<PAGE>
SCHEDULE 14A INFORMATION
Proxy Statement Pursuant to Section 14(a) of the Securities
Exchange Act of 1934 (Amendment No. )
Filed by the Registrant [X]
Filed by a Party other than the Registrant [_]
Check the appropriate box:
[_] Preliminary Proxy Statement [_] CONFIDENTIAL, FOR USE OF THE
COMMISSION ONLY (AS PERMITTED BY
RULE 14A-6(E)(2))
[X] Definitive Proxy Statement
[_] Definitive Additional Materials
[_] Soliciting Material Pursuant to Section 240.14a-11(c) or Section 240.14a-12
Franklin Electronic Publishers, Incorporated
- --------------------------------------------------------------------------------
(Name of Registrant as Specified In Its Charter)
- --------------------------------------------------------------------------------
(Name of Person(s) Filing Proxy Statement, if other than the Registrant)
Payment of Filing Fee (Check the appropriate box):
[X] No fee required
[_] Fee computed on table below per Exchange Act Rules 14a-6(i)(4) and 0-11.
(1) Title of each class of securities to which transaction applies:
-------------------------------------------------------------------------
(2) Aggregate number of securities to which transaction applies:
-------------------------------------------------------------------------
(3) Per unit price or other underlying value of transaction computed
pursuant to Exchange Act Rule 0-11 (Set forth the amount on which
the filing fee is calculated and state how it was determined):
-------------------------------------------------------------------------
(4) Proposed maximum aggregate value of transaction:
-------------------------------------------------------------------------
(5) Total fee paid:
-------------------------------------------------------------------------
[_] Fee paid previously with preliminary materials.
[_] Check box if any part of the fee is offset as provided by Exchange
Act Rule 0-11(a)(2) and identify the filing for which the offsetting fee
was paid previously. Identify the previous filing by registration statement
number, or the Form or Schedule and the date of its filing.
(1) Amount Previously Paid:
-------------------------------------------------------------------------
(2) Form, Schedule or Registration Statement No.:
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(3) Filing Party:
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(4) Date Filed:
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Notes:
<PAGE>
FRANKLIN ELECTRONIC PUBLISHERS, INCORPORATED
----------------
NOTICE OF ANNUAL MEETING OF SHAREHOLDERS
----------------
The annual meeting of shareholders of FRANKLIN ELECTRONIC PUBLISHERS,
INCORPORATED (the "Company"), a Pennsylvania corporation, will be held in the
11th Floor Conference Center in the offices of Rosenman & Colin LLP, 575
Madison Avenue, New York, New York, on Friday, August 6, 1999, at 9:00 A.M.,
for the following purposes:
(1) To elect nine directors of the Company to serve for a term of one
year;
(2) To ratify the appointment of auditors of the Company to serve until
the next annual meeting of shareholders; and
(3) To consider and act upon such other matters as may properly come
before the meeting.
Only shareholders of record at the close of business on June 18, 1999 are
entitled to vote at the meeting.
You are requested to fill in, date and sign the enclosed proxy, which is
solicited by the Board of Directors of the Company, and to mail it promptly in
the enclosed envelope.
By order of the Board of Directors,
GREGORY J. WINSKY,
Secretary
Burlington, New Jersey
July 13, 1999
<PAGE>
FRANKLIN ELECTRONIC PUBLISHERS, INCORPORATED
----------------
PROXY STATEMENT FOR ANNUAL MEETING OF SHAREHOLDERS
August 6, 1999
----------------
This Proxy Statement is furnished in connection with the solicitation of
proxies by the Board of Directors of FRANKLIN ELECTRONIC PUBLISHERS,
INCORPORATED (the "Company") to be used at the annual meeting of shareholders
of the Company which will be held in the 11th Floor Conference Center in the
offices of Rosenman & Colin LLP, 575 Madison Avenue, New York, New York, on
Friday, August 6, 1999, at 9:00 A.M., and at any adjournments thereof.
