<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:
<TABLE>
<S> <C>
/ / Preliminary Proxy Statement / / Confidential, for Use of the Commission
Only (as permitted by Rule 14a-6(e)(2))
/X/ Definitive Proxy Statement
/ / Definitive Additional Materials
/ / Soliciting Material Pursuant to sec.240.14a-11(c) or sec.240.14a-12
</TABLE>
EDMARK CORPORATION
- --------------------------------------------------------------------------------
(Name of Registrant as Specified In Its Charter)
- --------------------------------------------------------------------------------
(Name of Person(s) Filing Proxy Statement, if other than the Registrant)
Payment of Filing Fee (Check the appropriate box):
/X/ $125 per Exchange Act Rules 0-11(c)(1)(ii), or 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 Statement No.:
(3) Filing Party:
(4) Date Filed:
<PAGE> 2
[EDMARK LOGO]
6727 185th Ave. NE - P.O. Box 97021
Redmond, WA 98073-9721
206.556.8400 - 800.426.0856
September 11, 1996
Dear Shareholder,
The Board of Directors and Management of Edmark Corporation cordially invite you
to attend the Annual Meeting of Shareholders. The meeting will be held on
Wednesday, October 23, 1996, at 2:00 p.m. at the Woodmark Hotel (Lake Washington
Room), 1200 Carillon Point, Kirkland, Washington. Directions are included on the
front inside cover of this Proxy Statement.
In addition to electing directors and ratifying the Company's appointment of
auditors, there will also be a report on the progress of the Company and an
opportunity to ask questions of general interest to you as a Shareholder. Your
copy of the Annual Report for the 1996 fiscal year is enclosed.
YOUR VOTE IS VERY IMPORTANT. Therefore, whether or not you plan to attend the
meeting in person, please sign and return the enclosed Proxy in the envelope
provided. If you attend the meeting and desire to vote in person, you may do so
even though you have previously sent a Proxy.
Sincerely,
/s/ Sally G. Narodick
Sally G. Narodick
Chairman and Chief Executive Officer
DIRECTIONS ON NEXT PAGE.
<PAGE> 3
DIRECTIONS TO THE WOODMARK HOTEL
[GRAPHIC]
From Sea-Tac International Airport or Portland: Take I-5 north to Highway 405.
Continue north to Highway 520. Take Highway 520 west toward Seattle, Exit 14.
Merge right onto 108th Avenue. Turn left onto Northup Way. Turn right onto Lake
Washington Boulevard N.E. From Lake Washington Boulevard N.E., continue to
second stoplight (Lakeview Drive). Turn left into Carillon Point. Continue down
the double drive. The hotel is on the right.
From Bellevue: Take Bellevue Way north. Continue onto Lake Washington Boulevard
N.E. From Lake Washington Boulevard N.E., continue to second stoplight (Lakeview
Drive). Turn left into Carillon Point. Continue down the double drive. The hotel
is on the right.
From Seattle: Take Highway 520 east to Kirkland, exit Highway 908 east. Turn
north onto Lake Washington Boulevard N.E. From Lake Washington Boulevard N.E.,
continue to second stoplight (Lakeview Drive). Turn left into Carillon Point.
Continue down the double drive. The hotel is on the right.
Two hours of free parking are available in the parking lot in the Carillon Point
complex.
<PAGE> 4
[EDMARK LOGO]
NOTICE OF ANNUAL MEETING OF SHAREHOLDERS
TO BE HELD ON WEDNESDAY, OCTOBER 23, 1996
TO THE SHAREHOLDERS OF
EDMARK CORPORATION:
Notice is hereby given that the Annual Meeting of Shareholders of Edmark
Corporation (the "Company") will be held on Wednesday, October 23, 1996, at 2:00
p.m. at the Woodmark Hotel, 1200 Carillon Point, Kirkland, Washington, for the
following purposes:
1. To elect nine directors to hold office until the next annual meeting
of shareholders and until their successors are duly elected and
qualified;
2. To ratify the appointment of independent auditors for the Company; and
3. To transact any other business which may properly come before the
meeting or any adjournment thereof.
Holders of Common Stock at the close of business on August 30, 1996, are
entitled to notice of, and to vote at, the meeting. Shareholders are cordially
invited to attend the meeting in person.
By Order of the Board of Directors,
/s/ Paul N. Bialek
Paul N. Bialek
Secretary
EDMARK CORPORATION
6727 - 185th Avenue N.E.
Redmond, Washington 98052
September 11, 1996
IMPORTANT: Please fill in, date, sign and return the enclosed Proxy in the
postage-paid envelope to ensure that your shares are represented at the meeting.
If you attend the meeting, you may vote in person, if you wish to do so, even
though you have previously sent in your Proxy.
Proxy Statement - 1
<PAGE> 5
[EDMARK LOGO]
Edmark Corporation
PROXY STATEMENT
INFORMATION CONCERNING SOLICITATION AND VOTING
GENERAL
The enclosed Proxy is solicited by the Board of Directors of the Company for use
at the Annual Meeting of Shareholders to be held on October 23, 1996, and at any
adjournment or adjournments thereof (the "Annual Meeting"). The Company first
mailed this Proxy Statement to Shareholders on or about September 11, 1996.
RECORD DATE AND OUTSTANDING SHARES
Only Shareholders of record on the books of the Company at the close of business
on August 30, 1996, will be entitled to notice of, and to vote at, the Annual
Meeting. On that date there were issued and outstanding 6,626,672 shares of
Common Stock.
