<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
Norstan, 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/ $125 per Exchange Act Rules 0-11(c)(1)(ii), 14a-6(i)(1), 14a-6(i)(2) or
Item 22(a)(2) of Schedule 14A.
/ / $500 per each party to the controversy pursuant to Exchange Act Rule
14a-6(i)(3).
/ / Fee computed on table below per Exchange Act Rules 14a-6(i)(4)
and 0-11.
1) Title of each class of securities to which transaction applies:
------------------------------------------------------------------------
2) Aggregate number of securities to which transaction applies:
------------------------------------------------------------------------
3) Per unit price or other underlying value of transaction computed
pursuant to Exchange Act Rule 0-11 (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>
[LOGO]
605 NORTH HIGHWAY 169
PLYMOUTH, MINNESOTA 55441
------------------------
NOTICE OF ANNUAL MEETING OF SHAREHOLDERS
TO BE HELD SEPTEMBER 12, 1996
---------------------
TO THE SHAREHOLDERS OF NORSTAN, INC.:
NOTICE IS HEREBY GIVEN that the Annual Meeting of the shareholders of
Norstan, Inc., a Minnesota corporation, will be held on Thursday, September 12,
1996, at 2:00 P.M., at 605 North Highway 169, 11th Floor, Plymouth, Minnesota,
for the following purposes:
1. To elect ten directors.
2. To ratify the appointment of Arthur Andersen LLP as independent auditors
for the fiscal year ending April 30, 1997.
3. To transact such other business as may properly come before the Annual
Meeting or any adjournment thereof.
Only shareholders of record at the close of business on July 19, 1996, are
entitled to notice of and to vote at the Annual Meeting and any adjournment
thereof.
Each of you is invited and urged to attend the Annual Meeting in person if
possible. Whether or not you are able to attend in person, you are requested to
date, sign and return promptly the enclosed proxy in the envelope enclosed for
your convenience.
By Order of the Board of Directors
WINSTON E. MUNSON, Secretary
August 16, 1996
<PAGE>
PROXY STATEMENT
FOR ANNUAL MEETING OF SHAREHOLDERS OF
NORSTAN, INC.
605 NORTH HIGHWAY 169
PLYMOUTH, MINNESOTA 55441
TO BE HELD SEPTEMBER 12, 1996
SOLICITATION OF PROXIES
The enclosed proxy is solicited by and on behalf of the Board of Directors
of Norstan, Inc. (the "Company") for use at the Annual Meeting of shareholders
on September 12, 1996, and any adjournment thereof. The approximate date on
which this Proxy Statement and form of proxy will first be sent or given to
shareholders is August 16, 1996.
The expense of the solicitation of proxies for this Annual Meeting,
including the cost of mailing, has been or will be borne by the Company.
Arrangements will be made with brokerage houses and other custodian nominees and
fiduciaries to send proxies and proxy materials to their principals and the
Company will reimburse them for their expense in so doing. In addition to
solicitation by mail, proxies may be solicited by telephone, telegraph or
personally.
VOTING AND REVOCATION OF PROXY
Only shareholders of record at the close of business on July 19, 1996, are
entitled to notice of and to vote at the meeting. Each share so held entitles
the holder to one vote upon each matter to be voted upon. On July 19, 1996, the
Company had outstanding 4,432,697 shares of common stock. On July 31, 1996, a
two-for-one stock split of the Company common stock was made. The share and per
share data in this Proxy Statement do not reflect the stock split since the
shareholder record date for this annual meeting is July 19, 1996. A quorum,
consisting of a majority of the outstanding shares of the common stock entitled
to vote at the Annual Meeting, must be present in person or represented by proxy
before action may be taken at the Annual Meeting.
All shares represented by proxies which have been properly executed and
returned will be voted at the meeting. Where a specification is made by the
shareholder as provided in the form of proxy, the shares will be voted in
accordance with such specification. If no specification is made, the shares will
be voted (i) FOR the election of the nominees for directors named in this Proxy
Statement, and (ii) FOR the ratification of the appointment of Arthur Andersen
LLP as independent auditors for the fiscal year ending April 30, 1997.
Any proxy given pursuant to this solicitation may be revoked by the person
giving the proxy at any time before it is voted. Proxies may be revoked by (a)
giving written notice of such revocation to the Secretary of the Company, (b)
giving another written proxy bearing a later date, or (c) attending the Annual
Meeting and voting in person (although attendance at the Annual Meeting will not
in and of itself constitute a revocation of a proxy).
Votes cast by proxy or in person at the Annual Meeting will be tabulated by
the Inspectors of Election appointed for the meeting and will determine if a
quorum is present. If an executed proxy card is returned and the shareholder has
abstained from voting on any matter, the shares represented by such proxy will
be considered present at the meeting for purposes of determining a quorum and
for purposes of calculating the vote, but will not be considered to have been
voted in favor of such matter. If an executed proxy is returned by a broker
holding shares in street name which indicates that the broker does not have
discretionary authority as to certain shares to vote on one or more matters,
such
1
<PAGE>
shares will be considered present at the meeting for purposes of determining a
quorum, but will not be considered to be represented at the meeting for purposes
of calculating the vote with respect to such matter.
ELECTION OF DIRECTORS
The property, affairs and business of the Company are managed under the
direction of the Board of Directors. The bylaws of the Company provide that the
number of directors shall be not less than three nor more than fifteen, with the
number to be determined by the Board of Directors. The Board of Directors has
fixed the number of directors at ten for the ensuing year, and ten directors
will be elected at the Annual Meeting for a term of one year. Each of the
nominees named below is now a director of the Company and has served
continuously as a director of the Company since the year indicated. All nominees
have indicated a willingness to serve if elected.
All shares represented by proxies which have been properly executed and
returned will be voted for the election of the ten nominees named below, unless
other instructions are indicated thereon. In the event any one or more of such
nominees should for any reason be unable to serve as a director, it is intended
that the enclosed proxy will be voted for such person or persons as may be
selected in accordance with the best judgment of the proxy holders named
therein. The Board of Directors knows of no reason to anticipate that any of the
nominees named herein will be unable or unwilling to serve. Directors are
elected by a plurality of the votes cast for the election of directors at the
Annual Meeting.
<TABLE>
<CAPTION>
DIRECTOR
NAME POSITION WITH COMPANY AGE SINCE
- -------------------------- -------------------------------------------------- --- ---------
<S> <C> <C> <C>
Paul Baszucki Co-Chairman of the Board, Chief Executive Officer 56 1975
and Director
Richard Cohen Vice Chairman of the Board, Treasurer, Chief 52 1971
Financial Officer and Director
Sidney R. Cohen Co-Chairman of the Board and Director 76 1970
Arnold Lehrman Director 73 1970
Connie M. Levi Director 56 1993
Winston E. Munson Secretary and Director 67 1971
Gerald D. Pint Director 60 1983
Stanley H. Schweitzer Director 64 1981
Dr. Jagdish N. Sheth Director 57 1995
Herbert F. Trader Director 59 1983
</TABLE>
THE BOARD OF DIRECTORS RECOMMENDS A VOTE FOR THE ELECTION OF THE NOMINEES
NAMED ABOVE.
INFORMATION CONCERNING DIRECTORS,
NOMINEES AND EXECUTIVE OFFICERS
DIRECTORS AND NOMINEES
Certain information concerning the directors and nominees of the Company is
set forth below.
PAUL BASZUCKI has been Chief Executive Officer of the Company since 1986,
and Co-Chairman of the Board since June 1995. He was Vice Chairman of the Board
of the Company from 1987 to June 1995. He is also Chairman of the Board of
Norstan Communications, Inc., Norstan Network Services, Inc., Norstan Canada
Inc., Connect Computer Company and Norstan Network Services of New Hampshire,
Inc. and Chairman of the Board and President of Norstan Financial Services, Inc.
2
<PAGE>
Mr. Baszucki served as President and Chief Operating Officer of the Company from
1984 to 1987. Prior to 1984, he was Chief Executive Officer of Norstan
Communications, Inc. Mr. Baszucki is also a director of Washington Scientific
Industries, Inc. and G & K Services, Inc.
RICHARD COHEN has been Vice Chairman of the Board of the Company since 1984,
Treasurer since 1971, and Chief Financial Officer since May 1991. He is also
Vice Chairman of the Board, Treasurer and Chief Financial Officer of Norstan
Communications, Inc., Norstan Financial Services, Inc., Norstan Network
Services, Inc., Norstan Canada Inc., and Norstan Network Services of New
Hampshire, Inc. and Chief Financial Officer of Connect Computer Company.
SIDNEY R. COHEN has been Co-Chairman of the Board of the Company since June
1995 and was Chairman of the Board of the Company from 1973 to June 1995. He was
Chief Executive Officer of the Company from 1984 to 1986, and President of the
Company from 1970 to 1984.
ARNOLD LEHRMAN has been a partner in the firm of Lehrman, Flom & Co., PLLP,
Minneapolis, Minnesota, independent public accountants, since 1950.
CONNIE M. LEVI was President of the Greater Minneapolis Chamber of Commerce
from August 1988 until her retirement in 1994. She is a Trustee of the Lutheran
Brotherhood Family of Funds. She was formerly the chairperson of Hamline
University Board, Chair of the Ethics Division of the Amdahl Commission and
Majority Leader of the Minnesota House of Representatives. She is or has been a
director or member of numerous governmental, public service, and nonprofit
boards and organizations.
WINSTON E. MUNSON has been Secretary of the Company since 1971. He has been
of counsel to or a partner in the law firm of Mackall, Crounse & Moore, PLC,
Minneapolis, Minnesota, since 1960.
GERALD D. PINT is a telecom consultant. He was the Group Vice President for
Telecom Systems Group of 3M Company, a multinational diversified manufacturer,
from 1989 until his retirement from 3M in 1993. He was Group Vice President for
ElectroTelecommunications Group of 3M Company from 1982 to 1989. Mr. Pint is
also a director of Inventronics, Ltd.
STANLEY SCHWEITZER has been a shareholder or partner in the firm of
Schweitzer Rubin Karon & Bremer, PA, Minneapolis, Minnesota, independent public
accountants, since 1963.
DR. JAGDISH N. SHETH has been the Charles H. Kellstadt Professor of
Marketing in the Goizueta Business School, Emory University since 1991. Prior to
his present position, he was the Robert E. Brooker Professor of Marketing at the
University of Southern California (7 years), the Walter H. Stellner
Distinguished Professor of Marketing at the University of Illinois (15 years),
and on the faculty of Columbia University (5 years), as well as the
Massachusetts Institute of Technology (2 years). Dr. Sheth is nationally and
internationally known for his scholarly contribution in Marketing, Customer
Satisfaction, Global Competition, and Strategic Thinking.
HERBERT F. TRADER is an independent consultant specializing in international
marketing and management and telecommunication delivered computer services. He
was Vice President and Director, International Programs of William C. Norris
Institute, a nonprofit corporation which promotes the use of computer technology
to enhance education and information exchange on an international level, from
January 1991 to January 1995. From 1987 to January 1991 he was Vice President,
Training and Education Group, for Control Data Corporation, a computer company.
He was President of Business Development Group for Control Data Corporation from
1985 to 1987.
The Company knows of no arrangements or understandings between a director or
nominee and any other person pursuant to which any person has been selected as a
director or nominee. There is no family relationship between any of the
nominees, directors or executive officers of the Company except that Sidney R.
Cohen is the father of Richard Cohen.
3
<PAGE>
BOARD ACTIONS AND COMMITTEES
During the fiscal year ended April 30, 1996, the Company's Board of
Directors met or took action by written consent eleven times. All of the
directors attended at least 75 percent of the aggregate number of meetings of
the Board of Directors and the committees of the board on which he or she
served.
The Board of Directors has an Audit Committee, consisting of four
non-employee directors, Mr. Lehrman, Ms. Levi, Mr. Munson and Mr. Schweitzer.
The Audit Committee, which met once during the fiscal year ended April 30, 1996,
reviews and reports to the Board with respect to various auditing and accounting
matters, including the engagement of independent auditors, the scope of audit
procedures, the scope, frequency and results of internal audits, and the
adequacy of internal accounting controls.
The Board of Directors has a Compensation and Stock Option Committee,
consisting of three non-employee directors, Messrs. Lehrman, Munson and
Schweitzer. The Compensation and Stock Option Committee, which met two times
during the fiscal year ended April 30, 1996, awards stock options, reviews
salary levels, bonuses and other matters and makes recommendations to the Board
of Directors in connection therewith.
The Board of Directors has a Corporate Developments Committee, consisting of
Messrs. Baszucki, Richard Cohen, Pint, Sheth and Trader. The Corporate
Developments Committee reviews and evaluates present and future corporate
activities, business and marketing strategies, possible mergers and
acquisitions, and present and future business opportunities and products, and
makes recommendations to the Board of Directors in connection therewith. The
Corporate Developments Committee did not formally meet during the fiscal year
ended April 30, 1996 since the full Board of Directors reviewed strategies and
acquisitions during regular board meetings.
The Board of Directors does not have a nominating committee.
COMPENSATION OF DIRECTORS
For the last fiscal year, non-employee directors received an annual retainer
fee of $10,000 which was payable in Company stock and a bonus of $2,500.
Non-employee directors also received a per meeting fee of $1,500 for each Board
of Directors' meeting attended. Employee directors do not receive any fees for
serving on the Board or on any Board committee. Directors are entitled to
reimbursement for out-of-pocket expenses in connection with attendance at board
and committee meetings.
The Board of Directors has set the annual retainer for non-employee
directors for the period beginning with the meeting of shareholders on September
12, 1996 at $12,000, which will be payable in Company stock, pursuant to the
Restated Non-Employee Directors' Stock Plan. Non-employee directors will also
receive a per meeting fee of $1,500 for each Board of Directors' meeting
attended.
The Company has maintained a Directors' Stock Option Plan (the "Directors'
Plan") for non-employee directors since 1986. Under the Directors' Plan each
director of the Company who was not an employee of the Company or a subsidiary
received a 10,000 share option upon his or her election as a director. The
exercise price of the option is equal to the market price on the date of grant.
The Directors' Plan provides that options become exercisable in installments
over a four-year period, except that, as to non-employee directors elected at
the 1986 Annual Meeting, options were exercisable in full at the date of grant.
If a person ceases to be a director, he or she may exercise the option within
two years after ceasing to be a director to the extent it is otherwise
exercisable at the date of termination. In 1995, the Restated Non-Employee
Directors' Stock Plan ("Restated Directors' Plan") was approved by the
shareholders. The Restated Plan has provisions similar to those listed above
relating to the grant of options to non-employee directors. A total of 150,000
shares were reserved for issuance under the Restated Directors' Plan. As of July
1, 1996, options to purchase 80,000 shares were outstanding under the Restated
Directors' Plan.
4
<PAGE>
EXECUTIVE OFFICERS WHO ARE NOT DIRECTORS
Certain information concerning current executive officers of the Company who
are not directors is set forth below.
<TABLE>
<CAPTION>
EXECUTIVE
OFFICER
NAME POSITIONS WITH THE COMPANY AGE SINCE
- ---------------------------- ----------------------------------------------- --- ---------
<S> <C> <C> <C>
James J. Radabaugh Executive Vice President and General Manager of 49 1992
Area Operations of Norstan Communications,
Inc.
Joseph H. Rubin Executive Vice President of Communications 41 1996
Systems of Norstan Communications, Inc.
Roger D. Van Beusekom Executive Vice President and General Manager of 57 1996
Rolm Resale Systems and Norstan Resale
Services of Norstan Communications, Inc. and
Executive Vice President and General Manager
of Norstan Financial Services, Inc.
</TABLE>
JAMES J. RADABAUGH has been Executive Vice President and General Manager of
Area Operations of Norstan Communications, Inc. since May 1996. From May 1995 to
May 1996, he was Executive Vice President of Customer Services of Norstan
Communications, Inc. From May 1994 to May 1995, he was Executive Vice President
and Area General Manager of Norstan Canada Inc. From August 1992 to May 1994, he
was President and Chief Operating Officer of Norstan Canada Inc. From April to
August 1992, he was Executive Vice President and General Manager of Norstan
Canada Inc. From 1990 to 1992, he was Vice President of Field Support for the
Central Region of Norstan Communications, Inc. Prior to 1990, Mr. Radabaugh was
employed by ROLM Corporation in various management positions.
JOSEPH H. RUBIN has been Executive Vice President of Communications Systems
of Norstan Communications, Inc. since June, 1996. From May 1995 to June 1996, he
was Executive Vice President and Area General Manager of Norstan Canada Inc.
From January 1994 to May 1995, he was Vice President of Sales of Norstan Canada
Inc. From May 1990 to January 1994, he was Vice President and General Manager
(Wisconsin Area) of Norstan Communications, Inc.
ROGER D. VAN BEUSEKOM has been Executive Vice President and General Manager
of Rolm Resale Systems and Norstan Resale Services of Norstan Communications,
Inc. and Executive Vice President and General Manager of Norstan Financial
Services, Inc. since February 1996. From May 1994 to February 1996, he was
Executive Vice President and General Manager of Norstan Financial Services, Inc.
From August 1986 to May 1994, he was President of Norstan Financial Services,
Inc.
EXECUTIVE COMPENSATION
REPORT OF THE COMPENSATION AND STOCK OPTION COMMITTEE
The Compensation and Stock Option Committee ("Committee") of the Board of
Directors is composed entirely of non-employee directors. The Committee is
responsible for developing and making recommendations to the Board of Directors
with respect to the Company's executive compensation policies. Further, the
Committee annually reviews and makes recommendations to the Board of Directors
concerning the compensation to be paid to the executive officers who are also
directors. The base salaries and bonus formulas for Messrs. Baszucki, and
Richard Cohen were determined by the Board of Directors acting on the
recommendations of the Committee. Messrs. Baszucki and Richard Cohen annually
review and establish the base salaries and bonus formulas for all other
executive officers who are not directors of the Company.
5
<PAGE>
The components of the Company's executive compensation program which are
subject to the discretion of the Committee on an individual basis include (a)
base salaries, (b) performance based bonuses, (c) stock options, (d) restricted
stock grants and (e) other stock based awards.
The Company's executive compensation philosophy is to link executive
compensation directly to earnings performance and therefore to increases in
shareholder value. The objectives of the Company's executive compensation
program are to:
- Support the achievement of desired Company earnings performance.
- Provide compensation that enables the Company to attract and retain key
executives.
- Provide compensation opportunities that are linked to the performance of
the Company and that directly link the interests of the executives with
the interests of the shareholders.
The Company's executive officers are eligible for annual cash bonuses under
a performance bonus program. The program provides for the establishment of
various annual performance goals which, if achieved, result in the payment of
cash compensation to participants for that year over and above their base
salary. The program is intended to focus management attention on key business
goals and to reward superior performance. Goals under the program generally
include corporate performance objectives and individual performance objectives.
The target level of pretax earnings is assigned a significantly greater weight
than the aggregate weight assigned to all remaining factors. At the beginning of
the fiscal year ended April 30, 1996, performance goals for purposes of
determining annual incentive compensation were determined based on strategic and
financial measurements including a target level of pretax earnings. For fiscal
1996, the Company's executive officers were eligible to receive a specified
percentage of their base salary as a bonus payable upon achievement of
established Company, group and/or individual performance goals.
LONG-TERM COMPENSATION PROGRAM
The Norstan, Inc. 1995 Long-Term Incentive Plan (the "1995 Plan") provides
for grants of stock options, restricted stock grants, stock appreciation rights,
performance awards and other stock based awards. Through stock grants and awards
under this plan, executives will receive significant equity opportunity which
provides an incentive to build long-term stockholder value.
STOCK OPTIONS
Stock options reward and encourage effective leadership that contributes to
the Company's long-term financial success, as measured by an appreciation in its
stock price. Stock options only have value for the executives when the price of
the Company's stock appreciates in value from the date the stock options are
granted. All stockholders will benefit from such increases in the Company's
stock price.
Executives are considered for stock option grants consistent with the
Company's goal to include in total compensation a long-term equity interest for
executives. This also provides a greater opportunity for reward when long-term
performance is consistently achieved. No stock options were granted to current
executive officers during fiscal 1996, except that Messrs. Radabaugh and Rubin
received stock option grants of 10,000 shares and 5,000 shares, respectively.
Generally, stock options are granted at an exercise price equal to the fair
market value of the Company's common stock on the date of grant, have ten-year
terms, and have exercise restrictions which lapse over a five-year period. The
restricted stock awards generally have restrictions which lapse over a three to
five year period. The annual bonus and long-term incentives introduce
considerable risk to the total executive compensation package. These elements
are variable, may fluctuate significantly from year to year and are directly
tied to Company performance.
CHIEF EXECUTIVE OFFICER COMPENSATION
The salary and bonus of the Chief Executive Officer is set by and subject to
the discretion of the Committee with Board approval. The compensation for Paul
Baszucki, the Company's Co-Chairman and Chief Executive Officer, is determined
by using a process and philosophy similar to that used for
6
<PAGE>
other executive officers. The Committee considers its members' views as to
comparative compensation for like positions at other companies together with its
own assessment of Mr. Baszucki's performance and contributions to the Company,
recommending a salary and performance bonus formula for the Board of Directors'
approval. For fiscal 1996 he received a bonus of 70% of his base salary which
bonus was primarily based on achieving a target level of pretax earnings but
also included asset management and strategic goals. The Committee believes Mr.
Baszucki has managed the Company well in a challenging business climate and has
achieved significantly better results than other companies in the industry.
COMPENSATION COMMITTEE INTERLOCKS AND INSIDER PARTICIPATION
There are no interlocking relationships, as defined in the regulations of
the Securities and Exchange Commission, involving members of the Board of
Directors, or its Compensation and Stock Option Committee.
Mr. Munson is Secretary of the Company and of counsel to the law firm of
Mackall, Crounse & Moore, PLC, which provides legal services to the Company and
was paid fees for legal services performed by it.
GENERAL
The Committee has reviewed the provisions of Internal Revenue Code Section
162(m) relating to the deductibility of annual executive compensation in excess
of $1,000,000, and the proposed regulations relating to Section 162(m). The
Committee currently does not have a policy with respect to Section 162(m)
because it is unlikely that such limit will apply to compensation paid by the
Company to any of the Company's executive officers in the near future.
The purpose of this report is to inform shareholders of the responsibilities
and the philosophy of the Committee with respect to executive compensation.
Neither this report nor the Performance Graph are intended to be used for any
other purpose or to be incorporated by reference in any of the Company's past or
future filings with the Securities and Exchange Commission.
August 2, 1996 Compensation and Stock Option Committee
Arnold Lehrman, CHAIRMAN
Winston E. Munson
Stanley H. Schweitzer
EMPLOYMENT CONTRACTS AND TERMINATION OF EMPLOYMENT AND CHANGE-IN-CONTROL
ARRANGEMENTS
In April 1995, the Company entered into an employment agreement with Mr.
Baszucki. The agreement has an initial term which ends on April 30, 1998, which
is automatically extended on May 1, 1997, and on each May 1st thereafter, to a
date which is 24 months after such renewal date unless the Company gives written
notice to the contrary. The employment agreement provides for the participation
of Mr. Baszucki in the employee benefit plans and fringe benefit programs which
are from time to time maintained by the Company for its executive officers and
for certain other fringe benefits. Base salary will be continued, at the level
then in effect, for a period of 12 months if Mr. Baszucki dies during the
employment period. The base salary for the current fiscal year for Mr. Baszucki
is $308,700. The employment agreement also has provisions designed to encourage
Mr. Baszucki to continue to carry out his duties in the event of a change in
control (as hereinafter defined) of the Company. Under the agreement, if a
change in control of the Company occurs, Mr. Baszucki's employment period is
automatically extended to a date that is 36 months after the date of the change
in control. If, after a change in control, Mr. Baszucki's employment is
terminated by the Company (other than for cause) or by him within 18 months
after the change in control or by him during the term of the agreement (1)
because of certain changes in his duties, compensation, benefits or work
location, or (2) because contractual performance of his duties becomes hazardous
to his
7
<PAGE>
physical or mental health, or (3) for "good reason" (as defined in the
agreement), or if the Company terminates his employment (whether or not a change
in control has occurred) other than for cause or in case of disability, Mr.
Baszucki would receive the compensation and benefits set forth below.
In April 1995, the Company entered into an employment agreement with Mr.
Richard Cohen. The agreement has an initial term which ends on April 30, 1998,
which is automatically extended on May 1, 1997, and on each May 1st thereafter,
to a date which is 24 months after such renewal date unless the Company gives
written notice to the contrary. The employment agreement provides for
participation in the employee benefit plans and fringe benefit programs which
are from time to time maintained by the Company for its executive officers. Base
salary will be continued, at the level then in effect, for a period of 12 months
if Mr. Cohen dies during the employment period, or if the Company terminates his
employment without cause during the employment period. The base salary for the
current fiscal year for Mr. Cohen is $183,750. The employment agreement also has
provisions designed to encourage Mr. Cohen to continue to carry out his duties
in the event of a change in control (as hereinafter defined) of the Company.
Under the agreements, if a change in control of the Company occurs, Mr. Cohen's
employment period is automatically extended to a date that is 36 months after
the date of the change in control. If, after a change in control, Mr. Cohen's
employment is terminated by the Company (other than for cause) or by him within
18 months after the change in control or by him during the term of the agreement
(1) because of certain changes in his duties, compensation, benefits or work
location, or (2) because contractual performance of his duties becomes hazardous
to his physical or mental health, or (3) for "good reason" (as defined in the
agreement), or if the Company terminates his employment (whether or not a change
in control has occurred) other than for cause or in case of disability, Mr.
Cohen would receive the compensation and benefits set forth below.
If as above provided, the officer's employment is terminated as a result of
a change in control, the compensation and benefits to be received by such
officer are (1) two times his annual salary and incentive payment, (2) any
resulting damages including two times the amount of his annual benefits under
the Company's employee welfare benefit plans and perquisite programs, (3) up to
$15,000 in outplacement expenses and (4) the vesting of all shares of restricted
stock, performance awards, stock appreciation rights and stock options.
A "change in control" is deemed to occur when and if (i) any person (1)
makes a tender offer for the Company's common stock pursuant to which shares of
the Company are purchased or (2) acquires at least 20% of Company's stock or
(ii) the shareholders of the Company approve a plan of merger or consolidation
or to sell substantially all the assets of the Company or to liquidate the
Company or (iii) a majority of the Board of Directors become individuals other
than "Continuing Directors" (as defined in the agreements).
8
<PAGE>
SUMMARY COMPENSATION TABLE
The following table sets forth the cash and noncash compensation for each of
the last three fiscal years awarded to or earned by the Chief Executive Officer
of the Company and each of the four most highly compensated executive officers
of the Company as of April 30, 1996, whose total annual salary and bonus
compensation for the most recent fiscal year exceeded $100,000.
<TABLE>
<CAPTION>
ANNUAL COMPENSATION
OTHER ANNUAL
NAME AND PRINCIPAL FISCAL BONUS COMPENSATION
POSITION YEAR SALARY ($) ($)(1) ($)(2)
- ------------------------- ------ ---------- --------- ------------
<S> <C> <C> <C> <C>
Paul Baszucki 1996 $ 294,000 $ 205,800 --
Co-Chairman, CEO and 1995 $ 279,562 $ 126,755 --
Director 1994 $ 266,250 $ 197,786 --
Max A. Mayer 1996 $ 250,000 $ 175,000 --
Former President, COO 1995 $ 69,551 $ 37,713 --
and Director 1994 $ -0- $ -0- --
Richard Cohen 1996 $ 175,000 $ 122,500 --
Vice Chairman, CFO 1995 $ 164,115 $ 74,410 --
and Director 1994 $ 156,300 $ 110,565 --
Don C. Bice 1996 $ 159,000 $ 103,350 --
Executive Vice President 1995 $ 150,000 $ 67,500 --
and Area General Manager 1994 $ 141,000 $ 101,726 --
(Central States Area) of
Norstan Communications,
Inc.
James J. Radabaugh 1996 $ 130,500 $ 85,755 --
Executive Vice President 1995 $ 117,500 $ 88,125 --
and General Manager of 1994 $ 106,400 $ 70,040 --
Area Operations of
Norstan Communications,
Inc.
- --------------------------------------------------------------------------------------------------------
- --------------------------------------------------------------------------------------------------------
<CAPTION>
LONG TERM COMPENSATION
AWARDS PAYOUTS
SECURITIES
RESTRICTED UNDERLYING LTIP ALL OTHER
NAME AND PRINCIPAL STOCK OPTIONS/ PAYOUTS COMPENSATION
POSITION AWARDS($)(3)(4) SAR'S (#) ($) ($)(5)
- ------------------------- --------------- ------------ ----------- ------------
<S> <C> <C> <C> <C> <C>
Paul Baszucki $-0- -0- shs. $-0- $12,728
Co-Chairman, CEO and $-0- -0- shs. $-0- $11,916
Director $-0- -0- shs. $-0- $11,049
Max A. Mayer $-0- -0- shs. $-0- $ 222
Former President, COO $90,000 50,000 shs. $-0- $19,606(6)
and Director $-0- -0- shs. $-0- $-0-
Richard Cohen $-0- -0- shs. $-0- $ 7,002
Vice Chairman, CFO $-0- -0- shs. $-0- $ 6,695
and Director $-0- -0- shs. $-0- $ 5,829
Don C. Bice $-0- -0- shs. $-0- $10,285
Executive Vice President $-0- -0- shs. $-0- $ 9,835
and Area General Manager $-0- -0- shs. $-0- $ 9,384
(Central States Area) of
Norstan Communications,
Inc.
James J. Radabaugh $-0- 10,000 shs. $-0- $ 4,050
Executive Vice President $-0- -0- shs. $-0- $ 3,600
and General Manager of $-0- -0- shs. $-0- $ 3,148
Area Operations of
Norstan Communications,
Inc.
- -------------------------
- -------------------------
</TABLE>
(1) Reflects bonus earned during the fiscal year. For all fiscal years all or a
portion of the bonus was paid during the next fiscal year.
(2) Perquisites are excluded as their aggregate value did not meet the reporting
threshold of the lesser of $50,000 or 10% of salary plus bonus reported for
each named executive officer.
(3) The stock becomes vested in five equal annual installments. The first 20%
became vested on January 23, 1996. Vesting ceased upon termination of
employment and the unvested shares were forfeited. The officer would receive
any dividends paid on the shares. No restricted stock awards were made in
fiscal year 1996 to any named executive officer.
(4) As of April 30, 1996, Messrs. Baszucki, Mayer, Cohen, Bice, and Radabaugh
held 1,000; 4,000; 1,000; zero and zero shares of restricted common stock of
the Company, respectively, subject to risk of forfeiture which, on such
date, had market values of $27,000; $108,000; $27,000; none and none,
respectively. The aggregate restricted stock holdings for named executive
officers at the end of the fiscal year were 6,000 shares of common stock
with an aggregate market value of $162,000, based on the closing price of a
share of common stock of $27.00 on the NASDAQ National Market System at
fiscal year-end.
(5) All Other Compensation reported represents: (i) Company contributions to the
401(k) Plan of $4,050 for each executive officer except Mr. Mayer who had a
contribution of $222, and (ii) payments for executive disability insurance
as follows: Mr. Baszucki, $8,678; Mr. Cohen, $2,952; and Mr. Bice, $6,235.
(6) Includes stock award of 5,000 shares made on January 23, 1995 with a market
value of $90,000 in connection with his initial hiring.
(7) The share and per share data in the table do not reflect the two-for-one
stock split made on July 31, 1996.
9
<PAGE>
STOCK OPTIONS
The following tables provide certain information with respect to stock
options granted and stock options exercised in fiscal 1996 by the named
executive officers and the value of such officers' unexercised options at April
30, 1996.
OPTION GRANTS IN LAST FISCAL YEAR (1)
<TABLE>
<CAPTION>
INDIVIDUAL GRANTS
- ---------------------------------------------------------------------------------- POTENTIAL REALIZABLE
NUMBER OF VALUE AT ASSUMED ANNUAL
SECURITIES RATES OF STOCK PRICE
UNDERLYING % OF TOTAL APPRECIATION FOR OPTION
OPTIONS OPTIONS GRANTED EXERCISE OR TERM (4)
GRANTED TO EMPLOYEES IN BASE PRICE EXPIRATION ------------------------
NAME (#)(2) FISCAL YEAR ($/SH)(3) DATE 5% ($) 10% ($)
- ------------------------ ----------- ----------------- ----------- ----------- ----------- -----------
<S> <C> <C> <C> <C> <C> <C>
Paul Baszucki -0- -0- -0- -- -0- -0-
Max A. Mayer -0- -0- -0- -- -0- -0-
Richard Cohen -0- -0- -0- -- -0- -0-
Don C. Bice -0- -0- -0- -- -0- -0-
James J. Radabaugh 10,000 8.9% $ 23.75 6/8/05 $ 149,000 $ 379,000
</TABLE>
- ------------------------
(1) No SAR grants were made in the last fiscal year.
(2) The option becomes exercisable with respect to 20% of the shares one year
after the date of grant and an additional 20% of the shares becomes
exercisable on the same date of each of the four succeeding years.
(3) The option was granted at 100% of the fair market value on the date of
grant. The optionee may satisfy the exercise price by submitting shares
and/or cash.
(4) The dollar amounts in these columns are the result of calculations at the 5%
and 10% rates set by the SEC and are not intended to forecast future
appreciation of the Company's Common Stock.
(5) The share and per share data in this table do not reflect the two-for-one
stock split made on July 31, 1996.
AGGREGATED OPTION EXERCISES IN LAST FISCAL YEAR
AND FY-END OPTION VALUES
<TABLE>
<CAPTION>
NUMBER OF SECURITIES VALUE OF UNEXERCISED
UNDERLYING UNEXERCISED IN-THE-MONEY OPTIONS
OPTIONS AT FY-END (#)(1) AT FY-END ($)(2)
SHARES ACQUIRED ON VALUE REALIZED -------------------------- ----------------------------
NAME EXERCISE (#) ($) EXERCISABLE UNEXERCISABLE EXERCISABLE UNEXERCISABLE
- ------------------------ ------------------- --------------- ----------- ------------- ------------- -------------
<S> <C> <C> <C> <C> <C> <C>
Paul Baszucki -0- $ -0- 85,000 -0- $ 1,848,750 $ -0-
Max A. Mayer -0- $ -0- 10,000 40,000 $ 86,200 $ 344,800
Richard Cohen -0- $ -0- -0- -0- $ -0- $ -0-
Don C. Bice -0- $ -0- 40,000 -0- $ 810,000 $ -0-
James J. Radabaugh -0- $ -0- -0- 10,000 $ -0- $ 32,500
</TABLE>
- ------------------------
(1) There are no securities underlying outstanding stock appreciation rights.
(2) Calculated on the basis of the number of shares subject to such option
multiplied by the excess of the closing price of a share of common stock of
$27.00 on the NASDAQ National Market System, at fiscal year-end over the
exercise price of such option.
(3) The share and per share data in this table do not reflect the two-for-one
stock split made on July 31, 1996.
10
<PAGE>
PERFORMANCE GRAPH
The following performance graph compares cumulative total shareholder
returns on the Company's common stock over the last five fiscal years, ended
April 30, 1996, with the NASDAQ Stock Market (U.S. Companies) Index and the
NASDAQ Non-Financial Stock Index, assuming an initial investment of $100 at the
beginning of the period and the reinvestment of all dividends.
COMPARISON OF FIVE YEAR-CUMULATIVE TOTAL RETURNS
PERFORMANCE GRAPH FOR
NORSTAN, INC.
PREPARED BY THE CENTER FOR RESEARCH IN SECURITY PRICES
EDGAR REPRESENTATION OF DATA POINTS USED IN PRINTED GRAPHIC
<TABLE>
<CAPTION>
<S> <C> <C>
NORSTAN, INC.
4/30/91 100.000
5/31/91 116.667
6/28/91 119.697
7/31/91 121.212
8/30/91 121.212
9/30/91 125.758
10/31/91 139.394
11/29/91 142.424
12/31/91 154.545
1/31/92 206.061
2/28/92 187.879
3/31/92 169.697
4/30/92 143.939
5/29/92 151.515
6/30/92 136.364
7/31/92 145.455
8/31/92 166.667
9/30/92 154.545
10/30/92 145.455
11/30/92 172.727
12/31/92 181.818
1/29/93 187.879
2/26/93 203.030
3/31/93 184.848
4/30/93 169.697
5/28/93 190.909
6/30/93 166.667
7/30/93 154.545
8/31/93 159.091
9/30/93 172.727
10/29/93 196.970
11/30/93 206.061
12/31/93 203.030
1/31/94 218.182
2/28/94 203.030
3/31/94 187.879
4/29/94 196.970
5/31/94 190.909
6/30/94 212.121
7/29/94 209.091
8/31/94 234.848
9/30/94 230.303
10/31/94 242.424
11/30/94 233.333
12/30/94 212.121
1/31/95 224.242
2/28/95 232.576
3/31/95 275.758
4/28/95 272.727
5/31/95 284.848
6/30/95 293.939
7/31/95 303.030
8/31/95 309.091
9/29/95 315.151
10/31/95 303.030
11/30/95 303.030
12/29/95 306.061
1/31/96 306.061
2/29/96 309.091
3/29/96 325.000
4/30/96 327.273
Notes:
A. The lines represent monthly index levels derived from compounded daily returns that include all
dividends.
B. The indexes are reweighted daily, using the market capitalization on the previous trading day.
C. If the monthly interval, based on the fiscal year-end, is not a trading day, the preceding
trading day is used.
D. The index level for all series was set to $100.0 on 04/30/91.
<CAPTION>
<S> <C>
Nasdaq
Stock Market
(US Companies)
4/30/91 100.000
5/31/91 104.590
6/28/91 98.220
7/31/91 104.034
8/30/91 109.207
9/30/91 109.609
10/31/91 113.232
11/29/91 109.431
12/31/91 122.800
1/31/92 129.980
2/28/92 132.924
3/31/92 126.651
4/30/92 121.220
5/29/92 122.794
6/30/92 117.993
7/31/92 122.173
8/31/92 118.439
9/30/92 122.841
10/30/92 127.679
11/30/92 137.838
12/31/92 142.912
1/29/93 146.980
2/26/93 141.497
3/31/93 145.593
4/30/93 139.379
5/28/93 147.705
6/30/93 148.388
7/30/93 148.563
8/31/93 156.242
9/30/93 160.894
10/29/93 164.511
11/30/93 159.604
12/31/93 164.053
1/31/94 169.033
2/28/94 167.453
3/31/94 157.153
4/29/94 155.114
5/31/94 155.493
6/30/94 149.806
7/29/94 152.879
8/31/94 162.625
9/30/94 162.210
10/31/94 165.398
11/30/94 159.912
12/30/94 160.360
1/31/95 161.259
2/28/95 169.787
3/31/95 174.818
4/28/95 180.322
5/31/95 184.976
6/30/95 199.964
7/31/95 214.656
8/31/95 218.999
9/29/95 224.036
10/31/95 222.756
11/30/95 227.981
12/29/95 226.760
1/31/96 227.871
2/29/96 236.559
3/29/96 237.331
4/30/96 257.023
Notes:
A. The lines represent monthly index levels derived from compounded daily returns that include all
dividends.
B. The indexes are reweighted daily, using the market capitalization on the previous trading day.
C. If the monthly interval, based on the fiscal year-end, is not a trading day, the preceding
trading day is used.
D. The index level for all series was set to $100.0 on 04/30/91.
<CAPTION>
NASDAQ
Non-Financial Stocks
SIC 0100-5999,
7000-9999
US & Foreign
4/30/91 100.000
5/31/91 104.870
6/28/91 97.575
7/31/91 103.407
8/30/91 108.372
9/30/91 109.551
10/31/91 113.367
11/29/91 109.191
12/31/91 123.123
1/31/92 130.693
2/28/92 132.975
3/31/92 125.069
4/30/92 117.403
5/29/92 118.154
6/30/92 112.327
7/31/92 115.839
8/31/92 111.824
9/30/92 115.899
10/30/92 120.603
11/30/92 130.710
12/31/92 134.689
1/29/93 138.308
2/26/93 131.388
3/31/93 134.937
4/30/93 129.360
5/28/93 139.824
6/30/93 139.969
7/30/93 138.782
8/31/93 146.913
9/30/93 150.904
10/29/93 155.627
11/30/93 151.055
12/31/93 155.504
1/31/94 160.720
2/28/94 159.056
3/31/94 148.040
4/29/94 144.639
5/31/94 143.522
6/30/94 136.512
7/29/94 140.096
8/31/94 149.648
9/30/94 150.051
10/31/94 154.420
11/30/94 149.373
12/30/94 149.525
1/31/95 148.997
2/28/95 156.676
3/31/95 162.212
4/28/95 168.032
5/31/95 171.855
6/30/95 187.564
7/31/95 201.855
8/31/95 204.483
9/29/95 209.106
10/31/95 206.981
11/30/95 210.783
12/29/95 208.350
1/31/96 209.779
2/29/96 219.152
3/29/96 218.797
4/30/96 239.951
Notes:
A. The lines represent monthly index levels derived from compounded daily returns that include all
dividends.
B. The indexes are reweighted daily, using the market capitalization on the previous trading day.
C. If the monthly interval, based on the fiscal year-end, is not a trading day, the preceding
trading day is used.
D. The index level for all series was set to $100.0 on 04/30/91.
</TABLE>
11
<PAGE>
CERTAIN TRANSACTIONS
In March 1995, Sidney R. Cohen entered into a Consulting Agreement with the
Company which provides that Mr. Cohen will serve as a consultant to the Company
for a period of three years from May 1, 1995. Mr. Cohen continues to serve as
director of the Company and as Co-Chairman of the Board of Directors. The
Consulting Agreement also provides that during such period, Mr. Cohen will not
engage directly or indirectly in any business in the geographic area serviced by
the Company or its subsidiaries that is competitive with the business of the
Company or its subsidiaries. Pursuant to the Consulting Agreement, the Company
will pay Mr. Cohen a retainer of $95,000 per year and standard Non-Employee
Director's fees and provide him with office space, secretarial assistance and
the use of a Company automobile. The retainer will continue to be paid to Mr.
Cohen for the remainder of the consulting period in the event of his disability,
or to his beneficiary in the event of his death. The Consulting Agreement also
provides that, in the event of Mr. Cohen's death during the consulting period,
his beneficiaries will be paid the sum of $200,000, representing the proceeds of
certain insurance policies payable to the Company, which policies are assigned
to Mr. Cohen at the expiration of the consulting period.
Winston E. Munson, Secretary and a Director of the Company, is of counsel to
the law firm of Mackall, Crounse & Moore, PLC, counsel to the Company.
BENEFICIAL OWNERSHIP OF PRINCIPAL SHAREHOLDERS AND MANAGEMENT
The following table sets forth information as of July 1, 1996 (except as
otherwise noted), regarding the beneficial ownership of the common stock of the
Company, its only class of equity security outstanding, by each director or
nominee for director of the Company, by each current executive officer of the
Company named in the Summary Compensation Table herein, by all directors,
nominees and current executive officers as a group, and by each person
(including any "group" as that term is used in section 13(d)(3) of the
Securities Exchange Act of 1934, as amended) who is known by the Company to be
the beneficial owner of more than five percent of the common stock of the
Company:
<TABLE>
<CAPTION>
AMOUNT AND NATURE
OF
BENEFICIAL PERCENT OF
NAME AND ADDRESS OF BENEFICIAL OWNER OWNERSHIP (1) OUTSTANDING (2)
- --------------------------------------- ------------------- ----------------
<S> <C> <C>
Directors, nominees and executive
officers:
Paul Baszucki 245,148(3)(4)(5)(6) 5.4%
Richard Cohen 270,026(3)(4)(7) 6.1%
Sidney R. Cohen 85,227(4) 1.9%
Arnold Lehrman 78,122(3)(5) 1.8%
Connie M. Levi 8,600(5) *
Winston E. Munson 12,215(5) *
Gerald D. Pint 10,600(5) *
Stanley H. Schweitzer 22,850(4)(5) *
Herbert F. Trader 12,400(5) *
Dr. Jagdish N. Sheth 2,400(5) *
James J. Radabaugh 6,791(5) *
All directors, nominees and executive 736,740(3)(4)(5) 16.1%
officers as a group (13) persons,
including those named above)
</TABLE>
13
<PAGE>
<TABLE>
<CAPTION>
AMOUNT AND NATURE
OF
BENEFICIAL PERCENT OF
NAME AND ADDRESS OF BENEFICIAL OWNER OWNERSHIP (1) OUTSTANDING (2)
- --------------------------------------- ------------------- ----------------
<S> <C> <C>
Other beneficial owners:
David L. Babson & Company, Inc. 427,200(8) 9.6%
One Memorial Drive
Cambridge, MA 02142
First Bank System, Inc. 353,575(9) 8.0%
601 Second Avenue South
Minneapolis, MN 55402
Heartland Advisors, Inc. 398,500(10) 9.0%
790 North Milwaukee Street
Milwaukee, WI 53202
Perkins Capital Management, Inc. 225,715(11) 5.1%
730 East Lake Street
Wayzata, MN 55391
</TABLE>
- ------------------------
* Less than one percent
(1) Each person has sole voting and sole dispositive powers with respect to the
outstanding shares held by the indicated person, except as otherwise noted.
(2) Each figure showing the percentage of outstanding shares owned beneficially
has been calculated by treating as outstanding and owned the shares which
would be issuable within 60 days if stock options held by the indicated
person were exercised.
(3) Includes shares held by the indicated person as custodian or trustee for
others, as to which shares the indicated person has voting or dispositive
powers, as follows: Mr. Baszucki, 2,934 shares; Mr. Richard Cohen, 154,385
shares; Mr. Lehrman, 67,722 shares (which shares are also reported as
beneficially owned by Richard Cohen); all directors, nominees and executive
officers as a group, 157,319 shares.
(4) Includes shares beneficially held by members of the indicated person's
family, as to which shares the indicated person has no voting or
dispositive powers and disclaims beneficial ownership, as follows: Mr.
Baszucki, 285 shares; Mr. Richard Cohen, 26,623 shares; Mr. Sidney Cohen,
15,000 shares; Mr. Schweitzer, 450 shares; all directors, nominees and
executive officers as a group, 42,358 shares.
(5) Includes shares which would be issuable within 60 days if stock options
held by the indicated person were exercised, as follows: Mr. Baszucki,
85,000 shares; Mr. Lehrman, 10,000 shares; Ms. Levi, 8,000 shares; Mr.
Munson, 10,000 shares; Mr. Pint, 10,000 shares; Mr. Schweitzer, 10,000
shares; Mr. Trader, 10,000 shares; Dr. Sheth, 2,000 shares; Mr. Radabaugh,
2,000 shares; all directors, nominees and executive officers as a group,
147,000 shares.
(6) Mr. Baszucki's address is 250 Wakefield Road, Wayzata, Minnesota 55391.
(7) Mr. Cohen's address is 6990 Tupa Drive, Edina, Minnesota 55439.
(8) According to a Schedule 13G dated February 12, 1996, and filed with the
Securities and Exchange Commission, David L. Babson & Company, Inc. has
sole voting power with respect to 298,900 of such shares and shared voting
power with respect to 128,300 of such shares and sole dispositive power
with respect to 427,200 of such shares.
(9) According to a Schedule 13G dated February 9, 1996, and filed with the
Securities and Exchange Commission, First Bank System, Inc. has sole voting
power with respect to 353,575 shares and sole dispositive power with
respect to 347,700 shares.
14
<PAGE>
(10) According to a Schedule 13G dated February 9, 1996, and filed with the
Securities and Exchange Commission, Heartland Advisors, Inc. has sole
voting power with respect to 331,000 shares and sole dispositive power with
respect to 398,500 shares.
(11) According to a Schedule 13G dated February 1, 1996, and filed with the
Securities and Exchange Commission, Perkins Capital Management, Inc. has
sole voting power with respect to 32,000 shares and sole dispositive power
with respect to 225,715 shares.
(12) The share data in the table do not reflect the two-for-one stock split made
on July 31, 1996.
COMPLIANCE WITH SECTION 16(A)
The Company's directors, its executive officers, and any persons holding
more than 10% of the outstanding common stock are required to file reports
concerning their initial ownership of common stock and any subsequent changes in
that ownership. The Company believes that the filing requirements for the last
fiscal year were satisfied. In making this disclosure, the Company has relied
solely on written representations of its directors, executive officers and
beneficial owners of more than 10% of common stock and copies of the reports
that they have filed with the Securities and Exchange Commission.
PROPOSAL TO RATIFY THE APPOINTMENT
OF INDEPENDENT AUDITORS
The Board of Directors has appointed the firm of Arthur Andersen LLP as
independent public accountants to audit the books, records and accounts of the
Company for the fiscal year ending April 30, 1997. The firm also audited the
books, records and accounts of the Company for the fiscal year ended April 30,
1981 and for each fiscal year thereafter.
Representatives of Arthur Andersen LLP will be present at the Annual
Meeting, will have an opportunity to make a statement if they desire to do so
and will be available to respond to appropriate questions by shareholders.
All shares represented by proxies that have been properly executed and
returned will be voted in favor of the ratification of the appointment of the
independent auditors, unless other instructions are indicated thereon.
Ratification of the appointment of the independent auditors requires the
affirmative vote of a majority of the shares present in person or by proxy at
the 1996 Annual Meeting.
THE BOARD OF DIRECTORS RECOMMENDS A VOTE FOR THE RATIFICATION OF THE
APPOINTMENT OF ARTHUR ANDERSEN LLP AS INDEPENDENT AUDITORS.
PROPOSALS OF SHAREHOLDERS
Any proposal of a shareholder of the Company intended to be presented at the
Annual Meeting of shareholders in 1997 must be received at the Company's office
on or before April 18, 1997 in order to be considered for inclusion in the
Company's Proxy Statement and form of proxy relating to that meeting.
FINANCIAL AND OTHER INFORMATION
The Company's Annual Report for the fiscal year ended April 30, 1996,
including financial statements, is being sent to stockholders of record as of
the close of business on July 19, 1996 together with this Proxy Statement. The
Annual Report is not a part of the proxy solicitation materials. The Company
will furnish, without charge, a copy of its Annual Report on Form 10-K for the
fiscal year ended April 30, 1996 as filed with the Commission to any stockholder
who submits a written request to the Company's offices, Attention: Investor
Relations, 605 North Highway 169, Twelfth Floor, Plymouth, Minnesota 55441.
15
<PAGE>
OTHER MATTERS
At the date of this Proxy Statement, management knows of no other matters
which may come before the Annual Meeting. However, if any other matters properly
come before the meeting, it is the intention of the persons named in the
enclosed proxy form to vote such proxies received by the Company in accordance
with their judgment on such matters.
By Order of the Board of Directors
WINSTON E. MUNSON, SECRETARY
August 16, 1996
16
<PAGE>
PROXY
NORSTAN, INC.
THIS PROXY IS SOLICITED ON BEHALF OF THE BOARD OF DIRECTORS
The undersigned, revoking all prior proxies given by the undersigned for the
Annual Meeting of the shareholders of Norstan, Inc. to be held on Thursday,
September 12, 1996, at 2:00 P.M., at 605 North Highway 169, 11th Floor,
Plymouth, Minnesota, hereby appoints Sidney R. Cohen, Paul Baszucki, and Winston
E. Munson, and any one or more of them, as proxy or proxies, with full power of
substitution and revocation, to vote for the undersigned and in the name of the
undersigned all shares of common stock of Norstan, Inc. of the undersigned, as
if the undersigned were personally present and voting at said Annual Meeting,
and all adjournments thereof, upon the following matters:
<TABLE>
<S> <C> <C>
1. ELECTION OF DIRECTORS. Nominees: P. Baszucki, R. Cohen, S. Cohen, A. Lehrman, C. Levi, W. Munson, G. Pint, S.
Schweitzer, J. Sheth, and H. Trader.
/ / VOTE FOR all nominees listed above / / VOTE WITHHELD as to all nominees listed above.
(except as marked to the contrary below).
</TABLE>
(INSTRUCTION: To withhold authority to vote for any individual nominee write
that nominee's name in the space provided below.)
________________________________________
2. Ratification of appointment of Arthur Andersen LLP as independent auditors
for the fiscal year ending April 30, 1997.
/ / For / / Against / / Abstain
3. In their discretion the Proxies are authorized to vote upon such matters as
may properly come before the meeting.
Please mark, date, sign and mail this proxy promptly in the enclosed
envelope.
<PAGE>
This proxy when properly executed will be voted in the manner directed
herein by the undersigned shareholder. IF NO DIRECTION IS MADE, THIS PROXY WILL
BE VOTED FOR PROPOSALS 1 AND 2.
The Board of Directors recommends a vote FOR Proposals 1 and 2.
The number of shares being voted on this proxy card does not reflect the
two-for-one stock split made on July 31, 1996 since the shareholder record date
for this annual meeting is July 19, 1996.
The undersigned hereby acknowledges receipt of the Notice of the Annual
Meeting of Shareholders of Norstan, Inc. and the Proxy Statement furnished
therewith dated August 16, 1996.
Please sign your name exactly as it appears below. In the case of shares
owned in joint tenancy or as tenants in common, all should sign. Fiduciaries
should indicate their title and authority.
Dated: ________________________, 1996.
--------------------------------------
--------------------------------------
Signature
