Proxy Statement Pursuant to Section 14(a) of the
Securities Exchange Act of 1934
(Amendment No. )
Filed by the Registrant [X]
Filed by a Party other than the Registrant [ ]
Check the appropriate box:
[ ] Preliminary Proxy Statement
[ ] Confidential, for Use of the Commission Only (as permitted by Rule
14a-6(e)(2))
[X] Definitive Proxy Statement
[ ] Definitive Additional Materials
[ ] Soliciting Material Pursuant to Sec. 240.14a-11(c) or Sec. 240.14a-12
GO-VIDEO, INC.
----------------------------------------
(Name of Registrant as Specified in Its Charter)
DOUGLAS KLEIN
- - --------------------------------------------------------------------------------
(Name of Person(s) Filing Proxy Statement)
Payment of Filing Fee (Check the appropriate box):
[X] $125 per Exchange Act Rules 0-1l(c)(1)(ii), 14a-6(i)(1), 14a-6(j)(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>
GO-VIDEO, INC.
14455 North Hayden Road, Suite 219
Scottsdale, Arizona 85260
- - --------------------------------------------------------------------------------
July 17, 1995
Dear fellow Go-Video Stockholder:
You are cordially invited to attend our 1995 Annual Meeting of
Stockholders, which will begin at 8:00 a.m. at the Orange Tree Resort at 56th
Street and Shea Boulevard, Scottsdale, Arizona, on Tuesday, August 29, 1995.
At the meeting, you will be asked to reelect Tom Linnen and Bill Walker to
Go-Video's Board. Both gentlemen have contributed to the forward movement of
your company during their first two years as directors and I'm extremely pleased
that they have been nominated and agreed to stand for reelection for new three
year terms. They bring over sixty-five years of combined experience in growth
company management and have used their experience to provide invaluable
assistance in the formation of Go-Video's strategic direction. The Go-Video
Board of Directors recommends that you vote FOR the proposed slate of directors.
The second item of business concerns several amendments to the 1991
Nonstatutory Directors' Stock Option Plan (the "Directors' Plan"). I believe
that a portion of a director's compensation should directly align their personal
financial interests with an increase in shareholder value, specifically the
market price of the Company's common stock. Because the Directors' Plan's
authorized shares have been almost fully reserved for options issued over the
last four years, one of the proposed amendments authorizes and reserves an
additional 250,000 common shares for annual option grants. Under the current
formula and Board size, this amendment would reserve sufficient shares for
another four years. Another proposed amendment to the Directors' Plan authorizes
a pro-rata grant of options on the date a new director is appointed to the Board
so that a new director's interests would be more quickly aligned with changes in
the market price of the Company's Common Stock. The last proposed amendment to
the Directors' Plan extends the expiration date of options after a director
leaves the Board from a maximum of one to three years. Because a significant
component of a director's responsibilities lies in setting the strategic
direction of your Company, the value of which is not always realized within a
year, the proposed amendment would continue to align the financial interests of
directors who will not be standing for reelection with long-term strategic
enhancements to shareholder value. The Go-Video Board of Directors recommends
that you vote FOR the proposed amendments to the 1991 Directors' Stock Option
Plan.
You may recall that the Company recently changed its fiscal year end to
March 31. As a result, information included in this Proxy Statement relates to
the previous full fiscal year ended July 31, 1994 and the transition period from
August 1, 1994 to March 31, 1995.
It is important that your shares are represented at the meeting, whether or
not you plan to attend the meeting. Accordingly, please complete, date, sign and
return promptly your proxy sheet in the enclosed envelope. You may attend the
meeting and vote your shares in person if you wish, even if you have previously
returned your proxy.
The Notice of Meeting and Proxy Statement is attached. In addition, your
attention is directed to the enclosed 1995 Annual Report to Stockholders. In the
Annual Report is a self-addressed comment card which I encourage you to use if
you have any questions or observations you wish to share with me, particularly
if you will be unable to attend the Annual Meeting in person.
Sincerely,
ROGER B. HACKETT
Roger B. Hackett
Chairman, Chief Executive Officer
and President
<PAGE>
GO-VIDEO, INC.
14455 North Hayden Road, Suite 219
Scottsdale, Arizona 85260
NOTICE AND PROXY STATEMENT
For the Annual Meeting of Stockholders
to be held on August 29, 1995
To the Stockholders of Go-Video, Inc.:
The 1995 Annual Meeting of Stockholders of GO-VIDEO, INC., a Delaware
corporation, will be held at the Orange Tree Resort, 10601 North 56th Street (at
Shea Boulevard), Scottsdale, Arizona, on Tuesday, August 29, 1995, at 8:00 a.m.,
Mountain Standard Time, for the following purposes:
1. To elect two (2) directors to the Board of Directors;
2. To amend the 1991 Nonstatutory Directors' Stock Option Plan; and
3. To act upon such other business as may properly come before the meeting.
The Board of Directors has fixed the close of business on July 7, 1995, as the
record date for determining the stockholders entitled to receive notice of and
to vote at the Annual Meeting or any adjournment thereof. Shares of Common Stock
can be voted at the meeting only if the holder is present at the meeting in
person or by valid proxy.
WHETHER OR NOT YOU INTEND TO BE PRESENT AT THE ANNUAL MEETING, PLEASE MARK, SIGN
AND DATE THE ENCLOSED PROXY AND MAIL IT IN THE ENCLOSED POSTAGE-PAID ENVELOPE.
THE PROXY MAY BE REVOKED AT ANY TIME PRIOR TO THE ANNUAL MEETING BY WRITTEN
REQUEST TO THE SECRETARY OF THE COMPANY, BY VOTING IN PERSON AT THE ANNUAL
MEETING, OR BY SUBMITTING A LATER DATED PROXY.
Admission to the Annual Meeting is limited to stockholders or their proxies.
Stockholders who hold their shares in "Street" name (shares registered under a
broker, bank, or other nominee institution's name) will be admitted to the
meeting upon presentation of a written affidavit or statement from the
registered institution showing beneficial ownership as of the July 7, 1995
record date. The Annual Meeting will not be open to the public.
By Order of the Board of Directors
Douglas Klein
Vice President, Finance
Secretary and Treasurer
Scottsdale, Arizona
July 17, 1995
<PAGE>
GO-VIDEO, INC.
14455 North Hayden Road, Suite 219
Scottsdale, Arizona 85260
(602) 998-3400
PROXY STATEMENT
This Proxy Statement is furnished by the Board of Directors of GO-VIDEO, Inc.
(the "Company") in connection with the Annual Meeting of Stockholders to be held
at the Orange Tree Resort, 10601 North 56th Street, Scottsdale, Arizona, on
Tuesday, August 29, 1995, at 8:00 a.m., Mountain Standard Time. The proxy
materials were first mailed on or about July 17, 1995, to shareholders of record
at the close of business on July 7, 1995 (the "Record Date"). As of July 7,
1995, there were outstanding 11,328,012 shares of the Company's Common Stock.
Each share of Common Stock is entitled to one vote on each matter of business to
be considered at the Annual Meeting.
The Company recently changed its fiscal year end to March 31. As a result,
various information included in this Proxy Statement relates to the previous
full fiscal year and the transition period from August 1, 1994 through March 31,
1995.
The enclosed proxy is solicited by the Board of Directors of the Company (the
"Board"). A person giving the enclosed proxy has the power to revoke it at any
time before it is exercised by (i) attending the meeting and voting in person,
(ii) duly executing and delivering a proxy bearing a later date, or (iii)
sending a written notice of revocation to the Secretary of the Company, which
notice shall have been received by the Secretary prior to commencement of voting
at the Annual Meeting.
The Company will pay the cost of the proxy solicitation made by the Board,
including the charges and expenses of brokerage firms and others who forward
solicitation material to beneficial owners of Common Stock. In addition,
directors, officers, or employees of the Company may solicit proxies by mail,
personal interview, telephone, telegraph or facsimile transmission without
additional compensation.
If the enclosed proxy is properly executed and returned to the Company in time
to be voted at the meeting, it will be voted as specified on the proxy, unless
it is properly revoked prior thereto. If no specification is made in the proxy,
the shares represented by the proxy will be voted for the election of the
nominees for directors named below and for Proposal 2. With respect to any other
matters that may properly come before the meeting, or any adjournment thereof,
the proxy will be voted at the discretion of the person(s) named in the proxy.