SOLICITATION AND REVOCABILITY OF PROXIES
Proxies may be solicited by officers, directors and regular supervisory
employees of the Company, none of whom will receive any additional compensation
for their services. Solicitation of proxies may be made personally or by mail,
telephone, telecopy or messenger. All costs of solicitation of proxies will be
paid by the Company.
Any Shareholder granting a proxy has the power to revoke it at any time before
it is exercised. A proxy may be revoked either by (i) filing with the Secretary
of the Company prior to the Annual Meeting, at the Company's executive offices,
either a written revocation or duly executed proxy bearing a later date, or (ii)
attending the Annual Meeting and voting in person, regardless of whether a proxy
has previously been given. Attendance at the Annual Meeting will not revoke a
Shareholder's proxy unless the Shareholder votes in person.
QUORUM AND VOTING
Under Washington law and the Company's Articles of Incorporation, a quorum
consisting of a majority of the shares eligible to vote must be represented in
person or by proxy to elect directors and to transact any other business that
may properly come before the meeting. Generally, action on any matter, other
than the election of directors, is approved if the votes cast in favor of the
action exceed the votes cast against it. Abstention from voting or nonvoting by
brokers will have no effect since such actions do not represent votes cast by
Shareholders. In any election of directors, the nominees elected are the nine
individuals receiving the greatest number of votes cast by the shares entitled
to vote. Any action other than a vote for a nominee will have the effect of
voting against the nominee.
If the accompanying Proxy is properly executed and returned, the shares
represented thereby will be voted in accordance with the instructions given. In
the absence of instructions to the contrary, the shares will be voted in
accordance with the Board of Directors' recommendations. The Company is not
aware, as of the date hereof, of any matters to be voted upon at the Annual
Meeting other than those stated in this Proxy Statement and the accompanying
Notice of Annual Meeting of Shareholders.
Proxy Statement - 2
<PAGE> 6
SECURITY OWNERSHIP OF CERTAIN
BENEFICIAL OWNERS AND MANAGEMENT
The following table sets forth, as of August 30, 1996, certain information with
respect to the beneficial ownership of the Company's Common Stock by (i) each
person known by the Company to own beneficially more than 5% of the Common
Stock, (ii) each of the Company's directors, (iii) certain of the Company's
executive officers and (iv) all directors and executive officers as a group.
Except as otherwise noted, the named beneficial owner has sole voting and
investment power.
<TABLE>
<CAPTION>
Shares Percentage
Beneficially of
Name Owned Class
- ------------------------------------------ ------------ ----------
<S> <C> <C>
FMR Corp.(1) 689,250 10.4%
82 Devonshire Street
Boston, MA 02109
Douglas J. Mackenzie(2) 450,852 6.8%
Kleiner Perkins Caufield & Byers
2750 Sand Hill Road
Menlo Park, CA 94025
Frances M. Conley(3) 409,500 6.2%
Roanoke Investors' Limited Partnership
c/o Roanoke Capital, Ltd.
1111 Third Avenue, Suite 2220
Seattle, WA 98101
Richard S. Thorp(4) 383,987 5.8%
c/o Supertronix, Inc.
14624 - 4th South
Seattle, WA 98168
Keystone Investment Management Company(5) 375,000 5.7%
200 Berkeley Street
Boston, MA 02116
Sally G. Narodick(6) 240,346 3.5%
Donna G. Stanger(7) 99,750 1.5%
W. Hunter Simpson(8) 41,360 *
Timothy Mott(9) 40,377 *
Daniel P. Vetras(10) 31,125 *
Paul N. Bialek(11) 28,500 *
Harvey N. Gillis(12) 17,000 *
Allen D. Glenn(13) 9,900 *
Allan Epstein(14) 9,500 *
All directors and executive officers
as a group (13 persons)(15) 1,802,946 25.4%
- ----------
</TABLE>
* Less than 1%.
(1) Based on Schedule 13 G filed by FMR Corp. with the SEC and dated June 7,
1996, FMR beneficially owns (a) through its wholly-owned subsidiary,
Fidelity Management & Research Company ("Fidelity"), as advisor to
certain investment companies, 272,050 shares of the Company's Common
Stock as to which FMR has dispositive but not voting power, and (b)
through another controlled entity, Fidelity Management Trust Company
("FMTC"), as a managing agent, 417,200 shares of the Company's Common
Stock as to which FMR has dispositive and voting power.
Proxy Statement - 3
<PAGE> 7
(2) Includes 387,566 shares of Common Stock held by Kleiner Perkins Caufield
& Byers VI, L.P. ("KPCB") and 59,454 shares of Common Stock held by KPCB
VI Founders Fund, L.P. ("Founders"). The general partner of both KPCB and
Founders is KPCB VI Associates, L.P. ("Associates"). Mr. Mackenzie, a
director of the Company, has dispositive and voting power over the shares
of Company Common Stock held by KPCB and Founders pursuant to consent
resolutions adopted by Associates on November 13, 1995. Mr. Mackenzie
disclaims beneficial ownership of the shares that exceed his pro rata
interest in KPCB and Founders. Also includes 2,000 shares issuable upon
exercise of options exercisable within 60 days of August 30, 1996.
(3) Includes 396,000 shares held of record by Roanoke Investors' Limited
Partnership ("Roanoke"). Ms. Conley, a director of the Company, is a
shareholder, director and principal of Roanoke Capital, Ltd. ("Roanoke
Capital"), the general partner of Roanoke. The only other shareholder,
director and principal of Roanoke Capital is Gerald R. Conley, Ms.
