<PAGE>
SCHEDULE 14A INFORMATION
Proxy Statement Pursuant to Section 14(a) of
the Securities Exchange Act of 1934 (Amendment No. )
Filed by the Registrant / /
Filed by a party other than the Registrant / /
Check the appropriate box:
/X/ 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 Section 240.14a-11(c) or Section
240.14a-12
TELEVIDEO, 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):
/ / No fee required
/ / Fee computed on table below per Exchange Act Rules 14a-6(i)(1)
and 0-11
(1) Title of each class of securities to which transaction applies:
------------------------------------------------------------------------
(2) Aggregate number of securities to which transaction applies:
------------------------------------------------------------------------
(3) Per unit price or other underlying value of transaction computed
pursuant to Exchange Act Rule 0-11 (set forth the amount on which the
filing fee is calculated and state how it was determined):
------------------------------------------------------------------------
(4) Proposed maximum aggregate value of transaction:
------------------------------------------------------------------------
(5) Total fee paid:
------------------------------------------------------------------------
/ / Fee paid previously with preliminary materials.
/ / Check box if any part of the fee is offset as provided by Exchange Act Rule
0-11(a)(2) and identify the filing for which the offsetting fee was paid
previously. Identify the previous filing by registration statement number,
or the Form or Schedule and the date of its filing.
(1) Amount Previously Paid:
------------------------------------------------------------------------
(2) Form, Schedule or Registration Statement No.:
------------------------------------------------------------------------
(3) Filing Party:
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(4) Date Filed:
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<PAGE>
TELEVIDEO, INC.
2345 HARRIS WAY
SAN JOSE, CALIFORNIA 95131
March 17, 1998
TO THE STOCKHOLDERS OF TELEVIDEO, INC.
The Annual Meeting of Stockholders of TeleVideo, Inc. will be held at
Sheraton San Jose Hotel 1801 Barber Lane, Milpitas, California, on Tuesday,
April 21, 1998, at 9:30 a.m. California time.
The Annual Report for fiscal 1997 is enclosed herewith. At the stockholders'
meeting, we will discuss in more detail the subjects covered in the Annual
Report as well as other matters of interest to stockholders.
The enclosed proxy statement explains the items of business to come formally
before the Annual Meeting. As a stockholder, it is in your best interest to
express your views regarding these matters by signing and returning your
proxy. This will ensure the voting of your shares if you do not attend the
Annual Meeting.
Your vote is important regardless of the number of shares of the Company's
Stock you own, and all stockholders are cordially invited to attend the
Annual Meeting. To ensure your representation at the Annual Meeting, please
mark, sign, date and mail the enclosed proxy promptly in the return envelope
provided, which requires no postage if mailed in the United States. The
giving of a proxy will not affect your right to vote in person if you attend
the Annual Meeting. Please note, however, that if your shares are held of
record by a broker, bank or other nominee and you wish to vote at the Annual
Meeting, you must obtain from the record holder a proxy issued in your name.
Sincerely yours,
Dr. K. Philip Hwang
Chairman and Chief Executive Officer
<PAGE>
TELEVIDEO, INC.
2345 HARRIS WAY, SAN JOSE, CALIFORNIA 95131
NOTICE OF ANNUAL MEETING OF STOCKHOLDERS
TO BE HELD ON TUESDAY, APRIL 21, 1998
The Annual Meeting of Stockholders of TeleVideo, Inc., a Delaware
corporation, (the "Company") will be held at Sheraton San Jose Hotel, 1801
Barber Lane, Milpitas, California 95035, on Tuesday, April 21, 1998, 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 approve the amendment of the Company's Restated Certificate of
Incorporation to effect a 1 for 4 reverse stock split of the Company's
outstanding common stock.
3. To ratify the selection of Grant Thornton LLP as the independent public
accountant of TeleVideo, Inc. for the 1998 fiscal year.
4. To transact such other business as may properly come before the meeting
or any adjournment.
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 March 16, 1998 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
Ken Chong
Vice President and Chief Financial Officer
San Jose, California
March 17, 1998
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>
TELEVIDEO, INC.
PROXY STATEMENT FOR
ANNUAL MEETING OF STOCKHOLDERS
APRIL 21, 1998
GENERAL
This Proxy Statement is furnished in connection with the solicitation of the
enclosed proxy by the Board of Directors of TeleVideo, Inc, a Delaware
corporation (the "Company"), for use at its Annual Meeting of Stockholders to
be held on April 21, 1998, 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 Sheraton San Jose Hotel located at 1801
Barber Lane, Milpitas, California 95035, at 9:30 a.m. California time.
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 March 16, 1998, as the record
date of determination of stockholders entitled to vote at the Annual Meeting
(the "Record Date"). At the close of business on March 16, 1998, there were
outstanding and entitled to vote 45,527,960 shares of Common Stock of the
Company.
On each matter that may come before the Annual Meeting, each stockholder is
entitled to one vote for each share of Common Stock.
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.
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
<PAGE>
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 $3,250, plus
out-of-pocket expenses.
The Company intends to mail this Proxy Statement and proxy card on or about
March 18, 1998 to stockholders of record as of the Record Date.
2
<PAGE>
PROPOSAL NO. 1
MATTERS TO BE CONSIDERED AT ANNUAL MEETING
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.
Two of the four nominees are currently Directors of the Company: Dr. K.
Philip Hwang, and Dr. Robert E. Larson, were re-elected to the Board by the
stockholders at the last Annual Meeting. Two additional nominees are Mr.
Phillip Annen and Mr. Woo K. Kim. Mr. Stephen S. Kahng, who currently serves
as a director, is not standing for re-election at this 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 may be cast
in favor or withheld; votes that are withheld will be excluded entirely from
the vote and will have no effect. A broker-non-vote will not be treated as
entitled to vote on this matter.
The Board recommends a vote FOR the election of each of the nominees.
NOMINEES
The names of the nominees, and certain information about them, as of March
16, 1998, is set forth below:
<TABLE>
<CAPTION>
DIRECTOR
NAME OF NOMINEE AGE POSITION SINCE
--------------- --- -------- --------
<S> <C> <C> <C>
Dr. K. Philip Hwang 62 Chairman and Chief Executive Officer 1976
TeleVideo, Inc.
Mr. Woo K. Kim 46 President --
Selam Inc.
Mr. Phillip Annen 54 Director of Engineering --
TeleVideo, Inc.
Dr. Robert E. Larson (1) 59 Chairman and Chief Executive Officer 1989
Expert-EASE Systems, Inc.
</TABLE>
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(1) Member of the Audit Committee
3
<PAGE>
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. Phillip Annen has served as the Director of Engineering since August
1996. He was Manager of Engineering from April 1992 to July 1996. He joined
TeleVideo in October 1989 as a Senior Engineer with primary responsibilities
in the design and development of video display terminals.
Mr. Woo K. Kim has served as the president of Selam Inc. in San Jose, CA
since August 1995. Prior to that, Mr. Kim was TeleVideo's Director of
Engineering and Production from June 1994 to August 1995. Prior to that, he
was Director of Engineering from November 1990 to May 1994. Mr. Kim joined
the TeleVideo in 1990 as Senior Manager of Engineering.
Dr. Robert E. Larson joined the Company as a member of the Board of Directors
effective December 1989. Since September 1983, he has served 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.
RETIRING DIRECTOR
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, Austin,
Texas, a manufacturer of Power PC-based workstations. From December 1991 to
November 1993, he served as the President of Up to Date Technology, Inc., a
system design consulting company to the personal computer industry.
EXECUTIVE OFFICERS
The names of the Company's Executive Officers who are not Directors and
certain information about each of them are as follows:
Mr. Ken Chong joined TeleVideo in January 1998 as Vice President Chief
Financial Officer. Mr. Chong has more than 12 years of executive level
experience at companies in a variety of industries. He is immediate past
president of Enviroflex, Inc in Anaheim, CA. He was vice president and CFO
of Binggrae Company Ltd., Korea from January 1994 to December 1996 and from
April 1989 to December 1992, he was president of Union Foods of Costa Mesa,
CA.
Mr. Anthony Thia is currently Vice President of Worldwide Sales. He joined
TeleVideo in August 1996 as Vice President of Marketing and continued to
perform those duties through February 1998. Prior to coming to TeleVideo,
Mr. Thia was the Director of Marketing at ASI (Asia Source Inc.), a national
PC distributor headquartered in Fremont, California, from August 1994 to
August 1996. From 1990 to 1994, Mr. Thia was the Sales and Marketing Manager
at ASI.