The election of directors requires a plurality of votes cast at the meeting. All
other proposals that properly come before the meeting, including the amendment
to the Directors' Plan, require the affirmative vote of the holders of a
majority of the voting power of Common Stock represented at the meeting.
Abstentions are counted as present at the meeting for such proposals, but
because they are not affirmative votes for such proposals, they would have the
same effect as votes against the proposal. Broker non-votes are not considered
present at the meeting for particular proposals for which the broker withheld
authority.
THE COMPANY WILL FURNISH WITHOUT CHARGE TO EACH SHAREHOLDER WHO IS ENTITLED TO
VOTE AT THE MEETING AND WHO MAKES A WRITTEN REQUEST FOR SUCH, A COPY OF THE
COMPANY'S ANNUAL REPORT ON FORM 10-K FOR THE TRANSITION PERIOD ENDED MARCH 31,
1995, AS FILED WITH THE SECURITIES AND EXCHANGE COMMISSION PURSUANT TO THE
SECURITIES EXCHANGE ACT OF 1934, AS AMENDED. REQUESTS SHOULD BE ADDRESSED TO THE
SECRETARY AT THE COMPANY'S PRINCIPAL EXECUTIVE OFFICES.
PROPOSAL 1 - ELECTION OF DIRECTORS
The Company's Bylaws provide for a classified Board of Directors that is divided
into three classes. Each year the stockholders elect directors for terms of up
to three years. Two members of the Board will be elected at the 1995 Annual
Meeting.
NOMINEES FOR ELECTION
The Board has nominated Thomas E. Linnen and William T. Walker, Jr. for election
as directors for terms expiring at the 1998 Annual Meeting of Stockholders.
The Board of Directors recommends a vote
FOR the following nominees:
For Terms Expiring at the 1998 Annual Meeting
Thomas E. Linnen, age 49, is Vice President - Finance, Secretary and Treasurer
of Continental Circuits Corp. (NASQ: CCIR), a manufacturer of multi-layer,
surface mount circuit boards based in Phoenix, Arizona. Prior to joining
Continental Circuits in 1987, Mr. Linnen was Vice President - Finance for ITT
Systems, Tempe, Arizona. Mr. Linnen has over twenty-five years of experience in
corporate finance and accounting positions, holds a C.P.A. certificate, and
serves as Chairman of the Audit Committee and a member of the Compensation
Committee of the Board of Directors of the Company. Mr Linnen also serves as a
member of the board of directors for Innovonics, Inc. Mr. Linnen received a
Bachelor of Science Degree in Business Administration from the University of
Wisconsin.
William T. Walker, Jr., age 63, is Chairman and President of Walker Associates,
a Beverly Hills, California- based corporate finance consulting firm which he
founded in 1985. Mr. Walker has over forty years of experience in the capital
markets industry and currently serves as a member of the board of directors of
AmeriQuest Technologies, Inc. (NYSE: AQS) (formerly CMS Enhancements, Inc.) and
Fortune Petroleum Corporation (AMEX: FPX). Mr. Walker also serves on the
compensation committees of Fortune Petroleum and Go-Video. Mr. Walker has been a
member of the board of the Securities Industry Association, Chairman of the
California District Securities Industry Association, Governor of the Pacific
Stock Exchange, President of the Bond Club of Los Angeles, and a member of the
American Stock Exchange Advisory Committee. Mr. Walker graduated from Culver
Military Academy and attended Stanford University.
CONTINUING DIRECTORS
Terms Expiring at the 1996 Annual Meeting
R. Terren Dunlap, age 50, is a co-founder of the Company and has served as a
director since its incorporation in 1984. He served as President from the
Company's organization in 1984 until 1988 when he was elected Chief Executive
Officer and Chairman of the Board. He served in these capacities until March
1994, when he was reassigned as Special Projects Coordinator for the Company.
Mr. Dunlap is a member of the American Electronics Association, having served on
its national board; a member of the Electronics Industry Association; a member
of the Arizona State University West Advisory Board; and a member of the Arizona
and Ohio State Bar Associations. Mr. Dunlap received his Juris Doctorate Degree
from Ohio Northern University and his Bachelor of Science Degree in Business
Administration from Ashland University.
Roger B. Hackett, age 44, was first elected to the Board of Directors in
December 1992 and joined the Company as President and Chief Operating Officer in
January 1993. In March 1994, Mr. Hackett was elected Chief Executive Officer and
Chairman of the Board. Prior to joining the Company as President, Mr. Hackett
served as Senior Vice President, Corporate Affairs, of Serving Software Inc., a
Minneapolis, Minnesota-based provider of computer software used in the health
care industry. In 1986, Mr. Hackett founded the CAMS division of ATI Medical,
Inc., a provider of "critical care" medical equipment, and over six years
developed CAMS into one of the leading providers of bar-code-based information
systems for the health care industry. In 1992, Mr. Hackett negotiated the sale
of the CAMS division to Serving Software. He also served as a director of
Serving Software from January 1993 until September 1994 when Serving Software
was acquired by HBO & Co., a health care information systems company. Mr.
Hackett serves as a director of Medi-Serv, a privately-held company providing
health care information systems. Mr. Hackett received a Bachelor of Science
Degree in Business Administration from Ohio State University.
Terms Expiring at the 1997 Annual Meeting
Thomas F. Hartley, Jr., age 45, has served as a director of the Company since
November 1991. Mr. Hartley is currently President of Johnson & Higgins of
Arizona, the Arizona subsidiary of a large privately-owned insurance brokerage
and consulting firm, with headquarters in New York City and over 100 offices
worldwide. Prior to joining Johnson & Higgins in 1983, Mr. Hartley was Assistant
Vice President with Marsh & McLennan in Phoenix and New York, and an officer in
the U.S. Navy's nuclear submarine program. Mr. Hartley serves as Chairman of the
Compensation Committee of the Board of Directors of the Company. Mr. Hartley is
on the boards of directors of various community and professional organizations,
including the Phoenix Symphony, the Phoenix Economic Club, the Arizona
Association of Insurance Brokers, and the Arizona State University-First
Interstate Center for Services Marketing. He is also a member of Valley
Leadership and the Arizona State University Business School Dean's Council of
100. Mr. Hartley received a Bachelor of Science Degree from the U.S. Naval
Academy and a Masters in Business Administration from New York University.
Ralph F. Palaia, age 45, is President of Ralph F. Palaia & Assoc., a marketing
and distribution firm founded in April 1994 performing consultation, independent
sales representation, and importation and distribution of consumer electronics
and other products. From February 1991 to April 1994, Mr. Palaia served in
several sales and marketing executive positions, most recently as Senior Vice
President of Marketing and Sales for Philips Consumer Electronics, Knoxville,
Tennessee, a division of Philips N.V., a leading international manufacturer and
distributor of consumer electronic products. Earlier positions with Philips
included Vice President of Retail Sales, Vice President of National Account
Sales, and Vice President of Marketing for the Personal Computer Category. Prior
to joining Philips in February 1991, Mr. Palaia founded MGN Technology Corp.,
Knoxville, Tennessee, in 1987 and served as its President until he sold the
company to Craig Electronics in December 1990. From 1984 until 1987, Mr. Palaia
was Director of Marketing for the VCR-Camcorder Product Group of Philips. He
received a Bachelor of Arts Degree in Economics from Duke University.
Meetings and Committees of the Board of Directors
During the fiscal year ended July 31, 1994, the Board met nine times. During the
eight month transition period ended March 31, 1995, the Board met five times.
The Board has standing Audit and Compensation committees.
The Audit Committee is responsible for evaluating the Company's system of
accounting controls and approves the scope of the annual audit. The committee
consists of Thomas E. Linnen (Chairman) and, until December 8, 1994, Richard L.
Barrett. The Committee had two formal meetings during the fiscal year ended July
31, 1994 and one formal meeting during the transition period ended March 31,
1995.
The Compensation Committee consists of Thomas F. Hartley, Jr. (Chairman),
Richard L. Barrett (until December 8, 1994), Thomas E. Linnen, and William T.
Walker, Jr. The Committee acts on matters related to executive officer
compensation and grants of stock options pursuant to the Company's stock option
plans. None of the members of the Compensation Committee is eligible to receive
stock options under the Company's plans that they administer. The Compensation
Committee had six formal meetings during the fiscal year ended July 31, 1994 and
six formal meetings during the transition period ended March 31, 1995.