Conley's husband. Ms. Conley disclaims beneficial ownership of these
shares that exceed Roanoke Capital's interest in Roanoke. Also includes
2,000 shares issuable upon exercise of options exercisable within 60 days
of August 30, 1996.
(4) Includes 500 shares held by Mr. Thorp's wife. Mr. Thorp disclaims
beneficial ownership of those shares. Also includes 2,000 shares issuable
upon exercise of options exercisable within 60 days of August 30, 1996.
(5) Based on Schedule 13 G filed by Keystone Investment Management Company
("Keystone") with the SEC and dated February 14, 1996, certain Keystone
investment managers are considered beneficial owners in the aggregate of
375,000 shares of the Company's Common Stock.
(6) Includes 230,625 shares issuable upon exercise of options exercisable
within 60 days of August 30, 1996.
(7) Includes 3,000 shares held by Ms. Stanger's children. Ms. Stanger
disclaims beneficial ownership of those shares. Also includes 93,750
shares issuable upon exercise of options exercisable within 60 days of
August 30, 1996.
(8) Includes 3,000 shares held by Mr. Simpson's wife. Mr. Simpson disclaims
beneficial ownership of those shares. Also includes 17,000 shares
issuable upon exercise of options exercisable within 60 days of August
30, 1996.
(9) All of these shares are held of record by Ironwood Capital ("Ironwood").
Mr. Mott, a director of the Company, is a general partner of Ironwood.
Mr. Mott disclaims beneficial ownership of the shares that exceed his pro
rata interest in Ironwood. Also includes 2,000 shares issuable upon
exercise of options exercisable within 60 days of August 30, 1996.
(10) Represents 31,125 shares issuable upon exercise of options exercisable
within 60 days of August 30, 1996.
(11) Represents 28,500 shares issuable upon exercise of options exercisable
within 60 days of August 30, 1996.
(12) Includes 5,750 shares issuable upon exercise of options exercisable
within 60 days of August 30, 1996.
(13) Includes 8,000 shares issuable upon exercise of options exercisable
within 60 days of August 30, 1996.
(14) Represents 9,500 shares issuable upon exercise of options exercisable
within 60 days of August 30, 1996.
(15) Includes 473,000 shares issuable upon exercise of options exercisable
within 60 days of August 30, 1996.
Proxy Statement - 4
<PAGE> 8
COMPLIANCE WITH SECTION 16(a)
OF THE SECURITIES EXCHANGE ACT OF 1934
Based solely on its review of copies of reports made pursuant to Section 16(a)
of the Securities Exchange Act of 1934, as amended (the "Exchange Act"), and
written representations that no other reports were required, the Company
believes that during the fiscal year ended June 30, 1996, all Section 16(a)
filing requirements applicable to its officers, directors and 10 percent
shareholders were satisfied except that one report was filed late by Douglas J.
Mackenzie, a director of the Company.
EXECUTIVE OFFICERS OF THE COMPANY
The executive officers of the Company are as follows:
<TABLE>
<CAPTION>
Name Age Position
---- --- --------
<S> <C> <C>
Sally G. Narodick 51 Chairman and Chief Executive Officer
Paul N. Bialek 36 Vice President -- Finance and Administration,
Chief Financial Officer, Treasurer and Secretary
John R. Moore 46 Vice President -- Operations
Donna G. Stanger 53 Vice President -- Product Development
Daniel P. Vetras 37 Vice President -- Consumer Sales
</TABLE>
EXECUTIVE OFFICERS WHO ARE NOT DIRECTORS
Mr. Bialek has been Vice President -- Finance and Administration and Chief
Financial Officer since March 1995. From September 1993 to March 1995, he served
as the Company's Director of Finance and Administration. Mr. Bialek also has
been the Company's Treasurer since September 1993, and Secretary since March
1994. For the eleven years prior to joining the Company in September 1993, he
was with KPMG Peat Marwick LLP, an international public accounting firm. He has
a bachelor's degree in business administration from Seattle University and is a
Certified Public Accountant.
Mr. Moore has been Vice President -- Operations of the Company since June 1991.
He has been with the Company since 1978 and has worked in all phases of the
production, assembly and shipping segments of the Company's business.
Ms. Stanger has been Vice President -- Product Development of the Company since
November 1991. Prior to that she spent eight years at Sunburst Communications,
an educational software publisher, where she managed a product development team
focusing on the kindergarten through fifth grade market. She has a master's
degree in education from the University of Minnesota, a bachelor's degree in
education from Florida State University and 20 years of teaching experience.
Mr. Vetras has been Vice President -- Consumer Sales of the Company since
October 1993. From 1992 to July 1993, he was director for North American sales
at Traveling Software, Inc., and from 1985 to 1992, he was with Lotus
Development Corporation in a variety of sales management positions. He has a
bachelor's degree in political science from American International College.
There are no family relationships among the executive officers of the Company.
The executive officers serve at the discretion the Board of Directors.
Proxy Statement - 5
<PAGE> 9
EXECUTIVE COMPENSATION
SUMMARY COMPENSATION TABLE
The following table sets forth certain information concerning the compensation
paid or accrued for the fiscal years ended June 30, 1996, 1995 and 1994, to the
Company's Chairman and Chief Executive Officer and the other executive officers
of the Company who received compensation of at least $100,000 for services
rendered to the Company in all capacities during the 1996 fiscal year (the
"Named Executive Officers").
