SCHEDULE 14A
(Rule 14a-101)
INFORMATION REQUIRED IN A PROXY STATEMENT
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 that 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 Rule 14a-11(c) or Rule 14a-12
MERISEL, INC.
(Name of Registrant as Specified in Its Charter)
N/A
(Name of Person(s) Filing Proxy Statement, if other than the Registrant)
Payment of Filing Fee (Check the appropriate box): N/A
/ / $125 per Exchange Act Rules 0-11(c)(1)(ii), 14a-6(i)(1), or 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 No.:
- --------------------------------------------------------------------------------
(3) Filing Party:
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(4) Date Filed:
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<PAGE>
MERISEL, INC.
NOTICE OF ANNUAL MEETING OF STOCKHOLDERS
TO BE HELD MAY 16, 2000
TO THE STOCKHOLDERS OF MERISEL, INC.:
The Annual Meeting of Stockholders (the "Annual Meeting") of Merisel, Inc., a
Delaware corporation (the "Company"), will be held on Wednesday, May 16, 2000,
at 8:00 a.m., Los Angeles time, at the Company's headquarters located at 200
Continental Boulevard, El Segundo, California, for the following purposes as
described in the accompanying Proxy Statement:
1. To elect two Class III directors to the Board of Directors
to serve until the third succeeding annual meeting of
stockholders.
2. To transact such other business as may properly come before
the Annual Meeting or any adjournment or adjournments
thereof.
The Board of Directors has fixed March 31, 2000 as the record date for
determination of stockholders entitled to receive notice of and to vote at the
Annual Meeting and any adjournment thereof, and only record holders of Common
Stock at the close of business on that day will be entitled to vote. A copy of
the Company's 1999 Annual Report and Form 10-K, including financial statements
for the fiscal year ended December 31, 1999, is enclosed with this Notice of
Annual Meeting but is not to be considered part of the proxy soliciting
material.
All stockholders are cordially invited to attend the Annual Meeting in person.
Whether or not you expect to attend the Annual Meeting, to ensure your
representation at the Annual Meeting, please mark, sign, date and return the
enclosed proxy card as promptly as possible in the postage-prepaid envelope
enclosed for that purpose. Any stockholder attending the Annual Meeting may vote
in person even if he or she previously returned a proxy.
By Order of the Board of Directors
Karen A. Tallman
Secretary
El Segundo, California
April 4, 2000
<PAGE>
MERISEL, INC.
200 Continental Boulevard
El Segundo, California 90245
PROXY STATEMENT
GENERAL INFORMATION
This Proxy Statement is being sent on or about April 12, 2000 in connection with
the solicitation of proxies by the Board of Directors of Merisel, Inc., a
Delaware corporation (the "Company" or "Merisel"). The proxies will be voted at
the Company's Annual Meeting of Stockholders (the "Annual Meeting"), which will
be held on May 16, 2000, at 8:00 a.m., Los Angeles time, at the Company's
headquarters located at 200 Continental Boulevard, El Segundo, California, or at
any adjournment thereof, for the purposes set forth in the accompanying Notice
of Annual Meeting of Stockholders. The record date for the Annual Meeting is the
close of business on March 31, 2000 (the "Record Date"), and all holders of
record of Merisel's common stock, par value $0.01 per share (the "Common
Stock"), on the Record Date are entitled to notice of the Annual Meeting and to
vote at the Annual Meeting, or at any adjournment thereof. The Company's
principal executive offices are located at 200 Continental Boulevard, El
Segundo, California 90245, and its telephone number is (310) 615-3080.
A proxy form for use at the Annual Meeting is enclosed. Whether or not you plan
to attend the Annual Meeting in person, please date, sign and return the
enclosed proxy as promptly as possible in the postage prepaid envelope provided
in order to ensure that your shares will be voted at the Annual Meeting. Any
stockholder who returns a proxy has the power to revoke it at any time prior to
its effective use by filing an instrument revoking it or a duly executed proxy
bearing a later date with the Secretary of the Company or by attending the
Annual Meeting and voting in person. Unless contrary instructions are given, any
such proxy, if not revoked, will be voted at the Annual Meeting for the Director
nominees named herein and with regard to all other matters in the discretion of
the persons named in the accompanying form of proxy.
The only voting securities of the Company are the outstanding shares of Common
Stock. At the Record Date, 80,309,046 shares of Common Stock were outstanding
and there were 931 stockholders of record. The holders of record of a majority
of the outstanding shares of Common Stock will constitute a quorum for the
transaction of business at the Annual Meeting. As to all matters, each holder of
Common Stock is entitled to one vote for each share of Common Stock held.
Abstentions and broker non-votes are counted for purposes of determining the
presence or absence of a quorum for the transaction of business. The director
nominees who receive the greatest number of votes at the Annual Meeting will be
elected to the Board of Directors of the Company. Stockholders are not entitled
to cumulate votes. Votes against a candidate and votes withheld have no legal
effect with respect to the election of directors. In matters other than the
election of directors, abstentions are counted as votes against in tabulations
of the votes cast on proposals presented to stockholders, whereas broker
non-votes are not counted for purposes of determining whether a proposal has
been approved.
The cost of preparing, assembling, printing and mailing this Proxy Statement and
the accompanying form of proxy, and the cost of soliciting proxies relating to
the Annual Meeting, will be borne by Merisel. The Company may request banks and
brokers to solicit their customers who beneficially own Common Stock listed of
record in names of nominees, and will reimburse such banks and brokers for their
reasonable out-of-pocket expenses of such solicitation. The original
solicitation of proxies by mail may be supplemented by telephone, telegram and
personal solicitation by officers, directors and regular employees of the
Company, but no additional compensation will be paid to such individuals.
<PAGE>
PROPOSAL NO. 1
ELECTION OF DIRECTORS
The Board of Directors presently consists of six members divided into three
classes serving staggered terms, with one class of directors elected annually.
