SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
SCHEDULE 14A INFORMATION
Proxy Statement Pursuant to Section 14(a) of the Securities Exchange Act of 1934
(Amendment No. )
Filed by the Registrant [X]
Filed by a Party other than the Registrant [ ]
Check the appropriate box:
[ ] Preliminary Proxy Statement
[ ] Confidential, for Use of the Commission Only (as permitted by Rule
14a-6(e)(2))
[X] Definitive Proxy Statement
[ ] Definitive Additional Materials
[ ] Soliciting Material Pursuant to Rule 14a-11(c) or Rule 14a-12
GO-VIDEO, INC.
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(Name of Registrant as Specified In Its Charter)
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(Name of Person(s) Filing Proxy Statement)
Payment of Filing Fee (Check the appropriate box):
[X] No fee required.
[ ] Fee computed on table below per Exchange Act Rules 14a-6(i)(4) and 0-11.
1) Title of each class of securities to which transaction applies:
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2) Aggregate number of securities to which transaction applies:
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[ ] 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:
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<PAGE>
GO-VIDEO, INC.
7835 East McClain Drive
Scottsdale, Arizona 85260
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July 27, 1998
Dear fellow Go-Video Stockholder:
Enclosed is our 1998 Annual Report and our Proxy with voting sheet for
your review and response. We have placed much time and energy in the production
of the Annual Report and welcome your thoughts on the document. The primary
initiative on the Proxy that we ask you to pay particular attention is to a
proposal to change our corporate name from Go-Video, Inc. to Sensory Science
Corporation. We strongly believe this name change is in the best interest of our
company and our shareholders and urge you to vote for the name change on the
voting sheet and return it in the enclosed envelope.
With your ongoing support, Go-Video has evolved from a one-product
company into one of the nation's leading developers and marketers of
high-performance audio, video and security products. This Fall we anticipate our
first deliveries of our new line of digital televisions, and we are already
shipping digital audio and video products including DVD players. Our current
name, Go-Video, unfortunately does not reflect our new position and growth
potential in the marketplace, which is why we have proposed that we change our
name to Sensory Science Corporation. This is not only a name but a statement
about the future of this company, its products and the markets in which it
competes. We are taking advantage of the changing technology landscape to offer
the consumer the finest sensory experience available in the market now and in
the future. Our new products are, and will continue to be, designed for the
senses and engineered for the intellect, a combination of art and science, sight
and sound and unparalleled aesthetic appeal.
As indicated in our Annual Report, our mission is to build a global
consumer electronics company recognized for high-performance digital
technologies, superior industrial designs and world-class engineering. Our
growth strategies for fiscal year 1999 and beyond will help us complete this
mission and enable the company to excel in its quest to create superior
long-term shareholder value. We believe the name Sensory Science Corporation
reflects the essence of our company and our mission and will serve to inspire
our customers, employees, partners, suppliers and shareholders. I'm confident
our new name will serve us well as we enter this exciting new phase of our
corporate history. Once again, on behalf of our management team and employees,
we thank you for your continued support.
To officially change the name of the Company, we must amend the
Company's Articles of Incorporation. The amendment is described in more detail
in Proposal 2 of the attached Proxy Statement. The Go-Video Board of Directors
recommends that you vote FOR Proposal 2, changing the name of the Company from
Go-Video, Inc. to Sensory Science Corporation.
You are cordially invited to attend our 1998 Annual Meeting of
Stockholders, which will begin at 8:00 a.m. at the Scottsdale Princess, 7575
Princess Drive, Scottsdale, Arizona, on Thursday, August 20, 1998. Whether or
not you plan to attend the meeting, it is critical that your shares are
represented. Accordingly, please mark, date, sign and return promptly your proxy
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.
Sincerely,
Roger B. Hackett
Chairman, Chief Executive Officer,
and President
<PAGE>
GO-VIDEO, INC.
7835 East McClain Drive
Scottsdale, Arizona 85260
NOTICE AND PROXY STATEMENT
For the Annual Meeting of Stockholders
to be held on August 20, 1998
To the Stockholders of Go-Video, Inc.:
The 1998 Annual Meeting of Stockholders of Go-Video, Inc., a Delaware
corporation, will be held at the Scottsdale Princess, 7575 Princess Drive,
Scottsdale, Arizona, on Thursday, August 20, 1998, 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 Certificate of Incorporation to change the name of the
Company; 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 6, 1998, 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 6, 1998
record date. The Annual Meeting will not be open to the public.