Shareholders who execute proxies retain the right to revoke them at any time
by notice in writing to the Secretary of the Company, by revocation in person
at the meeting or by presenting a later dated proxy. Unless so revoked, the
shares represented by proxies will be voted at the meeting. The shares
represented by the proxies solicited by the Board of Directors of the Company
will be voted in accordance with the directions given therein. Shareholders
vote at the meeting by casting ballots (in person or by proxy) which are
tabulated by a person who is appointed by the Board of Directors before the
meeting to serve as inspector of election at the meeting and who has executed
and verified an oath of office. Abstentions and broker "non-votes" are
included in the determination of the number of shares present at the meeting
for quorum purposes, but broker "non-votes" are not counted in the tabulations
of the votes cast on proposals presented to shareholders. A broker "non-vote"
occurs when a nominee holding shares for a beneficial owner does not vote on a
particular proposal because the nominee does not have discretionary voting
power with respect to that item and has not received instructions from the
beneficial owner. There are no proposals at this meeting which involve broker
"non-votes."
The principal executive offices of the Company are located at One Franklin
Plaza, Burlington, New Jersey 08016-4907. The approximate date on which this
Proxy Statement and the enclosed form of proxy were first sent or given to
shareholders is July 13, 1999.
Shareholders of record at the close of business on June 18, 1999 will be
entitled to one vote for each share of common stock, no par value (the "Common
Stock"), of the Company then held. There were outstanding on such date
7,832,655 shares of Common Stock.
ELECTION OF DIRECTORS
Nine directors will be elected at the meeting for a term of one year and
until their respective successors shall have been elected and shall qualify.
The election of directors requires the affirmative vote of a plurality of the
shares of Common Stock present in person or by proxy at the meeting. Each
proxy received will be voted FOR the election of the nominees named below
unless otherwise specified in the proxy. At this time, the Board of Directors
of the Company knows of no reason why any nominee might be unable to serve.
There are no arrangements or understandings between any director or nominee
and any other person pursuant to which such person was selected as a director
or nominee.
<PAGE>
<TABLE>
<CAPTION>
Year
Became a
Name of Nominee Principal Occupation Age Director
--------------- -------------------- --- --------
<S> <C> <C> <C>
Edward H. Cohen... Partner, Rosenman & Colin LLP 60 1987
Bernard Director, Broadview Associates, LLC 68 1989
Goldstein........
Barry J. Lipsky... President and Chief Executive Officer of the 48 1997
Company
Leonard M. Professor of Marketing, Wharton School of the 55 1987
Lodish........... University of Pennsylvania
James Meister..... Retired Executive, formerly President and 57 1996
Chief Executive Officer, Kings Super Markets,
Inc.
Howard L. Morgan.. General Partner, idealab! Corporation 53 1981
Jerry R. Schubel.. President, New England Aquarium 63 1991
James H. Simons... Chairman of the Board, Renaissance 61 1981
Technologies Corp.
William H. President of PNC Bank, New Jersey 59 1994
Turner...........
</TABLE>
No family relationship exists between any director and executive officer of
the Company.
Mr. Cohen is, and for more than the past five years has been, a partner in
the New York City law firm of Rosenman & Colin LLP. Mr. Cohen is a director of
Phillips-Van Heusen Corporation, a manufacturer and marketer of apparel and
footwear, Levcor International, Inc., a converter of textiles for sale to
domestic apparel manufacturers, and Merrimac Industries, Inc., a manufacturer
of passive R.F. and microwave components for industry, government and science.
Mr. Goldstein became a director of Broadview Associates, LLC, an investment
banking firm that provides services to the information technology industry, on
January 1, 1997. For more than five years prior to that, he had been managing
director of Broadview. He is a director of SPSS, Inc., a statistical software
firm, Sungard Data Systems, Inc., a company that provides disaster recovery
and financial information services, and Giga Information Group, Inc., an
information technology research firm.
Mr. Lipsky joined the Company as Vice President in February, 1985. He was
elected Executive Vice President of the Company in 1997. Mr. Lipsky was named
acting President and Chief Operating Officer of the Company in April 1999 and
President and Chief Executive Officer of the Company in July 1999.
Dr. Lodish is the Samuel R. Harrell Professor of Marketing at the Wharton
School of the University of Pennsylvania. He has been a Professor of Marketing
since 1976, and was Chairman of the Marketing Department of the Wharton School
from 1984 to 1988 and 1992 to 1994. He is a director of Information Resources,
Inc., a marketing research and decision support systems firm, and J&J Snack
Foods, Inc., a producer and marketer of specialty foods.