The Board had designated a Strategic Opportunities Committee, which was
responsible for evaluating strategic opportunities presented to the Company. The
Committee consisted of William T. Walker, Jr. (Chairman), R. Terren Dunlap, and
Roger B. Hackett. The Strategic Opportunities Committee had no formal meetings
during the fiscal year ended July 31, 1994 and was dissolved in April 1995.
All non-employee directors of the Company receive an annual retainer fee of
$15,000 paid in quarterly installments. All directors, including employee
directors, also receive an annual grant of options to purchase Common Stock from
the 1991 Nonstatutory Director's Stock Option Plan (the "Directors' Plan"). The
Board of Directors and stockholders of the Company adopted the Directors' Plan
effective November 1, 1991. The Directors' Plan provides for the automatic
annual grant of stock options to directors serving as of September 1 of each
year. On that date, the Chairman is automatically granted options to purchase
20,000 shares of Common Stock and each other director is automatically granted
options to purchase 10,000 shares of Common Stock. The exercise price for all
options is the fair market value of the Common Stock on the date of grant. Each
option expires on the 10th anniversary date of its grant unless earlier
terminated in accordance with the Directors' Plan (see "Proposal 2" regarding
certain amendments to the Directors' Plan).
EXECUTIVE COMPENSATION
Report of the Compensation Committee
Committee Role
As part of its function, the Compensation Committee reviews the Company's
executive compensation programs to ensure they (i) are competitive with
companies of comparable size and complexity and those within the consumer
electronic equipment industry; (ii) reflect both stockholders' and participants'
best interests; (iii) are responsive to both short and long-term corporate and
individual performance goals; and (iv) provide the necessary incentives for the
executives to further stockholders' financial interests in the Company. In
performing this review, the Committee utilizes compensation data collected from
industry association studies on compensation and corporate performance data
provided by the Company. This data includes information concerning a peer group
of companies which the Company considers its primary competitors for both
executive talent and business opportunities. These peer companies for executive
talent are not identical to the group of companies identified under the section
"Stock Performance Graph". The groups are not the same because compensation data
was obtained from trade studies which did not disclose individual company
participants and also included privately-owned competitors which do not have
publicly-traded common stock results to incorporate into the stock performance
chart.
Compensation Philosophy
The Company's executive compensation philosophy, which serves as the foundation
of the total compensation package, is based on the following principals:
* Programs must be supportive of the Company's strategic business
objectives and thereby stockholders' financial interests in the
Company.
* A significant ownership interest in the Company by senior executives
promotes those behaviors and actions that will result in an alignment
of stockholder and management interests.
* The total compensation package for executive officers should be
competitive with those of an appropriate peer group of companies and
reflect the Company's performance against that peer group.
* Variable pay, in the form of annual incentives and long-term
stock-based compensation, is intended to create an incentive for
superior performance from executive officers.
Base Salaries
Initially, base salaries for executive officers are set based upon a review of
the responsibility level of each position and the relative pay levels for
comparable positions at peer companies. Base salaries may be periodically
increased as a result of an individual assuming increased responsibilities, as a
result of competitive data indicating a meaningful change in base pay levels
among peer companies or as a result of the Board of Directors increasing
performance objectives and goals for the individual executive officer or the
Company as a whole.
Annual Incentives
In making determinations to award incentive payments, the Compensation Committee
reviews a variety of Company performance measures as well as the individuals'
objectives and accomplishments. The source and amount of the annual incentives
to be paid to the Company's executives is subjective, with consideration to
revenue, operating income, net income, return on equity, and various other
quantitative and qualitative assessments. The annual incentive payment for the
Chief Executive Officer is based on a percentage of pre-tax profit of the
Company for a given fiscal period plus subjective components.
Long-Term Incentives
The Company's current method of providing long-term incentive compensation
opportunities to its executive officers is through the use of stock options.
Stock options allow the recipient to purchase shares of the Company's Common
Stock at a specified price, that is not less than its fair market value on the
grant date, during a fixed period of time following the grant date. This period
has typically been ten years. The Company believes that this form of long-term
incentive is presently the best vehicle by which to link stockholder and
management interests, because value is provided to recipients only if the
Company's stock price increases.
The Compensation Committee is the administrator of the Company's stock option
plans and has the authority to approve awards to executive officers and
employees. The level of the awards granted is subjective and reflects the
relative impact which a recipient is expected to have on future corporate
results. In making this determination, the Committee considers the number of
options held by the executive officer and the dilution effect such grants may
have on existing stockholders.
Chief Executive Officer's Compensation and Company Performance
For the Fiscal Year Ended July 31, 1994 (as presented in the Notice and Proxy
Statement dated November 17, 1994)
The Compensation Committee completed an individual performance review of the
Chief Executive Officer addressing such issues, among others, as individual
contributions to the Company, strengths and weaknesses in making those
contributions, and areas of responsibility the Chief Executive Officer was to
focus on. During this review, the Committee examined Mr. Hackett's and the
Company's performance. The Committee believed Mr. Hackett managed the Company
well during the year even though the Company did not meet its fiscal 1994 net
income goal. In particular, Mr. Hackett contributed significantly during the
final four months of fiscal 1994 (when he served as Chief Executive Officer) by
setting new directions for the Company for achieving its strategic goals. In
recognition of his new responsibilities as Chairman and Chief Executive Officer,
in addition to his responsibilities as President and Chief Operating Officer,
the Committee increased Mr. Hackett's base salary by 7% and granted him options
to purchase 50,000 shares of Common Stock. In addition, based on the Company's
level of pre-tax profit in fiscal 1994, Mr. Hackett received a bonus of $5,000.
For the Transition Period Ended March 31, 1995
The Compensation Committee completed an individual performance review of the
Chief Executive Officer addressing such issues, among others, as individual
contributions to the Company, strengths and weaknesses in making those
contributions, and areas of responsibility the Chief Executive Officer is to
focus on. During this review, the Committee examined Mr. Hackett's and the
Company's performance. The Committee believes Mr. Hackett has positioned the
Company for improved profitability and growth over the next several years. In
particular, Mr. Hackett contributed most significantly by creating and
presenting a comprehensive strategic plan for the Company which was adopted by
the Board. He then made, in the Committee's opinion, substantial progress in the
execution of the plan during the transition period. The Committee awarded Mr.
Hackett a 6.6% increase in his base salary based on the Committee's subjective
assessment of his performance for the transition period. The Committee also
increased Mr. Hackett's base salary by an additional 3% to bring it more in line
with competitive levels. The effective date for Mr. Hackett's base salary
increase was deferred until the beginning of the second quarter of fiscal 1996.
Based on the Company's level of pre-tax profit in the transition period ended
March 31, 1995, Mr. Hackett received a bonus of $9,605. The Committee approved
payment of a supplemental bonus for strategic accomplishments of $10,000, for a
total bonus of $19,605 for the transition period. Mr. Hackett did not receive
any non-director stock option grants for service during the transition period.
Section 162(m) of the Internal Revenue Code
The Committee has reviewed the Company's compensation plans in light of the
Internal Revenue Code relating to the disallowance of deductions for
compensation in excess of $1.0 million to certain executive officers. All
compensation paid to executive officers for fiscal 1994 and the transition
period ended March 31, 1995 is fully deductible. The Committee does not believe
that Section 162(m) limitations will apply to compensation to be paid in fiscal
1996.
Compensation Committee
Thomas F. Hartley, Jr., Chairman
Thomas E. Linnen
William T. Walker, Jr.
Summary Compensation Table
The following table shows, for the transition period ended March 31, 1995 and
for the fiscal years ending July 31, 1994, 1993 and 1992, the compensation of
the Chief Executive Officer, the former Chief Executive Officer, and all
executive officers of the Company with compensation exceeding $100,000:
<TABLE>
SUMMARY COMPENSATION TABLE
<CAPTION>
Long-Term
Compensation
Awards
Annual Compensation Securities
Name and Underlying
Principal Position Year Salary Bonus Options
- - --------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
Roger B. Hackett * 1995 $127,333 $ 19,605 70,000 (4)
Chairman, 1994 $179,000 $ 5,000 220,000 (5)
Chief Executive Officer and 1993 $ 79,962 $ 0 50,000
President (1) 1992 - - -
R. Terren Dunlap * 1995 - - -
Former Chairman and 1994 $187,012 $ 0 120,000 (4)
Chief Executive Officer (2) 1993 $221,820 $ 0 20,000 (4)
1992 $272,090 $ 0 200,000 (6)
Kevin P. Sullivan * 1995 $104,004 $ 5,000 0
Executive Vice President 1994 $156,006 $ 0 30,000
Sales and Marketing (3) 1993 $142,079 $ 0 20,000
1992 $107,692 $ 0 40,000
- - --------------------------------------------
NOTE: Certain columns have been excluded because the information called for
therein is not applicable to the Company or the individuals named above
for the periods indicated.