By Order of the Board of Directors
Douglas Klein
Vice President and Chief Financial Officer,
Secretary, Treasurer
Scottsdale, Arizona
July 27, 1998
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<PAGE>
GO-VIDEO, INC.
7835 East McClain Drive
Scottsdale, Arizona 85260
(602) 998-3400
PROXY STATEMENT
This Proxy Statement is furnished by the Board of Directors (the "Board") of
GO-VIDEO, Inc. (the "Company") in connection with the Annual Meeting of
Stockholders to be held at the Scottsdale Princess, 7575 Princess Drive,
Scottsdale, Arizona, on Thursday, August 20, 1998, at 8:00 a.m., Mountain
Standard Time. The proxy materials were first mailed on or about July 13, 1998,
to shareholders of record at the close of business on July 6, 1998 (the "Record
Date"). As of July 6, 1998, there were outstanding 13,005,153 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 enclosed proxy is solicited by the Board of Directors of the Company. 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 director named below and for the amendment to the Certificate of
Incorporation to change the name of the Company. 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 two director candidates receiving the greatest number of votes cast at the
meeting will be elected. The proposed amendment to the Certificate of
Incorporation changing the name of the Company requires the affirmative vote of
the holders of a majority of the voting power of the Common Stock outstanding as
of the Record Date. All other proposals that properly come before the meeting
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 proposals, but because they are not affirmative votes for
proposals, they would have the same effect as a vote 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 STOCKHOLDER 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 FISCAL YEAR ENDED MARCH 31, 1998,
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.
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<PAGE>
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 are to be elected at the 1998 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 2001 Annual Meeting of Stockholders.
The Board of Directors recommends a vote
FOR the following nominees:
For terms expiring at the 2001 Annual Meeting
Thomas E. Linnen, age 52, has served as a director of the Company since August
1993 and serves on the Compensation Committee and as Chairman of the Audit
Committee of the Board of Directors. Mr. Linnen is Chief Financial Officer and a
director of Hypercom Corporation (NYSE:HYC), a manufacturer of point-of-sale
terminals and computer networking products based in Phoenix, Arizona. Prior to
joining Hypercom in 1996, Mr. Linnen was Vice President of Finance, Secretary,
Treasurer and a director of Continental Circuits Corp. (NASDQ: CCIR), a
manufacturer of circuit boards. Prior to joining Continental Circuits in 1987,
Mr. Linnen served as Vice President - Finance for ITT Systems, Tempe, Arizona.
Mr. Linnen also serves as a director of Innovonics, Inc., a privately-owned
company that developed and markets "PC Pay" security products that facilitate
secure credit, debit, and smart card transactions from a personal computer. Mr.
Linnen received a Bachelor of Science Degree in Business Administration from the
University of Wisconsin and is a Certified Public Accountant.
William T. Walker, Jr., age 66, has served as a director of the Company since
August 1993 and serves on the Compensation Committee of the Board of Directors.
Mr. Walker 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 Aviation Distributors,
Inc. (ASE: ADI). 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
Term Expiring at the 1999 Annual Meeting
Roger B. Hackett, age 47, 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 from 1992 to January 1993 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 received a Bachelor of Science Degree in Business
Administration from Ohio State University.
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<PAGE>
Terms Expiring at the 2000 Annual Meeting
Thomas F. Hartley, Jr., age 48, has served as a director of the Company since
November 1991 and is Chairman of the Compensation Committee of the Board of
Directors. Mr. Hartley is currently a managing director of J&H Marsh & McLennan,
a subsidiary of Marsh & McLennan Companies, Inc. (NYSE: MMC) which is an
insurance brokerage and consulting firm headquartered in New York City with over
200 offices worldwide. Prior to joining Johnson & Higgins (a predecessor company
to J&H Marsh & McLennan) 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 is on the boards of directors of various
community and professional organizations, including the Phoenix Economic Club,
the Arizona Property Casualty Guarantee Fund, and the Arizona State University
Center for Services Marketing & Management. 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.