Mr. Meister retired in July 1998 from his position as President and Chief
Executive Officer of Kings Super Markets, Inc., a food retailer owned by Marks
& Spencer p.l.c., a position which he had held for more than the prior five
years. He is a director of PIC International Group, Inc., a life sciences
company in the United Kingdom.
Dr. Morgan is, and for more than the past five years has been, President of
Arca Group, Inc., a consulting and investment management firm, and since
January 1999 has been the General Partner of idealab! Corporation, an
incubator of internet and e-commerce companies. Dr. Morgan was Professor of
Decision Sciences at the Wharton School of the University of Pennsylvania from
1972 through 1986. He is a director of Unitronix Corp., a software supplier,
Cylink Corp., a developer of software for secure communications, Segue
Software, Inc., a developer of automated software systems, Infonautics Corp.,
a provider of online information, Kentek Information Systems, Inc., a
manufacturer of laser printers, MetaCreations, Inc., a developer of computer
graphics software, MyPoints.com, Inc., a provider of web direct mail, and
Tickets.com, Inc., an online reseller of event tickets.
2
<PAGE>
Dr. Schubel became President and Chief Executive Officer of New England
Aquarium in 1994. From 1974 to 1994, Dr. Schubel was the Director of the
Marine Sciences Research Center of the State University of New York at
Stonybrook, New York.
Dr. Simons has been Chairman of the Board and President of Renaissance
Technologies Corp. since 1982. He became Chairman of the Board of the Company
in 1997. Dr. Simons is a director of Kentek Information Systems, Cylink Corp.,
and Segue Software, Inc.
Mr. Turner became President of PNC Bank, New Jersey in August, 1997. Prior
to that, he had served as President and Co-Chief Executive Officer of the
Company from October 1, 1996. Prior to joining the Company, he was Vice
Chairman of The Chase Manhattan Bank. For more than the prior thirty years,
Mr. Turner held a variety of positions at Chemical Banking Corporation prior
to its merger with Chase Manhattan Bank. Mr. Turner is a director of Standard
Motor Products, Inc., a manufacturer of automotive replacement products, and
Volt Information Sciences, Inc., a provider of varied equipment and services
to the telecommunications and print media industries.
The Board of Directors of the Company has two standing committees: an Audit
Committee, consisting of Dr. Simons and Messrs. Turner and Cohen, and a Stock
Option and Compensation Committee (the "Compensation Committee"), consisting
of Drs. Simons and Morgan and Mr. Goldstein. The Audit Committee is charged
with recommending annually to the Board of Directors the independent auditors
to be retained by the Company, reviewing the audit plan with the auditors and
reviewing the results of the audit with the officers of the Company and its
auditors. The Audit Committee held three meetings during the fiscal year ended
March 31, 1999. The Compensation Committee is charged with administering the
Company's 1998 Stock Option Plan (the "Option Plan"), and fixing the
compensation, including salaries and bonuses, of all officers of the Company.
The Compensation Committee held one meeting during the fiscal year ended March
31, 1999.
During the fiscal year ended March 31, 1999, there were four regularly
scheduled meetings of the Board of Directors. Each of the directors attended
at least 75 percent of the aggregate number of meetings of the Board and of
any Committees of the Board on which he serves, except Messrs. Goldstein and
Turner, who attended 60 percent and 57 percent of such meetings, respectively.
The Company will consider for election to the Board of Directors a nominee
recommended by a shareholder if the recommendation is made in writing and
includes (i) the qualifications of the proposed nominee to serve on the Board
of Directors, (ii) the principal occupation and employment of the proposed
nominee during the past five years, (iii) each directorship currently held by
the proposed nominee and (iv) a statement that the proposed nominee has
consented to the nomination. The recommendation should be addressed to the
Secretary of the Company.