Each class consists of two directors. At the Annual Meeting, the terms of the
two present directors constituting Class III will expire. The term of the
directors in Class I extends through the next succeeding annual meeting of
stockholders, and the term of the directors in Class II extends through the
second succeeding annual meeting of stockholders. The table below indicates the
names of the directors in each class.
Class I Class II Class III
Albert J. Fitzgibbons III Bradley J. Hoecker Thomas P. Mullaney
Lawrence J. Schoenberg Dr. Arnold Miller Dwight A. Steffensen
The Board of Directors has nominated the two incumbent Class III directors named
above for election as Class III directors at the Annual Meeting. Each nominee
has consented to being named in this Proxy Statement as a nominee for election
as director and has agreed to serve as a director if elected. Each director
elected at the Annual Meeting will be elected for a term that will expire at the
third succeeding Annual Meeting of Stockholders.
If, by reason of death or other unexpected occurrence, any one or more of such
nominees should for any reason become unavailable for election (although
management knows of no reason to anticipate that this will occur), the persons
named in the accompanying form of proxy may vote for the election of such
substitute nominees as the Board of Directors may propose. The accompanying form
of proxy contains a discretionary grant of authority with respect to this
matter.
Information Regarding Nominees and the Board of Directors
The nominees for election as Class III directors and all current Class I and II
directors are listed below, together with their ages and all Company positions
and offices held by them.
Name Age Position
Dwight A. Steffensen............ 56 Chairman of the Board of
Directors, Chief Executive
Officer and President
Albert J. Fitzgibbons III....... 54 Director
Bradley J. Hoecker.............. 38 Director
Dr. Arnold Miller............... 71 Director
Thomas P. Mullaney.............. 67 Director
Lawrence J. Schoenberg.......... 67 Director
The business experience, principal occupations and employment during at least
the last five years of each of the nominees for election as Class III directors
and each of the Class I and II directors, together with their periods of service
as directors and officers of the Company, as applicable, are set forth below.
Dwight A. Steffensen. Mr. Steffensen was elected as Chief Executive Officer and
Chairman of the Board of the Company in February 1996. Mr. Steffensen was
elected President in January 2000 and also served as President from March 1998
to August 1998. Mr. Steffensen has been a member of the Board of Directors since
August 1990. From January 1985 to March 1992, Mr. Steffensen served as a
Director and Executive Vice President of Bergen Brunswig Corporation ("Bergen"),
a pharmaceuticals distributor. From April 1992 to October 1995, Mr. Steffensen
<PAGE>
served as President and Chief Operating Officer of Bergen. In January 1996, he
resigned from Bergen's Board of Directors.
Albert J. Fitzgibbons III. Mr. Fitzgibbons has been a member of the Board of
Directors since December 1997. Mr.Fitzgibbons is a Partner and a Director of
Stonington Partners, Inc. ("Stonington"), a position that he has held since
1993, and a Partner and a Director of Stonington Partners, Inc., II ("Stonington
II"). He has also been a Director of Merrill Lynch Capital Partners, Inc.
("MLCP"), a private investment firm associated with Merrill Lynch & Co.
("ML&C"), since 1988 and a Consultant to MLCP since 1994. He was a Partner of
MLCP from 1993 to 1994 and Executive Vice President of MLCP from 1988 to 1993.
Mr. Fitzgibbons was also a Managing Director of the Investment Banking Division
of ML&C from 1978 to July 1994. Mr. Fitzgibbons is also a director of Burns
International Services Corporation, Dictaphone Corporation and United Artists
Theater Circuit, Inc.
Bradley J. Hoecker. Mr. Hoecker has been a member of the Board of Directors
since December 1997. Mr. Hoecker is a Partner and Director of Stonington and a
Partner and Director of Stonington II. Prior to being named partner in 1997, Mr.
Hoecker was a Principal of Stonington since 1993. He has been a Consultant to
MLCP since 1994 and was an Associate in the Investment Banking Division of ML&C
from 1989 to 1993. From 1984 to 1987, Mr. Hoecker was employed by Bankers Trust
Company. Mr. Hoecker is also a director of Packard BioScience Company.
Dr. Arnold Miller. Dr. Miller was elected to the Board of Directors in August
1989. Since its formation in 1987, he has been President of Technology Strategy
Group, a consulting firm organized to assist businesses and government in the
fields of corporate strategy development, international technology transfer and
joint ventures, as well as business operations support. Prior to forming
Technology Strategy Group, Dr. Miller was employed at Xerox Corporation, a
computer products and information services company, for 14 years, where his most
recent position was Corporate Vice President with responsibility for worldwide
electronics operations.
Thomas P. Mullaney. Mr. Mullaney has been a member of the Board of Directors
since December 1997. Mr. Mullaney served as the President and a Director of
Merisel, Inc. (under its former name, Softsel Computer Products, Inc.) from 1985
to 1986. For the past five years, Mr. Mullaney has functioned as an investment
partner in and/or advisor to a variety of public and private businesses, none of
which are subsidiaries of or otherwise related to the Company in any material
way. In addition, Mr. Mullaney currently serves as a director of Ducommon Inc.
Lawrence J. Schoenberg. Mr. Schoenberg was elected to the Board of Directors
following the acquisition by the Company of Microamerica, Inc. ("Microamerica")
in April 1990. Mr. Schoenberg had previously served as a director of
Microamerica from 1983 to April 1990. From 1967 through 1990, Mr. Schoenberg
served as Chairman of the Board and Chief Executive Officer of AGS Computers,
Inc. ("AGS"), a computer software company. From January to December 1991, Mr.
Schoenberg served as Chairman and as a member of the executive committee of the
Board of Directors of AGS. Mr. Schoenberg retired from AGS in 1992. He is also a
director of Sungard Data Services, Inc., Government Technology Services, Inc.
and Cellular Technology Services, Inc.
Committees and Meetings of the Board of Directors
The Company's Board of Directors met eight times during 1999. Each incumbent
director attended at least 75% of the aggregate of (i) the total number of
meetings held by the Board of Directors and (ii) the total number of meetings
held by all Committees of the Board of Directors on which he served that
occurred during the portion of 1999 that such individual served on such
Committee.
The Board of Directors maintains an Audit Committee, which is currently
comprised of Dr. Miller and Messrs. Hoecker and Schoenberg. The Audit Committee
met six times in 1999. The duties of the Audit Committee include, among other
things, reviewing the Company's annual financial statements and the results of
each audit by the Company's independent accountants, consulting and meeting with
the Company's independent accountants, auditors and Chief Financial Officer and
other finance and accounting personnel concerning various matters, including the
adequacy of internal controls, reviewing potential conflict of interest
situations, where appropriate, and reporting and making recommendations to the
full Board of Directors regarding such matters.
<PAGE>
The Board of Directors maintains a Compensation Committee, which is currently
comprised of Messrs. Fitzgibbons, Mullaney and Schoenberg. The Compensation
Committee met five times in 1999. The Compensation Committee's primary purposes
are to establish policies relating to the compensation of the Company's
executive officers and other key employees, administer the Company's
compensation plans, including employee stock options plans, and consider and
make recommendations to the Board of Directors concerning other compensation
matters. The Compensation Committee is authorized to make recommendations to the
Board of Directors concerning the compensation of the Company's Chief Executive
Officer, to determine the compensation of the Company's President, Chief
Operating Officer, Chief Financial Officer and other executive officers, to
approve on an annual basis the Company's management bonus plan and to make
grants of stock options and other stock related incentive compensation awards.
The Board of Directors maintains a Nominating Committee, which is currently
comprised of Messrs. Schoenberg, Fitzgibbons and Hoecker. The purposes of the
Nominating Committee are to recommend persons for membership on the Board and to
establish criteria and procedures for the selection of new directors. There are
no procedures established to accept nominees recommended by the Company's
stockholders. The Nominating Committee did not meet during 1999.
Director Compensation
Each nonemployee director is entitled to receive an annual retainer fee of
$24,000, $1,000 for each Board of Directors meeting attended ($500 for meetings
held telephonically), $1,000 quarterly for acting as the chairman of a committee
of the Board of Directors and $500 for each committee meeting attended plus
reimbursement for travel expenses incurred in attending Board of Directors and
committee meetings. Messrs. Fitzgibbons and Hoecker have waived their rights to
receive any compensation for services as directors other than reimbursement of
travel expenses. Since the beginning of 1999, Dr. Miller has also received
$28,000 in fees for consulting services.
The Company's 1992 Stock Option Plan for Nonemployee Directors (the "Nonemployee
Director Plan") provides for annual grants of nonqualified stock options to
purchase 1,000 shares of Common Stock to each member of the Company's Board of
Directors who is not otherwise an employee or officer of the Company or any
subsidiary of the Company. No stock options were granted under the Nonemployee
Director Plan during 1997 or 1998 and in March 1998, the Board of Directors
voted to suspend the Plan. Beginning in 1998, nonemployee directors were able to
elect on a annual basis to take up to 25 percent of their annual retainer fee in
shares of Common Stock in lieu of cash, based on the market price of the Common
Stock on the first day of the quarter following each annual meeting of
stockholders.
<PAGE>
<TABLE>
<CAPTION>
Ownership Of Common Stock
The following table sets forth as of March 31, 2000 certain information
regarding beneficial ownership of Common Stock by each stockholder known by the
Company to be the beneficial owner of more than 5% of the outstanding Common
Stock as of such date, each director, each executive officer or former executive
officer of the Company named below under the caption "Executive Compensation -
Summary Compensation Table," and all directors and executive officers (including
such former executive officers) as a group. Unless otherwise indicated, the
stockholders have sole voting and investment power with respect to shares
beneficially owned by them, subject to community property laws, where
applicable.
Amount and Nature of Beneficial Percent of
Name and Address Ownership Shares Owned
---------------- --------- ------------
<S> <C> <C>
Albert J. Fitzgibbons III................... -0- (1) *
Bradley J. Hoecker.......................... -0- (1) *
Timothy N. Jenson........................... 167,883 (2)(3) *
Dr. Arnold Miller........................... 7,000 (4) *
Thomas P. Mullaney.......................... 4,042 (5) *
Phoenix Acquisition Company II, L.L.C..... 50,000,000 (6) 62.26%
767 5th Avenue, 48th Floor
New York, New York 10153
William R. Page............................. 99,410 (2)(3) *
Lawrence J. Schoenberg...................... 365,584 (4) *
Ronald S. Smith............................. 36,250 (7) *
Dwight A. Steffensen........................ 1,000,000 (8) 1.23%
James E. Illson............................. 317,624 (2)(9) *
Kristin M. Rogers........................... 2,100 (10) *
All Directors and Executive Officers........... 2,109,723 (2)(9)(11) 2.59%
as a Group (12 Persons)
</TABLE>
*Less than 1%
(1) Each of Messrs. Fitzgibbons and Hoecker is a director or partner of certain
affiliates of Phoenix Acquisition Company II, L.L.C. ("Phoenix") and,
therefore, may be deemed to beneficially own the 50,000,000 shares of
Common Stock beneficially owned by Phoenix. Each of Messrs. Fitzgibbons and
Hoecker disclaims such beneficial ownership. The address of each of
Messrs. Fitzgibbons and Hoecker is the same as that given for Phoenix.
(2) Includes shares held in the Company's 401(k) plan for the accounts of the
following individuals: Mr. Jenson- 2,483; Mr. Page - 2,610; and Mr. Illson
- 2,374.
(3) Includes 93,800 shares issuable with respect to stock options exercisable
within 60 days after March 31, 2000.
(4) Includes 5,000 shares issuable withrespect to stock options exercisable
within 60 days after March 31, 2000.
(5) Includes 2,042 shares issued in the name of Thomas P. Mullaney and Carol
Ann Mullaney, trustees of the Mullaney Family Trust.
(6) All information regarding share ownership is taken from and furnished in
reliance upon the Schedule 13D filed by Phoenix pursuant to Section 13(d)
of the Securities Exchange Act of1934. Stonington Capital Appreciation
1994 Fund, L.P. (the "Fund") is the solemember of Phoenix. Stonington
Partners, L.P. ("Stonington LP") is the general partner of the Fund, and
Stonington Partners, Inc. II ("Stonington II") is the general partner of
Stonington LP. The Fund is managed by Stonington. The following
individuals are the directors and/or officers of Stonington and
Stonington II and have shared voting and dispositive powers with respect to
the Common Stock held by Phoenix: Alexis P. Michas; James J. Burke, Jr.;
Robert F. End; Albert J. Fitzgibbons III; Bradley J. Hoecker; and
Scott M. Shaw. Stonington LP, Stonington II, Stonington and each of the
directors and officers of Stonington II and Stonington disclaim beneficial
ownership of these shares.
(7) Includes 31,250 shares issuable with respect to stock options exercisable
within 60 days after March 31, 2000.
(8) Includes 800,000 shares issuable with respect to stock options exercisable
within 60 days after March 31, 2000.
(9) Includes 315,250 shares with respect to stock options that expire in April
2000.
(10)Consists solely of shares held in the Company's 401(k) Plan.
(11)Includes 1,130,100 shares issuable with respect to stock options
exercisable within 60 days after March 31, 2000.
<PAGE>
<TABLE>
<CAPTION>
Executive Officers
Set forth in the table below are the names, ages and offices held by all
executive officers of the Company.
Name Age Position
---- --- --------
<S> <C> <C>
Dwight A. Steffensen............... 56 Chairman of the Board of Director, Chief
Executive Officer and President
Timothy N. Jenson.................. 41 Chief Financial Officer, Executive Vice
President and Assistant Secretary
William R. Page.................... 53 Senior Vice President and President, Merisel
Open Computing Alliance, Inc.
Ronald S. Smith.................... 59 Executive Vice President and President, North
American Distribution
Karen A. Tallman................... 43 Vice President, General Counsel and Secretary
</TABLE>
Executive officers of the Company are elected by and serve at the discretion of
the Board of Directors. Set forth below is a brief description of the business
experience for the previous five years of all executive officers except those
who are also directors. For information concerning the business experience of
Mr. Steffensen, see "Information Regarding Nominees and the Board of Directors"
above.
Timothy N. Jenson. Mr. Jenson joined the Company in 1993 as Vice President and
Treasurer and was elected Senior Vice President - Finance in 1998. Mr. Jenson
became Chief Financial Officer in August 1998 and was elected Executive Vice
President in January 2000. From 1989 to 1993, Mr. Jenson served as Vice
President at Citicorp North America, Inc. where he provided financial services,
banking products and advisory services to multinational corporations, including
the Company Previously, Mr. Jenson served as Vice President of Corporate Banking
at Bank of America for five years where he provided mid-size companies with
lines of credit, term loans and cash management products.
William R. Page. Mr. Page joined the Company in 1993. From 1993 to 1996 Mr. Page
held various management positions, including Vice President, VAR Channel and
Vice President, MOCA. In December 1996, Mr. Page became Vice President and
General Manager, MOCA, and in August 1999, Mr. Page was elected Senior Vice
President, MOCA. In December 1999, Mr. Page was elected to the office of
President, Merisel Open Computing Alliance, Inc. Prior to joining Merisel, Mr.
Page was employed by Hamilton/Avent Computer, a computer distributor, for twenty
years most recently as its Vice President, Services of the computer products
segment.
Ronald S. Smith. Mr. Smith joined the Company in June 1998 as President of
Merisel Canada Inc., the Company's Canadian subsidiary. In January 2000, Mr.
Smith was elected Executive Vice President and President, North American
Distribution. From October 1997 to June 1998, Mr. Smith was employed as
President and Chief Executive Officer by Dynatek & Cygnet, a CD/DVD storage
manufacturer. From November 1994 to September 1997, Mr. Smith served as
President and Chief Executive Officer of NCR Canada Ltd., a computer
manufacturer. Previously, Mr. Smith served as President of Amdahl Canada Ltd., a
manufacturer of mainframes.
Karen A. Tallman. Ms. Tallman joined the Company in 1997 as Vice President,
General Counsel and Secretary. From 1992 to 1997, Ms. Tallman was employed by CB
Commercial Real Estate Group, Inc., most recently in the positions of Vice
President, Secretary and Senior Counsel. Previously, Ms. Tallman was a corporate
attorney for nine years at the law firm of Skadden, Arps, Slate, Meagher & Flom
LLP.
<PAGE>
<TABLE>
<CAPTION>
Executive Compensation
Summary Compensation Table
The following table sets forth the cash and non-cash compensation for each of
the last three fiscal years awarded to or earned by the Company's Chief
Executive Officer, the four other most highly compensated executive officers of
the Company in 1999 and one former executive officer of the Company for whom
disclosure would have been provided had she been an executive officer of the
Company as of December 31, 1999.
Long Term
Compensation Awards(3) All Other
Name and Annual Compensation Restricted SARs/ Compensation
Principal Position Year Salary($)(1) Bonus($)(1) Stock Awards($)(2) Options(#) ($)(4)
- ------------------ ---- ------------------------ ----------------------------- ------
<S> <C> <C> <C> <C> <C> <C>
Dwight A. Steffensen 1999 505,000 -0- -0- -0- 2,478
Chairman of the Board of 1998 505,000 378,750 -0- -0- 1,802,365
Directors, Chief Executive 1997 505,000 378,750 -0- 500,000 5,760
Officer and President
Officer
Timothy N. Jenson 1999 272,115 -0- -0- -0- 4,800
Executive Vice President 1998 199,423 70,625 -0- -0- 4,800
and Chief Financial Officer1997 187,370 84,687 -0- 138,000 3,200
William R. Page 1999 175,095 31,790 42,187 -0- 4,800
Senior Vice President and 1998 152,530 34,646 -0- -0- 4,679
President, Merisel Open 1997 140,192 50,479 -0- 138,000 3,200
Computing Alliance, Inc.
Ronald S. Smith 1999 215,413 38,832 42,187 -0- -0-
Executive Vice President 1998(5) 142,548 26,999 -0- 125,000 -0-
and President, North 1997 -0- -0- -0- -0- -0-
American Distribution
James E. Illson 1999(6) 396,153 -0- -0- -0- 6,710
Former President and 1998 300,000 132,952 -0- -0- 131,510
Chief Operating Officer 1997 225,000 109,375 -0- 425,000 3,914
Kristin M. Rogers 1999(6) 267,715 -0- -0- -0- 490,307
Former Senior Vice 1998(5) 153,850 48,420 -0- 150,000 17,862
President - Products and 1997(6) 109,397 47,500 -0- -0- 61,641
Marketing
</TABLE>
(1) Portions of the salary and/or bonus earned by named executive officers may
be deferred pursuant to the Company's executive deferred compensation plan
(the "Deferred Compensation Plan"), which was adopted by the Board of
Directors in 1990. Under the Deferred Compensation Plan, executive officers
may elect on an annual basis to defer any portion of their pre-tax
compensation until retirement or termination of employment. The Company
will pay participants in the Deferred Compensation Plan, upon retirement or
termination of employment, an amount equal to the amount of deferred
compensation plus a guaranteed return at a specified rate that is no less
than a base interest rate. In addition, upon the death of a participant the
Company will pay a death benefit to a named beneficiary.
(2) On August 17, 1999 the Board of Directors approved an award of restricted
stock units to certain individuals. Such restricted stock units vest on
August 17, 2002 or earlier if certain financial targets are achieved. The
amounts listed for 1999 represent the value of the restricted stock units
at the date of grant. The aggregate number and value of the restricted
stock units held by the above named individuals as of December 31, 1999 was
as follows: William R. Page - 25,000 ($32,812.50); and Ronald S. Smith -
25,000 ($32,812.50).
(3) At December 31, 1999, the only long-term compensatory arrangement the
Company had for its executive officers was its stock-based incentive plans,
grants under which are listed in the Summary Compensation Table. On
December 22, 1997 the Board of Directors granted stock options under the
Company's 1997 Stock Award and Incentive Plan, including stock options in
exchange for previously granted employee stock options that were then
outstanding and that had an exercise price greater than the then-market
price of the Common Stock, subject to the agreement of each optionee to
cancel the outstanding options. The amounts listed for 1997 include options
for the following number of shares issued in exchange for canceled options
to the following individuals: Mr.
Steffensen - 4,000; Mr. Jenson - 27,500; and Mr. Page - 17,000.
<PAGE>
(4) Includes premiums paid by the Company on behalf of Messrs. Steffensen and
Illson for term life insurance coverage pursuant to their respective
employment agreements with the Company as follows: Mr. Steffensen - $2,478
in 1999, $2,365 in 1998 and $5,760 in 1997; and Mr. Illson - $1,910 in
1999, $1,710 in 1998 and $714 in 1997. Includes amounts contributed by the
Company to the Company's 401(k) plan as follows: Mr. Jenson - $4,800 in
1999, $4,800 in 1998 and $3,200 in 1997; Mr. Page - $4,800 in 1999, $4,679
in 1998 and $3,200 in 1997; Mr. Illson - $4,800 in 1999, $4,800 in 1998 and
$3,200 in 1997; and Ms. Rogers - $2,355 in 1998. For Messrs. Steffensen and
Illson, the amounts listed for 1998 include payments of $1,800,000 to Mr.
Steffensen and $125,000 to Mr. Illson pursuant to the terms of their
respective employment agreements with the Company, which amounts were
payable by reason of the change of control that occurred in December 1997.
For Ms. Rogers, the amount listed in 1999 includes a payment in the amount
of $250,000 payable pursuant to the terms of a change of control and
severance agreement, $150,000 in loan forgiveness and $90,307 of relocation
expenses; the amount listed for 1998 includes $15,507 of relocation
expenses; and the amount listed for 1997 includes $25,000 in loan
forgiveness and $36,641 for a related tax gross-up payment.
(5) The employment of Mr. Smith and Ms. Rogers commenced on June 22, 1998 and
May 11, 1998, respectively.
(6) The resignation of Mr. Illson was effective on January 8, 2000. The
resignations of Ms. Rogers were effective on April 1, 1997 and December 9,
1999.
Options in 1999
The following table summarizes stock option exercises during 1999 by the persons
named under "Summary Compensation Table" above and the value of the options held
by such persons at the end of 1999. No stock options were granted to any such
persons in 1999.
<TABLE>
<CAPTION>
Aggregated Option Exercises in 1999
and Value of Options at 1999 Year End
Number of Securities Value of Unexercised
Shares Underlying Unexercised In-the-Money Options at
Acquired on Options at Fiscal Year End (#) Fiscal Year End ($)(1)
----------------------
Name Exercise (#) Exercisable Unexercisable Exercisable Unexercisable
---- ------------ ----------- ------------- ----------- -------------
<S> <C> <C> <C> <C> <C>
Dwight A. Steffensen..... -0- 800,000 200,000 --- ---
Timothy N. Jenson........ -0- 93,800 56,200 --- ---
William R. Page.......... -0- 93,800 56,200 --- ---
Ronald S. Smith.......... -0- 31,250 93,750 --- ---
James E. Illson.......... -0- 315,250 184,750 --- ---
Kristin M. Rogers........ -0- 37,500 --- --- ---
- ----------
(1) The fair market value of the Common Stock as of December 31, 1999 was
$1.3125. No unexercised options had an exercise price less than such
value.
</TABLE>
<PAGE>
Compensation Committee Interlocks and Insider Participation
The members of the Compensation Committee of the Board of Directors, who are
appointed by the Board of Directors, are Messrs. Fitzgibbons, Mullaney and
Schoenberg. From May 1985 to April 1986, Mr. Mullaney served as a Director,
Chief Executive Officer and President of the Company.
Compensation Committee Report on 1999 Executive Compensation
The Compensation Committee (the "Committee") of the Board of Directors is
currently comprised of Messrs. Fitzgibbons, Mullaney and Schoenberg. The
Committee is authorized to make recommendations to the Board of Directors
concerning the compensation of the Company's Chief Executive Officer, to
determine the compensation of the Company's President, Chief Operating Officer,
Chief Financial Officer and other executive officers, to approve on an annual
basis the Company's management bonus plan and to make grants of stock options
and other stock related incentive compensation awards. In 1999, the Board of
Directors approved all of the Committee's recommendations regarding executive
compensation, as submitted. Additionally, each member of the Board of Directors
who is also an executive officer does not participate when the Board of
Directors reviews his compensation.
As required by rules designed to enhance the disclosure of Merisel's executive
compensation policies and practices, the following is the Committee's report
addressing the compensation of the Company's executive officers for 1999.
Compensation Policy. The Company's executive compensation policy is designed to
establish an appropriate relationship between executive pay and the Company's
annual performance, its long-term objectives, and its ability to attract and
retain qualified executive officers. The Committee attempts to achieve these
goals by integrating competitive annual base salaries with (a) bonuses based on
corporate performance and on the achievement of internal strategic objectives
and (b) stock options or other stock-based incentive awards through the
Company's stock option and similar plans. The Committee believes that cash
compensation in the form of salary and bonus provides Company executives with
short-term rewards for success in operations, and that long-term compensation
through the award of stock options or other stock-based awards encourages growth
in management stock ownership, which in turn leads to the expansion of
management's stake in the long-term performance and success of the Company.
Base Salary and Bonuses. The base salary levels of executive officers in 1999
were not increased as part of an across-the-board salary increase, however,
certain executives received salary increases that primarily consisted of merit
increases, increases in connection with a promotion or increases based on a
review of salaries being paid for similar positions in the industry. The
compensation of newly hired executives is generally determined based upon the
individual's previous experience and industry standards for compensation paid to
employees with comparable responsibilities.
In March 1998, the Committee approved the Merisel, Inc. 1999 Management
Incentive Plan (the "Incentive Plan"). The Incentive Plan is an annual plan that
provides for quarterly payments based on quarterly financial results, except
payments to the Chief Executive Officer, President and Chief Financial Officer
which are annual payments based on annual financial results. Payments are based
primarily on achievement of operating plan objectives, which consist of both
consolidated pre-tax net income objectives and profit contribution objectives
for each business segment. An individual's bonus may be based on one or both of
those objectives as well as on individual objectives. Payment of bonuses based
on the profit contribution of a business segment is contingent on achievement of
a minimum consolidated pre-tax net income. The Company did not achieve its
consolidated pre-tax net income objectives for any quarter during 1999.
Accordingly, individuals whose bonuses were based entirely on consolidated
pre-tax net income, which included Messrs. Steffensen, Jenson and Illson,
received no bonuses during 1999. Messrs. Page and Smith received a portion of
their target bonus amounts based on achievement of individual objectives.
<PAGE>
Stock Options. The Company has adopted a long-term incentive compensation
strategy to provide incentives and reward management's contribution to the
achievement of long-term Company performance goals, as measured by the market
value of the Common Stock. In determining the amount of option grants to an
individual, the Committee considers, among other things, the level of
responsibility, position, contribution and anticipated performance requirements
of such individual as well as prior grants to such individual and grants to
individuals in comparable positions. Because of the substantial stock option
grants made in 1997 and in 1998 to newly employed executive officers, no stock
option or other stock-based incentive awards were granted in 1999 to any
executive officers named under the caption "Executive Compensation Summary -
Compensation Table" above, other than the restricted stock unit grants to
Messrs. Page and Smith.
Compensation of Chief Executive Officer. Dwight A. Steffensen joined the Company
in February 1996 as its Chief Executive Officer. The salary earned by Mr.
Steffensen for 1999, 1998 and 1997 was $505,000, which is comparable to the
compensation package of Mr. Pickett, the Company's former Chief Executive
Officer. Mr. Steffensen's base salary was based upon Mr. Steffensen's 12 years
of experience at Bergen Brunswig Corporation and the Committee's belief that Mr.
Steffensen's experience would be instrumental in effecting the restructuring of
the Company's operational and capital structure and in helping to bring the
Company back to profitability. In addition, prior to entering into an employment
agreement with Mr. Steffensen, the Company engaged an executive compensation
consultant to conduct a study to assess the entire compensation package offered
to Mr. Steffensen and to determine if the compensation package was reasonable
and competitive with current industry standards for executives in similar
positions. In assessing Mr. Steffensen's compensation package, the executive
compensation consultant engaged by the Company reviewed the compensation of
chief executive officers of a peer group of six public companies as disclosed in
such companies' proxy statements and a published industry survey of executive
compensation in the technology industry.
Pursuant to the terms of his employment agreement with the Company, based on the
Company's financial results Mr. Steffensen was not entitled to receive any
bonuses during 1999.
Corporate Tax Deduction on Compensation. To the extent readily determinable and
as one of the factors in its consideration of compensation matters, the
Committee considers the anticipated tax treatment to the Company and to the
executives of various compensation. Some types of compensation and their
deductibility depend upon the timing of an executive's vesting or exercise of
previously granted rights. Further, interpretations of and changes in the tax
laws also affect the deductibility of compensation. To the extent reasonably
practicable and to the extent it is within the Committee's control, the
Committee intends to limit executive compensation in ordinary circumstances to
that deductible under Section 162(m) of the Internal Revenue Code of 1986. In
doing so, the Committee may utilize alternatives (such as deferring
compensation) for qualifying executive compensation for deductibility and may
rely on grandfathering provisions with respect to existing contractual
commitments.
Albert J. Fitzgibbons III
Thomas P. Mullaney
Lawrence J. Schoenberg
<PAGE>
Stock Price Performance Graph
The following graph compares the total cumulative stockholder return on the
Common Stock from December 31, 1994 to December 31, 1999 to that of (a) the
Standard & Poor's MidCap Index, an index that includes 400 companies with a
total capitalization of $945,147,400,050 billion as of December 31, 1999, and
(b) a combination, assuming investment on a weighted average basis, of the
Standard & Poor's Computer Systems Index and the Standard & Poor's Computer
Software & Services Index over the same period. The graph assumes that the value
of an investment in Common Stock and in each such index was $100 on December 31,
1994, and that all dividends have been reinvested. Cumulative total stockholder
return consists of change in stock price and cumulative dividends, assuming
dividend reinvestment.
[GRAPHIC OMITTED]
Employment and Change of Control Arrangements
In March 1999 the Company entered into a severance agreement with Mr. Jenson
which provides that if Mr. Jenson's employment by the Company terminates for any
reason other than as a result of (i) Termination for Cause (as defined in the
agreement), (ii) death or permanent disability, or (iii) Mr. Jenson's
resignation without Good Reason (as defined in the agreement), the Company shall
pay to Mr. Jenson an amount equal to his annual base salary over a period of 52
weeks in accordance with the Company's standard payroll practices. In addition,
if such amount is payable, the severance agreement requires the Company to
reimburse Mr. Jenson for any COBRA continuation payments he makes under the
Company's health plans for such 52-week period.
The Company has entered into a change of control agreement with Mr. Page which
provides that if, within one year of a change of control of the Company (as
defined in the agreement), Mr. Page's employment is terminated other than as a
result of (i) "Termination for Cause" (as defined in the agreement), (ii) his
death or permanent disability or (iii) his resignation without "Good Reason" (as
defined in the agreement), the Company will make a lump-sum payment to Mr. Page
equal to one year's base salary and reimburse Mr. Page for any COBRA
continuation payments he makes under the Company's health plans for the one year
following his termination.
In June 1998 the Company entered into a letter agreement with Mr. Smith
providing for his service as President of its Canadian subsidiary, Merisel
Canada Inc. The agreement provides that the Company shall be obligated to pay
Mr. Smith an amount equal to one year's salary and bonus at the rate then in
effect at the time of his termination of employment if (i) Mr. Smith's
employment by the Company is terminated without cause, or (ii) if there is a
material reduction in his job responsibilities from those that existed upon hire
and Mr. Smith resigns his employment within three months after notice of such
reduction.
<PAGE>
In March 1999 the Company entered into a severance agreement with Mr. Illson
which provides that if Mr. Illson's employment by the Company terminates for any
reason other than as a result of (i) Termination for Cause (as defined in the
agreement), (ii) death or permanent disability, or (iii) Mr. Illson's
resignation without Good Reason (as defined in the agreement), the Company shall
pay to Mr. Illson an amount equal to one and one-half times Mr. Illson's annual
base salary over a period of 78 weeks in accordance with the Company's standard
payroll practices. In addition, if such amount is payable, the severance
agreement requires the Company to reimburse Mr. Illson for any COBRA
continuation payments he makes under the Company's health plans for such 78-week
period. As a result of Mr. Illson's resignation on January 8, 2000, Mr. Illson
is entitled to such payments under his severance agreement.
In May 1998 the Company entered into a change of control and severance agreement
with Ms. Rogers which provides that if, within one year of a change of control
of the Company (as defined in the agreement), Ms. Rogers' employment is
terminated other than as a result of (i) "Termination for Cause" (as defined in
the agreement), (ii) her death or permanent disability or (iii) her resignation
without "Good Reason" (as defined in the agreement), or if Ms. Rogers resigns
within six months after there has been a material reduction in her job
responsibilities from those that existed immediately prior to the reduction, the
Company shall make a lump-sum payment to Ms. Rogers equal to one year's base
salary. In addition, if such amount is payable, the change of control and
severance agreement requires the Company to reimburse Ms. Rogers for any COBRA
continuation payments she makes under the Company's health plans (including a
gross-up to account for any taxes payable with respect to such reimbursement)
for the one year following her termination or resignation. In such event, the
change of control and severance agreement also requires the Company to forgive
the outstanding principal amount of plus accrued interest on the $150,000
housing loan made to Ms. Rogers in connection with her employment. As a result
of Ms. Rogers resignation on December 9, 1999, Ms. Rogers is entitled to such
payments and debt forgiveness under the change of control and severance
agreement.
Certain Relationships and Related Transactions
Merisel has entered into Indemnity Agreements with each of its directors and
executive officers, which agreements require Merisel, among other things, to
indemnify them against certain liabilities that may arise by reason of their
status or service as directors, officers, employees or agents of Merisel (other
than liabilities arising from conduct in bad faith or which is knowingly
fraudulent or deliberately dishonest), and, under certain circumstances, to
advance their expenses incurred as a result of proceedings brought against them.
The Company made a loan to Mr. Jenson in the amount of $65,000 for the sole
purpose of purchasing shares of the Company's common stock. The loan is interest
free and the entire principal amount will be forgiven on the earlier of (i) the
date the Company releases its earnings for fiscal year 1999, provided that the
Company's pre-tax net income equals at least a specified amount, and (ii) March
2, 2001. In addition, the entire principal amount of the loan will be forgiven
upon termination of Mr. Jenson's employment by the Company other than as a
result of termination for cause or resignation by Mr. Jenson without good reason
(each as defined in the severance agreement between the Company and Mr. Jenson).
The entire principal amount of the loan will be due and payable 90 days after
termination of Mr. Jenson's employment by the Company for reasons other than as
described above.
Under the terms of Ms. Rogers' employment by the Company, the Company made a
housing loan to Ms. Rogers in the amount of $150,000. The interest rate on such
loan was 7.5% per annum and accrued until paid or forgiven. See "Employment and
Change of Control Arrangements" above.
Section 16(a) Beneficial Ownership Reporting Compliance
Section 16(a) of the Exchange Act requires the Company's executive officers and
directors to file reports of ownership and changes in ownership with the
Securities and Exchange Commission and to furnish the Company with copies of all
such reports they file. Based on its review of the copies of such reports
received by it and on written representations from such persons, the Company
believes that, during 1999, all filing requirements applicable to its directors
and executive officers were complied with.
<PAGE>
RELATIONSHIP WITH
INDEPENDENT PUBLIC ACCOUNTANTS
The Company has appointed Deloitte & Touche LLP, certified public accountants,
to continue as the Company's auditors and to audit the books of account and
other records of the Company for the fiscal year ending December 31, 1999.
Deloitte & Touche LLP has audited the Company's financial statements since 1981.
A representative of that firm is expected to be present at the Annual Meeting
with the opportunity to make a statement if such representative desires to do so
and is expected to be available to respond to appropriate questions. The Company
has been advised that neither such firm, nor any of its partners or associates,
has any direct or indirect financial interest in or any connection with the
Company other than as accountants and auditors.
OTHER MATTERS
Management does not know of any other matters to be presented at the Annual
Meeting. If other matters do properly come before the Annual Meeting, it is
intended that the persons named in the proxy will vote on them in discretion.
In order to be included in the proxy statement and proxy card relating
to the Company's 2001 Annual Meeting of Stockholders, stockholder proposals must
be received at the Company's executive offices at 200 Continental Boulevard, El
Segundo, California 90245, addressed to the attention of the General Counsel, by
December 14, 2000. Any stockholder proposal submitted after February 25, 2001
will be considered filed untimely with the Company under Rule 14a-4(c)(i)
promulgated by the Securities and Exchange Commission. For proposals that are
not received in a timely manner, the proxies solicited by the Board of Directors
will confer discretionary authority to vote on any such proposal.
By Order of the Board of Directors
Karen A. Tallman
Secretary
El Segundo, California
April 4, 2000
<PAGE>
PROXY FORM
MERISEL, INC.
200 Continental Boulevard
El Segundo, California
This Proxy is Solicited on Behalf of the Board of Directors of MERISEL, INC.
The undersigned stockholder of Merisel, Inc., a Delaware corporation,
acting under the Delaware General Corporation Law, hereby constitutes and
appoints Timothy N. Jenson and Dwight A. Steffensen, and each of them, the
attorneys and proxies of the undersigned, each with the power of substitution,
to attend and act for the undersigned at the Annual Meeting of Stockholders of
said corporation to be held on May 16, 2000 8:00 a.m. at 200 Continental
Boulevard, El Segundo, California, and at any adjournments thereof, and to vote,
as follows:
The Board of Directors recommends a vote FOR all nominees listed in Proposal No.
1.
PROPOSAL NO. 1: To elect two Class III directors to the Board of Directors for
terms expiring in 2003.
/X/ FOR ALL NOMINEES LISTED BELOW / / WITHHOLD AUTHORITY TO VOTE
(EXCEPT AS INDICATED BELOW) FOR ALL NOMINEES LISTED BELOW
Thomas P. Mullaney
Dwight A. Steffensen
Instructions: To withhold authority to vote for any individual nominee write in
that nominee's name in the space provided:
Said attorneys and proxies, and each of them, shall have the powers
which the undersigned would have if acting in person. The undersigned hereby
revokes any other proxy to vote at such Meeting and hereby ratifies and confirms
all that said attorneys and proxies, and each of them, may lawfully do by virtue
hereof. Said proxies, without hereby limiting their general authority, are
specifically authorized to vote in accordance with their best judgment with
respect to matters incident to the conduct of the Meeting; matters presented at
the Meeting but which are not known to the Board of Directors at the time of the
solicitation of this Proxy; and with respect to the election of any person as a
director if a bona fide nominee for that office is named in the Proxy Statement
and such nominee is unable to serve or for good cause will not serve.
A majority of the above-named proxies present at said Meeting, either in person
or by substitute (or if only thereof shall be present and acting, then that
one), shall have and exercise all powers of said proxies hereunder. This proxy
will be voted in accordance with the choices specified by the undersigned on the
other side of this proxy. IF NO INSTRUCTIONS TO THE CONTRARY ARE INDICATED
HEREON, THIS PROXY WILL BE TREATED AS A GRANT OF AUTHORITY TO VOTE FOR THE
ELECTION OF THE NOMINEES LISTED IN PROPOSAL NO. 1.
<PAGE>
The undersigned acknowledges receipt of a copy of the Notice of Annual Meeting
and Proxy Statement relating to the Meeting and a copy of the Company's Annual
Report on Form 10-K.
Signature of Stockholder
Dated: , 2000
Signature of Stockholder
Dated: , 2000
- ------------------------------------------------
Important: In signing this proxy, please sign
your names on the signature lines in the same
way as it is stenciled on this proxy. When
signing as an attorney, executor,
administrator, trustee or guardian, please
give your full title as such.
EACH JOINT TENANT SHOULD SIGN.
- ------------------------------------------------