Carmine F. Adimando, age 54, has served as a director of the Company since
October 1996 and serves on the Compensation and Audit Committees of the Board of
Directors. Mr. Adimando is currently Chairman and President of CARMCO
Investments, LLC, a private investment and financial advisory firm. Prior to
founding CARMCO Investments in 1996, Mr. Adimando was Vice President of Finance
and Administration, Treasurer, and Chief Financial Officer of Pitney Bowes,
Inc., where he also served as President of Pitney Bowes International Holdings,
Inc. and as Chief Executive Officer of The Wheeler Group until it was sold in
1992. Prior to joining Pitney Bowes in 1979, Mr. Adimando held positions with
American Airlines, Burndy Corporation, and Deloitte, Haskins & Sells. Mr.
Adimando currently serves as Chairman of Cordillera Asset Management and as a
director of Executive Greetings, Inc. He also serves on the Board of Trustees of
Manhattanville College and the Board of Overseers of the University of
Connecticut School of Business. Mr. Adimando received a Bachelor of Science
Degree in Accounting from St. John's University, graduated from the Senior
Financial Management Program at Stanford University's Graduate School of
Business, and is a Certified Public Accountant.
Meetings and Committees of the Board of Directors
During the fiscal year ended March 31, 1998, the Board met six times. The Board
has standing Audit and Compensation committees.
The Audit Committee consists of Messrs. Linnen (Chairman) and Adimando and is
responsible for evaluating the Company's system of accounting controls and
approving the scope of the annual audit. The Audit Committee met once during the
fiscal year ended March 31, 1998.
The Compensation Committee consists of Messrs. Hartley (Chairman), Adimando,
Linnen, and Walker. 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 met three times during the fiscal year ended March 31, 1998.
All non-employee directors of the Company receive an annual retainer fee of
$15,000. All directors, including employee directors, also receive an annual
grant of options to purchase Common Stock from the 1991 Nonstatutory Directors'
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 granted options to purchase 20,000 shares of Common Stock and each
other director is granted options to purchase 10,000 shares of Common Stock. The
Directors' Plan also provides for an initial grant of options upon a director's
commencement of service. The number of options granted is equal to 10,000
multiplied by a fraction, the numerator of which is the number of full calendar
months from the date the Director was first appointed or elected to the Board to
the following September 1st and the denominator of which is 12. 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. During the fiscal
year ended March 31, 1996, the Board of Directors approved a resolution
voluntarily reducing the annual grant of options to be issued from the
Directors'
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<PAGE>
Plan from 20,000 to 15,000 for the Chairman and from 10,000 to 7,500
for each director, effective with the September 1996 grant. In 1997, the Board
approved a resolution reinstating the annual grant of options to the amounts
specified in the Directors' Plan, effective with the September 1998 grant.
COMPENSATION COMMITTEE INTERLOCKS AND INSIDER PARTICIPATION
Thomas F. Hartley, Jr., a director of the Company, is a managing director of J&H
Marsh & McLennan an insurance brokerage firm that obtains bids from and
administers the Company's relations with commercial insurance carriers. During
fiscal 1998, J&H Marsh & McLennan earned $23,519 in brokerage commissions on
insurance premiums paid by the Company of $196,548. Ralph F. Palaia, an
executive officer and former director of the Company, was President of
Innovative Marketing Group ("IMG"), which represented the Company for one of the
Company's customer accounts until Mr. Palaia joined the Company in December 1997
in his current capacity of Senior Vice President, Marketing and Sales. During
the time during fiscal 1998 that the Company was represented by IMG, the Company
paid sales commissions to IMG at the same percentage of revenue rate as was
customary for similar accounts serviced by other independent manufacturing
representatives. During fiscal 1998, sales commissions paid to IMG totaled
$203,600.
EXECUTIVE COMPENSATION
Report of the Compensation Committee
Compensation 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
electronics 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.
Annual Incentives
In making determinations to award incentive payments, the Compensation Committee
reviews a variety of Company
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<PAGE>
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. During fiscal 1998, the maximum incentive payments
available for award to all employees, including executive officers, was set by
the Compensation Committee as a percentage of pre-tax income.