3
<PAGE>
SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT
The following table sets forth certain information regarding the ownership
of the Common Stock as of June 30, 1999 by (i) all those known by the Company
to be the beneficial owners of more than five percent of the Common Stock,
(ii) all directors and nominees for director, (iii) each executive officer of
the Company named in the Summary Compensation Table on page 5 hereof and (iv)
all executive officers and directors of the Company as a group. Unless
otherwise indicated, each of the shareholders has sole voting and investment
power with respect to the shares listed as beneficially owned by such
shareholder.
<TABLE>
<CAPTION>
Amount
Beneficially Percent of
Name of Beneficial Owner Owned Class
- ------------------------ ------------ ----------
<S> <C> <C>
Bermuda Trust Company Ltd., Trustee(1)................ 1,584,640 18.3%
H. Andrew Cross....................................... 103,750 1.2%
Gregory J. Winsky(2).................................. 76,924 *
Howard L. Morgan(3)................................... 69,250 *
Barry J. Lipsky....................................... 68,740 *
James H. Simons(4).................................... 61,164 *
Bernard Goldstein..................................... 41,308 *
Peter F. DiNicola..................................... 41,000 *
Edward H. Cohen....................................... 40,045 *
Jerry R. Schubel...................................... 39,047 *
William H. Turner..................................... 36,500 *
Leonard M. Lodish..................................... 30,000 *
Toni M. Tracy......................................... 19,684 *
James Meister......................................... 12,000 *
All executive officers and directors as a group (15
persons)............................................. 5.7%
</TABLE>
- --------
*less than 1%
(1) Held by Bermuda Trust Company Ltd. as trustee of a trust of which James H.
Simons and members of his immediate family are beneficiaries. The address
of Bermuda Trust Company Ltd. is Front Street, Hamilton, Bermuda.
(2) Includes 1,600 shares in trust for the benefit of Mr. Winsky's children.
(3) Includes 5,250 shares held for the benefit of Dr. Morgan's children.
(4) Includes 16,954 shares held by or for the benefit of members of Dr.
Simons' immediate family, 9,198 shares held by a fund in which Dr. Simons
has indirect shared power to vote and dispose of the shares, and 53 shares
held by Renaissance Ventures Ltd., of which Dr. Simons is the chairman and
sole shareholder.
The foregoing table also includes shares which the following directors have
the right to acquire within sixty days upon the exercise of options: Dr.
Simons, 34,959 shares; Mr. Lipsky, 48,741 shares; Dr. Morgan, 30,000 shares;
Mr. Goldstein, 24,959 shares; Mr. Cohen, 34,959 shares; Dr. Schubel, 24,959
shares; Mr. Turner, 13,500 shares; Dr. Lodish, 20,000 shares; and Mr. Meister,
9,000 shares. The foregoing table also includes 213,025 shares which all
executive officers who are not directors, as a group, have the right to
acquire within sixty days upon the exercise of options.
Based upon a review of the filings furnished to the Company pursuant to Rule
16a-3(e) promulgated under the Securities Exchange Act of 1934 and on
representations from its executive officers and directors and persons who
beneficially own more than 10 percent of the Common Stock, all filing
requirements of Section 16(a) of the Securities Exchange Act of 1934 were
complied with in a timely manner during the fiscal year ended March 31, 1999.