* Information reflects compensation for the eight month transition period
from August 1, 1994 through March 31, 1995 as a result of the change in
the Company's fiscal year.
(1) Mr. Hackett joined the Company in January 1993 as President and began
serving as Chairman and Chief Executive Officer in March 1994.
(2) R. Terren Dunlap, former Chairman and Chief Executive Officer, was included
for the fiscal year ended July 31, 1994 because he served in the Chief
Executive Officer capacity during the first eight months of fiscal 1994. He
was reassigned as Special Projects Coordinator in March 1994 and did not
serve in an executive officer capacity during the transition period ended
March 31, 1995. As a result, no information regarding Mr. Dunlap has been
included for the transition period.
(3) Mr. Sullivan joined the Company in September 1991 as Vice President - Sales
and began serving as an executive officer in February 1993.
(4) Includes options to purchase 20,000 shares granted from the 1991
Non-Statutory Directors' Stock Option Plan (the "Directors' Plan") pursuant
to stockholder-approved plan rules.
(5) Includes options to purchase 10,000 shares granted from the Directors' Plan
pursuant to stockholder-approved plan rules and a special grant of 10,000
shares granted from the Directors' Plan pursuant to shareholder approval
received at the 1993 Annual Meeting of Stockholders.
(6) Options to purchase 200,000 shares were granted from the Directors' Plan
pursuant to stockholder approval received at the 1991 Annual Meeting of
Stockholders.
Non-cash personal benefits payable to executive officers during both the fiscal
year ended July 31, 1994 and the transition period ended March 31, 1995, did not
exceed, in the aggregate, the lesser of 10% of the cash compensation or $50,000
for any individual officer.
</TABLE>
Stock Options
The following tables set forth grants of options to purchase shares of Common
Stock of the Company made to the executive officers named in the Summary
Compensation Table who served during the fiscal year ended July 31, 1994 and the
eight month transition period ended March 31, 1995, respectively. The tables
also set forth the potential realizable value of these options assuming a 5% and
10% compounded appreciation in the market value of the stock over the term of
the option grants.
<TABLE>
OPTION GRANTS IN THE FISCAL YEAR ENDED JULY 31, 1994
<CAPTION>
Individual Grants
- - ------------------------------------------------------------------------------------------------------------------
Potential
Realizable
Value at Assumed
Number % of Total Annual Rates of
of Options Stock Price
Securities Granted to Appreciation for
Underlying Employees Option Term
Options in the 1994 Price Expiration
Name Granted Fiscal Year Per Share Date 5% 10%
- - -----------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C>
Roger B. Hackett 110,000 26.7% $2.6875 1/27/03 $185,917 $471,150
100,000 24.3% $2.3875 8/02/03 $150,149 $380,506
10,000 2.4% $2.6875 9/01/03 $ 16,902 $ 42,832
R. Terren Dunlap 100,000 24.3% $2.3875 8/02/03 $150,149 $380,506
20,000 4.8% $2.6875 9/01/03 $ 33,803 $ 85,664
Kevin P. Sullivan 30,000 7.3% $2.3875 8/02/03 $ 45,045 $114,152
- - -----------------------------------------------------------------------------------------------------------------
The options granted to the individuals listed above were made at the fair market
value of the Company's Common Stock on the date of grant and were fully vested
following a six month holding period. </TABLE>
<TABLE>
OPTION GRANTS IN THE TRANSITION PERIOD ENDED MARCH 31, 1995
<CAPTION>
Individual Grants
- - -----------------------------------------------------------------------------------------------------------------
Potential
Realizable
Value at Assumed
Number % of Total Annual Rates of
of Options Stock Price
Securities Granted to Appreciation for
Underlying Employees in Option Term
Options the Transition Price Expiration
Name Granted Period Per Share Date 5% 10%
- - -----------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C>
Roger B. Hackett 50,000 21.3% $1.875 9/01/04 $ 58,959 $149,413
20,000 8.5% $1.875 9/01/04 $ 23,584 $ 59,765
Kevin P. Sullivan 20,000 8.5% $1.75 8/15/04 $ 22,011 $ 55,781
- - -----------------------------------------------------------------------------------------------------------------------------
The options granted to the individuals listed above were made at the fair market
value of the Company's Common Stock on the date of grant and were fully vested
following a six month holding period.
</TABLE>
Option Exercises and Holdings
The following table summarizes option exercises during the fiscal year ended
July 31, 1994, by the executive officers named in the Summary Compensation Table
and unexercised options held by these individuals on July 31, 1994.
AGGREGATED OPTION EXERCISES IN FISCAL 1994 AND FISCAL YEAR-END OPTION VALUES
- - --------------------------------------------------------------------------------
Number of
Securities Value of
Underlying Unexercised
Unexercised In-the-Money
Options at Options at
Shares 7/31/94 (#) 7/31/94 (1)
Acquired
on Exercise Value Exercisable/ Exercisable/
Name (# of shares) Realized Unexercisable Unexercisable
- - --------------------------------------------------------------------------------
Roger B. Hackett - - 270,000 / 0 $ 0 / $0
R. Terren Dunlap - - 834,000 / 0 $436,000 / $0
Kevin P. Sullivan - - 90,000 / 0 $ 18,750 / $0
(1) The closing price of the Company's Common Stock as reported for July 31,
1994 on the American Stock Exchange Composite Tape was $1.50.
The following table summarizes option exercises during the transition period
ended March 31, 1995 by the individuals named in the Summary Compensation Table
who served as executive officers during the transition period and unexercised
options held by these individuals on March 31, 1995.
AGGREGATED OPTION EXERCISES IN TRANSITION PERIOD AND
PERIOD END OPTION VALUES
- - --------------------------------------------------------------------------------
Number of
Securities Value of
Underlying Unexercised
Unexercised In-the-Money
Options at Options at
Shares 3/31/95 (#) 3/31/95 (1)
Acquired
on Exercise Value Exercisable/ Exercisable/
Name (# of shares) Realized Unexercisable Unexercisable
- - --------------------------------------------------------------------------------
Roger B. Hackett - - 340,000 / 0 $ 2,189 / $0
Kevin P. Sullivan - - 120,000 / 0 $ 28,906 / $0
(1) The closing price of the Company's Common Stock as reported for March 31,
1995 on the American Stock Exchange Composite Tape was $1.90625.
Executive Separation Agreements
The Company has Separation Agreements with Roger B. Hackett and R. Terren
Dunlap. The Agreement with Mr. Dunlap, former Chairman and Chief Executive
Officer, was amended effective August 2, 1994. The Amendment provided for the
reassignment of Mr. Dunlap as Special Projects Coordinator, retained the
existing employment termination benefits but provided for an offset against the
base salary component of those (potential) benefits with base salary paid under
his reassignment. The Separation Agreement with Mr. Dunlap, as amended, provides
that:
(a) as Special Projects Coordinator, Mr. Dunlap is entitled to the same
annual base salary that he was receiving in his former capacity as
Chairman and Chief Executive Officer, for a period extending through
October 18, 1996;
(b) in the event that Mr. Dunlap's employment is terminated as a result of a
"takeover" of the Company, Mr. Dunlap shall receive 2.99 times his
annual base salary in a lump sum payment, offset by the amount of base
salary previously received as Special Projects Coordinator;
(c) in the event that either the Company's Board or Mr. Dunlap initiates Mr.
Dunlap's separation (absent a "takeover"), Mr. Dunlap shall receive: (i)
payments equal to two (2.0) times his gross annual base salary, payable
in equal installments timed to coincide with the Company's payroll
period, over two years, offset by the amount of base salary previously
received as Special Projects Coordinator; and (ii) all standard employee
benefits, including Company-paid health insurance, over the two year
period.
