<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
Information Resources, 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):
[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.:
-------------------------------------------------------------------------
(3) Filing Party:
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(4) Date Filed:
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<PAGE>
INFORMATION RESOURCES, INC.
150 NORTH CLINTON STREET
CHICAGO, ILLINOIS 60661
NOTICE OF THE ANNUAL MEETING OF STOCKHOLDERS
TO BE HELD MAY 22, 1997
To the Stockholders of
Information Resources, Inc.
Notice Is Hereby Given that the Annual Meeting of the stockholders of
INFORMATION RESOURCES, INC. (the "Company"), will be held at the offices of
the Company, 150 North Clinton Street, Chicago, Illinois 60661, on Thursday,
May 22, 1997, at 10:00 am Central Daylight Time, for the purpose of
considering and acting upon the following matters:
1. To elect three directors to the Board of Directors of the Company,
each to serve for a term of three years;
2. To consider and act upon such other business as may properly come
before the Meeting.
Stockholders of record as of the close of business on April 11, 1997, will
be entitled to notice of and to vote at the Meeting. The transfer books will
not be closed. For ten days prior to the Meeting, a list of stockholders
entitled to vote at the Meeting with the address of and number of shares held
by each will be kept on file at the offices of the Company at 150 North
Clinton Street, Chicago, Illinois 60661 and will be subject to inspection by
any stockholder at any time during the Company's usual business hours. The
list will also be available for inspection by any stockholder during the
Meeting. Stockholders who do not expect to attend in person are urged to
execute and return the accompanying proxy in the envelope enclosed.
The annual report of the Company for the year 1996 is being mailed to all
stockholders of record and accompanies this Proxy Statement.
By order of the Board of Directors,
Information Resources, Inc.
Edward S. Berger
Secretary
Chicago, Illinois
April 22, 1997
----------------
YOUR VOTE IS IMPORTANT
PLEASE SIGN, DATE AND RETURN YOUR PROXY PROMPTLY
WHETHER OR NOT YOU PLAN TO ATTEND THE MEETING
----------------
<PAGE>
PROXY STATEMENT
INFORMATION RESOURCES, INC.
ANNUAL MEETING OF STOCKHOLDERS
MAY 22, 1997
GENERAL INFORMATION
This Proxy Statement is being furnished to the stockholders of Information
Resources, Inc., a Delaware corporation (the "Company"), 150 North Clinton
Street, Chicago, Illinois 60661, in connection with the solicitation of
proxies by its Board of Directors for use at the Annual Meeting of
stockholders to be held on May 22, 1997, and any adjournments thereof.
Stockholders of record as of the close of business on April 11, 1997 are
entitled to notice of and to vote at the Meeting. The approximate date on
which this Proxy Statement and the accompanying proxy are first being sent to
stockholders is April 22, 1997.
Stockholders are urged to sign the accompanying form of proxy and return it
as soon as possible in the envelope provided for that purpose. Returning a
proxy card will not prevent a stockholder from attending the Meeting. If the
enclosed proxy is properly executed and returned in time for voting with a
choice specified thereon, the shares represented thereby will be voted as
indicated on such proxy. If no specification is made, the proxy will be voted
by the proxy committee (i) for the election as directors of the nominees named
below (or substitutes therefor if any nominees are unable or unwilling to
serve), and (ii) in the discretion of such proxy committee, upon such matters
not presently known or determined which may properly come before the Meeting.
A stockholder who wishes to designate a person or persons to act as his or her
proxy at the Meeting, other than the proxies designated by the Board of
Directors, may strike out the names appearing on the enclosed form of proxy,
insert the name of any other such person or persons, sign the form, and
transmit it directly to such other designated person or persons for use at the
Meeting.
A stockholder who has given a proxy may revoke it at any time before it is
voted by (i) a subsequently dated proxy, (ii) written notification to the
persons named therein as proxies, which may be mailed or delivered to the
Company at the above address, or (iii) attendance at the Meeting and voting in
person. Attendance at the Meeting will not, in and of itself, constitute a
revocation of a proxy. All shares represented by effective proxies will be
voted at the Meeting and at any adjournments thereof.
The Company has one class of stock outstanding, common stock, $.01 par value
per share ("Common Stock"). On April 11, 1997, 28,201,876 shares of Common
Stock were outstanding and entitled to one vote each on all matters considered
at the Meeting. There are no cumulative voting rights with respect to the
election of directors.