4
<PAGE>
EXECUTIVE COMPENSATION
SUMMARY COMPENSATION TABLE
The following table summarizes all plan and non-plan compensation awarded
to, earned by, or paid to each person who served as the Company's chief
executive officer during the last fiscal year and its four most highly
compensated executive officers, other than the chief executive officers
(together, the "Named Executive Officers"), who were serving as executive
officers of the Company or one of its subsidiaries or divisions during and at
the end of the Company's last fiscal year, for services rendered in all
capacities to the Company and its subsidiaries for each of the Company's last
three fiscal years:
<TABLE>
<CAPTION>
Long-Term
Compensation
Awards
Annual Compensation Securities
------------------- Underlying
Salary Bonus Options
Name and Principal Position Year $ $ #
- --------------------------- ---- ------------------- ------------
<S> <C> <C> <C> <C>
Howard L. Morgan(1) ..................... 1999 70,437 0 3,000
Interim President and Chief Executive 1998 36,500 0 18,000
Officer 1997 15,400 0 3,000
H. Andrew Cross(2). ..................... 1999 288,000 225,000 305,000
President and Chief Executive Officer
Toni M. Tracy............................ 1999 179,904 34,800 13,000
Senior Vice President 1998 131,500 45,328 9,000
1997 108,600 10,000 8,000
Barry J. Lipsky(3)....................... 1999 204,327 0 25,000
President and Chief Executive Officer 1998 180,000 74,225 35,000
1997 160,000 75,000 6,000
Peter DiNicola........................... 1999 110,800 85,000 35,000
Senior Vice President
Gregory J. Winsky........................ 1999 185,000 0 12,500
Executive Vice President 1998 177,000 72,513 35,000
1997 172,500 50,000 8,000
</TABLE>
- --------
(1) Dr. Morgan served as the Company's Interim President and Chief Executive
Officer from January 1998 to April 1998. The amounts reflected as salary
for Dr. Morgan include amounts paid to Dr. Morgan as compensation for his
services as Interim President and Chief Executive Officer during the 1998
and 1999 fiscal years and amounts paid as consulting fees during the three
fiscal years.
(2) Mr. Cross served as the Company's President and Chief Executive Officer
from April 1998 until he left the Company on April 19, 1999.
(3) Mr. Lipsky served as Executive Vice President of the Company during the
1999 fiscal year. He was named Interim President and Chief Operating
Officer of the Company in April 1999 and President and Chief Executive
Officer in July 1999.
No other annual compensation, other compensation, stock appreciation rights,
long-term restricted stock awards or long-term incentive plan payouts (as
defined in the proxy regulations of the Securities and Exchange Commission)
were awarded to, earned by, or paid to the Named Executive Officers during any
of the Company's last three fiscal years.
5
<PAGE>
OPTION GRANTS IN LAST FISCAL YEAR
The following table sets forth information with respect to grants of stock
options to purchase Common Stock pursuant to the Option Plan granted to the
Named Executive Officers during the fiscal year ended March 31, 1999.
<TABLE>
<CAPTION>
Individual Grants
-----------------------------------------
Potential
Realizable Value
Percent of at Assumed Annual
Number of Total Rates of Stock Price
Securities Options Appreciation
Underlying Granted to for Option Term
Options Employees Exercise Expira- ---------------------
Granted in Fiscal Price tion 5% 10%
Name # Year $/sh Date $ $
---- ---------- ---------- -------- -------- --------- -----------
<S> <C> <C> <C> <C> <C> <C>
Howard L. Morgan........ 3,000(1) 0.3% 11.8125 1/4/09 22,286 56,478
H. Andrew Cross......... 275,000(2) 40.2% 12.25 4/16/01 530,999 1,115,056
35,000(3) 5.1% 3.50 4/16/01 373,832 448,166
Toni M. Tracy........... 13,000(4) 1.9% 8.75 11/23/08 71,537 181,288
Barry J. Lipsky......... 15,000(5) 2.2% 11.00 4/02/08 103,768 262,968
10,000(4) 1.5% 8.75 11/23/08 55,028 139,452
Peter DiNicola.......... 35,000(5) 5.1% 8.4375 6/07/01 43,781 91,674
Gregory J. Winsky....... 7,500(5) 1.0% 11.00 4/02/08 51,884 131,484
5,000(4) 0.7% 8.75 11/23/08 27,514 69,726
</TABLE>
- --------
(1) Options became exercisable on the date six months and one day from the
date of grant.
(2) Options with respect to one-fourth of the shares become exercisable on
each of the first, second, third and fourth anniversaries of the date of
grant.
(3) Options with respect to one-twelfth of the shares become exercisable on a
monthly basis.
(4) Options with respect to one-fourth of the shares became exercisable on
June 1, 1999 and on each of the first, second and third anniversaries of
that date.
(5) Options with respect to one-third of the shares become exercisable on each
of the first, second and third anniversaries of the date of grant.
6
<PAGE>
AGGREGATED OPTION EXERCISES IN THE
LAST FISCAL YEAR AND
FISCAL YEAR-END OPTION VALUES
The following table sets forth information regarding unexercised stock
options held by the Named Executive Officers as of March 31, 1999. No stock
options were exercised by the Named Executive Officers during the fiscal year
ended March 31, 1999.
