<PAGE> 1
SCHEDULE 14A
(RULE 14A-101)
INFORMATION REQUIRED IN PROXY STATEMENT
SCHEDULE 14A INFORMATION
PROXY STATEMENT PURSUANT TO SECTION 14(A) OF THE SECURITIES
EXCHANGE ACT OF 1934
Filed by the registrant /X/
Filed by a Party other than the registrant / /
Check the appropriate box:
<TABLE>
<S> <C>
/ / Preliminary proxy statement / / Confidential, for Use of the Commission
Only (as permitted by Rule 14a-6(e)(2))
/ / Definitive proxy statement
/ / Definitive additional materials
/ / Soliciting material pursuant to Rule 14a-11(c) or Rule 14a-12
</TABLE>
TELEVIDEO SYSTEMS, INC.
- --------------------------------------------------------------------------------
(Name of Registrant as Specified in Its Charter)
- --------------------------------------------------------------------------------
(Name of Person(s) Filing Proxy Statement, if other than the Registrant)
Payment of Filing Fee (Check the appropriate box):
/ / $125 per Exchange Act Rules 0-11(c)(1)(ii), 14a-6(i)(1), or 14a-6(j)(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:
(4) Proposed maximum aggregate value of transaction:
(5) Total fee paid:
/ / Fee paid previously with preliminary materials.
/ / Check box if any part of the fee is offset as provided by Exchange Act Rule
0-11(a)(2) and identify the filing for which the offsetting fee was paid
previously. Identify the previous filing by registration statement number,
or the form or schedule and the date of its filing.
(1) Amount previously paid:
(2) Form, Schedule or Registration Statement No.:
(3) Filing Party:
(4) Date Filed:
<PAGE> 2
TELEVIDEO SYSTEMS, INC.
2345 HARRIS WAY
SAN JOSE, CALIFORNIA 95131
NOTICE OF ANNUAL MEETING OF STOCKHOLDERS
TO BE HELD ON TUESDAY, MARCH 26, 1996
TO TELEVIDEO STOCKHOLDERS:
The Annual Meeting of Stockholders of TeleVideo Systems, Inc., a Delaware
corporation (the "Company"), will be held at the Beverly Heritage Hotel located
at 1820 Barber Lane, Milpitas, California 95035, on Tuesday, March 26, 1996, at
9:30 a.m. California time, for the following purposes:
1. To elect four Directors to serve for the ensuing year and until their
successors are elected.
2. To ratify the selection of Grant Thornton LLP as the independent public
accountant of the Company for the 1996 fiscal year.
3. To transact such other business as may properly come before the meeting
or any adjournment thereof.
The foregoing items of business are more fully described in the Proxy Statement
accompanying this Notice.
Only stockholders of record at the close of business on February 6, 1996, are
entitled to notice of, and to vote at, the meeting.
ALL STOCKHOLDERS ARE CORDIALLY INVITED TO ATTEND THE MEETING IN PERSON. TO
ASSURE REPRESENTATION AT THE MEETING, HOWEVER, YOU ARE URGED TO MARK, SIGN, DATE
AND RETURN THE ENCLOSED PROXY AS SOON AS POSSIBLE.
By Order of the Board of Directors
/s/ K. David Kim
-----------------------
K. David Kim
Chief Financial Officer
San Jose, California
February 26, 1996
WHETHER OR NOT YOU EXPECT TO ATTEND THE MEETING, PLEASE COMPLETE, DATE, AND SIGN
THE ENCLOSED PROXY AND MAIL IT PROMPTLY IN THE ENCLOSED ENVELOPE, POSTAGE
PREPAID, IN ORDER TO ASSURE REPRESENTATION OF YOUR SHARES. NO POSTAGE NEED BE
AFFIXED IF MAILED IN THE UNITED STATES. YOUR GIVING OF SUCH PROXY DOES NOT
PRECLUDE YOUR RIGHT TO VOTE IN PERSON IF YOU ATTEND THE MEETING.
<PAGE> 3
TELEVIDEO SYSTEMS, INC.
PROXY STATEMENT FOR
ANNUAL MEETING OF STOCKHOLDERS
MARCH 26, 1996
GENERAL
This Proxy Statement is furnished in connection with the solicitation of the
enclosed proxy by the Board of Directors of TeleVideo Systems, Inc., a Delaware
corporation (the "Company"), for use at its Annual Meeting of Stockholders to be
held on March 26, 1996, and at any adjournments or postponements of that
meeting. All proxies will be voted in accordance with the instructions contained
in the proxy, and if no choice is specified, the proxies will be voted in favor
of the proposals set forth in the Notice of Annual Meeting. The Annual Meeting
will be held at 9:30 a.m. at the Beverly Heritage Hotel located at 1820 Barber
Lane, Milpitas, California 95035.
The Company's principal executive offices are located at 2345 Harris Way, San
Jose, California 95131.