The Separation Agreement with Roger B. Hackett provides that if Mr. Hackett's
employment is terminated, Mr. Hackett shall be entitled to receive:
(a) in the event that Mr. Hackett's employment is terminated as a result of
a "takeover" of the Company, Mr. Hackett shall receive 2.99 times his
annual base salary in a lump sum payment;
(b) in the event that the Company's Board initiates Mr. Hackett's separation
(absent a "takeover"), Mr. Hackett shall receive: (i) payments equal to
1/4 times each year of employment up to a maximum of one (1.0), plus one
(1.0), times his gross annual base salary, payable in equal installments
timed to coincide with the Company's payroll period, over the applicable
period (i.e. with two years of service, Mr. Hackett would be entitled to
receive one and one-half (1.5) times his gross annual base salary
payable in equal installments over eighteen months); and (ii) all
standard employee benefits, including Company-paid health insurance,
over the same period; and
(c) in the event Mr. Hackett initiates separation with a minimum of ninety
days notice, Mr. Hackett shall receive: (i) payments equal to 0.125
times each year of employment up to a maximum of one (1.0), plus
one-half (0.5), times his gross annual base salary, payable in equal
installments timed to coincide with the Company's payroll period, over
the applicable period (i.e. with two years of service, Mr. Hackett would
be entitled to receive three-quarters (0.75) times his gross annual base
salary payable in equal installments over nine months); and (ii) all
standard employee benefits, including Company-paid health insurance,
over the same period.
Both Mr. Dunlap's and Mr. Hackett's Separation Agreements provide for extension
of the right to exercise options to purchase Common Stock for the maximum
period, not to exceed seven years, permitted by the plans under which such
options were granted. The Agreements continue in full force and effect during
the life of the Corporation or its successors and/or assigns, unless amended or
terminated with the consent of both parties.
STOCK PERFORMANCE GRAPH
The following performance graph compares the yearly change since July 31, 1989
in cumulative return on the Common Stock of the Company to the AMEX Market Value
Index (Broad Market Index) and a Company-constructed Industry Peer Index. The
Industry Peer Index shown below is comprised of companies competing either
solely or substantially within the consumer electronics industry with common
stock or ADRs traded on an exchange within the United States. Each company's
stock performance is weighted within the Industry Peer Index by its relative
market capitalization. The graph assumes $100 was invested on July 31, 1989 and
shows the cumulative total return as of each July 31 thereafter through the
fiscal year ended July 31, 1994 and as of the eight month transition period
ended March 31, 1995.
Stock Performance Graph - Data Summary Table
Cumulative Total Return
7/31/89 7/31/90 7/31/91 7/31/92 7/31/93 7/31/94 3/31/95
------- ------- ------- ------- ------- ------- -------
Go-Video, Inc. 100 84 12 39 34 20 26
Peer Index 100 103 80 60 80 106 102
Amex Market Value 100 94 98 103 116 116 123
Companies comprising the Industry Peer Index are: Akai Electric, Ltd., Audiovox
Corp., Boston Acoustics Inc., Carver Corp., Cobra Electronics Corp., Harman
International Industries Inc., Hitachi Ltd., International Jensen Inc., Koss
Corp., Matsushita Electronics Industries Ltd., Philips Electronics NV, Pioneer
Electronic Corp., Polk Audio Inc., Recoton Corp., Sanyo Electronics Ltd., Sony
Corp., Victor Company Japan Ltd., Wells Gardner Electronics Group, and Zenith
Electronics Corp. Kloss Video was dropped from the peer index in fiscal 1994
because their stock no longer trades in the public market.
PROPOSAL 2
TO AMEND THE GO-VIDEO, INC.
1991 DIRECTORS' STOCK OPTION PLAN
In 1991, shareholders of the Company approved the 1991 Directors' Stock Option
Plan (the "Directors' Plan"). In 1993, shareholders approved amendments to the
Directors' Plan to increase the number of options automatically granted per
year, change the annual grant date, and ratify certain option grants The
Directors' Plan is a key component of the Company's compensation to directors
and ties the directors' personal financial interests directly to an increase in
the market price of the Company's Common Stock.
Summary of the Proposal
To enhance the effectiveness of the Directors' Plan, the Board of Directors of
the Company has approved a proposal (the "Proposal") to amend the Directors'
Plan, subject to approval by shareholders at the Annual Meeting as required by
its terms. The Board of Directors believes that the Proposal will promote the
achievement of long-term objectives of the Company by further linking the
personal interests of the directors to those of the shareholders and in aiding
the Company in attracting and retaining directors of outstanding competence.
With approval by the shareholders, the proposed amendments to the Directors'
Plan would become effective as of June 15, 1995. A summary of the Proposal is
set forth below.
Increase in Total Number of Shares That May Be Issued, Transferred or Exercised
Pursuant to Options Granted Under The Directors' Plan
The Proposal would increase the number of shares of Common Stock that could be
issued, transferred or exercised pursuant to options granted under the
Directors' Plan from 500,000 to 750,000. As of June 15, 1995, the Directors'
Plan had available for future issuance options to purchase 61,000 shares of
Common Stock. Under the formula approved by Shareholders at the 1993 Annual
Meeting, a total of 70,000 shares would be required to provide for the September
1, 1995 grant. The Proposal would provide sufficient shares of Common Stock for
future issuance over the next four years, given the current issuance formula and
size of the Board.
Addition of Initial Grant of Options For a New Director Entering Service
The Proposal would provide for an initial pro-rata grant of options to new
directors upon joining the Board. The current Plan provides only for annual
grants for directors on September 1st. As a result, a director appointed or
elected to the Board subsequent to September 1 would serve until September 1st
of the following year before receiving any options under the Plan. The Board of
Directors believes that it is in the best interests of the shareholders to tie
the personal financial interests of all directors, including those new to the
Board, directly to an increase in the market price of the Company's Common
Stock. Under this proposal, the initial grant would be proportional to the
number of months of service before the annual September 1 grant. For example, if
a director were appointed on January 20, the initial grant under this amendment
would be calculated as:
number of complete months before September 1 divided by 12 = 7/12
times 10,000 shares = 5,833 shares
The initial grant to a new director using the above example would be options to
purchase 5,833 shares of Common Stock, with a grant date of January 20 at the
then fair market value of the underlying Common Stock.
Extension of the Expiration Date of Options For a Director Leaving Service
The Plan currently provides for an expiration date of newly issued options to
the earlier of ten years or one year after leaving service as a director. The
Proposal would change the expiration date of newly issued options to the sooner
of ten years from issuance or three years after leaving service as a director.
Because a significant component of a director's responsibilities lies in setting
the strategic direction of the Company, the value of which is not always
realized within a year, the Board believes that the proposed amendment would
continue to align the financial interests of directors who would not be standing
for reelection with long-term strategic enhancements to shareholder value.
New Plan Benefits
The following table sets forth the number of stock options that will be granted
under the Directors' Plan to each of the named executives and to each of the
other specified groups. The Proposal increases the number of shares available
for issuance under the Directors' Plan, but, assuming no new directors are
elected, does not otherwise affect the number of options that would be issued in
1995 under the Directors' Plan.
New Plan Benefits
Go-Video, Inc. 1991 Nonstatutory Directors' Stock Option Plan
- - --------------------------------------------------------------------------------
Name and Position Grant Date $ Value Number of Units
(Shares of Common Stock)
- - --------------------------------------------------------------------------------
Roger B. Hackett 09/01/95 NA 20,000
Chairman, Chief Executive
Officer, and President
R. Terren Dunlap 09/01/95 NA 10,000
Former Chairman and
Chief Executive Officer
Kevin P. Sullivan None
Executive Vice President
Sales and Marketing
Executive Officer Group 09/01/95 NA 20,000
Non-Executive Officer 09/01/95 NA 10,000
Group
All Employees as a Group 09/01/95 NA 30,000
Non-Employee Directors 09/01/95 NA 40,000
as a Group
Summary of the Material Provisions of the 1991 Directors' Stock Option Plan That
Are Not Affected by the Proposal
The Board of Directors and stockholders of the Company adopted the Directors'
Plan effective November 1991 for directors of the Company. The Directors' Plan
provides for the automatic annual grant of stock options to eligible
participants. Only the Chairman of the Board and directors of the Company are
eligible to participate in the Directors' Plan. The Directors' Plan authorizes
the granting of options to purchase an aggregate of 500,000 (750,000 if the
Proposal is adopted) shares of Company Common Stock. If any option granted under
the Directors' Plan terminates, expires, or lapses for any reason, the shares
subject to purchase pursuant to such options are again available for grant under
the Directors' Plan. The Directors' Plan is administered by the Board of
Directors or any committee appointed by the Board (the "Committee"). The
Committee has the full power, discretion, and authority to interpret and
administer the Directors' Plan; however, the Committee in no event has any power
to determine eligibility, or to determine the number, value, vesting period or
timing of awards to be made under the Directors' Plan.