<TABLE>
<CAPTION>
Number of Securities Value of Unexercised
Underlying In-the-Money
Unexercised Options Options at Fiscal
at Fiscal Year End Year End
(#) Exercisable/ ($)(1)Exercisable/
Name Unexercisable Unexercisable
---- -------------------- --------------------
<S> <C> <C>
Howard L. Morgan..................... 24,000/3,000 0
H. Andrew Cross...................... 32,083/310,000 88,229/8,021
Toni M. Tracy........................ 14,414/21,686 0/0
Barry J. Lipsky...................... 37,908/48,332 0/0
Peter DiNicola....................... 0/35,000 0/0
Gregory J. Winsky.................... 52,508/35,832 0/0
</TABLE>
- --------
(1) Fair market value of securities underlying the options minus the exercise
price of the options at fiscal year end.
COMPENSATION OF DIRECTORS
Each director of the Company who is not an employee of the Company or any of
its subsidiaries receives, for his services as a director of the Company, an
annual grant of options under the Option Plan to purchase 3,000 shares of
Common Stock. No cash payment is made to any non-employee director of the
Company for service as a director nor do directors receive any fees from the
Company for attending meetings of the Board of Directors.
7
<PAGE>
EMPLOYMENT CONTRACTS, TERMINATION OF
EMPLOYMENT AND CHANGE-IN-CONTROL
ARRANGEMENTS
The Company has instituted a severance policy for each of its executive
officers who has served as such for at least one year, which includes Ms.
Tracy and Messrs. Lipsky and Winsky, that provides for, inter alia, salary
continuation payments based on the number of years of service performed by
each executive officer on termination of employment by the Company without
cause and the acceleration of the vesting of stock options in certain
instances on termination of employment or in connection with certain changes
in control of the Company. The Company has agreed to provide up to one year of
salary continuation to three executive officers of the Company: Mary Repke,
Senior Vice President, Marketing; Daniel Wall, Senior Vice President, Chief
Technology Officer; and Robert Fallow, Managing Director, Europe, Africa and
Middle East.
COMPENSATION COMMITTEE INTERLOCKS
AND INSIDER PARTICIPATION
The members of the Compensation Committee for the fiscal year ended March
31, 1999 were Bernard Goldstein, Howard Morgan and James Simons.
The investment banking firm of Broadview Associates, LLC, of which Mr.
Goldstein is a director, provided investment banking services to the Company
in prior years and may continue to provide such services to the Company in the
current fiscal year.
Dr. Morgan acted as Interim President and Chief Executive Officer of the
Company from January 1998 through April 1998 and provided consulting services
to the Company during the entire fiscal year ended March 31, 1999 and may
continue to provide such services to the Company in the current fiscal year.
COMPENSATION COMMITTEE REPORT ON EXECUTIVE COMPENSATION
The responsibilities of the Compensation Committee include administering the
Option Plan and fixing the compensation, including salaries and bonuses, of
all officers of the Company.
Overall Policy
The Compensation Committee has structured the Company's compensation program
(i) to compensate its executive officers on an annual basis with a cash salary
at a sufficient level to retain and motivate these officers, (ii) to link a
portion of executive compensation by means of annual bonuses based on the
Company's performance, and (iii) to link a portion of executive compensation
to appreciation of the Company's stock price by means of stock options. The
objectives of this strategy are to attract and retain effective and highly
qualified executives, to motivate executives to achieve the goals inherent in
the Company's business strategy, and to link executive and shareholder
interest through stock options.
Base Salaries
Annual base salaries for the officers are determined by evaluating the
performance of the individuals and their contributions to the performance of
the Company and are based on the recommendation of the chief executive
officer. Financial results, as well as non-financial measures such as the
magnitude of responsibility of the position, individual experience, and the
Compensation Committee's knowledge of compensation practices for comparable
positions at other companies are considered.
8
<PAGE>
In establishing Mr. Lipsky's annual base salary of $300,000 for the fiscal
year ending March 31, 2000, the Compensation Committee took into account the
base salaries for presidents at companies of comparable size and complexity,
both public and private, known to members of the Compensation Committee and
Mr. Lipsky's future anticipated contributions to the Company.