VOTING RIGHTS AND OUTSTANDING SHARES
The Board of Directors (the "Board") has fixed February 6, 1996, as the record
date of determination of stockholders entitled to vote at the Annual Meeting. At
the close of business of February 6, 1996, there were outstanding and entitled
to vote 45,265,460 shares of Common Stock of the Company. See "SECURITY
OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT," below. A majority of the
issued and outstanding shares represented at the Annual Meeting, by proxy or in
person, shall constitute a quorum.
On each matter that may come before the Annual Meeting, each stockholder is
entitled to one vote for each share of Common Stock. Abstentions and
broker-non-votes are counted for purposes of determining the presence or absence
of a quorum for the transaction of business. Abstentions are counted in
tabulations of the votes cast on proposals presented to stockholders, and
therefore will have the effect of a negative vote. Broker non-votes are not
counted for purposes of determining whether a proposal has been approved.
Under California law, a corporation incorporated in a state other than
California may nevertheless be treated for some purposes as though it is a
California corporation, if certain conditions are satisfied that establish that
the company has significant contacts with California. Those conditions relate to
the amount of property, payroll, sales and stock ownership in California. As of
the end of its last fiscal year, the Company met the applicable tests and
therefore, is subject to certain provisions of the California Corporations Code.
Among the California provisions application to the Company is the requirement
that cumulative voting be available in the election of directors. Under
cumulative voting rules, every stockholder voting in the election of directors
may cumulative such stockholder's votes and give one candidate a number of votes
equal to the number of directors to be elected, multiplied by the number of
votes to which the stockholder's shares are entitled, or distribute the
stockholder's votes on the same principle among as many candidates as the
stockholder thinks fit, provided that votes cannot be cast for more candidates
than are provided for by the By-laws at the time of voting. However, no
stockholder will be entitled to cumulate votes unless the name of the candidate
or candidates for whom such votes would be cast has been placed in nomination
prior to the voting and any stockholder has given notice, at the Annual Meeting
and prior to the commencement of voting, of such stockholder's intention to
cumulate votes. The candidates receiving the highest number of votes, up to the
number of directors to be elected, shall be elected.
1
<PAGE> 4
Votes cast by proxy or in person at the Annual Meeting will be tabulated by the
Inspector of Elections (the "Inspector"). The Inspector will also determine
whether or not a quorum is present. The Inspector will separately tabulate
affirmative and negative votes, abstentions and broker "non-votes."
The presence in person or by proxy of the holders of a majority of the
outstanding shares of Common Stock entitled to vote at the Annual Meeting will
constitute a quorum for the purpose of transacting business at the Annual
Meeting. Abstentions and broker non-votes are counted for purposes of
determining the presence or absence of a quorum for the transaction of business.
Abstentions are counted in tabulations of votes cast on proposals presented to
stockholders, and therefore will have the effect of a negative vote. Broker
non-votes are not counted for purposes of determining whether a proposal has
been approved. Except in certain specific circumstances, the affirmative vote of
a majority of shares present in person or represented by proxy at a duly held
meeting at which a quorum is present is required under Delaware law for approval
of proposals presented to stockholders. A blank space is provided on the proxy
card for stockholders to mark if they wish either to abstain on the proposal or
to withhold authority to vote for one or more nominees for director. Votes
withheld in connection with the election of one or more of the nominees for
director will not be counted as votes cast for such individuals. Any proxy which
is returned using the form of proxy enclosed and which is not marked as to a
particular item will be voted for the proposals described herein as the proxy
holders deem advisable, on other matters that may come before the meeting, as
the case may be with respect to the item not marked. If a broker indicates on
the enclosed proxy or its substitute 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 with respect to that matter. The Company believes
that the tabulation procedures to be followed by the Inspector are consistent
with the general statutory requirements in Delaware concerning voting of shares
and determination of a quorum.
REVOCABILITY OF PROXIES
At the Annual Meeting, valid proxies will be voted as specified by the
stockholder. Any stockholder giving a proxy in the accompanying form retains the
power to revoke it at any time prior to the exercise of the powers conferred in
the proxy and may do so by taking any of the following actions: (i) delivering
written notice to the Secretary of the Company, (ii) delivering to the Secretary
of the Company a duly executed proxy bearing a later date or (iii) personally
attending the Annual Meeting and revoking the proxy. A stockholder's attendance
at the Annual Meeting will not revoke the stockholder's proxy unless the
stockholder affirmatively indicates at the Annual Meeting the intention to vote
the stockholder's shares in person. If a stockholder's shares are held of record
by a broker, bank or other nominee and such stockholder wishes to vote in person
at the Annual Meeting, the stockholder must obtain from the record holder a
proxy issued in the name of the stockholder.
SOLICITATION
The Company will bear the cost of solicitation of proxies. In addition, the
Company will reimburse brokerage firms and other persons representing beneficial
owners of shares for their expenses in forwarding solicitation material to such
beneficial owners. Proxies may also be solicited by certain of the Company's
directors, officers and employees, without additional compensation, personally
or by telephone or telegram. The Company has retained Beacon Hill Partners,
Inc., 90 Broad Street, New York, NY 10004, to solicit proxies from brokers and
nominees for a fee of $3,000 plus out-of-pocket expenses.