<PAGE>
OWNERSHIP OF SECURITIES
The following table shows the total number of shares of Company Common Stock
beneficially owned as of the dates designated below, and the percentage of
Company Common Stock so owned as of that date, with respect to each person who
is known to be the beneficial owner of more than 5% of the Company's Common
Stock:
<TABLE>
<CAPTION>
AMOUNT AND
NATURE OF
BENEFICIAL PERCENT
NAME OF BENEFICIAL OWNER OWNERSHIP (1) OF CLASS
------------------------ ------------- --------
<S> <C> <C>
State of Wisconsin Investment Board ................. 2,656,214(2) 9.42
P. O. Box 7842
Madison, WI. 53707
RCM Capital Management, LLC.......................... 2,073,944(3) 7.35
4 Embarcadero Center
San Francisco, CA. 94111
FMR Corp............................................. 1,930,778(4) 6.85
82 Devonshire Street
Boston, MA. 02109
Dewey Square Investors Corp.......................... 1,749,350(5) 6.20
One Financial Center
Boston, MA. 02111
Merrill Lynch Asset Management....................... 1,586,500(6) 5.63
800 Scudders Mill Road
Plainsboro, NJ. 08536
</TABLE>
The following table shows the total number of shares of Company Common Stock
beneficially owned as of April 11, 1997, and the percentage of Company Common
Stock so owned as of that date with respect to (i) each director of the
Company, (ii) each executive officer named in the Summary Compensation Table
below (the "Named Executive Officers"), and (iii) all directors and executive
officers as a group:
<TABLE>
<CAPTION>
AMOUNT AND
NATURE OF
BENEFICIAL PERCENT
NAME OF BENEFICIAL OWNER OWNERSHIP (7) OF CLASS
------------------------ ------------- --------
<S> <C> <C>
James G. Andress..................................... 31,813 *
Edwin E. Epstein..................................... 32,188 *
Gerald J. Eskin...................................... 461,201 1.63
Gian M. Fulgoni...................................... 730,850 2.55
Gary M. Hill......................................... 90,208 *
John D. C. Little ................................... 213,329 *
Leonard M. Lodish ................................... 63,886 *
Edward E. Lucente ................................... 14,438 *
Edith W. Martin ..................................... 10,953 *
John P. McNicholas, Jr............................... 11,200 *
Randall S. Smith .................................... 298,624 1.05
Jeffrey P. Stamen ................................... 101,813 *
Glen L. Urban........................................ 47,703 *
Thomas W. Wilson, Jr................................. 48,125 *
All directors and executive officers as a group (15
persons)............................................ 2,214,646 7.53
</TABLE>
- --------
*Less than 1%.
2
<PAGE>
(1) Based on 28,201,876 shares outstanding on April 11, 1997.
(2) Number of shares is based upon information set forth in Schedule 13G filed
with the Securities and Exchange Commission ("SEC") as of January 21,
1997, which indicates that this stockholder is a government agency which
manages public pension funds.
(3) Number of shares is based upon information set forth in Schedule 13G filed
with the SEC as of February 3, 1997, which indicates that such shares are
held on behalf of numerous clients of this stockholder, a registered
investment adviser.
(4) Number of shares is based upon information set forth in Schedule 13G filed
with the SEC as of February 14, 1997, which indicates that such shares are
held on behalf of numerous clients of this stockholder, a registered
investment adviser.
(5) Number of shares is based upon information set forth in Schedule 13G filed
with the SEC as of February 11, 1997, which indicated that such shares are
held on behalf of numerous clients of this stockholder, a registered
investment adviser.
(6) Number of shares is based upon information set forth in Schedule 13G filed
with the SEC as of February 14, 1997, which indicated that such shares are
held on behalf of numerous clients of this stockholder, a registered
investment adviser.
(7) Unless otherwise indicated, each person has sole voting and investment
power with respect to all such shares. The number of shares disclosed for
the following individuals includes stock options which are exercisable
within 60 days in the following amounts: (i) James G. Andress--30,625
options; (ii) Edwin E. Epstein--15,000 options; (iii) Gerald J. Eskin--
113,246 options; (iv) Gian M. Fulgoni--417,290 options; (v) Gary M. Hill--
90,208 options; (vi) John D.C. Little--37,141 options; (vii) Leonard M.
Lodish--61,164 options; (viii) Edward E. Lucente--11,250 options; (ix)
Edith W. Martin--9,375 options; (x) John P. McNicholas, Jr.--10,000
options; (xi) Randall S. Smith--215,729 options; (xii) Jeffrey P. Stamen--
100,625 options; (xiii) Glen L. Urban--18,447 options; (xiv) Thomas W.
Wilson, Jr.--43,750 options; and (xv) all directors and officers as a
group (15 persons)--1,226,514 options.
SECTION 16(A) BENEFICIAL OWNERSHIP REPORTING COMPLIANCE
Section 16(a) of the Securities Exchange Act of 1934 ("Section 16") sets
forth certain filing requirements relating to securities ownership by
directors, executive officers and ten percent stockholders of a publicly-held
company. To the Company's knowledge, all filing requirements were satisfied by
the Company's directors and executive officers except that Glen L. Urban, a
director of the Company, inadvertently failed to file one report with respect
to an open-market sale of Company Common Stock. This transaction was
subsequently disclosed on a Section 16 report after the required filing
deadline. In making the foregoing disclosure, the Company has relied solely on
written representations of its directors and executive officers and copies of
the Section 16 reports that they have filed with the SEC.
ELECTION OF DIRECTORS
(PROPOSAL NUMBER 1 ON THE ENCLOSED PROXY CARD)
The By-laws of the Company provide that the number of directors of the
Company shall not be less than five nor more than fifteen and will be
determined from time to time by resolution of the Board of Directors. The
number of directors is currently set at twelve. The Certificate of
Incorporation of the Company provides for a classified Board of Directors
consisting of three classes (as nearly equal in number as possible) and that
the directors will be elected to hold office for terms of three years or until
their successors are elected and qualified. Those directors identified below
as nominees for election have been nominated for election to full three-year
terms ending in 2000. Also listed below are the remaining directors of the
Company whose terms expire as indicated below. If the listed nominees are
elected at the Meeting, the Board of Directors will have one vacancy. The
Board of Directors recently commenced a search for a new director and this
vacancy will be filled when the evaluation process is completed.