<TABLE>
<CAPTION>
Long-Term
Compensation
Awards
------------
Annual Compensation Shares All Other
Fiscal -------------------------- Underlying Compensation
Name and Principal Position Year Salary($) Bonus($)(1) Options(#) ($)
--------------------------- ------ --------- ----------- ------------ ------------
<S> <C> <C> <C> <C> <C>
Sally G. Narodick (2) 1996 $220,000 -0- -0- $4,800
Chairman and Chief Executive 1995 $200,000 $100,000 37,500 $4,800
Officer 1994 $135,000 -0- 15,000 $4,800
Paul N. Bialek(3) 1996 $100,000 -0- 30,000 -0-
Vice President -- Finance and 1995 $86,875 $43,438 30,000 -0-
Administration, Chief Financial 1994 $51,917 $7,500 37,500 -0-
Officer, Treasurer and Secretary
Judith G. Meleliat(4) 1996 $102,405 -0- 160,000 $112,500
Vice President -- Marketing
Donna G. Stanger 1996 $175,000 -0- -0- -0-
Vice President -- Product 1995 $150,000 $75,000 52,500 -0-
Development 1994 $110,000 $30,000 67,500 -0-
Daniel P. Vetras(5) 1996 $125,000 $62,593 30,000 -0-
Vice President -- Consumer Sales 1995 $94,167 $47,084 -0- -0-
1994 $55,487 $16,385 67,500 -0-
</TABLE>
- ----------
(1) The Compensation Committee of the Company's Board of Directors adopts a
Management Incentive Award Program for certain key employees each year.
That program establishes several performance targets and a cash bonus
pool based on a percentage of the aggregate officer base salaries. All of
the Named Executive Officers were eligible for bonuses under that
program.
(2) All Other Compensation represents an automobile allowance.
(3) Mr. Bialek joined the Company in September 1993.
(4) Ms. Meleliat joined the Company in August 1995, and resigned from the
Company in May 1996. All Other Compensation represents severance.
(5) Mr. Vetras joined the Company in October 1993.
Proxy Statement - 6
<PAGE> 10
OPTION GRANTS IN FISCAL YEAR 1996
The following table sets forth certain information with respect to stock options
granted during the 1996 fiscal year to the Named Executive Officers.
<TABLE>
<CAPTION>
Individual Grants Potential Realizable
------------------------------------------------------ Value at Assumed
Number of Percent of Annual Rates of Stock
Securities Total Options Price Appreciation For
Underlying Granted to Exercise Option Term(2)
Options Granted Employees in Price Expiration ---------------------------------
Name (#)(1) Fiscal Year ($/Sh) Date 0% ($) 5% ($) 10% ($)
---- --------------- ------------- -------- ---------- ------ ------ -------
<S> <C> <C> <C> <C> <C> <C> <C>
Sally G. Narodick -0- N/A N/A N/A N/A N/A N/A
Paul N. Bialek 30,000 6.4% $25.75 3/11/06 -0- $485,821 $1,231,166
Judith G. Meleliat(3) 90,000 19.1% $39.50 8/17/05 -0- $2,235,720 $5,665,754
30,000 6.4% $29.50 12/19/05 -0- $556,572 $1,410,462
40,000 8.5% $22.50 3/22/06 -0- $566,005 $1,434,368
Donna G. Stanger -0- N/A N/A N/A N/A N/A N/A
Daniel P. Vetras 30,000 6.4% $29.50 12/19/05 -0- $556,572 $1,410,462
</TABLE>
- ---------------
(1) The options listed were granted under the Company's Stock Option Plan.
The exercise price of each option is equal to the fair market value of
the underlying Common Stock on the date of grant as determined by the
Compensation Committee of the Company's Board of Directors and vest
ratably over four years from the date of grant. To the extent not already
vested, the options generally become fully vested and exercisable upon a
change in control of the Company. The options have ten year terms.
(2) Amounts represent hypothetical gains that could be achieved for the
respective options if exercised at the end of the option term. The
assumed 5% and 10% rate of stock price appreciation are mandated by the
rules of the Securities and Exchange Commission. None of the assumed
rates of stock price appreciation represent the Company's estimate or
projection of the future price of the Company's Common Stock.
(3) The options listed were not vested and expired on May 22, 1996, the date
of Ms. Meleliat's termination of employment with the Company.
Proxy Statement - 7
<PAGE> 11
OPTION EXERCISES IN FISCAL YEAR 1996 AND FISCAL YEAR END OPTION VALUES
The following table sets forth certain information concerning option exercises
by the Named Executive Officers during the 1996 fiscal year. In addition, the
table includes the number of shares covered by both exercisable and
unexercisable stock options as of June 30, 1996. Also reported are the values
for "in-the-money" options, which values represent the positive spread between
the exercise prices of those existing stock options and the fair market value of
the Company's Common Stock as of June 30, 1996.