The Company intends to mail this Proxy Statement and proxy card on or about
February 26, 1996.
2
<PAGE> 5
MATTERS TO BE CONSIDERED AT ANNUAL MEETING
PROPOSAL NO. 1
ELECTION OF DIRECTORS
The By-laws of the Company provide for three or more Directors, and the
currently authorized number of directors is four. Four Directors are to be
elected at the meeting. Each Director to be elected will hold office until the
next Annual Meeting of Stockholders and until his successor is elected, or until
the death, resignation or removal of such director.
The four nominees are currently Directors of the Company. The three nominees,
Dr. K. Philip Hwang, Mr. Stephen S. Kahng and Dr. Robert E. Larson were
re-elected to the Board by the stockholders at the 1995 Annual Meeting.
Each person nominated for election has agreed to serve if elected, and
management has no reason to believe that any nominee will be unable to serve. In
the event that any nominee is unable to serve as a Director at the time of the
Annual Meeting, the proxies may be voted for such substitute nominee as the
proxy holder may determine. Shares represented by the accompanying proxy will be
voted for the election of the four nominees recommended by the Board, unless the
proxy is marked in such a manner as to withhold authority to vote or as to vote
for one or more alternate candidates. The proxies solicited by this Proxy
Statement may not be voted for more than four nominees.
VOTING REQUIREMENTS
Directors are elected by a plurality of the votes present and in person or
represented by proxy and entitled to vote on the proposal. Votes withheld from
the nominee will be counted for purposes of determining the presence or absence
of a quorum but will not be counted as affirmative votes. A broker non-vote will
be counted for purposes of determining the presence or absence of a quorum but
will not be treated as entitled to vote on this matter.
The Board recommends a vote FOR the re-election of each of the nominees.
NOMINEES
The Board of Directors has nominated four people for election to the Board of
Directors, all of whom are currently members of the Board. The names of the
nominees, and certain information about them, as of February 26, 1996, is set
forth below:
<TABLE>
<CAPTION>
DIRECTOR
NAME OF NOMINEE AGE POSITION SINCE
--------------- --- -------- -----
<S> <C> <C> <C>
Dr. K. Philip Hwang 59 Chairman and Chief Executive Officer 1976
TeleVideo Systems, Inc.
Mr. Stephen S. Kahng (1) 46 President and Chief Executive Officer 1994
Power Computing Corporation
Kristine Kim 31 Vice President of Sales 1996
TeleVideo Systems, Inc.
Dr. Robert E. Larson (1) 57 Chairman and Chief Executive Officer 1989
Expert-EASE Systems, Inc.
</TABLE>
- ----------------------------------
(1) Member of the Audit Committee
3
<PAGE> 6
There is no family relationship between any Director (or Executive Officer) of
the Company.
Dr. K. Philip Hwang is the founder of the Company and has been Chairman of the
Board and Chief Executive Officer since October 1976. From August 1990 to April
1991, he served as the Acting Chief Financial Officer. Since 1992, Dr. Hwang has
also served as Chairman of AdMOS (Advanced MOS Systems), an engineering firm
specializing in ASIC chip design. AdMOS is a private corporation in which
TeleVideo holds a 20% interest.
Mr. Stephen S. Kahng joined the Company as a member of the Board of Directors
effective November 1994. Since November 1993, Mr. Kahng has been the President
and Chief Executive Officer of Power Computing Corporation which manufactures
Power PC-based workstations. From December 1991 to November 1993, he served as
the President of Up To Date Technology, Inc. which is a system design consulting
company to the personal computer industry. Prior thereto, from September 1987
until December 1991, Mr. Kahng was the Senior Vice President and General Manager
of Chips and Technologies, Inc. which was a supplier of ASICs to the personal
computer industry.
Ms. Kristine Kim has been serving TeleVideo for more than eight years since
January 1988 and has successfully managed various Sales and Marketing
Departments. She was promoted to Vice President of Sales and was elected as a
member of the Board in February 1996. In May 1992, she achieved her MBA degree
in International Corporate Management and Professional Export Management at
Golden Gate University in California. Ms. Kim also has a BA degree in Economics
and International Relations from UC Davis.
Dr. Robert E. Larson joined the Company as a member of the Board effective
December 1989. Since September 1985, Dr. Larson has been the Chairman of the
Board and Chief Executive Officer of Expert-EASE Systems, Inc., a company
engaged in the business of developing and selling "artificial intelligence"
software. Since December 1989 and September 1983, respectively, he has served as
Chairman of the Board and Chief Executive Officer of MIMD Systems, Inc., which
is engaged in software for parallel processing computers, and as General Partner
of Woodside Fund, a venture capital fund, and since September 1985, he has been
a member of the Board of Directors of Skye Investment Advisers, a registered
investment adviser firm. Since 1973, Dr. Larson has been a Consulting Professor
in the Engineering-Economic Systems Department at Stanford University.
