as amended, that might incorporate future
filings made by the Company under those statutes, neither the Stock Performance
Graph nor the Compensation and Stock Option Committee Report is to be
incorporated by reference into any such prior filings, nor shall such graph or
report be incorporated by reference into any future filings made by the Company
under those statutes.
CERPLEX PEER GROUP S & P 500
------- ---------- ---------
9/30/94 $100 $100 $100
9/30/95 $ 55.44 $158.69 $126.30
9/30/96 $ 34.78 $149.98 $148.54
9/30/97 $ 17.96 $453.36 $204.72
9/30/98 $ 1.79 $226.51 $219.79
9/25/99 $ 2.00 $448.07 $276.06
17
<PAGE>
CERTAIN TRANSACTIONS
Mr. McInerney and Mr. Anderson, both of whom are directors of the Company,
are also general partners of the respective sole general partners of WCAS
Capital Partners II, L.P., Welsh, Carson, Anderson & Stowe VII, L.P., and WCAS
Information Partners, L.P. (collectively, the "WCAS Entities"). The WCAS
Entities own approximately 69% of the capital stock of the Company on a fully
diluted basis. Between September 1998 and June 1999, certain of the WCAS
Entities made loans to the Company in the aggregate of $16.5 million (the "Short
Term Loans"). The Short Term Loans consist of seven loans due within one year of
the time they were made: a loan for $5.0 million made on September 30, 1998, a
loan for $2.5 million made on December 9, 1998, a loan for $2.0 million made on
January 26, 1999, a loan for $1.0 million made on February 26, 1999, a loan for
$2.0 million made on March 25, 1999, a loan for $2.0 million made on April 21,
1999 and a loan for $2.0 million made on June 3, 1999. On June 25, 1999, the
Company consented to an assignment by Greyrock Capital of its rights and
interests under a $36.0 million term loan and a $10.0 million revolving line of
credit to certain of the WCAS Entities in return for payment in full of all
outstanding balances of principal and interest thereunder. Concurrent with the
assignment and repayment of approximately $45.4 million principal and interest
due to Greyrock, certain of the WCAS Entities advanced to the Company an
additional $4.6 million for working capital purposes, and the Company issued to
the WCAS Entities $50.0 million of WCAS Senior Secured Notes. On June 30, 1999,
the Company issued to certain of the WCAS Entities approximately 58,643 shares
of Series B Preferred Stock at a price of $1,000 per share. The Series B
Preferred Stock was issued as repayment of various obligations owed to the WCAS
Entities, including $25.0 million of principal outstanding under the newly
issued WCAS Senior Secured Notes, $16.5 million of principal of the Short Term
Loans, approximately $15.6 million of principal of the 10% Series A Senior
Subordinated Debentures, and approximately $1.5 million of accrued interest owed
to the WCAS Entities under these obligations. The terms of the Short Term Loans,
the Series B Preferred Stock and the WCAS Senior Secured Notes are described in
greater detail in the Company's Annual Report on Form 10-K for the 1999 Fiscal
Year, mailed together with this Proxy Statement. The terms of the WCAS Senior
Secured Notes require substantial payments by the Company to the WCAS Entities
in April 2001, which the Company may not be able to pay based on recent
operating results and other obligations of the Company senior to the obligations
to the WCAS Entities. In the event the Company cannot repay the obligations to
the WCAS Entities, the obligations may be exchanged for equity and/or debt
securities of the Company on mutually agreeable terms. If these obligations, and
any future financing the Company may obtain from the WCAS Entities, are later
exchanged for equity or debt securities, such an exchange would increase the
percentage ownership of the WCAS Entities in the Company and would result in
substantial dilution to the ownership interests of stockholders of the Company
other than the WCAS Entities.
SECTION 16(a) BENEFICIAL OWNERSHIP REPORTING COMPLIANCE
The members of the Board of Directors, the executive officers of the
Company and persons who hold more than 10% of the Company's outstanding Common
Stock are subject to the reporting requirements of Section 16(a) of the
Securities Exchange Act of 1934, as amended, which require them to file reports
with respect to their ownership of the Common Stock and their transactions in
such Common Stock. Based upon (i) the copies of Section 16(a) reports which the
Company received from such persons for their 1999 Fiscal Year transactions in
the Common Stock and their Common Stock holdings, and (ii) the written
representations received from one or more of such persons that no annual Form 5
18
<PAGE>
reports were required to be filed by them for the 1999 Fiscal Year, the Company
believes that all reporting requirements under Section 16(a) for such fiscal
year were met in a timely manner by its directors, executive officers and
greater than ten percent beneficial owners.