Bonus Plan
The Company's bonus plan has been used to provide incentives for the
Company's executives and employees by tying profitability to an annual cash
bonus distribution. The Company's bonus plan is intended to focus the
executives' attention on short-term or annual business results and to award a
bonus to certain employees each year based on their contributions to the
profits of the Company. Prior to the 1999 fiscal year, participants in the
bonus plan and their level of participation were determined by the
Compensation Committee. For the 1999 fiscal year, the Compensation Committee
approved a new bonus plan that provided for bonuses to be paid to certain
employees at the end of the fiscal year that were based upon a percentage of
the respective salaries of the employees and the achievement of certain
revenue, profitability, and other goals by the Company and the achievement of
certain goals by the respective employees. No specific percentage of the
Company's earnings were set aside for distribution under the 1999 fiscal year
bonus plan.
For the 2000 fiscal year, given the Company's results of operations in the
prior fiscal year, no provision has been made to pay bonuses to executives or
employees.
Long-term Incentives
Under the Option Plan, stock options are granted to executives and key
employees of the Company. Stock options are designed to focus the executives'
attention on stock values and to align the interests of executives with those
of the shareholders. Stock options are customarily granted at prices equal to
the fair market value at the date of grant, are not exercisable until the
first anniversary of the date of grant and do not become fully exercisable
until the fourth anniversary of the date of grant. The options generally
remain exercisable during employment until the tenth anniversary of the date
of grant. This approach provides an incentive to executives to increase
shareholder value over the long term since the full benefit of the options
cannot be realized unless stock price appreciation occurs over a number of
years.
Compensation Committee
Bernard Goldstein
Howard L. Morgan
James H. Simons
9
<PAGE>
PERFORMANCE GRAPH
The following performance graph is a line graph comparing the yearly change
in the cumulative total shareholder return on the Common Stock against the
cumulative return of the Russell 3000 companies, and a line of business index
comprised of the Russell 3000 Publishing companies for the five fiscal years
ended March 31, 1999.
[CHART APPEARS HERE]
.
Cumulative Total Return
______________________________________________________
3/94 3/95 3/96 3/97 3/98 3/99
FRANKLIN ELECTRONIC
PUBLISHERS, INC. 100.000 212.264 185.849 88.679 85.849 45.283
PEER GROUP 100.000 121.011 134.424 131.032 176.623 201.429
RUSSELL 3000 100.000 113.723 150.376 175.253 258.809 291.050
.
Value of $100.00 Invested over five years:
<TABLE>
<S> <C>
Franklin Electronic Publishers Incorporated Common Stock............... $ 45.28
Russell 3000 companies................................................. $291.05
Russell 3000 Publishing companies...................................... $201.43
</TABLE>
SELECTION OF AUDITORS
The Audit Committee has recommended to the Board of Directors, and the Board
of Directors has selected, Radin, Glass & Co., LLP, independent auditors, as
auditors of the Company for the fiscal year ending March 31, 2000. Although
shareholder ratification of the Board of Directors' action in this respect is
not required, the Board considers it desirable for shareholders to pass upon
the selection of auditors and, if the shareholders disapprove of the selection,
intends to select other auditors for the fiscal year ending March 31, 2000.
It is expected that representatives of Radin, Glass & Co., LLP will be
present at the meeting, will have an opportunity to make a statement if they so
desire and will be available to respond to appropriate questions from
shareholders.
The Board of Directors recommends a vote FOR ratification of the appointment
of the auditors. Proxies received in response to this solicitation will be
voted FOR the appointment of the auditors unless otherwise specified in the
proxy.
10
<PAGE>
CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS
The law firm of Rosenman & Colin LLP, of which Mr. Cohen is a partner, was
engaged as the Company's general outside counsel in the fiscal year ended
March 31, 1999 and will continue to be so engaged for the fiscal year ending
March 31, 2000.
Dr. Morgan acted as Interim President and Chief Executive Officer of the
Company from January 1998 through April 1998 and provided consulting services
to the Company during the entire fiscal year ended March 31, 1999 and may
continue to provide such services to the Company in the current fiscal year.