COMPLIANCE WITH SECTION 16(a) OF THE SECURITIES EXCHANGE ACT OF 1934
Section 16(a) of the Securities Exchange Act of 1934, as amended (the "Exchange
Act") requires the Company's executive officers and directors and persons who
own more than ten percent of a registered class of the Company's equity
securities registered under the Exchange Act, to file with the Commission
reports of ownership and changes in ownership of Common Stock and other equity
securities of the Company. Executive officers, directors and greater than ten
percent stockholders are required by Commission regulations to furnish the
Company with copies of all Section 16(a) forms they file. Based solely on review
of this information, including written representations that no other reports
were required, the Company believes that during the fiscal year ended October
31, 1995, each of the Company's executive officers, directors an holders of ten
percent or more of the Company's Common Stock timely filed all reports required
to be filed pursuant to Section 16(a) of the Exchange Act.
4
<PAGE> 7
EXECUTIVE OFFICERS
A description of the business experience of the other executive officers of the
Company who are not directors for the fiscal year ended October 31, 1995 is as
follows:
Mr. David Kim rejoined the Company in January 1991 as Vice President, Business
Development, and since April 1991, he has served as the Company's Chief
Financial Officer. Mr. Kim was with the Company from 1981 to 1987 as Director of
Terminal Manufacturing Operations and in 1988, he was appointed as Vice
President, International Operations. From 1988 to January 1991, Mr. Kim was
Executive Vice President of Kabil Electronics Co., Ltd., a TeleVideo OEM of CRT
terminals and personal computers in Seoul, Korea.
SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT
The following table sets forth information regarding the beneficial ownership of
the Company's Common Stock as of February 6, 1996: (i) all those known to the
Company to be beneficial owners of more than five percent (5%) of its Common
Stock; (ii) each director and director nominee of the Company; (iii) each person
named in the Summary Compensation Table who is still an executive officer of the
Company; and (iv) all executive officers and directors of the Company as a
group.
<TABLE>
<CAPTION>
DIRECTORS, OFFICERS AND PRINCIPAL STOCKHOLDERS BENEFICIAL OWNERSHIP
- ---------------------------------------------- --------------------
PERCENT
NAME SHARES OF TOTAL
- ---- ------ --------
<S> <C> <C>
K. Philip Hwang 28,214,092 62.3%(1)
Stephen S. Kahng 100,000(2) (3)
Kristine Kim 102,500(4) (3)
Robert E. Larson 150,000(5) (3)
All present Executive Officers and Directors as a Group
(5 persons) 28,616,592 (6)
</TABLE>
- ----------------------------------
(1) Includes an aggregate of 303,934 shares held in trust for Dr. Hwang's
children, 90,000 shares held of record by the Kyupin Philip and C.
Gemma Hwang Foundation, and the 27,820,158 shares held of record by Dr.
Hwang and his spouse.
(2) Includes 25,000 shares Mr. Kahng may acquire within 60 days of the date
of this Proxy Statement pursuant to the exercise of stock options.
(3) Represents less than one percent (1%).
(4) Includes 52,500 shares Ms. Kim may acquire within 60 days of the date
of this Proxy Statement pursuant to the exercise of stock options.
(5) Includes 150,000 shares Dr. Larson may acquire within 60 days of the
date of this Proxy Statement pursuant to the exercise of stock options.
(6) Includes: (i) 50,000 shares of Common Stock certain officers (not named
in the table) may acquire within 60 days of the date of this Proxy
Statement pursuant to the exercise of stock options, and (ii) the
shares of Common Stock referred to in notes 1 to 5 above.
5
<PAGE> 8
BOARD MEETINGS AND COMMITTEES
During the fiscal year ended October 31, 1995, the Board held six meetings. Each
member of the Board attended all meetings held during the 1995 fiscal year.
The Company's Audit Committee, consisting of Dr. Larson and Mr. Kahng, met six
times during fiscal 1995. This Committee reviews the independence of the
Company's independent certified public accountants, recommends the engagement
and discharge of independent accountants and reviews accounting policies,
internal accounting controls and results of audit engagements. During fiscal
1995, neither the Board of Directors nor the Company's independent certified
public accountants raised any issues with respect to matters which required
formal review.
The Company does not have any executive, compensation, nominating or other
committees.
COMPENSATION OF DIRECTORS
Directors who are employees of the Company are not separately compensated for
their services as directors or as members of committees of the Board of
Directors. During fiscal 1995, directors who were not employees of the Company
received $500 for each board meeting attended and were reimbursed for reasonable
travel and other expenses. No compensation is paid for attendance at meetings of
committees of the Board of Directors.
COMPENSATION COMMITTEE INTERLOCKS AND INSIDER PARTICIPATION
During the fiscal year ended October 31, 1995, the Company did not have a
Compensation Committee. The full Board of Directors serves the function of the
Compensation Committees. None of the Board members sits on the Compensation
Committee of any other Board.