SECTION 16(a) BENEFICIAL OWNERSHIP COMPLIANCE
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 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, 1997, each of the Company's executive officers,
directors and 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 except that Kristine Kim, a Director and Executive during
fiscal 1997, inadvertently failed to file her Form 3 and Form 4s for
September 1997 and October 1997. She had no holding to report on Form 3. Her
September 1997 Form 4, if filed, would have reflected two option exercises on
a single day and seven sales of the shares she acquired, all on the same day.
Her October 1997 Form 4, if filed, would have reflected one option exercise
and two subsequent sales on a single day of such shares. All of these
transactions were reported on a Form 5.
4
<PAGE>
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 March 16, 1998: (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; and (iv) all Executive
Officers and Directors of the Company as a group. The Company knows of no
arrangements that will result in a change in control subsequent to the date
hereof. Except as otherwise indicated, each person has sole investment and
voting power with respect to the shares shown, subject to community property
laws, where applicable.
<TABLE>
<CAPTION>
DIRECTORS, OFFICERS AND PRINCIPAL STOCKHOLDERS BENEFICIAL OWNERSHIP
---------------------------------------------- ----------------------
PERCENT
NAME SHARES OF TOTAL
---- ------ --------
<S> <C> <C>
K. Philip Hwang 28,214,092(1) 61.97%(1)
2345 Harris Way, San Jose, California 95131
Phillip Annen 15,000(3) (2)
2345 Harris Way, San Jose, California 95131
Stephen Kahng 50,000(4) (2)
2555 North IH-35, Round Rock, TX 78664
Kristine Kim 100,000(5) (2)
2345 Harris Way, San Jose, CA 95131
Mr. Woo K. Kim 100,000(6) (2)
1887 O'Toole Ave., Suite #C-103, San Jose, CA 95131
Robert E. Larson 100,000(7) (2)
850 Woodside Drive, Woodside, California 94062
All present Executive Officers and Directors as a
Group (8 persons) 28,804,092(8) 63.3%
</TABLE>
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(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) Represents less than one percent (1%).
(3) Includes 15,000 shares Mr. Annen may acquire within 60 days of the date of
this table pursuant to the exercise of stock options.
(4) Includes 50,000 shares Mr. Kahng may acquire within 60 days of the date
of this table pursuant to the exercise of stock options.
(5) Includes 100,000 shares Ms. K. Kim may acquire within 60 days of the
date of this table pursuant to the exercise of stock options.
(6) Includes 100,000 shares Mr. W. Kim may acquire within 60 days of the
date of this table pursuant to the exercise of stock options.
(7) Includes 150,000 shares Dr. Larson may acquire within 60 days of the
date of this table pursuant to the exercise of stock options.
(8) Includes (i) 175,000 shares of Common Stock certain officers (not named
in the table) may acquire within 60 days of the date of this table
pursuant to the exercise of stock options, and (ii) the shares of
Common Stock referred to in notes 1 to 7.
5
<PAGE>
BOARD MEETINGS AND COMMITTEES
During the fiscal year ended October 31, 1997, the Board held five meetings.
Each member of the Board attended all meetings held during the 1997 fiscal
year.
The Company's Audit Committee, consisting of Dr. Larson and Mr. Kahng, who is
not standing for re-election, met five times during fiscal 1997. 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 1997, neither the Board of
Directors nor the Company's independent certified public accountants raised
any issues with respect to matters that 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 1997, 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, 1997, the Company did not have a
Compensation Committee. The full Board of Directors serves the function of
the Compensation Committee. None of the Board members or Executive Officers
has, during fiscal 1997, served on the board of directors or compensation
committee of any other entity, any of whose officers or directors served on
the Board of Directors of the Company.
COMPENSATION COMMITTEE REPORT (1)
The Board of Directors as a whole serves the function of a Compensation
Committee since the Company has no formal Compensation Committee. 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 Options Plan, subject to
vesting restrictions.
To further these objectives, compensation program for Executive Officers
generally consist of four components: (i) base cash salaries, (ii) management
bonus plan, (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 Board
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 Board 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.
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
limitation and the applicable proposed Treasury regulations offer a number of
- ------------------
(1) This Report is not "soliciting material," is not deemed "filed" with the
SEC and is not to be incorporated by reference in any filing of the
Company under the Securities Act of 1933, as amended, or the Exchange
Act, whether made before or after the date hereof and irrespective of
any general incorporation language in any such filing.
6
<PAGE>
transitional exceptions to this deduction limit for pre-existing compensation
plans, arrangements and binding contracts. As a result, the Board 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 Board 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 Board intends to continue to evaluate
the effects of the statue and any final Treasury regulations and to comply
with Code Section 162(m) in the future to the extent consistent with the best
interests of the Company.
BASE SALARIES
The Board approves salary changes for Executive Officers in accordance with
the salary administrative policy. Salary adjustments are generally made
following the anniversary of the Executive Officer's start date with the
Company. The salary administrative policy is a long-standing one that is
periodically reviewed by the Board. 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 Board.
MANAGEMENT BONUS PLAN
In 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 on the achievement of corporate and individual
goals set by the Board, as well as the financial condition and prospects for
the Company. 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 1997, no cash was paid under this plan.
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 1987, the Board adopted the TeleVideo, 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 is 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 1997 could not exceed $ 9,500. 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
7
<PAGE>
accounts among certain specified alternatives. Such alternatives do not
include an investment in the Company's Common Stock.
CHIEF EXECUTIVE OFFICER 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. He is entitled to a salary at an annual rate of $200,000 which, in
fiscal 1990, he agreed to temporarily reduce by 30%. Dr. Hwang's base salary
in fiscal 1997, therefore, was set at $140,000 which was the same as the
previous years. He is also entitled to participate in the Management Bonus
Plan. 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, 1997. The
Board based this compensation package on an assessment of various factors
related to the Company's profitability and cash position. As in previous
years, in making its compensation decisions the Board 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 Board has approved no change
in base salary for Dr. Hwang for fiscal 1998.
Board of Directors
K. Philip Hwang
Stephen S. Kahng
Kristine Kim*
Robert E. Larson
*Ms. Kim was a member of the Board of Directors throughout the fiscal year
ended October 31, 1997, but resigned in February 1998.
8
<PAGE>
EXECUTIVE COMPENSATION
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, 1997, to the
Company's Chief Executive Officer and each of the Company's other Executive
Officers (the "Named Executive Officers") whose total annual salary and bonus
exceeded $100,000 in the fiscal year ended October 31, 1997.
<TABLE>
<CAPTION>
ANNUAL COMPENSATION LONG TERM COMPENSATION
------------------- ----------------------
OTHER ANNUAL OPTIONS/ OTHER
COMPENSATION RESTRICTED SARS LTIP COMPEN-
NAME AND PRINCIPAL POSITION YEAR SALARY($) ($) STOCK (SHARES) PAYOUTS SATION
--------------------------- ---- --------- ------------ ---------- -------- ------- ------
<S> <C> <C> <C> <C> <C> <C> <C>
K. Philip Hwang 1997 140,000 0 0 0 0 0
Chief Executive Officer 1996 140,000 0 0 0 0 0
1995 140,000 0 0 0 0 0
Kristine Kim 1997 128,000 0 0 0 0 0
1996 124,000 0 0 0 0 0
1995 71,000 0 0 0 0 0
</TABLE>
OTHER COMPENSATION
STOCK OPTION GRANTS IN LAST FISCAL YEAR
The following table provides information with respect to options granted in the
Last Fiscal Year to the Named Executive Officers.
<TABLE>
<CAPTION>
INDIVIDUAL GRANTS
-----------------
% OF TOTAL POTENTIAL REALIZABLE VALUE
NUMBER OF OPTIONS AT ASSUMED ANNUAL RATES OF
SECURITIES GRANTED TO STOCK PRICE APPRECIATION FOR
UNDERLYING EMPLOYEES EXERCISE OPTION TERM
OPTIONS IN FISCAL PRICE EXPIRATION -------------------------------
NAME GRANTED YEAR ($/SH) DATE 5% ($) 10% ($)
---- ----------- --------- -------- ---------- ---------- -----------
<S> <C> <C> <C> <C> <C> <C>
K. Philip Hwang - - - - - -
Kristine Kim - - - - - -
</TABLE>
9
<PAGE>
AGGREGATED OPTION EXERCISES IN LAST FISCAL YEAR AND FISCAL YEAR END OPTION
VALUES
The following table provides information with respect to option exercises in the
Last Fiscal Year by the Named Executive Officers and the value of their
unexercised options at Fiscal Year End.
<TABLE>
<CAPTION>
NUMBER OF SECURITIES
UNDERLYING
UNEXERCISED OPTIONS VALUE OF UNEXERCISED
SHARES AT FISCAL YEAR IN-THE-MONEY OPTIONS AT
ACQUIRED VALUE END (#) (2) FISCAL YEAR END ($) (2) (3)
ON REALIZED ----------- --------------------------
NAME EXERCISE (#) ($) (1) VESTED UNVESTED VESTED UNVESTED
---- ------------ -------- ------ -------- ------ --------
<S> <C> <C> <C> <C> <C> <C>
K. Philip Hwang - - - - - -
Kristine Kim 70,000 .88 50,000 75,000 26,000 33,000
20,000 .91 - - - -
</TABLE>
(1) Market value of the shares on date of exercise, less the exercise price.
(2) All options are immediately exercisable, but shares issued upon exercise
are subject to vesting restrictions. Accordingly, there were no
unexercisable options outstanding at fiscal year end.
(3) Value is based on fair market value of the Company's common stock of
$0.84375 per share on October 31, 1997 (the last trading day of the last
fiscal year), less the exercise price.
LONG TERM INCENTIVE PLAN AWARDS: No long term incentive awards were made by the
Company during fiscal 1997. Accordingly, a table setting forth such awards has
not been included.
EMPLOYEE BENEFIT PLANS
TELEVIDEO, INC. 1991 INCENTIVE STOCK OPTION PLAN
On November 12, 1991, the Board adopted the TeleVideo, 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 of the Internal Revenue Code of 1986, as amended (the "Code). Options are
approved by the Board, which acts as the Plan Administrator. All options are
granted at an exercise price at least equal to 100% of the fair market value
on the date of grant (110% for persons who own at least 10% of the Company's
outstanding Common Stock).
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 1997, no amount was paid under this plan.
10
<PAGE>
CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS
During the two fiscal years ended October 31, 1997, 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.
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, 1992 through
December 31, 1997, and assumes a $100 investment made on December 31, 1992.
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.
[GRAPH]
<TABLE>
<CAPTION>
12/31/92 12/31/93 12/31/94 12/31/95 12/31/96 12/31/97
<S> <C> <C> <C> <C> <C> <C>
Televideo, Inc. 100 100 92 192 142 178
Standard & Poor's 500 100 107 106 140 160 191
S & P High Tech Composite 100 120 136 176 220 246
</TABLE>
11
<PAGE>
PROPOSAL NO. 2
AMENDMENT TO THE COMPANY'S CERTIFICATE OF INCORPORATION TO EFFECT A REVERSE
STOCK SPLIT
TeleVideo's Common Stock is quoted on the Nasdaq National Market. On
February 19, 1998, the closing sale price was $0.59375.
On August 22, 1997, the Securities and Exchange Commission approved certain
changes in the listing and maintenance requirements that had been requested
by The Nasdaq Stock Market for securities listed, or to be listed, on the
Nasdaq National Market and the Nasdaq SmallCap Market. These changes in
listing and maintenance requirements are intended to make it more difficult
for companies to be approved for listing and to maintain their listing on
Nasdaq, with the intent that the more stringent requirements will assist
Nasdaq in assuring a high quality level of listed companies and greater
protection for investors who purchase securities quoted on Nasdaq.
Both the old and the new maintenance requirements for National Market listed
companies include a requirement that TeleVideo must maintain a $1.00 stock
price. The recent change in maintenance requirements, however, deleted the
alternative of having a market value of the public float of $3 million and $4
million in net tangible assets, in the event the stock price was below $1.00.
TeleVideo's Common Stock did not close at or above $1.00 continuously for
more than one month in 1997 or 1996. However, TeleVideo has historically
been able to maintain its National Market listing by relying on the public
float and net tangible assets alternative to the $1.00 stock price
requirement. That option is no longer available to the Company.
Management of TeleVideo believes that it is in the best interests of the
Company and its stockholders that the Common Stock continue to be included on
the Nasdaq National Market. This market has a widespread following and
includes numerous companies of high quality. Management believes this is the
best market for the Company's stock. In order to increase the stock price of
the Common Stock to a level that will make it likely that TeleVideo will be
able to maintain its National Market listing, the Board of Directors has
delegated to management the authority to effect a reverse split of the
outstanding Common Stock in the range of between 1-for-3 and 1-for-5.
Management has determined, based on recent trading activity, to effect a
reverse stock split of 1-for-4.
A reverse stock split of the outstanding Common Stock will have the effect of
reducing the number of shares owned by each stockholder, while
proportionately increasing the per share price. By way of example, assuming
a 1-for-4 reverse stock split, a stockholder who owned 400 shares (at a price
of $0.72) prior to the combination would own 100 shares (at $2.88 per share)
immediately upon completion of the reverse split. Accordingly, each
stockholder's proportionate share ownership in the Company remains undiluted
by the reverse stock split. However, TeleVideo can give no assurance that,
upon completion of the reverse stock split, the adjusted stock price will not
drift down immediately or shortly thereafter. It is not unusual to see some
downward movement in a stock's price following a reverse stock split.
TeleVideo nevertheless believes that the reverse stock split is an
appropriate action that will assist the Company in protecting its listing on
the National Market.
While the proposed amendment to the Restated Certificate of Incorporation
will have the effect of reducing the number of outstanding shares, the number
of authorized shares of Common Stock will remain at 75,000,000. Therefore,
the amendment will make available a substantial number of additional shares
for issuance in the future, without the need for further stockholder action.
The Company does not have any current plans to issue such newly available
shares, but could decide to do so in the future.
STOCK CERTIFICATES AND FRACTIONAL SHARES
The reverse stock split will automatically occur upon the filing of the
Certificate of Amendment with the Delaware Secretary of State. No further
action is required by the stockholders. However, following consummation of
the
12
<PAGE>
reverse stock split, anticipated to be effected on or about April 22, 1998
(or as soon thereafter as practicable, as determined by management of the
Company), TeleVideo's Transfer Agent, American Stock Transfer & Trust
Company, will send to each stockholder of record on the effective date of the
reverse stock split information regarding replacement of the old stock
certificates with stock certificates that state the number of shares on a
post-reverse stock split basis.
TeleVideo will not issue fractional shares resulting from the reverse stock
split. In lieu of fractional shares, TeleVideo will pay in cash the fair
market value of the fractional share, based upon the closing sale price of
the Company's Common Stock on the last trading day immediately preceding the
effective date of the reverse stock split.
REQUIRED VOTE
To effect the reverse stock split, TeleVideo is required to amend its
Restated Certificate of Incorporation, as currently amended. The affirmative
vote of a majority of the outstanding shares entitled to vote thereon is
required to approve such an amendment.
The Board of Directors recommends a vote FOR the approval of the amendment to
the Company's Restated Certificate of Incorporation in order to effect a
1-for-4 reverse stock split of the outstanding Common Stock. A copy of the
proposed amendment is attached hereto as Appendix A. Approval of the
amendment will also grant to management the authority to make any changes to
the form or content of the amendment, if any, required by the Secretary of
State of Delaware in order for such amendment to be accepted for filing.
13
<PAGE>
PROPOSAL NO. 3
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, 1998 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.
REQUIRED VOTE
The affirmative vote of the holders of a majority of the shares present in
person or represented 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, 1998.
14
<PAGE>
REPORT TO STOCKHOLDERS
The Company's Annual Report to Stockholders for fiscal year 1997, 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 1999 must be
received by the Company no later than November 18, 1998, 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 April 21, 1998.
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.
By Order of the Board of Directors
Ken Chong
Vice President and 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, if they revoke their
proxies at or before a vote is taken.
March 17, 1998
15
<PAGE>
FORM OF
CERTIFICATE OF AMENDMENT
OF
RESTATED CERTIFICATE OF INCORPORATION
TeleVideo, Inc. a corporation organized and existing under and by virtues of
the General Corporation Law of the State of Delaware:
DOES HEREBY CERTIFY:
FIRST: That by unanimous written consent of the Board of Directors,
resolutions were duly adopted setting forth a proposed amendment of the
Restated Certificate of Incorporation of said corporation, declaring said
amendment to be advisable and declaring that the matter should be brought
before the stockholders for consideration at its next annual meeting of the
stockholders or otherwise brought before the stockholders for consideration.