3
<PAGE>
It is intended that, in the absence of contrary specifications, votes will
be cast pursuant to the enclosed proxies for the election of the listed
nominees. Proxies will not be voted for a greater number of nominees. Should
any of the nominees become unable or unwilling to accept nomination or
election, it is intended, in the absence of contrary specification, that the
proxies will be voted for the balance of those named and for a substitute
nominee or nominees. However, as of the date of this proxy statement,
officials of the Company know of no reason to anticipate such an occurrence.
All of the nominees have consented to be named as nominees and to serve as
directors if elected.
A. NOMINEES FOR ELECTION:
<TABLE>
<CAPTION>
POSITIONS WITH COMPANY, BUSINESS
NAME AGE EXPERIENCE AND OTHER POSITIONS
- ---- --- --------------------------------
<S> <C> <C>
Gerald J. Eskin, Ph. D........... 62 Co-founder of the Company; Director of the Company
since 1977; Vice Chairman since December 1981;
Professor of Marketing at the University of Iowa
since 1974 (currently adjunct status).
John D.C. Little, Ph.D........... 69 Director of the Company since 1985; Current member
of the Executive Committee; Professor of Manage-
ment Science at The Sloan School of Management,
Massachusetts Institute of Technology.
Glen L. Urban, Ph.D.............. 57 Director of the Company since 1986; Current member
of the Audit Committee; Professor of Management
Science at, and Dean of, The Sloan School of Man-
agement, Massachusetts Institute of Technology;
Director of The Dexter Corporation.
B. TERMS EXPIRING IN 1998:
Gian M. Fulgoni.................. 49 Chief Executive Officer since 1986; Chairman of
the Board of Directors from February 1991 until
April 1995; Director since 1981; current member of
the Executive Committee; Director of PLATINUM
technology, inc.
Leonard M. Lodish, Ph.D.......... 53 Director of the Company since 1985; Samuel R.
Harrell Professor of the Marketing Department at
the Wharton School of Business, University of
Pennsylvania; Director of Franklin Electronic Pub-
lishers, Inc., J&J Snack Foods Corp., Bogen Commu-
nication International, Inc., and Walsh Interna-
tional, Inc.
Edith W. Martin, Ph.D............ 51 Director of the Company since 1991; Current member
of the Compensation Committee and Executive Stock
Option Committee; Vice President, Information Sys-
tems and Chief Information Officer for Eastman Ko-
dak, Co., since January 1996. Executive Vice Pres-
ident and Chief Technology Officer for the Student
Loan Marketing Association (Sallie Mae) from Au-
gust 1994 until January 1996; Executive Vice Pres-
ident and Chief Information Officer for INTELSAT
from July 1992 until August 1994; Vice President
of High Technology Center for the Boeing Company
from 1984 to 1992; Director of Immunex Corpora-
tion.
Thomas W. Wilson, Jr............. 65 Director of the Company since 1991; Chairman of
the Board of Directors since April 1995; Current
Chairman of the Executive Committee; Senior Part-
ner of McKinsey & Company, management consultants,
from 1973 until 1990 (retired); Director of Aerial
Communications, Inc.
</TABLE>
4
<PAGE>
<TABLE>
<CAPTION>
POSITIONS WITH COMPANY, BUSINESS
NAME AGE EXPERIENCE AND OTHER POSITIONS
- ---- --- --------------------------------
TERMS EXPIRING IN 1999:
<S> <C> <C>
James G. Andress ................ 58 Director of the Company since 1989; Current member
of the Executive Committee and Audit Committee;
Current Chairman of the Compensation Committee;
Chief Executive Officer of Warner-Chilcott, PLC
since October 1996. President and Chief Operating
Officer of the Company from March 1994 to Septem-
ber 1995; Chief Executive Officer from May 1990 to
September 1995; Vice Chairman from July 1993 until
March 1994; President from November 1989 until
July 1993; Director of The Liposome Company, Inc.,
NeoRx Corp., Sepracor, Inc., Option Care, Inc.,
Warner-Chilcott PLC, Xoma Corporation, and The
Allstate Corporation.
Edwin E. Epstein ................ 73 Director of the Company since 1987; Current member
of the Executive Committee and Chairman of the Au-
dit Committee; President of Retailing Insights,
Inc., food industry consultants, 1971 until 1995;
Director of PIA Merchandising Services, Inc.
Edward E. Lucente ............... 57 Director of the Company since 1991; Current member
of the Compensation Committee and Executive Stock
Option Committee; President and CEO of Liant Soft-
ware Corp., since 1995; Head of worldwide sales
and marketing of Digital Equipment Corp. from
March 1993 until April 1994; Executive Vice-Presi-
dent of Northern Telecom Limited from January 1992
until March 1993; Member of the Executive Office
of Northern Telecom limited from February 1991 un-
til March 1993; Senior Vice-President of Marketing
for Northern Telecom Limited from February 1991
until January 1992; Corporate Vice President of
International Business Machines Corporation from
1981 until February 1991; Director of Genicom Cor-
poration; Director of Compuserve Corporation.
Jeffrey P. Stamen ............... 51 Director of the Company since March 1994; Senior
Vice-President of the OLAP Division of Oracle Cor-
poration since July 1995; President--IRI Software
from February 1991 to July 1995; Vice President of
the Company from January 1986 to July 1995.
</TABLE>
COMMITTEES OF THE BOARD OF DIRECTORS, MEETINGS AND COMPENSATION OF DIRECTORS
During 1996, the Board of Directors met on six occasions, and all members
with the exception of Glen L. Urban, attended at least 75% of the Board
meetings and their respective Committee meetings. Mr. Urban attended 70% of
the Board meetings and his respective Committee meetings.
The Board of Directors maintains an Executive Committee, Audit Committee,
Compensation Committee and Executive Stock Option Committee. The Company has
no nominating committee. The nominating function is performed by the Executive
Committee, which has not established a formal policy or procedure for
considering potential nominees including potential nominees recommended by
stockholders.
5
<PAGE>
The Executive Committee is empowered to exercise the authority of the Board
of Directors in the management of the business and affairs of the Company
between the meetings of the Board, except as provided by the by-laws or
limited by the provisions of the Delaware General Corporation Law.
The Audit Committee recommends to the Board of Directors the appointment of
the independent certified public accountants for the following year and
reviews the scope of the audit, the independent certified public accountants
report and the auditors' comments relative to the adequacy of the Company's
system of internal controls and accounting policies. The Audit Committee met
during 1996 on four occasions.
The Compensation Committee is responsible for making determinations
regarding salaries and other compensation for the Company's executive
officers. The Committee also makes recommendations to the Executive Stock
Option Committee with respect to stock option grants to the Company's
directors and executive officers pursuant to the Executive Option Plan.
The Executive Stock Option Committee is responsible for making
determinations regarding the grant of stock options from time to time to the
Company's directors and executive officers pursuant to the Executive Option
Plan. During 1996, the Executive Stock Option Committee approved all director
and executive stock option grants throughout the course of the year.
Directors of the Company who are also Officers do not receive any fee or
remuneration for services as members of the Board of Directors or of any
Committee of the Board of Directors. Until July 1, 1996 non-employee directors
received an annual retainer fee of $15,000 plus $1,500 for each Board meeting
attended paid in cash. Effective July 1, 1996 and pursuant to stockholder
approval of the "1996 Stock Plan for Non-Employee Directors in lieu of Cash
Retainer", non-employee directors are issued shares of common stock in lieu of
75 percent of the cash retainer otherwise payable for his or her services on
the Board. Pursuant to this plan, each non-employee director received 1,188
shares of common stock in 1996. Non-employee directors who serve on a
committee each receive an annual cash fee of $2,500. Chairpersons of such
committee each receive an annual cash fee of $5,000. Total cash fees for
committee membership and the cash portion of the annual retainer paid during
1996 to non-employee directors were as follows: Mr. Andress, $10,720; Mr.
Epstein, $20,625; Dr. Eskin, $13,125; Dr. Little; $15,625; Dr. Lodish;
$15,625; Mr. Lucente, $13,125; Dr. Martin; $18,125; Mr. Stamen, $13,125; and
Dr. Urban, 15,625. All directors are reimbursed for travel expenses.
In addition, during 1996, the Company granted options to purchase 2,500
shares of the Company's Common Stock to each of the Non-employee directors
listed above at an exercise price of $12.75, the market value of the Company's
Common Stock on the date of grant.
EXECUTIVE COMPENSATION
The following information regarding compensation is given with respect to
Gian M. Fulgoni, who served in the capacity of Chief Executive Officer during
the last completed fiscal year and the four other highest paid executive
officers of the Company (the "Named Executive Officers").
REPORT ON EXECUTIVE COMPENSATION
The Compensation Committee of the Board of Directors (the "Committee") is
responsible for determining the annual salary, bonus and other compensation of
the Company's executive officers whose annual salaries are in excess of
$175,000. The compensation for executive officers whose annual salary is less
than $175,000 may be established by the Company's Chief Executive Officer and
Chief Financial Officer, in each case with the approval of the Committee. The
Committee also makes recommendations to the Executive Stock Option Committee
with respect to stock option grants to the Company's executive officers. The
Committee is composed entirely of outside, non-management directors.
6
<PAGE>
The goals of the Company's compensation programs are to align executive
compensation with the Company's performance, and to attract, retain and reward
executive officers who contribute to the Company's success within a highly
competitive service industry. The programs are intended to support the goal of
increasing stockholder value by achieving specific financial and strategic
objectives.
The Committee has considered the potential impact of Section 162(m) of the
Internal Revenue Code on executive compensation in future years. Section
162(m) disallows a tax deduction by any publicly-held corporation for
individual compensation exceeding $1 million in any taxable year for a Named
Executive Officer, unless compensation is performance based. The Committee has
determined that, while Section 162(m) should be given consideration in
compensating executive officers, the Committee's compensation philosophy
should not be arbitrarily altered in order to limit or maintain executive
compensation within the Section 162(m) deduction limit. The Committee has,
however, determined that it will make every reasonable effort, consistent with
sound executive compensation principles and the needs of the Company, to
permit all amounts paid to the Named Executive Officers to be deductible by
the Company.
Compensation of Executive Officers Generally
The Company's fundamental compensation philosophy is to relate the total
compensation package for an executive officer directly to his or her
contribution to the Company's performance objectives. Each executive's
incentive, or "at risk," compensation is typically directly tied to the
achievement of both Company and individual objectives, including both
quantitative and qualitative objectives. The performance objectives of each
executive officer differs depending upon individual roles and responsibilities
within the management group and typically include performance objectives for
both the Company and a business unit or function for which the executive
officer has direct involvement. Certain elements of compensation for
individual executive officers are also dictated by employment contracts or
agreements that are in place.
In 1996, the Committee emphasized financial, strategic and service/quality
oriented objectives. It generally based its determination of executive
performance upon the achievement of the following pre-established objectives:
(i) improvement of the Company's earnings per share and cash flow; (ii)
business unit revenue growth and profitability (including the reduction of
losses relating to the Company's expanding international operations); and
(iii) qualitative objectives. These qualitative objectives included, among
others: (i) the further development and implementation of re-engineered data
processing systems to reduce costs and enhance quality (e.g. "Project Omega");
(ii) the development and implementation of productivity enhancement programs;
(iii) the development and implementation of financial/accounting control
systems; and (iv) the development and implementation of enhanced quality
control systems.
For the year ended December 31, 1996, the Company's consolidated revenues
from ongoing businesses increased 13% over 1995. Revenues from the Company's
ongoing U.S. services businesses were up 9% over 1995, while earnings from
U.S. operations before special charges improved by nearly 43% over 1995
levels. International revenues increased 45% versus a year ago and the loss
from operations decreased 19% despite continued start-up costs in some
European countries. As a result, overall consolidated operating results for
the twelve months ended December 31, 1996 significantly improved over the
comparable period in 1995. The Company's cash flow position improved
significantly over the course of the year as the Company generated positive
cash flow in the second half of 1996.
The Company's executive compensation package consists of three principal
components: (i) base salary; (ii) potential for an annual cash bonus; and
(iii) the opportunity to earn stock options grants. The Company generally
seeks to position its compensation package for each executive position at a
level which, for outstanding performance, is at or somewhat above industry
average. In addition, the Company strives to make a significant portion of the
total compensation variable, based on performance.
Salary. The Committee reviews each executive officer's salary annually. In
determining appropriate salary levels, the Committee considers the level and
scope of responsibility, experience, Company and individual performance for
the preceding year, contractual provisions in employment and other agreements,
as well as
7
<PAGE>
competitive market data on salary levels. During 1996 the Chief Executive
Officer recommended to the Committee that a freeze on salary increases be
adopted generally for the Company's senior management group (which group
includes its executive officers whose compensation is discussed herein) based
on the Company's 1995 financial performance. Notwithstanding this freeze, two
executive officers received salary increases in 1996. One executive officer's
salary increase was determined prior to the establishment of the freeze. As a
result, this officer will forego a full salary increase, if applicable, in
1997. The other salary increase was awarded to the Company's Controller based
on personal achievement levels during his first twelve months of employment.
Cash Bonuses. During fiscal year 1996, the executive officers of the Company
were eligible for a target annual incentive bonus calculated by the Committee
as a percentage of the officer's base salary. For 1996, bonus targets ranged
from 28% to 40% of an executive officer's salary. As stated above, in
determining the cash bonuses the Committee considered company as well as
individual performance. A significant portion of this target bonus (generally
as high as 70%) is based on the achievement of objectives relating to the
Company's overall financial performance. The balance is based on individual or
specific business unit objectives. In 1997, all executive officers received
partial cash bonuses for services rendered in 1996 based on the improved
financial condition of the Company and individual performance. The bonus
amounts awarded to the Company's executive officers ranged from 40% to 47% of
their targeted bonus potential, or 16% to 18% of salary.
Option Grants. The Committee is responsible for recommending to the
Executive Stock Option Committee the individuals to whom grants should be
made, the timing of the grants, the exercise price per share and the number of
shares subject to each option. The Executive Stock Option Committee has final
approval of option grants made to executive officers. Stock options granted to
executive officers generally vest over a four-year period and are typically
granted with an exercise price equal to the fair market value of the Company's
Common Stock as of the date of grant. The ultimate value of stock options is
directly tied to change in the value of a share of Common Stock. The Committee
also considers the amount and terms of options already held by a particular
officer, the amount and terms of options granted to that officer's peers, the
role of each executive in accomplishing the Company's performance objectives
and the highly competitive nature of the Company's industry.
The Committee believes that stock based incentives for executive officers
are an important feature of the Company's executive compensation package. The
Committee believes that stock options directly motivate an executive to
maximize long-term stockholder value and provide the executive officer with
the opportunity to share in the appreciation of the value of the stock of the
Company.
During 1996, in conjunction with the salary freeze described above, the
Company awarded stock options to four of its executive officers to make their
total compensation more variable and more closely aligned with the Company's
ongoing performance and to reward their individual performance.
Compensation of the Chief Executive Officer. The Office of the Chief
Executive is currently served by Mr. Gian M. Fulgoni. During 1996, the Company
compensated Mr. Fulgoni utilizing the same philosophy and general criteria
used for other executive officers as described above. Mr. Fulgoni's principal
quantitative performance objectives included a specific earnings per share
target, reduced losses from the Company's international operations and
increased revenues from the Company's census data businesses. Qualitative
objectives included productivity, quality, and service/product enhancements.
During 1996, Mr. Fulgoni received a $330,750 salary, the same amount paid in
1995. The Committee has awarded Mr. Fulgoni a $55,600 cash bonus, representing
42% of his target bonus potential, or 16% of salary. Although the earnings per
share target established at the beginning of the year was not achieved, the
Committee awarded Mr. Fulgoni the cash bonus recognizing the substantial
progress made on several financial and non-financial criteria. The Committee
also acknowledged the progress made in strategically repositioning the
Company, consistent with its three-year business plan. In conjunction with the
salary freeze for senior executive officers in 1996, Mr. Fulgoni was awarded
35,000 stock options. In determining the
8
<PAGE>
amount of this option grant, the Committee considered the improving financial
condition of the Company as measured by its earnings and cash flow performance
and shareholder return. The Committee also considered the fact that Mr. Fulgoni
has not received, (i) a salary increase since 1993, or (ii) an award of stock
options since 1994.
It is the Committee's view that Mr. Fulgoni's total compensation package was
based on an appropriate balance of (i) the Company's performance in 1996, (ii)
individual performance levels and (iii) competitive standards.
The foregoing report has been approved by the current members of the
Committee.
The Compensation Committee
James G. Andress, Chairman
Edward E. Lucente *
Edith W. Martin*
- --------
*Also members of the Executive Stock Option Committee.
SUMMARY COMPENSATION TABLE
The following table sets forth all compensation to the Named Executive
Officers for services rendered to the Company for the Company's last three
fiscal years:
<TABLE>
<CAPTION>
LONG TERM
COMPENSATION
ANNUAL COMPENSATION AWARDS
------------------------ ------------
NUMBER OF
SECURITIES
NAME AND PRINCIPAL UNDERLYING ALL OTHER
POSITION YEAR SALARY BONUS OPTIONS COMPENSATION(1)
- ------------------ ---- -------- ------- ------------ --------------
<S> <C> <C> <C> <C> <C>
Gian M. Fulgoni......... 1996 $330,750 $55,600 35,000(2) $ 3,325
Chief Executive Officer 1995 330,750 0 0 2,772
1994 330,750 0 161,465(3) 2,772
Randall S. Smith........ 1996 $286,000 53,700 30,000(2) 3,325
President--Operations
Group and 1995 272,692 0 80,000(4) 2,772
International Services
Group 1994 275,465 0 7,764(5) 2,772
Gary M. Hill(6)......... 1996 $275,000 47,300 27,500(2) 2,288
Executive Vice
President and 1995 163,942(7) 20,000(8) 150,000(9) 1,143
Chief Financial Officer 1994 -- -- -- --
Thomas W. Wilson,
Jr.(6)................. 1996 $275,000 46,200 0 0
Chairman of the Board 1995 174,519(7) 0 80,000(10) 0
1994 0 0 20,000(11) 115,000(12)
John P. McNicholas,
Jr.(6)................. 1996 $148,333 22,000 0 3,291
Controller and Chief 1995 69,712(7) 8,400(8) 30,000(13) 602
Accounting Officer 1994 -- -- -- --
</TABLE>
- --------
(1) Except as otherwise noted, represents contributions made by the Company to
the Information Resources, Inc., 401K Retirement Savings Plan.
(2) Options granted May 24, 1996, in connection with a salary freeze imposed
on senior executive officers in 1996, to make the total executive
compensation package more closely aligned with the Company's ongoing
performance and to reward performance.
(3) Includes 11,465 options granted in lieu of the cash bonus for services
rendered in 1993 and 150,000 performance options granted for services
rendered in 1993.
(4) Options granted in recognition of significantly increased responsibilities
undertaken within the Company's international business operations.
9
<PAGE>
(5) Options granted in lieu of the cash bonus for 1993.
(6) Mr. Hill, Mr. Wilson and Mr. McNicholas each joined the Company's
executive management team in fiscal year 1995.
(7) Salary from May 12, 1995 to December 31, 1995 for Mr. Wilson, May 15,
1995 to December 31, 1995 for Mr. Hill and June 22, 1995 to December 31,
1995 for Mr. McNicholas.
(8) Cash bonus paid in 1996 for services rendered in 1995.
(9) Options granted as an inducement to join the Company's executive
management team.
(10) Options granted in recognition of significantly increased
responsibilities with the Company's executive management team.
(11) Options granted for directorship services rendered in 1994.
(12) Payments for consulting services.
(13) Options granted as an inducement to join the Company's executive
management team.
STOCK OPTION GRANTS IN THE LAST FISCAL YEAR
The following table sets forth information concerning individual grants of
stock options made during the Company's last fiscal year to each of the Named
Executive Officers:
<TABLE>
<CAPTION>
POTENTIAL
REALIZABLE VALUE
AT
ASSUMED ANNUAL
RATES OF
STOCK PRICE
APPRECIATION FOR
INDIVIDUAL GRANTS OPTION TERM(2)
------------------------ -----------------
NUMBER OF % OF TOTAL
SECURITIES OPTIONS
UNDERLYING GRANTED TO
OPTIONS EMPLOYEES IN EXERCISE EXPIRATION
NAME GRANTED FISCAL YEAR PRICE(1) DATE 5% 10%
- ---- ---------- ------------ -------- ---------- -------- --------
<S> <C> <C> <C> <C> <C> <C>
Gian M. Fulgoni......... 35,000(3) 8.54% $12.75 05/23/06 $280,644 $711,208
Randall S. Smith........ 30,000(3) 7.32 12.75 05/23/06 240,552 609,606
Gary M. Hill............ 27,500(3) 6.71 12.75 05/23/06 220,506 558,806
</TABLE>
- --------
(1) Represents the fair market value of the Company's Common Stock on the date
of grant.
(2) The amounts shown under these columns are the result of calculations at
the 5% and 10% rates required by the Securities and Exchange Commission
and are not intended to forecast future appreciation of the price of the
Company's Common Stock.
(3) Represents options granted on May 24, 1996, in connection with a freeze
imposed on senior executive officers in 1996, to make total executive
compensation package more closely aligned with the Company's ongoing
performance and to reward performance. The options are exercisable in four
installments beginning on the first anniversary of the grant date and on
the next three anniversaries thereafter.
AGGREGATE STOCK OPTION EXERCISES IN THE LAST FISCAL YEAR
AND FISCAL YEAR-END STOCK OPTION VALUES
The following table sets forth information concerning each exercise of stock
options during the Company's last fiscal year by each of the Named Executive
Officers and the fiscal year-end value of unexercised stock options:
<TABLE>
<CAPTION>
NUMBER OF SECURITIES VALUE OF UNEXERCISED
SHARES UNDERLYING UNEXERCISED IN-THE-MONEY
ACQUIRED ON OPTIONS AT YEAR-END OPTIONS AT YEAR-END(1)
EXERCISE VALUE ------------------------- -------------------------
NAME (#) REALIZED EXERCISABLE UNEXERCISABLE EXERCISABLE UNEXERCISABLE
- ---- ----------- -------- ----------- ------------- ----------- -------------
<S> <C> <C> <C> <C> <C> <C>
Gian M. Fulgoni......... 0 $ 0 340,810 158,709 $589,668 $43,750
Randall S. Smith........ 19,995 69,465 183,979 74,250 531,324 67,500
Gary M. Hill............ 0 0 33,333 144,167 25,000 121,875
Thomas Wilson........... 0 0 38,125 71,875 62,969 183,906
John P. McNicholas, Jr.. 0 0 0 30,000 0 0
</TABLE>
- --------
(1) The value of "in-the-money options" represents the difference between the
exercise price of such option and the stock price at the close of business
on December 31, 1996 which was $14.00 per share.
10
<PAGE>
STOCK PERFORMANCE GRAPH
The following line graph compares cumulative total stockholder return on the
Company's Common Stock over the past five fiscal years with the cumulative
total return of (i) the Standard & Poors 500 Composite Index, and (ii) The
Furman Selz LLC Marketing Services and Technology Index.
LOGO
EMPLOYMENT AGREEMENTS
The Company has employment agreements with two of its Named Executive
Officers, Randall S. Smith, President, Operations Group and International
Services Group and Gary M. Hill, Executive Vice President and Chief Financial
Officer. Mr. Smith's agreement provides for: (i) a minimum base salary of
$286,000 per year; (ii) bonus or other incentive compensation as provided
under any present or future incentive compensation plan of the Company as
applied to other senior officers of the Company; and (iii) the right to
participate during the employment period in all benefit plans applicable to
senior officers of the Company. Mr. Smith's agreement may be terminated: (i)
by Mr. Smith for "Good Reason" (as defined in the agreement) upon one month's
prior written notice; or (ii) by the Company "With" or "Without" Cause (as
defined in the agreement) upon two months' prior written notice. If the
agreement is terminated Without Cause or for Good Reason, Mr. Smith is
entitled to receive: (i) his base salary for a period of twelve months
following the termination date; (ii) a pro rated bonus (determined based upon
the average bonus awarded to other executive officers of the Company); and
(iii) an extended option exercise period. In the event of Mr. Smith's death
during the Employment Period all unvested options will immediately vest and be
exercisable for 24 months from the date of death. In the event of a change of
control (as defined in the Agreement) which occurs at least two years
following the effective date of the Agreement, all of Mr. Smith's options,
whether or not then vested, become immediately exercisable.
Mr. Hill's agreement provides for: (i) a minimum base salary of $275,000 per
year; and (ii) the right to participate in all benefit plans applicable to
senior officers of the Company. In the event of a change of control (as
defined in the Agreement) which occurs prior to the second anniversary of Mr.
Hill's employment and in the event of Mr. Hill's leaving the Company within
one year of that change of control, all of Mr. Hill's options will continue to
vest and become exercisable in accordance with their original vesting
schedules and Mr. Hill
11
<PAGE>
will continue to be paid at a rate equal to 130% of his base salary then in
effect for a period of twelve months following the date of such termination.
In the event of a change of control which occurs after the second anniversary
of Mr. Hill's employment, all of Mr. Hill's options, whether or not then
vested, become immediately exercisable. Should Mr. Hill's employment be
terminated (including a reduction in responsibility or compensation, other
than a reduction in compensation applicable to all executive officers of the
Company) for any reason other than for cause, death or voluntary resignation
(except in case of resignation within one year following change of control),
Mr. Hill will continue to be paid at a rate equal to 130% of his base salary
then in effect for a period of twelve months following the date of such
termination.
MANAGEMENT RELATIONSHIPS AND RELATED TRANSACTIONS
The Company has entered into an consulting agreement with Leonard M. Lodish,
a director of the Company. During 1996, Dr. Lodish was paid $114,923 pursuant
to this arrangement.
RELATIONSHIP WITH INDEPENDENT AUDITORS
The Company's financial statements for the year ended December 31, 1996 have
been audited by Ernst and Young LLP, independent auditors. Ernst and Young
have been selected as the Company's independent certified public accountants
for the calendar year 1997. At a meeting held on August 22, 1996 the Board of
Directors of the Company approved the engagement of Ernst & Young LLP as its
independent auditors for the fiscal year ending December 31, 1996 to replace
Grant Thornton LLP, effective August 22, 1996. The appointment of Ernst &
Young LLP was recommended to the Company's Board of Directors by its Audit
Committee, composed of directors who are not officers or employees of the
Company, on August 19, 1996 after a review of the Company's worldwide needs.
The reports of Grant Thornton LLP on the Company's financial statements for
the past two fiscal years did not contain an adverse or disclaimer of opinion
nor was the opinion qualified or modified as to uncertainty, audit scope or
accounting principles. In connection with the audits of the Company's
financial statements for each of the two fiscal years ended December 31, 1995,
and in the subsequent interim period, there were no disagreements with Grant
Thornton on any matters of accounting principles or practices, financial
statement disclosure, or auditing scope or procedure which, if not resolved to
the satisfaction of Grant Thornton LLP, would have caused Grant Thornton LLP
to make reference to the matter in its report.
It is expected that a representative of Ernst & Young LLP will attend the
Annual Meeting and will be available to make a statement, if they desire to do
so, or respond to appropriate questions.
STOCKHOLDER PROPOSALS FOR 1998 ANNUAL MEETING
In order for a proposal by a stockholder of the Company to be included in
the Company's proxy statement and form of proxy for the 1998 Annual Meeting of
stockholders, the proposal must be received by the Company at its executive
offices located at 150 North Clinton, Chicago, Illinois 60661-1416 no later
than December 24, 1997.
QUORUM AND VOTING PROCEDURES
The presence in person or by proxy of holders of record of a majority of the
outstanding shares of Common Stock is required for a quorum to transact
business at the Meeting, but if a quorum should not be present, the Meeting
may be adjourned from time to time until a quorum is obtained. Under
applicable Delaware law, abstentions and "broker non-votes" (i.e., proxies
from brokers or nominees indicating that such persons have not received
instructions from the beneficial owner or other persons entitled to vote
shares as to a matter with respect to which the brokers or nominees do not
have discretionary power to vote) will be treated as present for purposes of
determining the presence of a quorum at the Meeting.
Directors will be elected by the plurality vote of the holders of Common
Stock entitled to vote at the Meeting and present in person or by proxy. The
remaining proposals described herein require the vote of holders of a majority
of the shares of Common Stock entitled to vote at the Meeting and present in
person or
12
<PAGE>
by proxy. Under applicable Delaware law, abstentions will be deemed present and
entitled to vote and will, therefor, have the effect of a negative vote on the
proposals other than the election of directors, but will have no effect on the
outcome of the election of directors. A broker non-vote will have no effect on
any proposal described in the proxy statement, including the election of
directors.
OTHER MATTERS
The Company knows of no matters, other than those referred to herein, which
will be presented at the Meeting. If, however, any other appropriate business
should properly be presented at the Meeting, the proxies named in the enclosed
form of proxy will vote the proxies in accordance with their best judgment.
EXPENSES OF SOLICITATION
All expenses incident to the solicitation of proxies by the Company will be
paid by the Company. Solicitation may be made personally, or by telephone,
telegraph or mail, by one or more employees of the Company, without additional
compensation. The Company has engaged Georgeson & Co., Inc. to assist in the
distribution of proxy materials to shareholders of the Company. If Georgeson &
Co. is requested to assist in the solicitation process, it will receive a fee
from the Company of approximately $6,500, plus reimbursement of its out-of-
pocket expenses. The Company will reimburse brokerage houses and other
custodians, nominees and fiduciaries for reasonable out-of-pocket expenses
incurred in forwarding copies of solicitation material to beneficial owners of
Common Stock held of record by such persons.
By order of the Board of Directors,
Information Resources, Inc.
Edward S. Berger
Secretary
Chicago, Illinois
April 22, 1997
13
<PAGE>
INFORMATION RESOURCES, INC.
PLEASE MARK VOTE IN OVAL IN THE FOLLOWING MANNER USING DARK INK ONLY. [_]
[ ]
1. Election of Directors --
Nominees: Gerald J. Eskin, PhD.,
John D. C. Little, PhD., and Glen L. Urban, PhD.
For Withhold For All--(Except nominee(s) whose name(s) are written below)
All All
[_] [_] [_]
--------------------------------------------------
2. In their discretion, the Proxies are authorized to vote upon 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 stockholder(s). IF NO DIRECTION IS MADE, THE PROXY
WILL BE VOTED FOR PROPOSAL 1.
Dated: 1997
-----------------------------,
Signatures(s)
---------------------------------------------------------------
----------------------------------------------------------------------------
Please sign exactly as your name appears herein. When shares are held by
joint tenants, both should sign. When signing as attorney, executor,
administrator, trustee, or guardian, please give full title as such. If a
corporation, please sign in full corporate name by president or other
authorized officer. If a partnership, please sign in partnership name by
authorized person.
. FOLD AND DETACH HERE .
YOUR VOTE IS IMPORTANT!
PLEASE MARK, SIGN AND DATE, AND RETURN
IN THE ENCLOSED ENVELOPE.
<PAGE>
PROXY PROXY
INFORMATION RESOURCES, INC.
150 NORTH CLINTON STREET
CHICAGO, ILLINOIS 60661-1416
This Proxy is Solicited on Behalf of the Board of Directors
for the Annual Meeting of Stockholders -- May 22, 1997
The undersigned hereby appoints Gian M. Fulgoni and Edward S. Berger as
Proxies, each with power to appoint his substitute, and hereby authorizes them,
together or separately, to represent and to vote, as designated below, all
shares of Common Stock of Information Resources, Inc. (the "Company") held of
record by the undersigned on April 11, 1997, at the Annual Meeting of
Stockholders to be held on May 22, 1997, or any adjournment thereof.
PLEASE MARK, SIGN AND DATE ON THE REVERSE SIDE,
AND RETURN IN THE ENCLOSED ENVELOPE.
(Continued and to be signed on reverse side.)