COMPENSATION COMMITTEE REPORT
The Company's executive compensation philosophy is to attract and retain
executive officers capable of leading the Company to fulfillment of its business
objectives by offering competitive compensation opportunities that in large part
reward individual contributions as well as including a component that recognizes
overall corporate performance. In addition, long-term equity compensation is
awarded to align the interests of management and stockholders. The Company
provides executive officers (and key employees) of the Company with a
substantial economic interest in the long-term appreciation of the Company's
stock through the grant of stock options and participation in the Employee Stock
Bonus Plan, subject to vesting restriction.
To further these objectives, compensation program for executive officers
generally consist of four components: (i) base cash salaries, (ii) annual cash
bonus plans, (iii) stock options, and (iv) employee retirement plan. Total
compensation paid by the Company to its executive officers is designed to be
competitive with the compensation packages paid to the management of comparable
companies in the electronic manufacturing industry. The Committee generally
evaluates corporate and individual performance based on factors such as
achieving profitability, increasing stockholders' value and continued growth. As
a result, a significant component of the evaluation involves a subjective
assessment of qualitative factors. Moreover, the committee does not base its
considerations on any single performance factor, nor does it specifically assign
relative weight to factors, but rather considers a mix of factors and evaluates
the Company and individual performance against that mix.
6
<PAGE> 9
Base Salaries
The Committee approves salary changes for executive officers in accordance with
the salary administrative policy. Salary adjustments are generally made
following the anniversary of the executive officers. The salary administrative
policy is a long-standing one that is periodically reviewed by the Committee.
The policy sets ranges for various positions, based on job evaluation and
competitive salary data of other companies. Within the ranges, adjustments are
recommended on the basis of position within the range, individual performance
and an overall corporate merit salary percentage factor, which is established by
the Committee.
Annual Cash Bonuses
Cash bonuses are awarded on a discretionary basis, usually following the
Company's fiscal year-end, and are based on the achievement of corporate and
individual goals set by the Committee, as well as the financial condition and
prospects for the Company. Following the fiscal 1995 year, which ended October
31, 1995, the Commmittee awarded a recruitment bonus of $90,000 to the Executive
Vice President.
Stock Options
Long-term equity incentives are granted to executive officers and other selected
employees from time to time on a discretionary basis. All options granted to
date have been for four year terms, with an exercise price equal to the Common
Stock's market value on the date of grant, and generally become incrementally
exercisable after one year of continued employment following the grant date.
Options are granted based upon recommendations of management as to the grantees,
number of options that should be granted and other terms. Options are granted to
key employees, including the executive officers, based on current performance,
anticipated future contribution based on the performance and ability to impact
corporate and/or business results.
Employee Retirement Plan
Effective January 1996, the Board adopted the TeleVideo Systems, Inc. Employee
Savings and Retirement Plan and Trust (the "401(k) Plan") pursuant to which
employees may defer compensation for income tax purposes under Section 401(a)
and 401(k) of the Code. All domestic employees of the Company, including
officers, who have completed three months of service are eligible to participate
in the 401(k) Plan.
The Plan provides that from time to time eligible employees may contribute to
their account up to 15% of their cash compensation through payroll deductions,
subject to statutory limitations. The Company may make a discretionary matching
contribution equal to a specified percentage (determined annually by the Board,
but not exceeding 25%) of the first four percent of the compensation contributed
by the employee. Employee contributions in calendar 1995 could not exceed $
9,240. In addition, contributions of "highly compensated" employees (as defined
in the Code) may be further limited by anti-discrimination rules governing
401(k) plans.
Employees have a 100% vested interest in their contributions to the 401(k) Plan
and the earnings thereon at all times. An employee's interest in the Company's
matching discretionary contributions and the earnings thereon vest at a rate of
33.33% per year for each year of the employee's service after 1986, except that
such interest will be fully vested as the result of the disability, death or
retirement of the employee or the termination of the Plan. All contributions are
held by a trustee under a written trust agreement. Participants may direct the
investment of their accounts among certain specified alternatives. Such
alternatives do not include an investment in the Company's Common Stock.
Since its adoption, the Company has made a one percent contribution to the
401(k) Plan.
7
<PAGE> 10
EXECUTIVE COMPENSATION
The Company's policy is to compensate its officers, including the Chief
Executive Officer, with salary commensurate with the base compensation paid by
competitive employers, supplemented by compensation in recognition of
performance. Dr. Hwang was named Chief Executive Officer effective October 1976
and The Committee set Dr. Hwang's base salary for fiscal 1995 at $140,000. Dr.
Hwang did not receive a bonus under the annual bonus plan and was awarded no
stock options during the fiscal year ended October 31, 1995. The Committee based
this compensation package on an assessment of various factors related to the
Company and specifically to Dr. Hwang. As in previous years, in making its
compensation decisions the Committee also took into consideration executive
compensation information from other companies in the industry, including
industry surveys, publicly available information and reports from compensation
consulting firms. The Committee has approved no change in base salary for Dr.