MISCELLANEOUS
Any proposal of an eligible shareholder intended to be presented at the next
annual meeting of shareholders must be received by the Company for inclusion
in its proxy statement and form of proxy relating to that meeting no later
than April 1, 2000. The proxy or proxies designated by the Company will have
discretionary authority to vote on any matter properly presented by a
stockholder for consideration at the next Annual Meeting of Shareholders but
not submitted for inclusion in the proxy materials for such Meeting unless
notice of the matter is received by the Company on or prior to May 30, 2000
and certain other conditions of the applicable rules of the Securities and
Exchange Commission are satisfied. Stockholder proposals should be directed to
the Secretary of the Company at the address set forth below.
The Board of Directors of the Company does not intend to present, and does
not have any reason to believe that others intend to present, any matter of
business at the meeting other than those set forth in the accompanying Notice
of Annual Meeting of Shareholders. However, if other matters properly come
before the meeting, it is the intention of the persons named in the enclosed
form of proxy to vote any proxies in accordance with their judgment.
The Company will bear the cost of preparing, assembling and mailing the
enclosed form of proxy, this Proxy Statement and other material which may be
sent to shareholders in connection with this solicitation. Solicitation may be
made by mail, telephone, telegraph and personal interview. The Company may
reimburse persons holding shares in their names or in the names of nominees
for their expense in sending proxies and proxy material to their principals.
Copies of the 1999 Annual Report to Shareholders, which includes the
Company's Annual Report to the Securities and Exchange Commission (Form 10-K),
are being mailed to shareholders simultaneously with this Proxy Statement.
By order of the Board of Directors,
GREGORY J. WINSKY
Secretary
One Franklin Plaza
Burlington, New Jersey 08016-4907
July 13, 1999
11
<PAGE>
FRANKLIN ELECTRONIC PUBLISHERS, INCORPORATED
PROXY FOR ANNUAL MEETING OF SHAREHOLDERS
August 6, 1999
This Proxy Is Solicited On Behalf of the Board of Directors
The undersigned hereby appoints JAMES H. SIMONS and GREGORY J. WINSKY, or
either of them, attorneys and proxies, with power of substitution and
revocation, to vote, as designated below, all shares of stock which the
undersigned is entitled to vote, with all powers which the undersigned would
possess if personally present, at the Annual Meeting of Shareholders (including
all adjournments thereof) of FRANKLIN ELECTRONIC PUBLISHERS, INCORPORATED to be
held on Friday, August 6, 1999 at 9:00 A.M. at the offices of Rosenman & Colin
LLP, 575 Madison Avenue, New York, New York. The Board of Directors recommends a
vote FOR proposals 1 and 2.
1. ELECTION OF DIRECTORS
FOR all nominees WITHHOLD AUTHORITY
--- --- to vote for all nominees
Edward H. Cohen, Bernard Goldstein, Barry J. Lipsky, Leonard M.
Lodish, James Meister, Howard L. Morgan, Jerry R. Schubel, James H. Simons and
William H. Turner.
Shareholders may withhold authority to vote for any nominee(s) by
writing the name of that nominee in the space provided below.
---------------------------------------------
2. APPROVAL of the appointment of auditors as set forth in the accompanying
Proxy Statement.
FOR AGAINST ABSTAIN
--- --- ---
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<PAGE>
3. The proxy is authorized to transact such other business as may properly
come before the meeting.
This proxy, when properly executed, will be voted in the manner
directed herein by the undersigned shareholder. If no direction is given, this
proxy will be voted FOR items 1 and 2 and in the discretion of said proxy on any
other matter which may come before the meeting or any adjournments thereof.
Dated: , 1999
-----------------
-------------------------------
Print Name
-------------------------------
Signature
NOTE: When shares are held by joint tenants, both should sign. When signing as
attorney, executor, administrator, trustee, custodian, guardian or corporate
officer, please give your full title as such. If a corporation, please sign full
corporate name by authorized officer. If a partnership, please sign in
partnership name by authorized person.
PLEASE MARK, DATE, SIGN AND RETURN THE PROXY CARD PROMPTLY USING THE
ENCLOSED ENVELOPE.
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