<PAGE> 1
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
[X] Definitive Proxy Statement
[ ] Definitive Additional Materials
[ ] Soliciting Material Pursuant to sec.240.14a-11(c) or sec.240.14a-12
[ ] Confidential, for Use of the Commission Only (as permitted by Rule
14a-6(e)(2))
BROOKTROUT TECHNOLOGY, INC.
(Name of Registrant as Specified In Its Charter)
BROOKTROUT TECHNOLOGY, INC.
(Name of Person(s) Filing Proxy Statement)
PAYMENT OF FILING FEE (CHECK THE APPROPRIATE BOX):
[X] No fee required.
[ ] Fee computed on table below per Exchange Act Rules 14a-6(i)(4) and 0-11.
1) Title of each class of securities to which transaction applies:
2) Aggregate number of securities to which transaction applies:
3) Per unit price or other underlying value of transaction computed pursuant
to Exchange Act Rule 0-11 (Set forth the amount on which the filing fee
is calculated and state how it was determined):
4) Proposed maximum aggregate value of transaction:
5) Total fee paid:
[ ] Fee paid previously with preliminary materials.
[ ] Check box if any part of the fee is offset as provided by Exchange Act Rule
0-11(a)(2) and identify the filing for which the offsetting fee was paid
previously. Identify the previous filing by registration statement number,
or the Form or Schedule and the date of its filing.
1) Amount Previously Paid:
2) Form, Schedule or Registration Statement No.:
3) Filing Party:
4) Date Filed:
- --------------------------------------------------------------------------------
<PAGE> 2
BROOKTROUT TECHNOLOGY, INC.
NOTICE OF ANNUAL MEETING OF STOCKHOLDERS
TO BE HELD ON THURSDAY, MAY 15, 1997
NOTICE IS HEREBY GIVEN that the 1997 Annual Meeting (the "Annual Meeting")
of Stockholders of Brooktrout Technology, Inc. (the "Company") will be held on
Thursday, May 15, 1997 at 10:00 a.m., local time, at Fleet National Bank, 75
State Street, Boston, Massachusetts 02109 for the following purposes:
1. To elect two Class II Directors, each to serve for a three-year
term until the year 2000 annual meeting of stockholders and until their
respective successors are duly elected and qualified;
2. To consider and act upon a proposal to ratify and approve the
selection of Deloitte & Touche LLP as the Company's independent auditors
for the fiscal year ending December 31, 1997; and
3. To consider and act upon any other matters which may properly be
brought before the Annual Meeting and any adjournments or postponements
thereof.
Any action may be taken on the foregoing proposals at the Annual Meeting on
the date specified above, or on any date or dates to which, by original or later
adjournment, the Annual Meeting may be adjourned, or to which the Annual Meeting
may be postponed.
The Board of Directors has fixed the close of business on March 21, 1997 as
the record date for determining the stockholders entitled to notice of and to
vote at the Annual Meeting and any adjournments or postponements thereof. Only
stockholders of record of the Company's common stock, $.01 par value per share
(the "Common Stock"), at the close of business on that date will be entitled to
notice of and to vote at the Annual Meeting and at any adjournments or
postponements thereof.
You are requested to fill in and sign the enclosed form of proxy which is
solicited by the Board of Directors and to mail it promptly in the enclosed
postage-prepaid envelope. Any proxy may be revoked by delivery of a later dated
proxy. Stockholders of record who attend the Annual Meeting may vote in person,
even if they have previously delivered a signed proxy.
By Order of the Board of Directors,
DAVID W. DUEHREN
Clerk
Needham, Massachusetts
April 4, 1997
WHETHER OR NOT YOU PLAN TO ATTEND THE MEETING, PLEASE COMPLETE, SIGN, DATE
AND PROMPTLY RETURN THE ENCLOSED PROXY IN THE POSTAGE-PREPAID ENVELOPE PROVIDED.
IF YOU WISH TO VOTE YOUR SHARES IN PERSON AT THE MEETING, YOUR PROXY MAY BE
REVOKED.
<PAGE> 3
BROOKTROUT TECHNOLOGY, INC.
410 FIRST AVENUE
NEEDHAM, MASSACHUSETTS 02194
------------------------------
PROXY STATEMENT
------------------------------
FOR 1997 ANNUAL MEETING OF STOCKHOLDERS
TO BE HELD ON THURSDAY, MAY 15, 1997
April 4, 1997
This proxy statement is furnished in connection with the solicitation of
proxies by the Board of Directors of Brooktrout Technology, Inc. (the "Company")
from holders of the outstanding shares of capital stock of the Company for use
at the 1997 Annual Meeting of Stockholders of the Company to be held on
Thursday, May 15, 1997, and any adjournments or postponements thereof (the
"Annual Meeting"), for the purposes set forth in the accompanying Notice of
Annual Meeting.