Hwang for fiscal 1996.
Section 162(m) of the Internal Revenue Code (the "Code") limits the Company to a
deduction for federal income tax purposes of no more than $1,000,000 of
compensation paid to certain Named Executive Officers in a taxable year.
Compensation above $1,000,000 may be deducted if it is "performance-based
compensation" within the meaning of the Code. The statute containing this law
and the applicable proposed Treasury regulations offer a number of transitional
exceptions to this deduction limit for pre-existing compensation plans,
arrangements and binding contracts. As a result, the Compensation Committee
believes that at the present time it is quite unlikely that the compensation
paid to any Named Executive Officer in a taxable year which is subject to the
deduction limit will exceed $1,000,000. Therefore, the Compensation Committee
has not yet established a policy for determining which forms of incentive
compensation awarded to its Named Executive Officers shall be designed to
qualify as "performance-based compensation." The Compensation Committee intends
to continue to evaluate the effects of the statue and any final Treasury
relations and to comply with Code Section 162(m) in the future to the extent
consistent with the best interests of the Company.
The following table shows executive compensation paid or accrued by the Company
for services rendered to the Company or its subsidiaries in all capacities
during the three fiscal years ended October 31, 1995, to the Company's Chief
Executive Officer and each of the Company's other executive officers (the "Named
Executive Officers") whose aggregate cash compensation exceeded $100,000.
SUMMARY COMPENSATION TABLE
<TABLE>
<CAPTION>
ANNUAL COMPENSATION LONG TERM COMPENSATION
------------------- ----------------------
OPTIONS/ OTHER
NAME AND PRINCIPAL RESTRICTED SARS LTIP COMPEN-
POSITION YEAR SALARY($) BONUS($) STOCK (SHARES) PAYOUTS SATION
- -------- ---- --------- -------- ----- -------- ------- ------
<S> <C> <C> <C> <C> <C> <C> <C>
K. Philip Hwang
Chief Executive Officer 1995 140,000 0 0 0 0 0
1994 140,000 0 0 0 0 0
1993 140,000 0 0 0 0 0
Isaac Levanon (1) 1995 132,308 90,000 0 750,000 0 0
Executive Vice President
</TABLE>
- --------------------------------
(1) Mr. Levanon was appointed an executive officer in January 1995. His
employment with the Company terminated in January 1996.
8
<PAGE> 11
EXECUTIVE COMPENSATION TERMS
Dr. Hwang is entitled to a salary at an annual rate of $200,000 which, in fiscal
1990, he agreed to temporarily reduce by 30%. He is also entitled to participate
in the Management Bonus Plan. No stock options under the Company's plans or
otherwise have been granted to Dr. Hwang.
Mr. Isaac Levanon was entitled to a salary at an annual rate of $160,000 and a
recruitment bonus of $90,000.
OTHER COMPENSATION
Stock Option Grants and Exercises:
The following table sets forth option grants pursuant to the ISO Plan and the
Supplemental Plan to current Officers and Directors of the Company during the
period from November 1, 1988 through October 31, 1995. The table also includes
options granted to Directors outside of the foregoing plans during the
aforementioned period.
<TABLE>
<CAPTION>
OPTIONS GRANTED OPTIONS EXERCISED
--------------- -----------------
PER SHARE
NUMBER OF EXERCISE NUMBER OF NET VALUE
OFFICERS AND DIRECTORS SHARES PRICE SHARES REALIZED (1)
- ---------------------- ------ ----- ------ ------------
<S> <C> <C> <C> <C>
K. Philip Hwang -- -- -- --
Stephen S. Kahng 100,000(2) $1.00 -- --
Kristine Kim 2,500(3) $0.22 -- --
100,000(4) $0.38 -- --
K. David Kim 30,000(5) $0.22 30,000(6) 19,800
50,000(7) $0.41 -- --
Robert E. Larson 150,000(8) $0.22 -- --
Isaac Levanon 750,000(9) $0.28 -- --
All present Officers and Directors as a 1,182,500 $0.22 - $1.00 30,000 19,800
Group (6 Persons)
</TABLE>
- -----------------------------------------
(1) Represents the fair market value of the Company's Common Stock on the
date of exercise (based on the closing sales price reported on the
Nasdaq SmallCap Market or the actual sales price if the shares were
sold by the optionee), less the exercise price, and does not
necessarily indicate that the shares were sold by the optionee.
(2) Options covering these shares were granted in March 1995 under the ISO
Plan.
(3) Options covering these shares were granted in November 1991 under the
ISO Plan.
(4) Options covering these shares were granted in December 1993 under the
ISO Plan.
(5) Options covering these shares were granted in November 1991 under the
ISO Plan.
(6) Options covering these shares were exercised in April 1995 under the
ISO Plan.
(7) Options covering these shares were granted in May 1994 under the ISO
Plan.