<TABLE>
<CAPTION> Value of Unexercised
Number of Securities Underlying In-the-Money
Number of Unexercised Options at Options at
Shares Fiscal Year End(#) Fiscal Year End($)(1)
Acquired on Dollar Value ------------------------------ ---------------------------
Name Exercise(#) Realized($) Exercisable Unexercisable Exercisable Unexercisable
---- ----------- ----------- ----------- ------------- ----------- -------------
<S> <C> <C> <C> <C> <C> <C>
Sally G. Narodick -0- N/A 226,875 35,625 $3,876,994 $105,094
Paul N. Bialek 9,000 $261,720 17,250 71,250 $186,300 $417,150
Judith G. Meleliat -0- N/A -0- -0- -0- -0-
Donna G. Stanger 37,500 $1,254,863 76,875 73,125 $1,114,088 $950,400
Daniel P. Vetras 10,500 $279,885 14,250 63,750 $194,798 $461,363
- ------------------
</TABLE>
(1) These values represent the number of shares subject to in-the-money options
multiplied by the difference between the closing bid price of the Company's
Common Stock on June 30, 1996 ($20.00 per share), and the exercise price.
Proxy Statement - 8
<PAGE> 12
COMPENSATION COMMITTEE REPORT
ON EXECUTIVE OFFICER COMPENSATION
The Compensation Committee is comprised of four nonemployee directors. The
Committee is responsible for recommending to the Board of Directors compensation
levels for the Chairman and Chief Executive Officer and for reviewing and
approving compensation recommendations made by the Chief Executive Officer for
all other officers, including the Vice Presidents named in the Summary
Compensation Table.
Compensation Policy. The Company's overall compensation policy is to provide
competitive and incentive based compensation keyed to both individual and
Company performance. In carrying out this policy, the Committee considers
current corporate performance, the potential for future performance gains,
whether Shareholder value has been or will be enhanced, and competitive market
conditions for executives. Those factors are evaluated and considered for each
officer on an annual basis, including consideration of the contribution made by
each officer over the prior fiscal year. The Company's compensation package for
its officers includes both short-term and long-term features in the form of base
salary, variable compensation keyed to Company performance and stock options
which are granted at the discretion of the Committee. Base salary and variable
compensation award targets for executive officers are determined at the
beginning of the fiscal year, and individual variable compensation awards are
made after the fiscal year based on performance for the prior year.
Base Salary is targeted within the competitive range for executives in similar
positions at local, regional and national software companies having similar
revenues and numbers of employees. The Committee also considers the compensation
levels paid by direct competitors in the early childhood and educational
software fields, including some of the companies listed in Hambrecht & Quist's
Technology Index referenced in the Performance Graph on page 10. Salaries for
all officers are reviewed by the Committee at least annually and, for officers
other than the Chief Executive Officer, may be increased or decreased at that
time based on recommendations made by the Chief Executive Officer and on the
Committee's assessment of how the respective individual contributes to the
Company, as well as increases in competitive pay levels reflected in local,
regional and national salary survey information reviewed by the Committee. In
determining how the officer contributes to the Company, the Committee considers
current corporate performance, including timely development of quality software
products, market reception to new products, sales growth, market position and
brand identity for quality educational products. The Committee also considers
the potential for future performance gains. The Committee has neither set
targets related to these factors nor has it attributed any specific weight to
them for purposes of determining base salaries.
Variable Compensation Keyed to Company Performance for officers is intended to
reflect the Company's belief that management's contribution to short- and
long-term Company performance comes, in part, from providing a form of "at-risk"
cash incentive award based on the achievement of pre-established financial
targets relative to the Company's budget. Accordingly, a Management Incentive
Award Program is adopted each year by the Committee. That Program establishes
several performance targets and a cash bonus pool based on a percentage of the
aggregate base salaries for all of the Company's officers. The Committee
believes that the Management Incentive Award Program provides an appropriate
link between Company performance and compensation incentives paid to officers.
Since the performance targets are based on budgeted financial performance, the
Program also serves to measure the achievement of corporate goals, such as the
Company's progress on its strategic plan, timely development and market
reception of new products, sales growth and profitability.
The Committee has not attributed any specific weight to these factors.
Generally, awards are made under the Program only if the Company's performance
targets are achieved. The specific amount of an individual award is dependent
upon the officer's relative performance during the prior fiscal year. The
Committee does not independently measure performance of officers, but relies on
allocation recommendations from the Chief Executive Officer, including her
assessment of the respective officer's
Proxy Statement - 9
<PAGE> 13
individual contribution toward meeting the performance targets. For the past
fiscal year, the performance targets were not met and no bonuses were paid under
the Program. A bonus in the amount of $62,593 was paid to the Vice President --
Consumer Sales under a special incentive compensation arrangement dependent on
actual sales in relation to pre-established quarterly sales goals.
Stock Options. Under the Company's Stock Option Plan, the Company has reserved
for issuance a maximum of 1,950,000 shares of Common Stock. Committee members
are not eligible to receive options under the Plan. Subject to the terms of the
Plan, the Committee determines the terms and conditions of options granted under
the Plan, including the exercise price. The exercise price of nonqualified stock
options may not be less than the fair market value per share of common stock on
the date of grant, as determined by the Committee. It has been the practice of
the Committee to grant options with an exercise price equal to the closing bid
price of the Company's Common Stock as reported on the Nasdaq National Market as
of the date of grant. Therefore, stock options will only have value to
recipients if value is created for Shareholders through increases in the
Company's stock price. It has been the practice of the Committee to grant stock
options which vest ratably over a four-year period from the date of grant.
Option awards for officers other than the Chief Executive Officer are based on
recommendations made by the Chief Executive Officer and on the Committee's
assessment of how the respective individual contributes to the Company. The
factors considered in this assessment are identical to those set forth in the
base salary paragraph above. The Committee has not attributed any specific
weight to these factors. The Committee also reviews prior option grants in
determining current awards under the Plan. The Committee believes that stock
options provide an incentive for officers and allow the Company to attract and
retain management.