As currently structured, on September 1 of each calendar year, the Chairman of
the Board is automatically granted options to purchase 20,000 shares of Common
Stock and each other director is automatically granted options to purchase
10,000 shares of Common Stock. The exercise price for all options is the fair
market value on the date of grant ($1.9375 at June 23, 1995). Each option
granted expires on the 10th anniversary date of its grant unless earlier
terminated in accordance with the Directors' Plan. Participants are entitled to
exercise such options at any time six (6) months after date of grant. The
adoption by the shareholders of Proposal 2 would add an initial grant of options
to purchase shares of Common Stock for new directors and would (potentially)
extend the expiration date for directors upon leaving service.
The Board may terminate, amend, or modify the Directors' Plan at any time
(except that plan provisions relating to the amount, price, and timing of
securities to be awarded may not be amended more than once every six (6) months
other than to comport with changes in the Internal Revenue Code, ERISA, or the
regulations promulgated thereunder); provided, however, that stockholder
approval is required for any amendment that would materially increase the
benefits accruing to directors under the Directors' Plan, materially increase
the number of securities subject to the plan, or materially modify the
eligibility requirements; and provided further that the consent of the director
is required to any amendment which would alter, terminate, or impair options
previously granted to the director. The Directors' Plan shall remain in effect
until all shares subject to it have been either purchased or acquired in
accordance with the terms; however, in no event may an award be granted under
the Directors' Plan after October 31, 2001.
Upon exercise of a stock option, the purchase price must be paid in full in
either cash or its equivalent or by tendering previously acquired shares of
Company Common Stock with a fair market value at the time of exercise equal to
the exercise price (provided such shares have been held for at least six (6)
months prior to tender). The Committee may also allow cashless exercises or by
any other means that the Committee determines to be consistent with the purpose
of the Directors' Plan as permitted under applicable law.
Federal Income Tax Consequences
The following discussion of certain relevant federal income tax effects
applicable to stock options granted under the Directors' Plan is a brief summary
only, and reference is made to the Code and the regulations and interpretations
issued thereunder for a more complete statement of relevant federal tax
consequences.
A participant receiving nonqualified stock options will not recognize taxable
income at the time of grant. At the time the nonqualified stock option is
exercised, the participant will recognize ordinary taxable income in an amount
equal to the difference between the amount paid for the shares and the fair
market value of the Company's Common Stock on the date of exercise. The Company
will be entitled to a concurrent deduction equal to the ordinary income
recognized by the participant.
Upon a subsequent disposition of the Company Common Stock acquired through
exercise of a nonqualified stock option, the participant will realize capital
gain or loss to the extent of any intervening appreciation or depreciation. The
Company will not be entitled to any further deduction at that time.
Text of the 1991 Directors' Stock Option Plan
A copy of the Directors' Plan as amended to reflect the Proposal is attached to
this Proxy Statement as Exhibit A and is incorporated herein by reference. The
provisions of the Directors' Plan added by the Proposal are underlined, and the
provisions deleted by the Proposal are crossed out with a solid line, in the
attached exhibit. The foregoing description of the Proposal and the Directors'
Plan is qualified in its entirety by reference to the full text of the 1991
Directors' Stock Option Plan set forth in Exhibit A.
Vote Required
Adoption of the Proposal to amend the 1991 Directors' Plan requires approval by
a majority of the holders of the outstanding shares of Company Common Stock
present at the 1995 Annual Meeting and entitled to vote thereon.
Recommendation of the Board of Directors
The Board of Directors recommends a vote FOR the Proposal to amend the 1991
Directors' Stock Option Plan.
PRINCIPAL STOCKHOLDERS AND SECURITY OWNERSHIP OF MANAGEMENT
The following table sets forth certain information, as of June 23, 1995,
concerning shares of Common Stock beneficially owned by each stockholder known
by the Company to be the beneficial owner of more than five percent of the
Common Stock, by directors, named executive officers, and by all directors and
executive officers of the Company as a group. The information presented is based
upon information furnished to the Company by the beneficial owners.
Name and address of Number of shares Percent of
beneficial owner beneficially owned (3) outstanding shares
- - ------------------- ---------------------- ------------------
Ralph Weil (1) 591,200 5.2%
R. Terren Dunlap (2) 808,458 (4) 6.7%
Roger B. Hackett (2) 341,000 (5) 2.9%
Kevin P. Sullivan (2) 98,700 (6) **
William T. Walker, Jr. (2) 59,450 (7) **
Thomas F. Hartley, Jr. (2) 36,000 (8) **
Thomas E. Linnen (2) 20,000 (9) **
Ralph F. Palaia (2) 10,000 **
All officers and directors
as a group (9 persons) 1,474,188 (10) 11.6%
** Less than 1.0%
- - --------------------------------------
(1) The address of this beneficial owner is 2 Crossfield Avenue, West Nyack, New
York 10994. The information contained herein was obtained from a Schedule
13D dated September 21, 1994 on file with the Securities and Exchange
Commission. The Company makes no representation as to the accuracy or
completeness of the information reported.
(2) The address of each beneficial owner is 14455 N. Hayden Rd., Ste. 219,
Scottsdale, Arizona 85260.
(3) All options and warrants indicated are exercisable within 60 days.
(4) Includes options and warrants to acquire 774,718 shares.
(5) Includes options to acquire 340,000 shares.
(6) Includes options to acquire 85,000 shares.
(7) Includes options and warrants to acquire 58,450 shares.
(8) Includes options to acquire 33,000 shares.
(9) Includes options to acquire 20,000 shares.
(10)Includes options and warrants to acquire 1,411,248 shares.
CERTAIN TRANSACTIONS
Richard L. Barrett, a director of the Company until December 8, 1994, is a
shareholder of Richard L. Barrett, P.C., a law firm that performed legal
services billed at hourly rates for the Company. During fiscal 1994, fees paid
to Richard L. Barrett, P.C. totaled $103,698. During the transition period ended
March 31, 1995, no fees were paid to Richard L. Barrett, P.C. Thomas F. Hartley,
Jr., a director of the Company, is the President of Johnson & Higgins of
Arizona, an insurance brokerage firm that obtains bids from and administers the
Company's relations with commercial, ocean marine, and directors' and officers'
liability insurance carriers. During fiscal 1994, Johnson & Higgins of Arizona
earned $25,886 in brokerage commissions on insurance premiums paid of $161,068.
During the transition period ended March 31, 1995, Johnson & Higgins of Arizona
earned $7,060 in brokerage commissions on insurance premiums paid of $51,600.
Mark A. Sullivan is the principal of Total Market Sales Inc., an independent
manufacturers' representative who represents the Company, along with other
consumer electronic and personal computer firms, in the mid-Atlantic sales
region. Mark A. Sullivan is the brother of Kevin P. Sullivan, an executive
officer of the Company. During fiscal 1994, sales commissions paid to Total
Market Sales Inc. totaled $86,096. During the transition period ended March 31,
1995, sales commissions paid to Total Market Sales Inc. totalled $79,785. Sales
commissions were paid to Total Market Sales at the same percentage of revenue
rate as were the majority of the Company's other independent manufacturers'
representatives. Ralph F. Palaia, a director of the Company, is the principal
and President of Ralph F. Palaia & Assoc., which among other services provides
sales and marketing consultation. The Company signed a one year sales and
marketing consulting agreement with Ralph F. Palaia & Assoc. effective April 1,
1995 through March 31, 1996, in which the Company will pay a monthly retainer of
$6,000 plus reimbursable direct expenses in exchange for sales and marketing
consulting services.