The resolution setting forth the proposed amendment is as follows:
RESOLVED, that the Restated Certificate of Incorporation of this
corporation be amended by changing the first paragraph of the Article
thereof numbered "4" so that, as amended, said first paragraph of such
Article shall be and read as follows:
The total number of shares of stock of all classes which the
Corporation has authority to issue is 78,000,000 shares, consisting of
75,000,000 shares of Common Stock with a par value of $0.01 per share,
and 3,000,000 shares of Preferred Stock with a par value of $0.01 per
share. Upon the amendment of this article to read as herein set forth,
each four shares of Common Stock outstanding shall be combined and
converted into one share of Common Stock. In lieu of fractional shares,
the Company shall pay in cash the fair market value of any fractional
shares based on the last sale price on the last trading day preceding the
date of this amendment.
SECOND: That thereafter, pursuant to resolution of its Board of
Directors, the corporation's Annual Meeting of Stockholders was duly called
and held upon notice in accordance with Section 222 of the General
Corporation Law of the State of Delaware, at which meeting the necessary
number of shares as required by statute were voted in favor of the amendment.
THIRD: That said amendment was duly adopted in accordance with the
provisions of Section 242 of the General Corporation Law of the State of
Delaware.
Appendix A-1
<PAGE>
IN WITNESS WHEREOF, said corporation has caused this certificate to be
signed by Ken Ho Chong, its authorized officer, this ____ day of April, 1998,
and such amendment is effective on the date of filing in the Office of the
Delaware Secretary of State.
/s/ Ken Ho Chong
----------------------------
Ken Ho Chong
VICE PRESIDENT AND CHIEF OF
FINANCIAL OFFICER
Attest:
/s/ Kathy K. Cleveland
- --------------------------
Kathy K. Cleveland
Secretary
Appendix A-2
<PAGE>
TELEVIDEO, INC.
2345 HARRIS WAY, SAN JOSE, CALIFORNIA 95131
PROXY SOLICITED BY BOARD OF DIRECTORS FOR THE
ANNUAL MEETING OF STOCKHOLDERS
APRIL 21, 1998
KATHY CLEVELAND and SHERRI CHONG KIM, 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, Inc. Common Stock of the undersigned at
the 1998 Annual Meeting of Stockholders of TeleVideo, Inc., which is being
held at Sheraton San Jose Hotel, 1801 Barber Lane, Milpitas, California 95035,
on Tuesday, April 21, 1998, 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.
THIS PROXY WILL BE VOTED AS SPECIFIED OR, IF NO CHOICE IS SPECIFIED, WILL BE
VOTED FOR THE ELECTION OF THE NOMINEES NAME AND
FOR PROPOSALS 2 AND 3 SPECIFIED HEREIN.
(CONTINUED AND TO BE SIGNED ON REVERSE SIDE.)
<PAGE>
THE BOARD OF DIRECTORS RECOMMENDS A VOTE FOR THE NOMINEES FOR DIRECTOR LISTED
BELOW:
1. Election of Directors
/ / FOR all nominees listed below / / WITHHOLD AUTHORITY
(except as marked below) to vote for all nominees listed below
K. PHILIP HWANG, PHILLIP ANNEN, WOO K. KIM, ROBERT E. LARSON
To elect directors to serve for the ensuing year and until their
successors are elected.
(INSTRUCTION: To withhold authority to vote for any nominee, write that
nominee's name below:)
- ---------------------------------------------------------------------------
THE BOARD OF DIRECTORS RECOMMENDS A VOTE FOR EACH OF THE FOLLOWING PROPOSALS:
2. To approve the amendment of the Company's Restated Certificate of
Incorporation to effect a 4:1 Reverse Stock Split of the Company's
outstanding common stock.
/ / FOR / / AGAINST / / ABSTAIN
3. To ratify the selection of Grant Thornton LLP as the independent public
accountant of TeleVideo, Inc. for the 1998 fiscal year.
/ / FOR / / AGAINST / / ABSTAIN
4. In their discretion with respect to any other matters that may properly
come before the meeting or any adjournment thereof.
Signature(s) _______________________ Dated: ____________, 1998
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.