As of July 17, 1996, the Company had outstanding options to purchase an
aggregate of 1,109,385 shares of Common Stock under the Plan at a weighted
average exercise price of $12.80 per share, 493,153 of which were exercisable
within 60 days of July 17, 1995. Options to purchase 163,097 shares under the
Plan had been exercised as of July 17, 1996.
COMPENSATION OF THE CHIEF EXECUTIVE OFFICER
The increase in Mrs. Narodick's base salary for the 1996 fiscal year was due to
her significant contributions during the prior year to the Company's progress on
its strategic plan, including timely and continued development of quality
software products, market reception to new products, sales growth, establishment
of market position and brand identity for quality educational products, and
improvement in corporate administration. The foregoing factors, which reflect
both individual performance and the overall performance of the Company, are not
specifically weighted, but are considered as a whole and applied to the Chief
Executive Officer along with consideration of the competitive mean for direct
competitors in the early childhood and educational software fields. Mrs.
Narodick's total cash compensation for fiscal year 1996 decreased by 27% from
fiscal year 1995 due to the fact that no management incentive compensation award
was paid for fiscal year 1996.
The Committee believes the Company has an appropriate mix of short-term and
long-term incentives to attract high quality executive officers and to reward
them for continued, loyal service to the Company.
July 17, 1996 COMPENSATION COMMITTEE
W. Hunter Simpson (Chair)
Frances M. Conley
Harvey N. Gillis
Douglas J. Mackenzie
Proxy Statement - 10
<PAGE> 14
STOCK PRICE PERFORMANCE GRAPH
The graph below compares the cumulative total return on the Company's Common
Stock with the cumulative total return of the H & Q Technology Index and the
Nasdaq Stock Market - U.S. Index during the last five years ended June 30, 1996
(1).
HAMBRECHT & QUIST INDEX PRODUCTS AND SERVICES:
1996 PROXY PERFORMANCE GRAPH DATA
ANNUAL DATA SERIES
[CHART]
SCALED PRICES: Stock and index prices scaled to 100 at 6/30/91
<TABLE>
<CAPTION>
Nasdaq Stock Market-
DATES Edmark Corp. H&O Technology U.S.
- ----- ------------ -------------- --------------------
<S> <C> <C> <C>
Jun-91 100 100 100
Jun-92 219.06 113.63 120.13
Jun-93 561.93 138.83 151.08
Jun-94 409.54 140.86 152.52
Jun-95 1538.17 235.88 203.59
Jun-96 1142.86 279.83 261.37
</TABLE>
(1) Assumes $100 invested on June 30, 1991, in the Company's Common Stock,
the H & Q Technology Index and the Nasdaq Stock Market - U.S. Index, with
all dividends reinvested. Stock price performance shown above for the
Company's Common Stock is historical and not necessarily indicative of
future price performance. Information before November 1991, when the
Company's Common Stock was accepted for listing on Nasdaq, is based on
quotations from the National Quotation Bureau's Pink Sheets as published in
the Journal American, Bellevue, Washington.
PROPOSAL NO. 1: ELECTION OF DIRECTORS
All nine nominees for election to the Board of Directors are members of the
current Board of Directors.
The Board of Directors has unanimously approved the nominees who upon election
will hold office for a term of one year and until their successors are duly
elected and qualified. Unless otherwise instructed, it is the intention of the
persons named in the accompanying Proxy to vote the shares represented by
properly executed proxies for the nine nominees of the Board of Directors named
on the following pages. Although the Board of Directors anticipates that all of
the nominees will be available to serve as directors of the Company, should any
one or more of them be unwilling or unable to serve, it is intended that the
proxies will be voted for the election of a substitute nominee or nominees
designated by the Board of Directors.
Proxy Statement - 11
<PAGE> 15
The names of the Board's nominees for directors of the Company are as follows:
<TABLE>
<CAPTION>
DIRECTOR PRINCIPAL OCCUPATION AND BUSINESS
NAME AND AGE SINCE EXPERIENCE FOR THE PAST FIVE YEARS
------------ -------- -----------------------------------------
<S> <C> <C>
Frances M. Conley 1992 Ms. Conley is a shareholder, director and
Age 53 principal of Roanoke Capital, Ltd., the
general partner of Roanoke Investors'
Limited Partnership, a venture capital
limited partnership. She has a master's
degree in business administration from the
Harvard Graduate School of Business
Administration and a bachelor's degree in
music from Emmanuel College. Ms. Conley
serves as a director of Cutter & Buck,
Inc., and Data I/O Corporation.
Allan Epstein 1992 Mr. Epstein is President and Chief
Age 45 Executive Officer of Orthopedic Systems,
Inc., a developer and manufacturer of
orthopedic soft goods, operating room
equipment and diagnostic instruments. From
1988 to 1991, he was President and Chief
Executive Officer of Accolade, Inc., a
developer and publisher of entertainment
software for computers and video games. He
has a bachelor's degree in industrial
engineering from Cornell University.