COMPENSATION COMMITTEE INTERLOCKS AND INSIDER PARTICIPATION
Thomas F. Hartley, Jr., Thomas E. Linnen, William T. Walker, Jr., and, until
December 8, 1994, Richard L. Barrett, all of whom are or were non-employee
directors, serve(d) on the Compensation Committee. Mr. Barrett is a shareholder
of Richard L. Barrett, P.C., a law firm that performed legal services billed at
hourly rates for the Company during fiscal 1994. During fiscal 1994 and the
transition period ended March 31, 1995, fees paid to Richard L. Barrett, P.C.
totalled $103,698 and $0, respectively. Mr. Hartley is the President of Johnson
& Higgins of Arizona, an insurance brokerage firm that obtains bids from and
administers the Company's relations with commercial, ocean marine, and
directors' and officers' liability insurance carriers. During fiscal 1994,
Johnson & Higgins of Arizona earned $25,886 in brokerage commissions on
insurance premiums paid of $161,068. During the transition period ended March
31, 1995, Johnson & Higgins of Arizona earned $7,060 in brokerage commissions on
insurance premiums paid of $51,600.
SECTION 16 REQUIREMENTS
Section 16(a) of the Securities Exchange Act of 1934, as amended, requires the
Company's directors and officers, and persons who own more than 10% of a
registered class of the Company's equity securities, to file reports of
ownership and changes of ownership with the Securities and Exchange Commission.
Based solely on its review of the copies of such forms received by it, the
Company believes that during fiscal year 1994 and the transition period ended
March 31, 1995, all filing requirements applicable to its directors, officers,
and greater-than-10% beneficial owners were complied with, except that a
transaction that should have been included in the Form 4 for R. Terren Dunlap
that was filed on September 10, 1994 was reported on an amended Form 4 filed on
February 13, 1995.
RELATIONSHIP WITH INDEPENDENT PUBLIC ACCOUNTANTS
The principal independent public accounting firm utilized by the Company during
the fiscal year ending July 31, 1994 and the transition period ended March 31,
1995 was Deloitte and Touche, independent certified public accountants (the
"Auditors"). It is presently contemplated that the Auditors will be retained as
the principal accounting firm to be utilized by the Company during the current
fiscal year, although such selection won't be finalized until the end of the
fiscal year. It is anticipated that a representative of the Auditors will attend
the Annual Meeting for the purpose of responding to appropriate questions. At
the meeting, a representative of the Auditors will be afforded an opportunity to
make a statement if the Auditors so desire.
REPORTS TO STOCKHOLDERS
The Company has mailed this Notice and Proxy Statement and a copy of its 1995
Annual Report to each stockholder entitled to vote at the Annual Meeting.
Included in the 1995 Annual Report are the Company's financial statements for
the transition period ended March 31, 1995. The Company's 1995 Annual Report is
not to be regarded as proxy soliciting material.
PROPOSALS BY STOCKHOLDERS
Any stockholder proposal which is intended to be presented at the next annual
meeting must be received at the Company's principal executive offices by no
later than March 19, 1996, if such proposal is to be considered for inclusion in
the Company's Proxy Statement and Form of Proxy relating to such meeting.
OTHER BUSINESS
The meeting is being held for the purposes set forth in the Notice which
accompanies this Proxy Statement. The Board is not presently aware of any
business to be transacted at the meeting other than the business described in
the Notice.
Go-Video, Inc.
DOUGLAS P. KLEIN
Douglas P. Klein
Vice President, Finance
Secretary, Treasurer
July 17, 1995
<PAGE>
EXHIBIT A
GO-VIDEO, INC.
1991 NONSTATUTORY DIRECTORS'
STOCK OPTION PLAN
1. PURPOSE OF THE PLAN.
The purpose of the Go-Video, Inc. 1991 Nonstatutory Directors' Stock Option
Plan (the "Plan") is to encourage ownership in Go-Video, Inc., a Delaware
corporation (the "Company") by Directors, to strengthen the ability of the
Company to attract and retain the services of experienced and knowledgeable
individuals as Directors of the Company and to provide those individuals with a
further incentive to work for the best interests of the Company and its
shareholders.
2. DEFINITIONS.
For purposes of the Plan, the following terms will have the meaning set
forth herein:
(a) "Board" means the Board of Directors of the Company.
(b) "Company" means Go-Video, Inc. and any successor thereto.
(c) "Date of Grant" means the first business day in September of the
year in which Options are granted to Participants as provided in
Section 5, with the exception of the January 27, 1993 grants.
(d) "Director" means an individual (including an employee of the
Company) who is a member of the Board of Directors of the Company.
(e) "Fair Market Value" means the closing bid price for the Stock on
the American Stock Exchange ("ASE") as reported in the Wall Street
Journal for the date that Fair Market Value is to be determined, or
if no such bids were made on such date, the closing bid price for
the Stock on the ASE as reported in the Wall Street Journal for the
immediately succeeding date on which such bids were made.
(f) "Option" means an option to purchase Stock granted in accordance
with Section 5.
(g) "Participant" means a Director who has been granted an Option
pursuant to paragraph 5.
(h) "Plan" means the Go-Video, Inc. 1991 Nonstatutory Directors' Stock
Option Plan, as the same may be amended from time to time.
(i) "Stock" means the Common Stock of the Company as defined in the
Company's Articles of Incorporation or such other stock that is
substituted therefor as provided in Section 6 of the Plan.
3. SHARES OF STOCK SUBJECT TO THE PLAN.
(a) Subject to the provisions of Section 3(c) and Section 6 of the
Plan, the aggregate number of shares of Stock that may be issued,
transferred or exercised pursuant to Options granted under the Plan
will not exceed [(delete): Five Hundred Thousand (500,000)] [(add):
SEVEN HUNDRED FIFTY THOUSAND (750,000)] shares.
(b) The shares to be delivered under the Plan may be made available
from (i) authorized but unissued shares of Stock, (ii) Stock held
in the treasury of the Company or (iii) previously issued and
outstanding shares of Stock reacquired by the Company, including
shares purchased on the open market.
(c) To the extent that an Option lapses or the rights of a Participant
thereto terminate, any shares of Stock subject to such Option will
again be available for the grant of an Option.
4. ADMINISTRATION OF THE PLAN.
The Board will administer the Plan; provided, however, that the Board may
appoint a committee of two (2) or more directors to administer the Plan if
deemed necessary or advisable in order to comply with the exemptive rules
promulgated pursuant to Section 16(b) of the Securities Exchange Act of 1934, as
amended (the "Exchange Act"). Grants of Options under the Plan and the amount,
price and timing of the awards to be granted will be automatic as described in
Section 5. However, all questions of interpretation of the Plan will be
determined by the Board or the Board committee, as applicable, and such
determination will be final and binding upon all parties.
5. STOCK OPTIONS.
(a) As of the Date of Grant in 1991, the Company shall grant an Option
to each Director for the number of shares of Stock determined
pursuant to the following table:
Position Option Shares
-------- -------------
Chairman of the Board 200,000
All Other Directors 20,000
On the Date of Grant in 1992, the Company shall grant an Option to
each Director for the number of shares of Stock determined pursuant
to the following table:
Position Option Shares
-------- -------------
Chairman of the Board 20,000
All Other Directors 3,000
As of January 27, 1993, the Company shall grant Options to purchase
10,000 shares of Common Stock to each of Richard L. Barrett, Roger
B. Hackett, and Thomas F. Hartley, Jr.
On the Date of Grant in 1993 and in each year thereafter until the
termination of the Plan, the Company shall grant an Option to each
Director for the number of shares of Stock determined pursuant to
the following table:
Position Option Shares
-------- -------------
Chairman of the Board 20,000
All Other Directors 10,000
[(add): EFFECTIVE FOR DIRECTORS WHO FIRST COMMENCE SERVICE ON THE
BOARD ON OR AFTER JUNE 15, 1995, UPON BEING APPOINTED OR ELECTED,
EACH DIRECTOR SHALL BE GRANTED A NUMBER OF OPTIONS AT THE FAIR
MARKET VALUE ON SUCH DATE WHICH SHALL EQUAL 10,000 MULTIPLIED BY A
FRACTION, THE DENOMINATOR OF WHICH IS 12 AND THE NUMERATOR OF WHICH
IS THE NUMBER OF FULL CALENDAR MONTHS FROM THE DATE THE DIRECTOR IS
FIRST APPOINTED OR ELECTED TO THE FOLLOWING SEPTEMBER 1ST.]