ANNUAL REPORT ON FORM 10-K
The Company filed an Annual Report on Form 10-K with the Securities and
Exchange Commission on January 11, 2000 (the "Annual Report"), mailed together
with this Proxy Statement. Stockholders may obtain a copy of exhibits filed with
the Annual Report, without charge, by writing or calling Ms. Terri Boulanger, at
the Company's principal executive offices located at 111 Pacifica Avenue,
Irvine, California 92618, (949) 754-5300, or by accessing the Annual Report on
the Securities and Exchange Commission's web site at:
http://www.sec.gov/edgarhp.htm.
STOCKHOLDER PROPOSALS FOR 2001 ANNUAL MEETING
All proposals of stockholders intended to be presented at the Company's
annual meeting of stockholders to be held in 2001 must be delivered to the
attention of the Secretary of the Company, at the address of the Company set
forth on the first page of this Proxy Statement, prior to September 30, 2000, if
they are to be considered for possible inclusion in the Proxy Statement and form
of proxy used in connection with such meeting.
THE BOARD OF DIRECTORS OF THE
CERPLEX GROUP, INC.
George L. McTavish
Chief Executive Officer and
Chairman of the Board of Directors
Irvine, California
January 24, 2000
THE CERPLEX GROUP, INC.
PROXY
ANNUAL MEETING OF STOCKHOLDERS, APRIL 5, 2000
THIS PROXY IS SOLICITED ON BEHALF OF THE BOARD OF
DIRECTORS OF THE CERPLEX GROUP, INC.
The undersigned revokes all previous proxies, acknowledges receipt of the
Notice of the Annual Meeting of Stockholders to be held April 5, 2000 and the
Proxy Statement and appoints George L. McTavish and Richard A. Alston and each
of them, the Proxy of the undersigned, with full power of substitution, to vote
all shares of Common Stock or Preferred Stock of The Cerplex Group, Inc. (the
"Company") which the undersigned is entitled to vote, either on his or her own
behalf or on behalf of any entity or entities, at the Annual Meeting of
19
<PAGE>
Stockholders of the Company to be held at the Corporate Headquarters of The
Cerplex Group, Inc., 111 Pacifica Avenue, Suite 300, Irvine, CA, 92618 on March
23, 1999 at 2:00 p.m. Pacific Time (the "Annual Meeting"), and at any
adjournment or postponement thereof, with the same force and effect as the
undersigned might or could do if personally present thereat. The shares
represented by this Proxy shall be voted in the manner set forth in this proxy
card.
1. To elect the following directors to serve for one-year terms ending in
the year 2001 or until their successors are duly elected and qualified;
WITHHOLD
AUTHORITY
FOR TO VOTE
George L. McTavish [ ] [ ]
Bruce K. Anderson [ ] [ ]
Thomas E. McInerney [ ] [ ]
Richard H. Stowe [ ] [ ]
(Continued on reverse side)
2. FOR [ ] AGAINST [ ] ABSTAIN [ ]
To ratify the appointment of KPMG LLP as independent auditors of the Company
for the fiscal year ending September 30, 2000.
3. In accordance with the discretion of the proxy holders, to act upon all
matters incident to the conduct of the meeting and upon other matters as may
properly come before the meeting.
The Board of Directors of the Company recommends a vote IN FAVOR OF the
directors listed above and a vote IN FAVOR OF the listed proposal. This Proxy,
when properly executed, will be voted as specified above. IF NO SPECIFICATION IS
MADE, THIS PROXY WILL BE VOTED IN FAVOR OF THE ELECTION OF THE DIRECTORS LISTED
ABOVE AND IN FAVOR OF THE OTHER PROPOSAL.
Please print the name(s)
appearing on each share
certificate(s) over
which you have voting
authority:
------------------------
(Print name(s) on
certificate)
Please sign your name:
------------------------
(Authorized
Signature(s))
------------------------
Date:
