<PAGE> 1
SCHEDULE 14A INFORMATION
Proxy Statement Pursuant to Section 14(a) of the Securities Exchange Act of 1934
Filed by the registrant [X]
Filed by a party other than the registrant [ ]
Check the appropriate box:
[ ] Preliminary Proxy Statement
[ ] Confidential, for Use of the Commission only (as permitted by Rule
14a-6(e)(2))
[X] Definitive Proxy Statement
[ ] Definitive Additional Materials
[ ] Soliciting Material Pursuant to sec. 240.14a-11(c) or sec. 240.14a-12
INFORMATION RESOURCES, INC.
---------------------------------------------------------
(Name of Registrant as Specified In Its Charter)
---------------------------------------------------------
(Name of Person(s) Filing Proxy Statement if other than 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:
(4) Date filed:
<PAGE> 2
INFORMATION RESOURCES, INC.
150 NORTH CLINTON STREET
CHICAGO, ILLINOIS 60661
NOTICE OF THE ANNUAL MEETING OF STOCKHOLDERS
TO BE HELD MAY 21, 1998
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 21,
1998, at 10:00 am Central Daylight Time, for the purpose of considering and
acting upon the following matters:
1. To elect four 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 or any adjournment thereof.
Stockholders of record as of the close of business on April 10, 1998, 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 1997 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 21, 1998
------------------------
YOUR VOTE IS IMPORTANT
PLEASE SIGN, DATE AND RETURN YOUR PROXY PROMPTLY
WHETHER OR NOT YOU PLAN TO ATTEND THE MEETING
------------------------
<PAGE> 3
PROXY STATEMENT
INFORMATION RESOURCES, INC.
ANNUAL MEETING OF STOCKHOLDERS
MAY 21, 1998
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 21, 1998, and any adjournments thereof (the "Meeting"). Stockholders
of record as of the close of business on April 10, 1998 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 21, 1998.
Stockholders are urged to sign, date and complete 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 persons designated on the proxy (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 persons, 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) submitting a subsequently dated proxy, (ii) written notification to
the persons named therein as proxies, which may be mailed or delivered to the
Secretary of 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 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 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.
The Company has one class of stock outstanding, common stock, $.01 par
value per share ("Common Stock"). On April 10, 1998, 28,712,259 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> 4
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
NAME OF BENEFICIAL OWNER BENEFICIAL OWNERSHIP(1) PERCENT OF CLASS
------------------------ ----------------------- ----------------
<S> <C> <C>
Fidelity Management and Research 1,914,878(2) 6.67
One Federal Street
Boston, MA. 02109
R. Eliot King and Associates, Inc. 1,860,360(3) 6.48
3000 Sand Hill Road, Suite 2-245
Menlo Park, CA. 94025
State of Wisconsin Investment Board 1,811,514(4) 6.31
P.O. Box 7842
Madison, WI. 53707
Dresdner RCM Global Investors 1,608,816(5) 5.60
Four Embarcadero Center, Suite 3000
San Francisco, CA. 94111-4189
Merrill Lynch Asset Management 1,458,100(6) 5.08
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 10, 1998, 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
NAME OF BENEFICIAL OWNER BENEFICIAL OWNERSHIP(7) PERCENT OF CLASS
------------------------ ----------------------- ----------------
<S> <C> <C>
James G. Andress........................................ 34,160 **
Edwin E. Epstein........................................ 33,210 **
Gerald J. Eskin, Ph.D................................... 503,230 1.74
Gian M. Fulgoni......................................... 795,579* 2.73
Gary M. Hill............................................ 147,084* **
John D.C. Little, Ph.D.................................. 218,801 **
Leonard M. Lodish, Ph.D................................. 49,869 **
Edward E. Lucente....................................... 18,035* **
Edith W. Martin, Ph.D................................... 14,550* **
John P. McNicholas, Jr.................................. 21,950 **
Randall S. Smith........................................ 325,624* 1.12
Jeffrey P. Stamen....................................... 104,160 **
Glen L. Urban, Ph.D..................................... 49,103 **
Thomas W. Wilson, Jr.................................... 79,375* **
All directors and executive officers as a group (16 2,629,711 8.15
persons)..............................................
</TABLE>
- ---------------
* Includes open market purchases of the Company's common stock in the amount of
9,200 shares in November 1995 for Mr. Fulgoni: 10,000 shares in November 1995
for Mr. Wilson; 2,000 shares in November 1995 for Mr. Lucente and 390 shares
in December 1995 for Dr. Martin. Also includes acquisitions of the Company's
common stock upon the cash exercise of stock options in the amount of
2
<PAGE> 5
2,866 shares in December 1997 for Mr. Fulgoni; 4,072 shares in September
1996; 15,923 shares in November 1996 and 2,293 shares in December 1997 for
Mr. Smith; and 4,000 shares in March 1998 for Mr. Hill.
** Less than 1%.
(1) Based on 28,712,259 shares outstanding on April 10, 1998
(2) Number of shares is based upon information set forth in Schedule 13G filed
with the SEC as of January 20, 1998, which indicates that such shares are
held on behalf of numerous clients of this stockholder, a registered
investment adviser.
(3) Number of shares is based upon information set forth in Schedule 13G filed
with the SEC as of January 28, 1998, 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 January 22, 1998, which indicates that this stockholder
is a government agency which manages public pension funds.
(5) Number of shares is based upon information set forth in Schedule 13G filed
with the SEC as of January 30, 1998, which indicates 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 6, 1998, which indicates 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 of April 10, 1998 in the following amounts: James G. Andress -- 31,875
options; (ii) Edwin E. Epstein -- 18,125 options; (iii) Gerald Eskin, PhD.
-- 134,178 options; (iv) Gian M. Fulgoni -- 479,153 options; (v) Gary M.
Hill -- 143,083 options; (vi) John D.C. Little, Ph.D. -- 41,516 options;
(vii) Leonard M. Lodish, Ph.D. -- 46,050 options; (viii) Edward E. Lucente
-- 13,750 options; (ix) Edith W. Martin, Ph.D. -- 11,875 options; (x) John
P. McNicholas, Jr. -- 20,750 options; (xi) Randall S. Smith -- 240,936
options; (xii) Jeffrey P. Stamen -- 101,875 options; Glen L. Urban, Ph.D. --
18,750 options; (xiv) Thomas W. Wilson, Jr. -- 69,375 options; and (xv) all
directors and officers as a group (16 persons) -- 1,436,706 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. 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.
3
<PAGE> 6
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 2001. 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 is continuing its search for a new
director and this vacancy will be filled when the evaluation process is
completed.
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.
NOMINEES FOR ELECTION:
<TABLE>
<CAPTION>
POSITIONS WITH COMPANY, BUSINESS
NAME AGE EXPERIENCE AND OTHER POSITIONS
- ------------------------------------------ --- ----------------------------------------------------
<S> <C> <C>
Gian M. Fulgoni........................... 50 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................... 54 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
Publishers, Inc. and J&J Snack Foods Corp.
Edith W. Martin, Ph.D..................... 52 Director of the Company since 1991; Current member
of the Compensation Committee and Executive Stock
Option Committee; Vice President, Information
Systems and Chief Information Officer for Eastman
Kodak, Co., from 1996 to 1997. Executive Vice
President and Chief Technology Officer for the
Student Loan Marketing Association (Sallie Mae) from
August 1994 until January 1996; Executive Vice
President 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 Corporation and
Pharmacopeia, Inc.
Thomas W. Wilson, Jr...................... 66 Director of the Company since 1991; Chairman of the
Board of Directors since April 1995; Current
Chairman of the Executive Committee; Senior Partner
of McKinsey & Company, management consultants, from
1973 until 1990 (retired); Director of Aerial
Communications, Inc.
</TABLE>
4
<PAGE> 7
<TABLE>
TERMS EXPIRING IN 1999:
<S> <C> <C>
James G. Andress.......................... 59 Director of the Company since 1989; Current member
of the Executive Committee and Audit Committee;
Current Chairman of the Compensation Committee;
President and Chief Operating Officer of the Company
from 1994 to 1995; Chief Executive Officer from 1990
to 1995; Vice-Chairman from 1993 until 1994;
President from 1989 until 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.......................... 74 Director of the Company since 1987; Current member
of the Executive Committee and Chairman of the Audit
Committee; President of Retailing Insights, Inc.,
food industry consultants -- 1971 until 1995.
Director of PIA Merchandising Services.
Edward E. Lucente......................... 58 Director of the Company since 1991; Current member
of the Compensation Committee and Executive Stock
Option Committee; President & CEO of QMS, Inc 1997
to present; President and CEO of Liant Software
Corp., from 1995 to 1997; Head of worldwide sales
and marketing of Digital Equipment Corp. from March
1993 until April 1994; Executive Vice-President of
Northern Telecom Limited from January 1992 until
March 1993; Member of the Executive Office of
Northern Telecom limited from February 1991 until
March 1993; Director of Compuserve and QMS, Inc.
Jeffrey P. Stamen......................... 52 Director of the Company since March 1994; Senior
Vice-President of the OLAP Division of Oracle
Corporation since July 1995; President -- IRI
Software from February 1991 to July 1995; Vice
President of the Company from January 1986 to July
1995.
TERMS EXPIRING IN 2000:
Gerald J. Eskin, Ph. D.................... 63 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.................... 70 Director of the Company since 1985; Current member
of the Executive Committee; Professor of Management
Science at The Sloan School of Management,
Massachusetts Institute of Technology.
Glen L. Urban, Ph.D....................... 58 Director of the Company since 1986; Current member
of the Audit Committee; Professor of Management
Science at, and Dean of, The Sloan School of
Management, Massachusetts Institute of Technology;
Director of The Dexter Corporation.
</TABLE>
5
<PAGE> 8
COMMITTEES OF THE BOARD OF DIRECTORS, MEETINGS AND COMPENSATION OF DIRECTORS
During 1997, the Board of Directors met on five occasions, and all members
attended at least 75% of the Board of Director's meetings and their 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 Board of
Directors, which has not established a formal policy or procedure for
considering potential nominees including potential nominees recommended by
stockholders.
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 Executive
Committee met during 1997 on three occasions.
The Audit Committee recommends to the Board of Directors the appointment of
the independent auditors for the following year and reviews the scope of the
audit, the independent auditors 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 1997 on three occasions.
The Compensation Committee is responsible for reviewing and approving
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 Compensation Committee and
the Executive Stock Option Committee held one joint meeting in 1997.
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 1997, 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 employees 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. 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 1,097 shares of common stock in 1997 and an annual retainer
fee of $3,750. Non-employee Directors receive $1,500 for each Board meeting
attended paid in cash. 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 1997 to non-employee
Directors were as follows: Mr. Andress, $12,750; Mr. Epstein, $10,250; Mr.
Eskin, $5,250; Mr. Little; $5,250; Mr. Lodish; $5,250; Mr. Lucente, $12,750; Dr.
Martin; $10,250; Mr. Stamen, $5,250; and Mr. Urban, $7,750. All directors are
reimbursed for travel expenses.
Each Non-employee Director receives an annual grant of 2,500 stock options.
During 1997, 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 $14.00, 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").
6
<PAGE> 9
REPORT ON EXECUTIVE COMPENSATION
The Compensation Committee of the Board of Directors (the "Committee") is
responsible for reviewing and approving the annual salary, bonus and other
compensation of 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 executive officers. The Committee is composed
entirely of outside directors.
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 information and software services 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 1997, 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; (ii) improvement of the
Company's cash flow; and (iii) other quantitative and qualitative objectives.
These other objectives included, among others: (i) a quantitative goal for error
reduction based on established quality measures and the achievement of specific
milestones related to the Company's reengineering efforts (e.g. "Project
Impact"); (ii) the development and implementation of other programs to increase
productivity and efficiency and to enhance both quality and reliability; and
(iii) the development and implementation of enhanced financial and accounting
control and information systems.
For the year ended December 31, 1997, the Company's consolidated revenues
increased 13% over 1996. Revenues from the Company's ongoing U.S. businesses
were up 6% over 1996, while earnings from U.S. operations improved by 27% over
1996 levels. International revenues increased 47% versus a year ago and the loss
from operations decreased 44%. As a result, overall consolidated operating
results for the twelve months ended December 31, 1997 improved significantly and
the Company returned to profitability after three years of operating losses. In
addition, the Company's cash flow position continued to improve, with the
Company generating positive cash flow in 1997.
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 as much of the total compensation mix as
possible, variable, based on performance.
7
<PAGE> 10
Salary. The Committee reviews each senior 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 competitive market data on salary levels. During
1997 six officers received salary increases based on their performance, market
adjustments and contractual provisions in employment and other agreements.
Cash Bonuses. During fiscal year 1997, the senior 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. Target bonus is defined
as the payment earned if an officer achieves 100% of his/her objectives. The
Company's bonus plan allows for the payment of adjusted (i.e. lower or higher)
amounts based on the comparison of results against objectives. For 1997, bonus
targets ranged from 23% to 50% of an executive officers salary. As stated above,
in determining the cash bonuses the Committee considered Company performance as
well as other factors. A specified portion of this target bonus (generally as
high as 70%) is based on the achievement of company-wide financial objectives.
The balance is based on individual objectives which may be either readily
measurable or qualitative. In 1998, six executive officers received cash bonuses
for services rendered in 1997 based on (i) the improved financial results of the
Company; (ii) the attainment of milestones related to Project Impact; (iii) the
progress made on the development and implementation of financial control and
information systems; and (iv) the progress made on other non-financial
initiatives. The bonus amounts awarded to the Company's executive officers
ranged from 57% to 81% of their targeted bonus potential, or 16% to 31% 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 1997, the Company awarded stock options to one executive officer to
reward performance.
Compensation of the Chief Executive Officers. The Office of the Chief
Executive is currently served by Mr. Gian M. Fulgoni. During 1997, 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 specific earnings per share and
cash flow targets and other objectives including data quality and
service/product enhancements.
During 1997, Mr. Fulgoni received a base salary of $355,210, an increase of
$24,460 over the amount paid in 1996. Effective May 1, 1997 Mr. Fulgoni's base
salary was increased to $370,000. Mr. Fulgoni's salary increase included a
market adjustment recognizing the fact that Mr. Fulgoni had not received a base
salary increase since 1993. The Committee awarded Mr. Fulgoni a $101,200 cash
bonus, representing 57% of his target bonus potential, or 28% of salary. The
Committee awarded Mr. Fulgoni a salary increase and a cash bonus recognizing the
substantial progress made against objectives 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.
8
<PAGE> 11
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 1997;
(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
AWARDS
------------
NUMBER OF
ANNUAL COMPENSATION SECURITIES
-------------------------- UNDERLYING ALL OTHER
NAME AND PRINCIPAL POSITION YEAR SALARY BONUS OPTIONS COMPENSATION(1)
--------------------------- ---- -------- -------- ------------ ---------------
<S> <C> <C> <C> <C> <C>
Gian M. Fulgoni.......................... 1997 $355,210 $101,200 0 $3,709
Chief Executive Officer 1996 330,750 55,600 35,000(2) 3,325
1995 330,750 0 0 2,772
Randall S. Smith......................... 1997 288,493 89,600 0 3,709
Group President -- Information 1996 286,000 53,700 30,000(2) 3,325
Technology and International Services 1995 272,692 0 80,000(3) 2,772
Gary M. Hill(4).......................... 1997 281,854 85,200 0 3,709
Executive Vice President and 1996 275,000 47,300 27,500(2) 2,288
Chief Financial Officer 1995 163,942(5) 20,000(6) 150,000(7) 1,143
Thomas W. Wilson, Jr.(4)................. 1997 275,000 78,400 0 0
Chairman of the Board 1996 275,000 46,200 0 0
1995 174,519(5) 0 80,000(8) 0
John P. McNicholas, Jr.(4)............... 1997 154,157 25,000 3,000 3,709
Senior Vice President, Controller 1996 148,333 22,000 0 3,291
and Chief Accounting Officer 1995 69,712(5) 8,400(6) 30,000(7) 602
</TABLE>
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(1) Except as otherwise noted, represents contributions made by the Company to
the Information Resources, Inc. 401(k) 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 variable and to reward performance.
(3) Options granted May 24, 1995 in recognition of significantly increased
responsibilities undertaken within the Company's international business
operations.
(4) Mr. Hill, Mr. Wilson, and Mr. McNicholas each joined the Company's executive
management team during fiscal year 1995.
9
<PAGE> 12
(5) Salary from May 12, 1995 to December 31, 1995 for Mr. Wilson; May 15, 1995
to December 31, 1995 for Mr. Hill; and July 1, 1995 to December 31, 1995 for
Mr. McNicholas.
(6) Cash bonus paid in 1996 for services rendered in 1995.
(7) Options granted as an inducement to join the Company's executive management
team.
(8) Options granted November 27, 1995, in recognition of significantly increased
responsibilities with 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>
INDIVIDUAL GRANTS
------------------------- POTENTIAL REALIZABLE VALUE AT
NUMBER OF % OF TOTAL ASSUMED ANNUAL RATES OF
SECURITIES OPTIONS STOCK PRICE APPRECIATION FOR
UNDERLYING GRANTED TO OPTION TERM(2)
OPTIONS EMPLOYEES IN EXERCISE EXPIRATION ------------------------------
NAME GRANTED FISCAL YEAR PRICE(1) DATE 5% 10%
---- ---------- ------------ -------- ---------- ------------- -------------
<S> <C> <C> <C> <C> <C> <C>
John P. McNicholas, Jr....... 3,000(3) .4 $14.00 05/22/07 $26,413.57 $66,413.57
</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) 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 certain stock option information, including
exercises during the Company's last fiscal year for each of the Named Executive
Officers:
<TABLE>
<CAPTION>
VALUE OF UNEXERCISED
NUMBER OF SECURITIES UNDERLYING IN-THE-MONEY
SHARES UNEXERCISED OPTIONS AT YEAR-END OPTIONS AT YEAR-END(1)
ACQUIRED ON VALUE ----------------------------------- ---------------------------
NAME EXERCISE REALIZED EXERCISABLE UNEXERCISABLE EXERCISABLE UNEXERCISABLE
---- ----------- -------- ------------------- ------------- ----------- -------------
<S> <C> <C> <C> <C> <C> <C>
Gian M. Fulgoni......... 2,866 $22,556 414,424 82,229 $500,764 $16,406
Randall S. Smith........ 2,293 15,037 213,436 42,500 442,435 16,563
Gary M. Hill............ 0 0 90,208 87,292 14,714 21,224
Thomas W. Wilson, Jr.... 0 0 63,750 46,250 95,156 95,156
John P. McNicholas,
Jr.................... 0 0 10,000 23,000 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 which was $13.38 per share
at the close of business on December 31, 1997.
10
<PAGE> 13
STOCK PERFORMANCE GRAPH
The following 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 PaineWebber
LLC Marketing Services Index. The Furman-Selz Marketing Services Index, used by
the Company in the 1997 performance graph, is no longer maintained. The
PaineWebber LLC Marketing Services Index includes many of the same marketing
services companies which were included in the Furman-Selz Marketing Services
Index.
[PERFORMANCE GRAPH]
EMPLOYMENT AGREEMENTS
The Company has employment agreements with two of its Named Executive
Officers, Randall S. Smith, Group President, Information Technology and
International Services 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.
11
<PAGE> 14
Mr. Hill's agreement provides for: (i) a minimum base salary of $275,000
per year, (ii) participation in the Company's bonus plan; and (iii) 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) all of Mr.
Hill's unvested options will vest immediately. In the event Mr. Hill's
employment is terminated by the Company for any reason other than for cause or
Mr. Hill's death or voluntary resignation (except in case of a resignation
within one year following a change of control) Mr. Hill is entitled, for a
period of 12 months, to continue to receive all benefits and to be paid at a
rate equal to 130% of his base salary then in effect.
CERTAIN TRANSACTIONS
The Company has entered into consulting agreements with Leonard M. Lodish,
John D.C. Little, and Gerald Eskin, directors of the Company. Pursuant to these
arrangements, 1997 payments were as follows; Dr. Lodish -- $104,473, Dr. Little
- -- $77,175, and Dr. Eskin -- $24,000.
RELATIONSHIP WITH INDEPENDENT AUDITORS
The Company's financial statements for the year ended December 31, 1997
have been audited by Ernst & Young LLP, independent auditors. Ernst & Young has
been selected as the Company's independent auditors for the calendar year 1998.
It is expected that a representative of Ernst & Young LLP will attend the
Meeting and will be available to make a statement, if they desire to do so, or
respond to appropriate questions.
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.
STOCKHOLDER PROPOSALS FOR 1999 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 1999 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 23, 1998.
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
12
<PAGE> 15
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.
ADDITIONAL INFORMATION
A copy of the Company's Annual Report on Form 10K, filed with the
Securities and Exchange Commission, is available without charge upon written
request addressed to the Corporate Secretary of the Company, 150 North Clinton,
Chicago, Illinois 60661-1416.
By order of the Board of Directors,
INFORMATION RESOURCES, INC.
Edward S. Berger
Secretary
Chicago, Illinois
April 21, 1998
13
<PAGE> 16
PROXY INFORMATION RESOURCES, INC. PROXY
150 NORTH CLINTON STREET
CHICAGO, ILLINOIS 60881-1416
THIS PROXY IS SOLICITED ON BEHALF OF THE BOARD OF DIRECTORS
FOR THE ANNUAL MEETING OF STOCKHOLDERS -- MAY 21, 1998
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 10, 1998, at the Annual Meeting of
Stockholders to be held on May 21, 1998, 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.)
- --------------------------------------------------------------------------------
[ ]
<TABLE>
<S> <C>
1. ELECTION OF DIRECTORS-- For Withhold For All-(Except nominee(s) whose name(s) are written below)
Nominees: Gian M. Fulgoni, Leonard M. Lodish, All All
Ph.D., Edith W. Martin, Ph.D., and [ ] [ ] [ ]_____________________________________________________________
Thomas W. Wilson, Jr.
2. In their discretion, the Proxies are authorized to THIS PROXY WHEN PROPERLY EXECUTED, WILL BE VOTED IN THE MANNER
vote upon such other business as may properly DIRECTED HEREIN BY THE UNDERSIGNED STOCKHOLDER(S). IF NO
come before the meeting. DIRECTION IS MADE, THE PROXY WILL BE VOTED FOR PROPOSAL 1.
Dated:__________________________,1998
Signature(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.
</TABLE>