(b) The per share exercise price of any Option shall be equal to Fair
Market Value on the Date of Grant.
(c) Each Option under the Plan may be exercised at any time during the
period beginning six (6) months after the latter to occur of (i)
its Date of Grant or (ii) the effective date of the Plan (see
Section 10), and ending on the date which is ten (10) years after
its Date of Grant. In addition, at least six (6) months must elapse
between a Participant's receipt of an Option and the disposition of
the Stock obtained upon the exercise of such Option.
Notwithstanding the foregoing, if a Participant ceases to be a
Director for any reason, any outstanding Options held by that
Participant shall expire on the [(delete): first] [(add): THIRD]
anniversary of the date on which the Participant ceased to be a
Director, unless such Options expire sooner by their terms.
(d) Options shall be evidenced by a written instrument and shall not
include any terms and conditions which are inconsistent with the
provisions of the Plan.
(e) Options may be exercised by written notice to the Company,
accompanied by payment in full in cash or by check, in shares of
Stock having a Fair Market Value equal to the exercise price
provided that such shares have been held for at least six (6)
months as of the date of exercise, by delivery to the Company of a
promissory note with such collateral as the Board, in its
discretion, determines to be sufficient, or in a combination of the
foregoing. As an alternate, payment of the Option exercise price
may, in the discretion of the Board, be made as provided in Section
5(f).
(f) In its discretion, the Board may assist Participants in paying the
exercise price of Options by:
(i) Causing the Company to extend a loan to a Participant or
to guarantee a loan obtained by the Participant from a
third party; or
(ii) Authorizing payment of the Option exercise price in
installments over such period and subject to such terms
and conditions as the Board shall determine.
6. DILUTION AND OTHER ADJUSTMENTS.
In the event of any change in the outstanding Stock by reason of any stock
dividend, stock split, recapitalization, merger, consolidation, reorganization,
combination or exchange of shares or other similar event, the number or kind of
shares subject to any outstanding Option, and the Option price per share under
any outstanding Option, will be automatically adjusted so that the proportionate
interest of the Participants will be maintained as before the occurrence of any
such event. Any adjustment in outstanding Options will be made without change in
the total Option exercise price applicable to the unexercised portion of such
Options and with a corresponding adjustment in the Option exercise price per
share. Any adjustment permitted by this Section 6 will be conclusive and binding
for all purposes of the Plan.
7. GENERAL PROVISIONS.
(a) Nothing in the Plan or in any instrument executed pursuant to the
Plan will confer upon any Participant any right to continue to
serve as a Director for any period of time.
(b) Neither a Participant nor any beneficiary or other person claiming
under or through such Participant will have any right, title or
interest in any shares of Stock allocated or reserved under the
Plan or subject to any Option except as to such shares of Stock, if
any, that have been issued or transferred to such Participant or
beneficiary or other person claiming under or through the
Participant.
(c) No Option may be exercised by any person other than the Participant
or his or her guardian or legal representative during the
Participant's lifetime. No Option or any other right under the
Plan, contingent or otherwise, will be transferable, assignable or
subject to any encumbrance, pledge or charge of any nature, other
than by will or the laws of descent and distribution.
(d) The grant of Options and the obligation of the Company to issue or
transfer Stock as a result of the exercise of an Option under the
Plan will be subject to the requirements of all applicable laws,
rules and regulations and to such approval by government agencies
and/or the securities exchanges on which the Stock is listed as may
be required or deemed advisable by the Company. As a condition
precedent to the grant of any Option or the issuance or transfer of
shares pursuant to the exercise of any Option, the Company may
require the Participant to take any reasonable action to meet such
requirements or to obtain such approvals. The Company will be under
no obligation to register under the Securities Act of 1933, as
amended (the "Securities Act"), any of the shares of Stock issued
or transferred as a result of the Plan. The Company will have the
right to restrict the transferability of shares of Stock issued or
transferred under the Plan in such manner as it deems necessary or
appropriate to insure the availability of any exemption from
registration under the Securities Act that may be available.
(e) The Board and each member thereof will be indemnified and held
harmless by the Company against any and all loss, cost, liability
or expense that may be imposed upon or reasonably incurred by it or
any member thereof in connection with or resulting from any claim,
action, suit or proceeding as a result of any action or failure to
act under the Plan.
(f) Except as expressly provided in Section 8 below, nothing herein
contained is intended to limit in any way, the compensation to be
paid or the benefits to be provided by the Company to any Director.
8. AMENDMENT OF THE PLAN.
The Board may amend the Plan at any time; provided, however, that (a) Plan
provisions relating to the amount, price and timing of securities to be awarded
under the Plan may not be amended more than once every six (6) months, other
than to comport with changes in the Internal Revenue Code, the Employee
Retirement Income Security Act or the rules thereunder, (b) no Plan amendment
will, without the Participant's consent, alter, terminate or impair any right or
obligation under any Option previously granted under the Plan, except as
expressly provided under the terms of the Plan and (c) shareholder approval is
required for any Plan amendment (including those described in clauses (a) and
(b) of this Section 8) that would materially increase the benefits accruing to
Participants under the Plan, materially increase the number of securities which
may be issued under the Plan or materially modify the requirements as to
eligibility for participation in the Plan.
9. TERMINATION OF THE PLAN.
The Plan will terminate upon the earlier of the following dates or events to
occur:
(a) upon the adoption of a resolution of the Board terminating the Plan
or
(b) the date ten (10) years after the effective date of the Plan.
The termination of the Plan will not affect the validity of any Option
outstanding on the date of termination.
10. EFFECTIVE DATE OF THE PLAN.
The Plan is effective November 1, 1991, subject to and conditioned upon
subsequent approval of the Plan by the shareholders of the Company. The Plan and
the grant of Options thereunder will be void ab initio and of no force and
effect if the Company's shareholders do not approve the Plan.
<PAGE>
REVOCABLE PROXY
THIS PROXY IS SOLICITED ON BEHALF OF THE BOARD OF DIRECTORS OF GO-VIDEO, INC.
THE UNDERSIGNED Stockholder(s) of GO-VIDEO, INC. (the "Company"), 14455
North Hayden Road, Suite 219, Scottsdale, Arizona 85260, hereby appoints Roger
B. Hackett and Douglas P. Klein, and each of them individually, as proxy with
full powers of substitution, to cast all votes which undersigned would be
entitled to vote at the Annual Meeting of the Stockholders of the Company to be
held at 8:00 a.m., Mountain Standard Time, on August 29, 1995, at the Orange
Tree Resort, 10601 North 56th Street, Scottsdale, Arizona, and all adjournments
thereof, with all powers the undersigned would possess if personally present,
and particularly (without limiting the generality of the foregoing) to vote and
act.
1. Election of the following Directors:
Terms Expiring at the 1998 Annual Meeting: Thomas E. Linnen
and
William T. Walker, Jr.
FOR all nominees [ ] WITHHOLD authority [ ]
listed above to vote for all nominees listed above
To withhold authority for any individual nominee, write that nominee's name in
the space provided below:
- - -------------------------------------------------------------------
2. Amendments to the Go-Video, Inc. 1991
Nonstatutory Directors' Stock Option Plan.
FOR [ ] AGAINST [ ]
3. In the discretion of the proxy holders on such matters as may properly
come before the meeting or any adjournment thereof.
NOTE: THE COMPANY KNOWS OF NO OTHER BUSINESS TO COME BEFORE THE MEETING.
The Proxy Holders intend to vote FOR all the nominees indicated above
and for Proposal 2 unless marked to the contrary. If any other business should
come before the meeting, this Proxy will be voted in accordance with the best
judgement of the proxy holders. This Proxy will be used only at the August 29,
1995 Annual Meeting or any adjournment(s) thereof.
The undersigned hereby acknowledges receipt of the accompanying Notice
of Annual Meeting and Proxy Statement dated July 17, 1995, prior to signing this
Proxy.
The Board of Directors recommends a VOTE FOR the election of the
proposed directors and for Proposal 2. Please sign, date and return this Proxy
today in the envelope provided. PLEASE SIGN EXACTLY AS NAMES APPEAR ON THIS
PROXY. ONLY ONE SIGNATURE IS NEEDED FOR SHARES OF COMMON STOCK OWNED JOINTLY.
- - ------------------------------ ----------------------------------------
Date Signature(s)