(8) Nonqualified options covering these shares were granted pursuant to
Board resolutions and were approved by the stockholders at the 1990
Annual Meeting.
(9) Options covering these shares were granted in January 1995 under the
ISO Plan.
9
<PAGE> 12
Long Term Incentive Plan Awards: No long term incentive awards were made by the
Company during fiscal 1995. Accordingly, a table setting forth such awards has
not been included.
EMPLOYEE BENEFIT PLANS
TeleVideo Systems, Inc. 1991 Incentive Stock Option Plan
On November 12, 1991, the Board adopted the TeleVideo Systems, Inc. 1991
Incentive Stock Option Plan (the "1991 ISO Plan"), which was approved by the
stockholders of the Company at the 1992 Annual Meeting. This plan authorizes
4,000,000 shares of Common Stock for options to be granted to employees of the
Company including officers. Options granted under the 1991 ISO Plan are intended
to qualify as incentive stock options within the meaning of Section 422(b) of
the Internal Revenue Code of 1986, as amended (the "Code"). A total of 850,000
shares of stock options were granted to the Company Officers and members of the
Board during the 1995 fiscal year.
CASH PROFIT SHARING PLAN
Effective May 1984, the Board approved a Cash Profit Sharing Plan for employees
(other than Executive Officers, Directors, and sales persons covered by the
sales incentive plan) that provides for semi-annual cash payments to eligible
employees who complete six months of service with the Company. The cash payment
is determined by a formula based upon the Company's contribution of a percentage
of the after-tax profits of the Company and the ratio that each eligible
employee's compensation bears to the eligible compensation of all employees in
the plan. For fiscal year 1995, no amount was paid under this plan.
MANAGEMENT BONUS PLAN
Effective for fiscal 1984, the Board adopted a Management Bonus Plan that
provides for annual or semi-annual cash awards to officers and other key
employees as determined annually by the Board (or by the standing compensation
Committee of the Board, if any) based upon performance and a percentage of
annual base salary of the participant. The plan provides that the maximum amount
that may be awarded to any person is equal to 45% of such person's salary and
the allocation of individual bonuses is determined by the person's position,
individual performance within certain ranges, and the Company's performance. For
fiscal year 1995, no cash was paid under this plan.
CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS
During the two fiscal years ended October 31, 1995, there were no Company
transactions exceeding $60,000 in which any director or executive officer,
director nominee, principal stockholder or member of any such person's immediate
family had a direct or indirect material interest. Similarly, there are no such
proposed transactions pending.
10
<PAGE> 13
STOCK PERFORMANCE GRAPH
The following graph compares the cumulative stockholder returns on the Company's
Common Stock, the Standard & Poor's 500 and the S & P High Tech Composite
Indexes, The graph covers the five-year period from December 31, 1990 through
December 31, 1995, and assumes a $100 investment made on December 31, 1990. Each
of the three measures of cumulative total return assumes reinvestment of
dividends. The stock performance shown on the graph below is not necessarily
indicative of future performance.
YEAR END COMPARISON OF FIVE YEAR TOTAL RETURN AMONG TELEVIDEO, S&P 500, AND
S&P HIGH TECH COMPOSITE INDEXES
[GRAPHIC CHART, TABLE BELOW]
<TABLE>
<CAPTION>
12/31/90 12/31/91 12/31/92 12/31/93 12/31/94 12/31/95
<S> <C> <C> <C> <C> <C> <C>
TeleVideo Systems, Inc 100 71 171 171 157 314
Standard & Poor's 500 100 126 132 141 139 187
Peer Group(1) 100 111 113 136 158 225
</TABLE>
- -----------------------------
(1) The Peer Group Index is based on the Standard & Poor's High Tech
Composite Index.
11
<PAGE> 14
ITEM NO. 2
RATIFICATION OF SELECTION
OF INDEPENDENT PUBLIC ACCOUNTANTS
The Board of Directors has selected Grant Thornton LLP as the Company's
independent auditors for the fiscal year ending October 31, 1996 and has further
directed that management subject the selection of independent auditors for
ratification by the stockholders at the Annual Meeting. Grant Thornton LLP has
audited the Company's financial statements since 1991. Representatives of Grant
Thornton LLP are expected to be present at the Annual Meeting, will have an
opportunity to make a statement if they so desire and will be available to
respond to appropriate questions.
Stockholder ratification of the selection of Grant Thornton LLP as the Company's
independent auditors is not required by the Company's By-laws or otherwise.
However, the Board is submitting the selection of Grant Thornton LLP to the
stockholders for ratification as a matter of good corporate practice. If the
stockholders fail to ratify the selection, the Board will reconsider whether or
not to retain that firm. Even if the selection is ratified, the Board, in its
discretion, may direct the appointment of a different independent accounting
firm at any time during the year if the directors determine that such a change
would be in the best interests of the Company and its stockholders.