Harvey N. Gillis 1990 Mr. Gillis is Senior Vice President of
Age 50 Finance and Administration and Chief
Financial Officer for Advanced Technology
Laboratories, Inc., a developer,
manufacturer and distributor of diagnostic
medical ultrasound systems. From 1991 to
1992, he served as Senior Vice President
of Finance and Administration and Chief
Financial Officer for NeoPath, Inc., a
medical technology company. Prior to 1991,
he served as Chief Operating Manager for
Samuel Stroum Enterprises, a private
investment firm. He has a master's degree
in business administration, and a master's
degree in engineering from Stanford
University and a bachelor's degree in
engineering from Carnegie-Mellon
University. Mr. Gillis serves as a
director of Digital Systems International,
Inc.
Dr. Allen D. Glenn 1990 Dr. Glenn has been Dean of the College of
Age 54 Education and Professor of Curriculum
and Instruction at the University of
Washington since 1989. Prior to that, he
served for 18 years on the faculty and
administration of the University of
Minnesota. He has a Ph.D and a master's
degree in education from the University of
Michigan, a master's degree in political
science from Kansas State Teachers College
and a bachelor's degree in political
science and history from Ottawa
University.
Douglas J. Mackenzie 1994 Mr. Mackenzie has been with Kleiner
Age 36 Perkins Caufield & Byers, a venture
capital partnership, for over seven years,
most recently as a general partner. He has
a master's degree in business
administration from the Harvard Graduate
School of Business Administration and a
bachelor's degree in economics and a
master's degree in industrial engineering
from Stanford University. Mr. Mackenzie
serves as a director of Visio Corporation
in addition to several private
technology-based companies.
</TABLE>
Proxy Statement - 12
<PAGE> 16
<TABLE>
<S> <C> <C>
Timothy Mott 1994 Mr. Mott is a general partner of Ironwood
Age 47 Capital, a venture capital partnership.
Mr. Mott was Chairman of the Board of
Directors of Macromedia, Inc., from 1992
to 1995 and was Chief Executive Officer of
Macromedia, Inc., (and its predecessor
corporations, MacroMind and
MacroMind/Paracomp) from 1990 to 1992. Mr.
Mott was a co-founder of Electronic Arts,
Inc., an entertainment software company,
where he was employed from 1982 to 1990 in
a variety of capacities, including Senior
Vice President of Business Development and
Managing Director of Electronic Arts (UK)
Limited. He has a bachelor's degree in
computer science from Manchester
University. Mr. Mott serves as a director
of Electronic Arts.
Sally G. Narodick 1989 Mrs. Narodick has been Chairman and Chief
Age 51 Executive Officer of the Company since
November 1989 and a director since April
1989. Immediately prior to joining the
Company, she was co-founder of Narodick,
Ross & Associates, a financial and
marketing consulting company specializing
in emerging businesses. Prior to 1987, she
was a Senior Vice President with Seafirst
Corporation, a commercial banking
institution, serving as Corporate
Controller and as District Manager in
charge of business and personal banking.
She has a master's degree in teaching from
Columbia University, a master's degree in
business administration from New York
University and a bachelor's degree from
Boston University. Mrs. Narodick serves as
a director of Fluke Corporation, Penwest
Corporation and Washington Energy
Corporation.
W. Hunter Simpson 1989 Mr. Simpson is the former President and
Age 69 Chief Executive Officer of Physio Control
Corporation, where he was employed from
1966 to 1986. He has a bachelor's degree
in business administration from the
University of Washington. Mr. Simpson
serves as a director of Data I/O
Corporation, the Washington Research
Foundation and KCTS public television. He
has also served on the Board of Regents of
the University of Washington.
Richard S. Thorp 1988 Mr. Thorp has been Chairman and Chief
Age 62 Executive Officer of Shannon, Ltd., a
Washington-based distributor of electronic
components, since 1972, and President of
Supertronix, Inc., an electronics parts
retailer, since 1985. Mr. Thorp has been
involved in various capacities with Edmark
since its inception more than twenty-five
years ago.
</TABLE>
INFORMATION ON COMMITTEES OF THE BOARD OF DIRECTORS AND MEETINGS
Directors hold office until the next Annual Meeting of Shareholders of the
Company or until their successors have been elected and qualified.
The Board of Directors of the Company held a total of eight meetings during the
fiscal year ended June 30, 1996. The Board has an Audit Committee, a
Compensation Committee and a Nominating Committee. The Audit Committee met two
times, the Compensation Committee met six times and the Nominating Committee met
one time during the fiscal year ended June 30, 1996. During the last fiscal
year, each director attended at least 75% of the aggregate of all meetings of
the Board of Directors and all meetings of committees to which he or she was
assigned.
Proxy Statement - 13
<PAGE> 17
The Audit Committee generally selects the Company's independent auditors,
subject to ratification by Shareholders, and considers related scope and fee
arrangements. Current members of the Audit Committee are Harvey N. Gillis
(Chair), Allan Epstein, Dr. Allen D. Glenn and Richard S. Thorp. The
Compensation Committee generally recommends the framework for establishing
officer compensation and reviews and recommends officer salary levels and
variable compensation awards. That committee also administers the Company's
Stock Option Plan. Current members of the Compensation Committee are W. Hunter
Simpson (Chair), Frances M. Conley, Harvey N. Gillis and Douglas J. Mackenzie.
The Nominating Committee is primarily responsible for recommending candidates
for the Board of Directors to be elected by Shareholders of the Company. Current
members of the Nominating Committee are Harvey N. Gillis (Chair), Allan Epstein,
Sally G. Narodick, W. Hunter Simpson and Timothy Mott. The Nominating Committee
will consider nominees recommended by the Shareholders. Suggestions may be
submitted to the Secretary of the Company.