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
The Compensation Committee completed an individual performance review of the
Chief Executive Officer addressing such issues as the Company's financial
performance for the fiscal year ended March 31, 1998 and strategic initiatives
commenced or advanced during the year. The Committee determined that Mr. Hackett
exceeded or met substantially all of his strategic and financial goals for
fiscal 1998. In particular, Mr. Hackett's financial accomplishments included
four consecutive quarters of increased revenues and earnings while
simultaneously investing in future products and technology. Mr. Hackett's
strategic accomplishments included the successful product positioning for the
introduction of a $299 Dual-Deck VCR, launch of the DDVCR into several
international markets, the acquisition of California Audio Labs, and completion
of the Development, Marketing, and Distribution Agreement with Loewe Opta GmbH.
As a result of the performance review and after giving consideration to the
other factors listed above in establishing executive compensation, the Committee
increased Mr. Hackett's base salary by 9% to $250,000, awarded a performance
bonus of $125,000, and is currently evaluating a Common Stock option grant.
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 the fiscal year ended March 31, 1998
is deductible. The Committee does not believe that Section 162(m) limitations
will apply to compensation to be paid in fiscal 1999.
Compensation Committee
Thomas F. Hartley, Jr., Chairman
Carmine F. Adimando
Thomas E. Linnen
William T. Walker, Jr.
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<PAGE>
Summary Compensation Table
The following table shows, for the fiscal years ended March 31, 1998, 1997, and
1996, the compensation of the Chief Executive Officer and all executive officers
of the Company with compensation exceeding $100,000:
Summary Compensation Table
<TABLE>
<CAPTION>
Long-Term
Annual Compensation Compensation
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Name and Principal Securities All Other
Position in Salary Bonus Underlying Compensation
Fiscal 1998 Year ($) ($) Options/SAR's ($) (1)
(#)
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<S> <C> <C> <C> <C> <C>
Roger B. Hackett
Chairman, Chief Executive 1998 $230,000 $125,000 65,000 (2) $10,219
Officer, President, and Chief 1997 $200,000 $135,000 80,000 (2) $10,000
Operating Officer 1996 $195,500 $ 0 80,000 (2) $9,077
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Edward J. Brachocki
Vice President, Corporate 1998 $120,000 $60,000 40,000 $9,677
Development 1997 $100,910 $65,000 40,000 $9,069
1996 $93,525 $ 0 25,000 $6,219
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Douglas P. Klein
Chief Financial Officer, Vice 1998 $115,000 $62,500 30,000 $9,483
President, Finance and 1997 $105,266 $65,000 40,000 $9,119
Administration, Secretary 1996 $100,968 $ 0 25,000 $6,727
- ------------------------------------------------------------------------------------------------------
</TABLE>
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.
(1) Amounts shown are Company contributions to the Go-Video, Inc. 401(k)
Savings Plan, an employee retirement savings plan, and automobile
expense allowance of $9,000 per annum for Mr. Hackett and $6,000 per
annum for Messrs.
Brachocki and Klein.
(2) Includes annual, automatic option grants from the 1991 Non-Statutory
Directors' Stock Option Plan (the "Directors' Plan") pursuant to
stockholder-approved plan rules. Options granted under the Directors'
Plan totaled 15,000 shares for each of 1998, 1997, and 1996.
Non-cash personal benefits payable to executive officers during the fiscal year
ended March 31, 1998 did not exceed, in the aggregate, the lesser of 10% of the
cash compensation or $50,000 for any individual officer.
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 March 31, 1998. 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.
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<PAGE>
Option Grants in the Fiscal Year Ended March 31, 1998
<TABLE>
<CAPTION>
- ------------------------------------------------------------------------------------------------------------
Potential
Individual Grants Realizable
Value at Assumed
Number % of Total Annual Rates of
Of Securities Options / SAR's Stock Price
Underlying Granted to Exercise Appreciation for
Options / Employees Price Option Term
SAR's in the 1998 Per Expiration
Name Granted Fiscal Year Share Date 5% 10%
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<S> <C> <C> <C> <C> <C> <C>
Roger B. Hackett 50,000 13.8% $1.3750 7/02/07 $ 43,237 $109,570
15,000 4.1% $2.3125 9/01/07 $ 21,815 $ 55,283
Edward J. Brachocki 40,000 11.0% $1.3750 7/02/07 $ 34,589 $ 87,656
Douglas P. Klein 30,000 8.3% $1.3750 7/02/07 $ 25,942 $ 65,742
</TABLE>
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.