VOTING REQUIREMENTS
The affirmative vote of the holders of a majority of the shares present in
person or representd by proxy and entitled to vote at the Annual Meeting will be
required to ratify the selection of Grant Thornton LLP.
The Board of Directors recommends a vote FOR the ratification of the appointment
of Grant Thornton LLP as the Company's independent auditors for the fiscal year
ending October 31, 1996. An abstention is not counted as a vote cast with
respect to this Proposal No. 2.
REPORT TO STOCKHOLDERS
The Company's Annual Report to Stockholders for fiscal year 1995, which contains
the Consolidated Financial Statements and Management's Discussion and Analysis
of Financial Condition and Results of Operations, is being mailed with this
Proxy Statement to stockholders entitled to notice of the Annual Meeting.
DEADLINE FOR RECEIPT OF STOCKHOLDER PROPOSALS
Proposals of stockholders of the Company that are intended to be presented by
such stockholders at the Company's Annual Meeting to be held in 1997 must be
received by the Company no later than October 29, 1996, in order for them to be
considered for inclusion in the Company's Proxy Statement and form of Proxy
relating to that meeting. It is recommended that stockholders submitting
proposals direct them to the Secretary of the Company and use "certified mail,
return receipt requested" in order to provide proof of timely receipt. No such
proposals were received with respect to the Annual Meeting scheduled for March
26, 1996.
OTHER MATTERS
The Company knows of no other matters to be submitted to the meeting. However,
if any other matters are properly presented to the meeting, it is intended that
proxies, in the form enclosed, will be voted in respect thereof in accordance
with the judgment of the persons voting such proxies.
12
<PAGE> 15
STOCKHOLDERS PROPOSALS
Proposals of stockholders that are intended to be presented at the Company's
Annual Meeting of Stockholders to be held in 1997 must be received by the
Company no later than September 15, 1996, in order to be included in the Proxy
Statement and proxy relating to that meeting.
By Order of the Board of Directors
/s/ K. David Kim
-----------------------
K. David Kim
Chief Financial Officer
The Board of Directors hopes that stockholders will attend the meeting. Whether
or not you plan to attend, you are urged to complete, sign and return the
enclosed proxy in the accompanying envelope. A prompt response will greatly
facilitate arrangements for the meeting, and your cooperation will be
appreciated. Stockholders who attend the meeting may vote their shares
personally even though they have sent in their proxies.
February 26, 1996
13
<PAGE> 16
TELEVIDEO SYSTEMS, INC.
2345 HARRIS WAY, SAN JOSE, CALIFORNIA 95131
PROXY SOLICITED BY BOARD OF DIRECTORS FOR THE ANNUAL MEETING OF STOCKHOLDERS
MARCH 26, 1996
KATHY CLEVELAND and JOYCE YAU, or each of them, each with the power of
substitution and revocation, are hereby authorized to represent the undersigned,
with all powers which the undersigned would possess if personally present, and
to vote the TeleVideo Systems, Inc. Common Stock of the undersigned at the 1996
Annual Meeting of Stockholders of TeleVideo Systems, Inc., which is being held
at the Beverly Heritage Hotel, 1820 Barber Lane, Milpitas, California 95035, on
Tuesday, March 26, 1996, at 9:30 a.m. California time, and at any postponements
or adjournments of that meeting, as set forth below, and, in their discretion,
upon any other business that may properly come before the meeting.
THE BOARD OF DIRECTORS RECOMMENDS A VOTE FOR THE NOMINEES FOR DIRECTOR LISTED
BELOW:
1. To elect directors to serve for the ensuing year and until their successors
are elected.
/ / FOR all nominees listed below / / WITHHOLD AUTHORITY
(except as marked below) to vote for all nominees listed below
K. PHILIP HWANG, STEPHEN S. KAHNG, KRISTINE KIM, ROBERT E. LARSON
(INSTRUCTION: To withhold authority to vote for any nominee, write that
nominee's name below:)
- --------------------------------------------------------------------------------
<PAGE> 17
THE BOARD OF DIRECTORS RECOMMENDS A VOTE FOR EACH OF THE FOLLOWING PROPOSALS:
2. To ratify the selection of Grant Thornton LLP as the independent public
accountant of TeleVideo Systems, Inc. for the 1996 fiscal year.
/ / FOR / / AGAINST / / ABSTAIN
3. In their discretion with respect to any other matters that may properly come
before the meeting or any adjournment thereof.
THIS PROXY WILL BE VOTED AS SPECIFIED OR, IF NO CHOICE IS SPECIFIED, WILL
BE VOTED FOR THE ELECTION OF THE NOMINEES NAMES AND FOR PROPOSAL 2 SPECIFIED
HEREIN.
Dated: , 1996
----------------------------
----------------------------------------
If shares are issued in the names of two
or more persons, each of you should sign
the proxy. If the proxy is executed by a
corporation, it should be signed in the
corporate name by an authorized officer.
When signing as attorney, executor,
administrator, trustee, or guardian, or
in any representative capacity, give
full title as such.