COMPENSATION OF DIRECTORS
Beginning in the 1996 fiscal year, non-employee directors are paid a fee of $500
for each Board meeting attended and for each Committee meeting attended when
those meetings are held on days different from Board meetings. Employee
directors are not paid any fees for those services. All directors are entitled
to reimbursement for expenses incurred in traveling to and from Board and
Committee meetings. In addition, each non-employee director also participates in
the 1995 Non-Employee Directors' Stock Option Plan. Upon reelection to the Board
of Directors, each non-employee director receives an option to purchase 2,000
shares of the Company's Common Stock on the third day following the day of each
Annual Meeting of Shareholders. The option is granted at the then current fair
market value of the Company's Common Stock, has a ten-year term and is vested
upon grant. In fiscal year 1996, options to purchase 2,000 shares of the
Company's Common Stock were granted to each of the Company's eight non-employee
directors at an exercise price of $44.00 per share.
THE BOARD OF DIRECTORS RECOMMENDS A VOTE FOR EACH OF THE NOMINEES FOR DIRECTOR
LISTED ABOVE.
PROPOSAL NO. 2: RATIFICATION OF APPOINTMENT OF AUDITORS
The Board of Directors, acting upon the recommendation of the Audit Committee,
has appointed KPMG Peat Marwick LLP ("KPMG") as auditors of the Company for the
fiscal year ending June 30, 1997. KPMG has audited the accounts of the Company
since 1987. Representatives of KPMG are expected to attend the Annual Meeting
and will have the opportunity to make a statement and to respond to appropriate
questions from Shareholders. In the event Shareholders do not ratify the
appointment of KPMG, the selection of auditors will be reconsidered by the Board
of Directors.
THE BOARD OF DIRECTORS RECOMMENDS A VOTE FOR RATIFICATION OF KPMG AS AUDITORS
FOR THE COMPANY.
Proxy Statement - 14
<PAGE> 18
OTHER MATTERS
As of the date of this Proxy Statement, management knows of no other business
which will be presented for action at the Annual Meeting. If any other business
requiring a vote of the Shareholders should come before the Annual Meeting, the
persons designated as your proxies will vote or refrain from voting in
accordance with their best judgment.
Copies of the Company's Annual Report to Shareholders for the fiscal year ended
June 30, 1996, are being mailed to Shareholders together with this Proxy
Statement, the Proxy and the Notice of Annual Meeting of Shareholders.
Additional copies may be obtained from the Secretary of the Company, 6727 -
185th Avenue N.E., Redmond, Washington 98052.
SHAREHOLDER PROPOSALS FOR 1997 ANNUAL MEETING
Proposals for Shareholder action, which eligible Shareholders wish to have
included in the Company's Proxy Statement mailed to Shareholders in connection
with the Company's 1997 Annual Meeting, must be received by the Company at its
offices on or before May 7, 1997.
By Order of the Board of Directors,
/s/ Paul N. Bialek
Paul N. Bialek
Secretary
Redmond, Washington
September 11, 1996
Proxy Statement - 15
<PAGE> 19
PROXY
THIS PROXY IS SOLICITED ON BEHALF OF THE BOARD OF DIRECTORS
[LOGO]
EDMARK
P.O. Box 97021 The undersigned hereby appoints S. Narodick and P.
Redmond, WA 98073-9721 Bialek, or either of them, as Proxies, each with the
power to appoint her or his substitute, and hereby
authorizes them to represent and to vote, as
designated below, all the shares of Common Stock of
Edmark Corporation held of record by the undersigned
on August 30, 1996, at the Annual Meeting of
Shareholders to be held on October 23, 1996, or any
adjournment thereof.
1. ELECTION OF DIRECTORS. / / FOR all nominees listed below (except as
marked to the contrary below).
/ / WITHHOLD AUTHORITY to vote for all nominees
listed below.
(INSTRUCTION: To withhold authority to vote for any
individual nominee, strike a line through the
nominee's name listed below.)
F. Conley, A. Epstein, H. Gillis, A. Glenn, D.
Mackenzie, T. Mott, S. Narodick, W. Simpson, R.
Thorp
2. INDEPENDENT AUDITORS. Ratify appointment of auditors.
/ / FOR / / AGAINST / / ABSTAIN
3. In their discretion, the Proxies are authorized to vote upon such other
business as may properly come before the meeting.
(Continued and to be signed on other side.)
<PAGE> 20
THIS PROXY, WHEN PROPERLY EXECUTED, WILL BE VOTED IN THE MANNER DIRECTED HEREIN
BY THE UNDERSIGNED SHAREHOLDER. IF NO DIRECTION IS MADE, THIS PROXY WILL BE
VOTED FOR PROPOSALS 1 THROUGH 2 AND WILL BE VOTED IN ACCORDANCE WITH THE
DISCRETION OF THE PROXIES UPON ALL OTHER MATTERS WHICH MAY COME BEFORE THE
MEETING OR ANY ADJOURNMENT THEREOF.
Please sign name as appears below. When shares are held by joint tenants, both
should sign. When signing as attorney, executor, administrator, trustee or
guardian, please give full title. If a corporation, please sign full corporate
name by President or other authorized officer. If a partnership, please sign in
partnership name by authorized person.
Please mark, sign, date and return the Proxy card
promptly, using the enclosed envelope.
_________________________________________________ ____________________________
Signature
____________________________
Signature, if held jointly
Dated: ______________ , 1996