This proxy statement, the accompanying Notice of Annual Meeting and the
Proxy Card are first being sent to stockholders on or about April 4, 1997. The
Board of Directors has fixed the close of business on March 21, 1997 as the
record date for the determination of stockholders entitled to notice of and to
vote at the Annual Meeting (the "Record Date"). Only stockholders of record of
the Company's common stock, par value $.01 per share (the "Common Stock"), at
the close of business on the Record Date will be entitled to notice of and to
vote at the Annual Meeting. As of the Record Date, there were 10,686,352 shares
of Common Stock outstanding and entitled to vote at the Annual Meeting. Holders
of Common Stock outstanding as of the close of business on the Record Date will
be entitled to one vote for each share.
The presence, in person or by proxy, of holders of at least a majority of
the total number of outstanding shares of Common Stock entitled to vote is
necessary to constitute a quorum for the transaction of business at the Annual
Meeting. Shares that reflect abstentions or "broker nonvotes" (i.e., shares
represented at the meeting held by brokers or nominees as to which instructions
have not been received from the beneficial owners or persons entitled to vote
such shares and, with respect to one or more but not all issues, such brokers or
nominees do not have discretionary voting power to vote such shares) will be
counted for purposes of determining whether a quorum is present for the
transaction of business at the meeting. Abstentions and broker nonvotes will
have no impact on the outcome of the vote on a particular proposal presented at
the meeting. With respect to the election of directors, votes may only be cast
in favor of or withheld from each nominee, votes that are withheld will be
excluded entirely from the vote and will have no effect.
STOCKHOLDERS OF THE COMPANY ARE REQUESTED TO COMPLETE, DATE, SIGN AND
PROMPTLY RETURN THE ACCOMPANYING PROXY CARD IN THE ENCLOSED ENVELOPE. SHARES
REPRESENTED BY A PROPERLY EXECUTED PROXY RECEIVED PRIOR TO THE VOTE AT THE
ANNUAL MEETING AND NOT REVOKED WILL BE VOTED AT THE ANNUAL MEETING AS DIRECTED
IN THE PROXY. IF A PROPERLY EXECUTED PROXY IS SUBMITTED AND NO INSTRUCTIONS ARE
GIVEN, THE PROXY WILL BE VOTED FOR (i) THE ELECTION OF THE NOMINEES FOR CLASS II
DIRECTORS OF THE COMPANY NAMED IN THIS PROXY STATEMENT; AND (ii) THE
RATIFICATION AND APPROVAL OF THE SELECTION OF DELOITTE & TOUCHE LLP AS THE
COMPANY'S INDEPENDENT AUDITORS FOR THE CURRENT FISCAL YEAR. IT IS NOT
ANTICIPATED THAT ANY MATTERS OTHER THAN THOSE SET FORTH IN THIS PROXY STATEMENT
WILL BE PRESENTED AT THE ANNUAL MEETING. IF OTHER MATTERS ARE PRESENTED, PROXIES
WILL BE VOTED IN ACCORDANCE WITH THE DISCRETION OF THE PROXY HOLDERS.
<PAGE> 4
A stockholder of record may revoke a proxy at any time before it has been
exercised by filing a written revocation with the Clerk of the Company at the
address of the Company set forth above, by filing a duly executed proxy bearing
a later date, or by appearing in person and voting by ballot at the Annual
Meeting. Any stockholder of record as of the Record Date attending the Annual
Meeting may vote in person whether or not a proxy has been previously given, but
the presence (without further action) of a stockholder at the Annual Meeting
will not constitute revocation of a previously given proxy.
The Annual Report of the Company, including financial statements for the
fiscal year ended December 31, 1996 ("Fiscal 1996"), is being mailed to
stockholders concurrently with this proxy statement. The Annual Report, however,
is not part of the proxy solicitation materials, except for certain parts of the
Annual Report which are expressly incorporated by reference herein. See
"Incorporation of Certain Documents by Reference."
PRINCIPAL STOCKHOLDERS
The following table presents information as to the persons or entities
known to the Company to be beneficial owners of more than 5% of the Common Stock
of the Company on January 31, 1997. The information in the table is given as of
January 31, 1997. Such information was provided by the person listed.
<TABLE>
<CAPTION>
SHARES
NAME AND ADDRESS BENEFICIALLY
OF BENEFICIAL OWNER OWNED(L) PERCENT
- ------------------- ------------ -------
<S> <C> <C>
George D. Bjurman & Associates............................................. 717,695 6.7%
10100 Santa Monica Boulevard
Suite 1200
Los Angeles, CA 90067
Pilgrim Baxter & Associates, Ltd. ......................................... 710,700 6.7%
11255 Drummers Lane
Suite 300
Wayne, PA 19087
</TABLE>
- ---------------
(1) Based upon Schedule 13G filed with the Securities and Exchange Commission
reporting beneficial ownership.
ELECTION OF A CLASS OF DIRECTORS
(ITEM 1 OF THE PROXY CARD)
The Board of Directors of the Company is comprised of six members and is
divided into three classes, with the Directors in each class serving for a term
of three years and until their successors are duly elected and qualified. As the
term of one class expires, a successor class is elected at each annual meeting
of stockholders.
At the Annual Meeting, two Class II Directors will be elected to serve
until the 2000 Annual Meeting and until their successors are duly elected and
qualified. The Board of Directors has nominated Patrick T. Hynes and W. Brooke
Tunstall to serve as Class II Directors (the "Nominees"). Each of the Nominees
is currently serving as a Director of the Company. The Board of Directors
anticipates that each of the Nominees will serve, if elected, as Director.
However, if any person nominated by the Board of Directors is unable to accept
election, the proxies will be voted for the election of such other person or
persons as the Board of Directors may recommend.
The affirmative vote of the holders of a plurality of the shares of Common
Stock present or represented at the Annual Meeting is required for the election
of Directors.
2
<PAGE> 5
THE BOARD OF DIRECTORS RECOMMENDS A VOTE FOR THE NOMINEES.
INFORMATION REGARDING NOMINEES AND DIRECTORS
The following table sets forth certain information with respect to the two
Nominees for election as Directors at the Annual Meeting and those continuing
Directors of the Company whose terms expire at the annual meetings of
stockholders in 1998 and 1999, based on information furnished to the Company by
each Director as of January 31, 1997.
<TABLE>
<CAPTION>
NAME AND PRINCIPAL DIRECTOR
OCCUPATION FOR PAST FIVE YEARS AGE SINCE
- ------------------------------ --- --------
<S> <C> <C>
CLASS II NOMINEES FOR ELECTION AT 1997 ANNUAL MEETING - TERM TO EXPIRE IN 2000
Patrick T. Hynes............................................................... 37 1984
Vice President of Advanced Product Engineering since January 1994 and a
Director of the Company since the Company's inception in 1984. Mr. Hynes was
Vice President of Engineering from the Company's inception to December 1993.
W. Brooke Tunstall............................................................. 75 1990
President of Brooke Tunstall Associates since January 1, 1985, and a Senior
Advisor to Mercer Management Consulting, a subsidiary of Marsh and McLennan,
Inc., from November 1987 to January 1994.
CLASS III CONTINUING DIRECTORS - TERM TO EXPIRE IN 1998
Eric R. Giler.................................................................. 41 1984
President and Director of the Company since the Company's inception in 1984
and Director of NeTegrity, Inc.
Robert G. Barrett.............................................................. 52 1990
General Partner of Battery Ventures, L.P. since 1984; Director of Marcam
Corporation, Peerless Systems Corp. and various privately-held high
technology companies.
CLASS I CONTINUING DIRECTORS - TERM TO EXPIRE IN 1999
David L. Chapman............................................................... 62 1992
President and Chief Executive Officer of NorthPoint Software Ventures, Inc.
since February 1992; from March 1990 to February 1992, General Partner and
Executive Vice President of Landmark Ventures, Inc.; from March 1988 to March
1990, President and Chief Executive Officer of Computer Power Group,
Americas; from March 1986 to March 1988, Chairman, Vice Chairman, President
and Chief Executive Officer of Cullinet Software, Inc.; and Director of
various privately-held high technology companies.
David W. Duehren............................................................... 38 1984
Vice President of Research and Development and a Director of the Company
since the Company's inception in 1984.
</TABLE>
THE BOARD OF DIRECTORS AND ITS COMMITTEES
Board of Directors. The Company has a six member Board of Directors.
Pursuant to the terms of the Company's Articles of Organization, the directors
are divided into three classes. Class II directors hold office for a term
expiring at the Annual Meeting. Class III directors hold office for a term
expiring at the annual meeting of stockholders to be held in 1998. Class I
directors hold office for a term expiring at the annual meeting of stockholders
to be held in 1999. Each director will hold office for the term to which he is
elected and until his successor is duly elected and qualified. At each annual
meeting of the stockholders of the Company, the successors to the class of
directors whose terms expire at that meeting will be elected to hold office for
a term continuing until the annual meeting of stockholders held in the third
year following the year of their election and the election and qualification of
their successors.
3
<PAGE> 6
The Board of Directors of the Company held 4 meetings during Fiscal 1996.
During Fiscal 1996, each of the Directors attended at least 75% of the total
number of meetings of the Board of Directors and of the committees of which he
was a member.
The Company has standing Audit and Compensation Committees.
Audit Committee. The members of the Audit Committee are Messrs. Barrett,
Chapman and Tunstall. The Audit Committee reviews the internal accounting
procedures of the Company and consults with and reviews the services provided by
the Company's independent auditors. During Fiscal 1996, the Audit Committee held
4 meetings.
Compensation Committee. The members of the Compensation Committee are
Messrs. Barrett, Chapman and Giler. The Compensation Committee reviews and
recommends to the Board of Directors the compensation and benefits of all of the
officers of the Company and reviews general policy matters relating to
compensation and benefits of employees of the Company. During Fiscal 1996, the
Compensation Committee of the Company held 2 meetings. The non-employee
Directors who are members of the Compensation Committee, Messrs. Barrett and
Chapman, also administer the Company's stock option and stock purchase plans.
The Board of Directors selects nominees for election as Directors of the
Company. The Board of Directors will consider a nominee for election to the
Board recommended by a stockholder of record if such recommendation is presented
on a timely basis in accordance with, and is accompanied by the information
required by the Company's By-laws. The Company does not maintain a standing
nominating committee.
DIRECTOR COMPENSATION
Directors of the Company who are also employees receive no additional
compensation for their services as directors. Each non-employee director
receives an annual director's fee of $10,000, payable quarterly. Each
non-employee director also receives $1,000 in connection with each Board of
Directors or Committee meeting attended. The Company has implemented its 1992
Stock Incentive Plan which provides that non-employee Directors who are not
stockholders who beneficially own 10% or more of the Company's Common Stock or
affiliates of such stockholders, will receive stock options according to a
specified formula.
4
<PAGE> 7
OWNERSHIP BY MANAGEMENT OF EQUITY SECURITIES
The following table shows the beneficial ownership of Common Stock,
reported to the Company as of January 31, 1997, including shares as to which a
right to acquire ownership within 60 days exists, of each Director and Nominee,
the President and the four other most highly compensated executive officers of
the Company.
<TABLE>
<CAPTION>
AMOUNT AND NATURE OF
BENEFICIAL OWNERSHIP PERCENT
NAME* OF COMMON STOCK(1)** OF CLASS
- ----- -------------------- --------
<S> <C> <C>
Robert G. Barrett.............................................. 11,624(2) +
David L. Chapman............................................... 35,666(3) +
W. Brooke Tunstall............................................. 36,779(4) +
Eric R. Giler.................................................. 431,520(5) 4.0%
David W. Duehren............................................... 474,249(6) 4.4%
Patrick T. Hynes............................................... 189,984(7) 1.8%
Stephen A. Ide................................................. 96,104(8) +
Robert C. Leahy................................................ 171,162(9) 1.6%
Jonathan J. Sirota............................................. 111,848(10) 1.0%
All Directors and executive officers as a group (9 persons).... 1,558,936(11) 13.6%
</TABLE>
- ---------------
* Except as otherwise indicated, the address of the beneficial owner is: c/o
Brooktrout Technology, Inc., 410 First Avenue, Needham, MA 02194.
** Adjusted to give effect to stock splits.
+ Less than 1%.
(1) The persons named in the table have sole voting and investment power with
respect to all shares of Common Stock shown as beneficially owned by them,
subject to the information contained in the other footnotes to this table.
(2) Includes 8,908 shares subject to options exercisable within 60 days.
(3) Includes 4,687 shares subject to options exercisable within 60 days, 11,304
shares held jointly with Mr. Chapman's wife, 4,500 shares held jointly with
Mr. Chapman's mother and Mr. Chapman's wife, and 675 shares held by Mr.
Chapman's wife, as to which 675 shares he disclaims beneficial ownership.
(4) Includes 27,654 shares subject to options exercisable within 60 days and
1,125 shares held by Mr. Tunstall's wife, as to which he disclaims
beneficial ownership.
(5) Includes 212,253 shares subject to options exercisable within 60 days,
212,317 shares held jointly with Mr. Giler's wife and 450 shares held by
Mr. Giler's minor sons, as to which 450 shares he disclaims beneficial
ownership.
(6) Includes 110,168 shares subject to options exercisable within 60 days.
(7) Includes 46,878 shares subject to options exercisable within 60 days.
(8) Includes 96,104 shares subject to options exercisable within 60 days.
(9) Includes 143,450 shares subject to options exercisable within 60 days.
5
<PAGE> 8
(10) Includes 93,750 shares subject to options exercisable within 60 days and
450 shares held by Mr. Sirota's wife, as to which shares he disclaims
beneficial ownership.
(11) See Notes 2-10 above.
EXECUTIVE COMPENSATION
Summary of Compensation in Fiscal 1996. The following table sets forth
information concerning compensation for services in all capacities awarded to,
earned by or paid to the Company's President and the four other most highly
compensated executive officers of the Company (the "Named Executives") during
Fiscal 1996 and fiscal years 1995 and 1994.
SUMMARY COMPENSATION TABLE
<TABLE>
<CAPTION>
LONG-TERM
COMPENSATION
------------
SECURITIES
ANNUAL COMPENSATION UNDERLYING
------------------------------ OPTIONS
NAME AND PRINCIPAL POSITION YEAR SALARY BONUS (#)(1)
--------------------------- ---- -------- -------- ------------
<S> <C> <C> <C> <C>
Eric R. Giler.................................... 1996 $194,000 $252,060 112,500
President 1995 185,000 124,630 --
1994 185,000 70,600 112,500
David W. Duehren................................. 1996 147,000 107,537 75,000
Vice President of Research and Development 1995 140,000 56,084 --
1994 140,000 44,200 75,000
Stephen A. Ide................................... 1996 160,000 156,276 75,000
Sr. Vice President of Sales and Marketing 1995 120,000 123,625 --
1994 120,000 96,800 75,000
Robert C. Leahy.................................. 1996 150,000 139,388 75,000
Vice President of Finance and Operations 1995 142,000 74,778 --
and Treasurer 1994 142,000 53,000 75,000
Jonathan J. Sirota............................... 1996 147,000 133,140 75,000
Vice President of Engineering 1995 140,000 56,084 45,000
1994 120,000 26,500 30,000
</TABLE>
- ---------------
(1) Adjusted to reflect stock split subsequent to grant.
Stock Options Granted in Fiscal 1996. In August 1992, the Company
implemented the 1992 Plan pursuant to which options to purchase Common Stock of
the Company may be granted to non-employee directors, officers and other key
employees of the Company. The following table sets forth the stock options
granted under the 1992 Plan during Fiscal 1996 to the Named Executives.
6
<PAGE> 9
OPTION GRANTS IN FISCAL YEAR 1996
<TABLE>
<CAPTION>
INDIVIDUAL GRANTS
-----------------------------------------------------------------------
PERCENT
NUMBER OF TOTAL
OF SHARES OPTIONS EXERCISE
UNDERLYING GRANTED TO OR BASE GRANT
OPTIONS EMPLOYEES IN PRICE EXPIRATION DATE
NAME GRANTED(#) FISCAL YEAR ($/SH) DATE VALUE(1)
- ---- ---------- ------------ -------- ---------- -----------
<S> <C> <C> <C> <C> <C>
Eric R. Giler.................... 112,500 20% $22.50 6/18/2006 $1,572,840
David W. Duehren................. 75,000 13% $22.50 6/18/2006 $1,048,560
Stephen A. Ide................... 75,000 13% $22.50 6/18/2006 $1,048,560
Robert C. Leahy.................. 75,000 13% $22.50 6/18/2006 $1,048,560
Jonathan J. Sirota............... 75,000 13% $22.50 6/18/2006 $1,048,560
</TABLE>
- ---------------
(1) The estimated grant date present value reflected in this column is
determined using the Black-Scholes pricing model. The material assumptions
and adjustments incorporated in the Black-Scholes model in estimating the
value of the options reflected above include (i) an exercise price as
indicated in the table above; (ii) options are exercised at the end of a
five year period; (iii) interest rates representing the interest rate on
U.S. Treasury securities with maturity dates of five years as of the date of
grant; and (iv) volatility of approximately 66 2/3% calculated using daily
stock prices from October 1992 to the date of grant. The ultimate value of
the options will depend on the future market price of the Common Stock,
which cannot be forecast with reasonable accuracy. The actual value, if any,
an optionee will realize upon exercise of an option will depend on the
excess of the market value of the Common Stock on the date the option is
exercised over the exercise price.
Aggregated Stock Option Exercises in Fiscal 1996 and Stock Option
Values. The following table contains information concerning the value of
unexercised stock options held by each executive officer of the Company listed
below on December 31, 1996. On December 31, 1996, the last trading day in Fiscal
1996, the last sales price of the Common Stock on the Nasdaq National Market was
$28.00 per share.
AGGREGATED OPTION EXERCISES IN
FISCAL 1996 AND FISCAL
YEAR-END 1996 OPTION VALUES
<TABLE>
<CAPTION>
NUMBER OF
SECURITIES VALUE OF
UNDERLYING UNEXERCISED
SHARES UNEXERCISED IN-THE-MONEY
ACQUIRED OPTIONS AT FISCAL OPTIONS AT FISCAL
ON YEAR-END (#) YEAR-END (#)
EXERCISE VALUE EXERCISABLE/ EXERCISABLE/
NAME (#) REALIZED UNEXERCISABLE(1) UNEXERCISABLE
---- ----------- ----------- ----------------- -----------------
<S> <C> <C> <C> <C>
Eric R. Giler................... 31,500 $796,463 212,253/84,375 4,392,097/464,063
David W. Duehren................ 45,460 $897,781 110,168/56,250 2,202,863/309,375
Stephen A. Ide.................. 33,431 $558,966 96,104/56,250 1,779,386/309,375
Robert C. Leahy................. 32,800 $830,005 143,450/56,250 3,033,261/309,375
Jonathan J. Sirota.............. 37,500 $927,647 93,750/56,250 1,720,726/309,375
</TABLE>
- ---------------
(1) Market value of underlying common stock at year-end, minus the exercise
price of the options.
7
<PAGE> 10
COMPENSATION COMMITTEE INTERLOCKS AND INSIDER PARTICIPATION
The Compensation Committee of the Board of Directors consists of Robert G.
Barrett, David L. Chapman and Eric R. Giler. Mr. Giler is the President of the
Company. Mr. Giler does not participate in actions or consideration by the
Committee with respect to his own compensation, and is not a part of the
committee (comprising the other members of the Compensation Committee) which
administers the 1992 Plan.
COMPENSATION COMMITTEE REPORT ON EXECUTIVE COMPENSATION
The Compensation Committee's executive compensation philosophy (which is
intended to apply to all senior management, including Mr. Giler) is to provide a
balanced compensation package while recognizing the Company's particular needs.
The Compensation Committee seeks to establish competitive levels of
compensation, integrate management's pay with the achievement of the Company's
performance goals, and assist the Company in attracting and retaining qualified
management. With this philosophy in mind, the Company has developed and
implemented compensation policies, plans and programs that seek to align closely
the financial interests of senior management of the Company with those of the
stockholders of the Company and to provide management additional incentive to
enhance the sales growth and profitability of the Company, and thus stockholder
value.
Members of senior management of the Company are being compensated
substantially in accordance with the terms of the Management Compensation Plan
(the "Compensation Plan"), which was established in 1991 and has been updated
annually thereafter. The three components of the Compensation Plan are base
salary, cash bonuses and incentive stock.
Base Salary. The Company sets base salary levels for senior management
each year based on a number of factors, including the status of the competitive
marketplace for such positions (including a comparison of base salaries for
comparable positions at comparable companies within the Company's industry), the
responsibilities of the position, the experience, and the required knowledge of
the individual. Base salary comparisons are based on a number of industry
compensation surveys which are available to the Compensation Committee.
Companies included in these surveys include a number of companies which are
included in the indices shown in the performance comparison on page 10, but also
include some companies which are private or are traded in markets other than
Nasdaq. The Compensation Committee selected the surveys used in the base salary
comparison on the basis of availability and general comparability of the
included companies to the Company. The Compensation Committee has attempted to
fix base salaries on a basis generally in line with base salary levels for
comparable companies.
Variable Compensation -- Cash Bonuses. The Compensation Plan establishes
criteria for awarding cash bonuses to the Company's executive officers based on
a percentage of each such officer's base salary and consists of up to three
components, weighted differently for different executives: the achievement of
Company sales goals, Company profit goals and departmental goals (collectively,
the "Bonus Goals"). In the case of Mr. Ide, his cash bonus is also based on a
percentage of the Company's gross sales. The Compensation Plan bonus levels for
1996 were established by the Compensation Committee at levels that would make
available bonuses a significant part of the total compensation package if Bonus
Goals were met, in order that the cash bonus component may act as a substantial
performance incentive. The sales and profit components of the cash bonuses are
paid quarterly; the department goal component is paid upon the achievement of
the objective, on a semiannual basis; and bonuses are paid with respect to the
sales or profit goal if the Company achieves 85% of such goal. An additional
bonus (based on a percentage of the available bonus) is paid for each percentage
point by which sales and profits exceed 100% of the Bonus Goals.
8
<PAGE> 11
Incentive Stock. During each fiscal year the non-employee directors who
are members of the Compensation Committee may consider granting senior
executives of the Company awards under the Company's 1992 Plan. Such awards are
based on various factors, including both corporate and individual performance
during the preceding year and incentives to reach certain goals during future
years. In Fiscal 1996, the Compensation Committee awarded certain stock options
to Eric R. Giler, David W. Duehren, Stephen A. Ide, Robert C. Leahy and Jonathan
J. Sirota, which options have an exercise price equal to $22.50 per share, the
closing price of the Common Stock as reported by the Nasdaq National Market on
June 19, 1996. The vesting of these shares will occur equally over a four year
period.
The non-employee directors who are members of the Compensation Committee
also administer the 1992 Stock Purchase Plan. During Fiscal 1996, Mr. Sirota was
the only Named Executive who purchased Common Stock under the 1992 Plan.
Compensation of the President. In January 1996, the Compensation Committee
(without the participation of Mr. Giler) determined the compensation of Mr.
Giler, the President of the Company (the "President"), for Fiscal 1996
substantially in accordance with the Compensation Plan, which is more
particularly described in the foregoing section of this report. The President's
base salary was fixed at a level designed to be comparable to the salary of the
presidents at similarly situated companies. The cash bonus available to be paid
to the President under the Compensation Plan was based upon and determined by
Company sales goals, profit goals and organizational goals, and consideration of
the actual financial performance of the Company relative to the Compensation
Plan and to historical performance in accordance with the rules and procedures
described above.
Compensation Committee
Robert G. Barrett
David L. Chapman
Eric R. Giler
COMPARATIVE PERFORMANCE BY THE COMPANY
The Securities and Exchange Commission requires the Company to present a
chart comparing the cumulative total shareholder return on its Common Stock with
the cumulative total shareholder return of (i) a broad equity market index and
(ii) a published industry index or peer group. Although such a chart would
normally be for a full five-year period, the Common Stock has been publicly
traded only since October 20, 1992 and, as a result, the following chart
reflects only the period during which the Common Stock has been publicly traded.
Such chart compares the Common Stock with (i) the CRSP Total Return Index for
The Nasdaq Stock Market (the "Nasdaq Index") and (ii) the Nasdaq Computer & Data
Processing Services Stocks Total Return Industry Index (the "Nasdaq Computer
Index"). The total return for each of the Company Common Stock, the Nasdaq Index
and the Nasdaq Computer Index assumes the reinvestment of dividends, although
dividends have not been declared on the Company's Common Stock. This chart
assumes an investment of $100 on October 20, 1992 in each of the Common Stock,
the stocks comprising the Nasdaq Index and the stocks comprising the Nasdaq
Computer Index. The Nasdaq Index tracks the aggregate price performance of all
domestic equity securities traded on the Nasdaq National Market and the Nasdaq
Small-Cap Market. The Company's Common Stock is traded on the Nasdaq National
Market.
Comparison of Cumulative Total Return among Brooktrout Technology, Inc.
Common Stock, the CRSP Total Return Index for The Nasdaq Stock Market and the
Nasdaq Computer & Data Processing Services Stocks Total Return Industry Index.
9
<PAGE> 12
[BROOKTROUT TECHNOLOGY, INC. PERFORMANCE CHART]
<TABLE>
<CAPTION>
- -----------------------------------------------------------------------------------------------------------
10/20/92 12/31/92 12/31/93 12/31/94 12/31/95 12/31/96
- -----------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C>
Brooktrout Technology, Inc. $100.00 $122.00 $119.00 $ 95.00 $238.00 $525.00
NASDAQ Index $100.00 $114.00 $132.00 $128.00 $180.00 $221.00
Computer & Data Processing Index $100.00 $107.00 $113.00 $137.00 $209.00 $258.00
- -----------------------------------------------------------------------------------------------------------
</TABLE>
RATIFICATION OF SELECTION OF INDEPENDENT AUDITORS
(ITEM 2 OF THE PROXY CARD)
The Board of Directors has selected, subject to ratification by the
stockholders of the Company at the Annual Meeting, the firm of Deloitte & Touche
LLP to serve as the independent auditors for the Company for the fiscal year
ending December 31, 1997. Deloitte & Touche LLP has served as the Company's
independent auditors since 1984. A representative of Deloitte & Touche LLP will
be present at the Annual Meeting, will be given the opportunity to make a
statement if he or she so desires and will be available to respond to
appropriate questions.
A majority of the votes properly cast at the meeting is required to ratify
and approve the selection of Deloitte & Touche LLP as the Company's independent
auditors for the fiscal year ending December 31, 1997.
BOARD OF DIRECTORS RECOMMENDS A VOTE FOR THIS PROPOSAL.
OTHER MATTERS
SOLICITATION OF PROXIES
The cost of solicitation of proxies in the form enclosed herewith will be
borne by the Company. In addition to the solicitation of proxies by mail, the
Directors, officers and employees of the Company may also solicit proxies
personally or by telephone without special compensation for such activities. The
Company will also request persons, firms and corporations holding shares in
their names or in the names of their nominees,
10
<PAGE> 13
which are beneficially owned by others, to send proxy materials to and obtain
proxies from such beneficial owners. The Company will reimburse such holders for
their reasonable expenses. The Company also may retain a proxy solicitation firm
to assist in soliciting proxies. The costs of retaining such a firm would depend
upon the amount and type of services rendered, but the Company does not expect
the cost to exceed $5,000.
STOCKHOLDER PROPOSALS
For a proposal of a stockholder to brought before the Company's 1998 Annual
Meeting of Stockholders, it must be received in writing at the principal
executive offices of the Company not earlier than January 29, 1998 or later than
March 30, 1998.
A stockholder proposal submitted pursuant to Exchange Act Rule 14a-8 for
inclusion in the Company's proxy statement and form of proxy for the 1998 annual
meeting of stockholders must be received by December 16, 1997. Such a proposal
must also comply with the requirements as to form and substance established by
the Securities and Exchange Commission for such a proposal to be included in the
proxy statement and form of proxy. Any such proposal should be mailed to:
Brooktrout Technology, Inc., 410 First Avenue, Needham, Massachusetts 02194,
Attn: Clerk.
OTHER MATTERS
The Board of Directors does not know of any matters other than those
described in this Proxy Statement which will be presented for action at the
Annual Meeting. If other matters are presented, proxies will be voted in
accordance with the best judgment of the proxy holders.
INCORPORATION OF CERTAIN DOCUMENTS BY REFERENCE
The Company's Annual Report on Form 10-K for the fiscal year ended December
31, 1996 previously filed with the Securities and Exchange Commission (the
"SEC") pursuant to the Exchange Act, and all other reports filed pursuant to
Section 13(a) or 15(d) of the Exchange Act since December 31, 1996, are
incorporated into this Proxy Statement by reference. The description of the
Company's Common Stock contained in the Company's Registration Statement on Form
8-A dated September 30, 1992 previously filed with the SEC pursuant to the
Exchange Act is also incorporated herein by reference.
All documents filed by the Company pursuant to Section 13(a), 13(c), 14 or
15(d) of the Exchange Act subsequent to the date of this Proxy Statement and
prior to the Shareholder Meeting to which this Proxy Statement relates shall be
deemed to be incorporated by reference herein and to be a part hereof from the
date of filing of such documents.
Any statement contained in a document incorporated or deemed to be
incorporated herein by reference shall be deemed to be modified or superseded
for purposes of this Proxy Statement to the extent that a statement contained
herein or in any subsequent filed document which also is or is deemed to be
incorporated by reference herein or in any accompanying Proxy Statement
Supplement modifies or supersedes such statement. Any such statement so modified
or superseded shall not be deemed to constitute a part of this Proxy Statement
or any supplement thereto, except as so modified or superseded.
11
<PAGE> 14
THIS PROXY STATEMENT INCORPORATES DOCUMENTS BY REFERENCE WHICH ARE NOT
PRESENTED HEREIN OR DELIVERED HEREWITH. COPIES OF ANY SUCH DOCUMENTS, OTHER THAN
EXHIBITS TO SUCH DOCUMENTS WHICH ARE NOT SPECIFICALLY INCORPORATED HEREIN BY
REFERENCE, ARE AVAILABLE WITHOUT CHARGE TO ANY PERSON, INCLUDING ANY BENEFICIAL
OWNER, TO WHOM THIS PROXY STATEMENT IS DELIVERED UPON REQUEST MADE TO INVESTOR
RELATIONS, BROOKTROUT TECHNOLOGY, INC., 410 FIRST AVENUE, NEEDHAM, MASSACHUSETTS
02194, ATTENTION: ROBERT C. LEAHY, VICE PRESIDENT OF FINANCE AND OPERATIONS,
(TELEPHONE: 617-449-4100).
REGARDLESS OF THE NUMBER OF SHARES YOU OWN, YOUR VOTE IS IMPORTANT TO THE
COMPANY. PLEASE COMPLETE, DATE, SIGN AND PROMPTLY RETURN THE ENCLOSED PROXY CARD
TODAY.
12
<PAGE> 15
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BROOKTROUT TECHNOLOGY, INC.
PROXY FOR ANNUAL MEETING OF STOCKHOLDERS -- MAY 15, 1997
The undersigned hereby constitutes and appoints Eric R. Giler and Robert C.
Leahy, and each of them, as Proxies of the undersigned, with full power of
substitution, and authorizes each of them to represent and to vote all shares of
Common Stock of Brooktrout Technology, Inc. (the "Company") held by the
undersigned as of the close of business on March 21, 1997, at the Annual Meeting
of Stockholders to be held at Fleet National Bank, 75 State Street, Eighth Floor
Conference Center, Boston, Massachusetts on Thursday, May 15, 1997, at 10:00
a.m., local time, and at any adjournments or postponements thereof.
When properly executed, this proxy will be voted in the manner directed
herein by the undersigned stockholder(s) and if not direction is given, this
proxy will be voted for the election of all the nominees listed in Proposal 1
and for the item described in Proposal 2 and at the Proxies' discretion upon
such other business as may properly come before the meeting. The Board of
Directors recommends a vote "FOR" all nominees. A stockholder wishing to vote in
accordance with the Board of Directors' recommendations need only sign and date
this proxy and return it in the envelope provided.
PLEASE MARK WITH AN X IN BLUE OR BLACK INK.
-
1. Proposal to elect the following persons as Class II Directors: Patrick T.
Hynes and W. Brooke Tunstall.
[ ] FOR all nominees [ ] WITHHELD from all nominees
FOR, except vote withheld from the following nominee [ ]
----------------------
2. Proposal to ratify and approve the selection of Deloitte & Touche LLP as the
independent auditors of the Company for the fiscal year ending December 31,
1997.
FOR [ ] AGAINST [ ] ABSTAIN [ ]
- -------------------------------------------------------------------------------
- -------------------------------------------------------------------------------
The undersigned hereby acknowledge(s) receipt of a copy of the accompanying
Notice of Annual Meeting of Stockholders, the Proxy Statement with respect
thereto and the Company's 1996 Annual Report to Stockholders, and hereby
revoke(s) any proxy or proxies heretofore given. This proxy may be revoked at
any time before it is executed.
(Please sign name exactly as shown. Where there is more than one holder, each
should sign the proxy. When signing as an attorney, administrator, executor,
guardian or trustee, please add your title as such. If executed by a
corporation, the proxy should be signed by a duly authorized person, stating his
or her title or authority.)
Dated:, 1997 ---------------------------------------------------
---------------------------------------------------
---------------------------------------------------
Signature(s) of Stockholder(s)
THIS PROXY IS SOLICITED ON BEHALF OF THE BOARD OF DIRECTORS
- -------------------------------------------------------------------------------