Option Exercises and Holdings
The following table summarizes option exercises during the fiscal year ended
March 31, 1998 by the executive officers named in the Summary Compensation Table
and unexercised options held by these individuals on March 31, 1998.
Aggregated Option Exercises in Fiscal 1998 and Fiscal Year-End Option Values
<TABLE>
<CAPTION>
- ----------------------------------------------------------------------------------------------
Number of
Securities Value of
Underlying Unexercised
Unexercised In-the-Money
Options at Options at
Shares 3/31/98 (#) 3/31/98 (1)
Acquired
on Exercise Value Exercisable/ Exercisable/
Name (# of shares) Realized ($) Unexercisable Unexercisable
- ----------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
Roger B. Hackett - - 565,000 / 0 $334,688 / $ 0
Edward J. Brachocki - - 155,080 / 0 $165,953 / $ 0
Douglas P. Klein - - 145,000 / 0 $161,563 / $ 0
</TABLE>
(1) The closing price of the Company's Common Stock as reported for March 31,
1998 on the American Stock Exchange Composite Tape was $2.5625.
Employment Contracts, Termination of Employment and Change-in-Control
Arrangements
The Company has a Separation Agreement with Roger B. Hackett. The Agreement
provides that if Mr. Hackett's employment is terminated, Mr. Hackett would 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 would 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 would be entitled to
receive payments equal to two times his gross annual base salary in
effect at the time of separation payable in equal installments over
twenty-four months. During the time of such payments, Mr. Hackett would
also receive all standard employee benefits including health insurance;
(c) in the event Mr. Hackett initiates separation with a minimum of ninety
days notice, Mr. Hackett would receive payments equal to (i) 0.125
times each year of employment, to a maximum of one; plus (ii) 1/2,
multiplied by his gross annual base salary in effect at the time of
separation. Payments would be payable in equal installments timed to
coincide with the Company's payroll period over the applicable period.
As of July 20, 1998, with five years of service, Mr. Hackett would be
entitled to receive thirteen and one-half
-9-
<PAGE>
months' gross base salary payable in equal installments over the same
time period. During the time of such payments, Mr. Hackett would also
receive all standard employee benefits including health insurance.
The Agreement provides for the 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 Agreement
continues 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.
The Company is in the process of preparing an Employment Agreement for Mr.
Hackett that would replace the existing Separation Agreement. It is anticipated
that the new Employment Agreement would provide for an initial base salary of
$250,000 and an incentive bonus and contain non-competition and
change-in-control provisions.
STOCK PERFORMANCE GRAPH
The following performance graph compares the yearly change since July 31, 1992
in cumulative return on the Common Stock of the Company to the AMEX 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 ADR's 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, 1992 and shows the cumulative total return
as of each July 31 thereafter through the fiscal year ended July 31, 1994, as of
the eight month transition period ended March 31, 1995, and as of the fiscal
years ended March 31, 1996, 1997 and 1998.
<TABLE>
<CAPTION>
- ----------------------------------------------------------------------------------------------------------------
Total Return
Analysis 7/31/92 7/31/93 7/31/94 3/31/95 3/31/96 3/31/97 3/31/98
- ----------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C> <C>
Go Video, Inc. $ 100.00 $ 86.96 $ 52.17 $ 65.76 $ 39.13 $ 54.35 $ 89.13
- ----------------------------------------------------------------------------------------------------------------
Peer Group $ 100.00 $ 144.24 $ 193.93 $ 189.50 $ 206.81 $ 174.64 $ 203.98
- ----------------------------------------------------------------------------------------------------------------
AMEX Market Value $ 100.00 $ 112.38 $ 112.56 $ 119.42 $ 146.94 $ 146.24 $ 193.49
- ----------------------------------------------------------------------------------------------------------------
</TABLE>
Companies comprising the Industry Peer Index are: Audiovox Corp., Boston
Acoustics Inc., Carver Corp., Cobra Electronics Corp., Harman International
Industries Inc., Hitachi Ltd., Koss Corp., Matsushita Electronics Industries
Ltd., Philips Electronics NV, Pioneer Electronic Corp., Polk Audio Inc., Recoton
Corp., Sanyo Electronics Ltd., Sony Corp., Wells Gardner Electronics Group, and
Zenith Electronics Corp.
-10-
<PAGE>
PROPOSAL 2
TO AMEND THE GO-VIDEO, INC.
CERTIFICATE OF INCORPORATION
The Board of Directors has unanimously adopted and submitted to the stockholders
for approval an amendment to the Certificate of Incorporation of the Company
(the "Name Change Amendment") to change the name of the Company to Sensory
Science Corporation. The text of the Name Change Amendment is attached hereto as
Exhibit A and is incorporated herein by reference.
The Board of Directors believes that a name change is desirable in view of the
Company's change over time in overall mission and strategic direction. The Board
believes that the name Sensory Science Corporation more accurately reflects the
character and focus of the Company as it pursues the development of additional
digital video and audio products in the consumer electronics industry. Because
of this, the Board of Directors believes that changing the name of the Company
is in the best interests of the Company and its stockholders.
Vote Required
Approval of Proposal 2 to amend the Certificate of Incorporation of the Company
to change the name of the Company requires the affirmative vote of a majority of
the outstanding shares of Common Stock of the Company entitled to vote at the
Annual Meeting. If approved by the stockholders, the amendment will become
effective upon the filing of a Certificate of Amendment of the Company's
Certificate of Incorporation with the Secretary of State of Delaware, which
filing is expected to take place shortly after the Annual Meeting. However, the
Board of Directors will be authorized, without a further vote of the
stockholders, to abandon the name change and determine not to file the
Certificate of Amendment if the Board concludes that for some reason such action
would be in the best interest of the Company and its stockholders. If this
proposal is not approved by the stockholders, then the Certificate of Amendment
will not be filed. Pursuant to Delaware corporate law, the Company's
stockholders are not entitled to dissenters' rights of appraisal with respect to
the Name Change Amendment.
Recommendation of the Board of Directors
The Board of Directors recommends a vote FOR Proposal 2 to amend the Certificate
of Incorporation to change the name of the Company.
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<PAGE>
PRINCIPAL STOCKHOLDERS AND SECURITY OWNERSHIP OF MANAGEMENT
The following table sets forth certain information, as of July 6, 1998,
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.
<TABLE>
<CAPTION>
Name and address of Number of shares Percent of
beneficial owner beneficially owned (3) outstanding shares
- -------------------------------- ---------------------- ------------------
<S> <C> <C>
Kirr, Marbach & Company, LLC (1) 668,400 5.1%
Roger B. Hackett (2) 581,000 (4) 4.3%
Edward J. Brachocki (2) 156,080 (5) 1.2%
Douglas P. Klein (2) 150,000 (6) 1.1%
Carmine F. Adimando (2) 105,833 (7) 0.8%
Thomas F. Hartley, Jr. (2) 67,500 (8) 0.5%
Thomas E. Linnen (2) 46,600 (9) 0.4%
William T. Walker, Jr. (2) 48,000 (10) 0.4%
All officers and directors as a group 1,407,013 (11) 9.8%
(9 persons)
</TABLE>
- ------------------------------------------
(1) The address of this beneficial owner is P.O. Box 1729, Columbus, Indiana,
47201. The information provided was obtained from a Schedule 13G dated April 28,
1998 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 7835 E. McClain Dr., Scottsdale,
Arizona, 85260.
(3) All options indicated are exercisable within 60 days.
(4) Includes options to acquire 565,000 shares.
(5) Includes options to acquire 155,080 shares.
(6) Includes options to acquire 145,000 shares.
(7) Includes options to acquire 15,833 shares.
(8) Includes options to acquire 58,000 shares.
(9) Includes options to acquire 45,000 shares.
(10) Includes options to acquire 45,000 shares.
(11) Includes options to acquire 1,263,913 shares.
CERTAIN TRANSACTIONS
Certain transactions involving Thomas F. Hartley, Jr., a director of the
Company, and Ralph F. Palaia, an executive officer and former director of the
Company, are described in Compensation Committee Interlocks and Insider
Participation above.
SECTION 16(a) BENEFICIAL OWNERSHIP REPORTING COMPLIANCE
Section 16(a) of the Securities Exchange Act of 1934, as amended, requires
directors, 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 the fiscal year ending March 31, 1998, all filing requirements applicable
to its directors, officers, and greater-than-10% beneficial owners were complied
with except that Mr. Linnen, a director, filed a Form 4 in July 1998 showing
beneficial ownership of Company common stock that was attributed to him as a
result of his recent marriage. The form should have been filed in April 1998.
-12-
<PAGE>
RELATIONSHIP WITH INDEPENDENT PUBLIC ACCOUNTANTS
The principal independent public accounting firm utilized by the Company during
the fiscal year ending March 31, 1998 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. 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 1998
Annual Report to each stockholder entitled to vote at the Annual Meeting.
Included in the 1998 Annual Report are the Company's financial statements for
the fiscal year ended March 31, 1998. The Company's 1998 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 23, 1999, 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 of Directors is not presently aware
of any business to be transacted other than the business described in the
Notice.
Go-Video, Inc.
Douglas P. Klein
Vice President and Chief Financial Officer,
Secretary, Treasurer
-13-
<PAGE>
EXHIBIT A
PROPOSED AMENDMENT TO THE CERTIFICATE
OF INCORPORATION OF
GO-VIDEO, INC.
Section 1 of the Certificate of Incorporation of the Company shall be amended to
read as follows:
"The name of the corporation is: Sensory Science Corporation."
-14-
<PAGE>
PROXY
-----
GO-VIDEO, INC.
7835 East McClain Drive
Scottsdale, Arizona 85260
THIS PROXY IS SOLICITED BY THE BOARD OF DIRECTORS OF GO-VIDEO, INC.
The undersigned hereby appoints Roger B. Hackett and Douglas P. Klein, or any
one of them acting in the absence of the other with full powers of substitution,
the true and lawful attorneys and proxies for the undersigned and to vote, as
designated below, all shares of Common Stock of Go-Video, Inc. (the "Company")
that the undersigned is entitled to vote at the Annual Meeting of Stockholders
of Go-Video, Inc., to be held on Thursday, August 20, 1998, or at any
postponement or adjournment thereof, with the same effect as if the undersigned
was (were) present and voting the stock on all matters set forth in the Notice
and Proxy Statement for the Annual Meeting of Stockholders, dated July 27, 1998,
as directed below.
1. Proposal 1 - Election of Directors. The Board of Directors recommends a
vote for the nominees listed below:
Thomas E. Linnen, William T. Walker, Jr.
[ ] VOTE FOR ALL NOMINEES [ ] WITHHOLD AUTHORITY FOR A NOMINEE
Instructions: To withhold authority to vote for any individual nominee,
strike a line through the nominee's name above.
2. Proposal 2 - Approval of an amendment to the Certificate of
Incorporation of Go-Video, Inc. to change the name of the Company to
Sensory Science Corporation. The Board of Directors recommends a vote
in favor of Proposal 2.
[ ] VOTE FOR [ ] WITHHOLD AUTHORITY [ ] VOTE AGAINST
3. In their discretion, the proxies are authorized to vote upon such other
business as may properly come before the meeting.
THIS PROXY WHEN PROPERLY EXECUTED WILL BE VOTED IN THE MANNER DIRECTED
HEREIN BY THE UNDERSIGNED STOCKHOLDER(S). UNLESS OTHERWISE DIRECTED, OR IF NO
DIRECTION IS GIVEN, THE PROXY WILL BE VOTED FOR THE NOMINEES IN PROPOSAL 1 AND
IN FAVOR OF THE AMENDMENT IN PROPOSAL 2, AND IN ACCORDANCE WITH THE BEST
JUDGMENT OF THE PROXIES OR ANY OF THEM ON ANY MATTERS WHICH MAY PROPERLY COME
BEFORE THE MEETING.
THE UNDERSIGNED HEREBY ACKNOWLEDGE(S) RECEIPT OF THE NOTICE AND PROXY
STATEMENT FOR THE ANNUAL MEETING OF STOCKHOLDERS.
Dated______________, 1998 _____________________________________________________
Shareholder Joint Owner
Please date and sign exactly as your name or names
appear herein. Person signing in a fiduciary capacity
or as corporate officers should sign as indicated.
