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UNITED STATES
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 Section 240.14a-11(c) or Section 240.14a-12
ADVO, INC.
- --------------------------------------------------------------------------------
(Name of Registrant as Specified In Its Charter)
- --------------------------------------------------------------------------------
(Name of Person(s) Filing Proxy Statement, if other than the Registrant)
Payment of Filing Fee (Check the appropriate box):
[X] No fee required
[_] Fee computed on table below per Exchange Act Rules 14a-6(i)(4) and 0-11.
(1) Title of each class of securities to which transaction applies:
-------------------------------------------------------------------------
(2) Aggregate number of securities to which transaction applies:
-------------------------------------------------------------------------
(3) Per unit price or other underlying value of transaction computed
pursuant to Exchange Act Rule 0-11 (Set forth the amount on which
the filing fee is calculated and state how it was determined):
-------------------------------------------------------------------------
(4) Proposed maximum aggregate value of transaction:
-------------------------------------------------------------------------
(5) Total fee paid:
-------------------------------------------------------------------------
[_] Fee paid previously with preliminary materials.
[_] Check box if any part of the fee is offset as provided by Exchange
Act Rule 0-11(a)(2) and identify the filing for which the offsetting fee
was paid previously. Identify the previous filing by registration statement
number, or the Form or Schedule and the date of its filing.
(1) Amount Previously Paid:
-------------------------------------------------------------------------
(2) Form, Schedule or Registration Statement No.:
-------------------------------------------------------------------------
(3) Filing Party:
-------------------------------------------------------------------------
(4) Date Filed:
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Notes:
<PAGE>
[LOGO OF ADVO, INC.]
December 16, 1999
Dear Stockholder:
You are cordially invited to the Annual Meeting of Stockholders of ADVO,
Inc., to be held on Thursday, January 20, 2000, at the Sheraton Hotel at
Bradley International Airport, Windsor Locks, Connecticut, commencing at 10:30
A.M. (EST). Your Board of Directors and management look forward to greeting
personally those of you who are able to attend.
At the Meeting, you will be asked to elect the members of the Board of
Directors; to ratify the appointment of independent auditors for the fiscal
year ending September 30, 2000; and to transact such other business as may
properly be brought before the Meeting.
In addition to the specific matters to be acted upon, there will be a report
on the progress of the Company and an opportunity for you to ask questions of
general interest. Important information is contained in the accompanying proxy
statement, which you are urged to read carefully.
It is important that your shares are represented and voted at the Meeting,
regardless of the number you own and whether or not you plan to attend.
Accordingly, you are requested to mark, sign, date and return the enclosed
proxy in the envelope provided at your earliest convenience.
Your interest and participation in the affairs of the Company are greatly
appreciated.
Sincerely,
/s/ Gary M. Mulloy
Gary M. Mulloy
Chairman and Chief
Executive Officer
<PAGE>
[LOGO OF ADVO, INC.]
ADVO, INC.
Notice of Annual Meeting of Stockholders
The Annual Meeting of Stockholders of ADVO, Inc. (the "Company") will be
held at the Sheraton Hotel at Bradley International Airport, Windsor Locks,
Connecticut, on Thursday, January 20, 2000, at 10:30 A.M. (EST), to consider
and take action on the following items:
1. The election of six Directors, as described in the attached proxy
statement, to serve until the Annual Meeting of Stockholders in 2001;
2. The ratification of the appointment of Ernst & Young LLP as the
Company's independent auditors for the fiscal year ending September 30,
2000; and
3. The transaction of such other business as may properly come before
said meeting or any adjournment thereof.
Only holders of Common Stock of record at the close of business on November
26, 1999 are entitled to vote at the Meeting or any adjournment thereof. A
list of the stockholders entitled to vote at the Meeting will be available for
examination by any stockholder for any purpose germane to the Meeting during
ordinary business hours for ten days prior to the Meeting at the Sheraton
Hotel at Bradley International Airport, Windsor Locks, Connecticut.
By Order of the Board of Directors
/s/ David M. Stigler
David M. Stigler, Secretary
Windsor, Connecticut
December 16, 1999
YOUR VOTE IS IMPORTANT. EVEN IF YOU PLAN TO ATTEND THE MEETING IN PERSON,
PLEASE MARK, SIGN AND RETURN YOUR PROXY IN THE ENCLOSED ENVELOPE AS PROMPTLY
AS POSSIBLE.
<PAGE>
ADVO, INC.
One Univac Lane
P.O. Box 755
Windsor, Connecticut 06095-0755
PROXY STATEMENT
This statement is furnished in connection with the solicitation of proxies
to be used at the Annual Meeting of Stockholders of ADVO, Inc. (the "Company"
or "ADVO"), a Delaware corporation, to be held at the Sheraton Hotel at
Bradley International Airport, Windsor Locks, Connecticut, on Thursday,
January 20, 2000 at 10:30 A.M. (EST).
The solicitation of proxies on the enclosed form is made on behalf of the
Board of Directors of the Company.
The cost of soliciting proxies on the accompanying form has been or will be
borne by the Company. In addition to solicitation by mail, the Company will
request banks, brokers and other custodians, nominees, and fiduciaries to send
proxy material to the beneficial owners and to secure their voting
instructions, if necessary. The Company will reimburse such banks, brokers,
custodians, nominees and fiduciaries for their expenses in so doing.
Directors, officers, and regular employees of the Company, who will receive no
compensation for their services other than their regular salaries, may solicit
proxies personally, by telephone and by telegram from stockholders. The
Company has retained ChaseMellon Shareholder Services, L.L.C. to assist in the
solicitation of proxies at an estimated cost of $10,000 including expenses,
which will be paid by the Company. These proxy materials are first being
mailed to stockholders on or about December 16, 1999. The Company's Annual
Report to stockholders for the fiscal year ended September 25, 1999 is being
furnished concurrently herewith to stockholders of record. Additional copies
of the Annual Report may be obtained upon written request to the Corporate
Secretary, ADVO, Inc., One Univac Lane, Windsor, CT 06095 or by telephone at
860-285-6100.
A stockholder signing and returning a proxy on the enclosed form has the
power to revoke it at any time before the shares subject to it are voted, by
notifying the Secretary of the Company in writing of such revocation, by
filing a duly executed proxy bearing a later date, or by attending the meeting
and voting in person. Properly executed proxies, not revoked, will be voted in
accordance with the instructions contained thereon. Unless a contrary
specification is made thereon, it is the intention of the attorneys named in
the enclosed form of proxy to vote FOR the election of the nominees named
herein as Directors and FOR Proposal 2.
OUTSTANDING VOTING SECURITIES
Only holders of ADVO Common Stock, par value $.01 per share ("Common
Stock"), of record at the close of business on November 26, 1999 (the "Record
Date") are entitled to notice of and to vote at the Meeting. On the Record
Date, there were 20,631,648 shares of Common Stock outstanding. Each share of
Common Stock is entitled to one vote.
<PAGE>
SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS
As of the Record Date, those persons known to the Company who beneficially
owned 5% or more of the outstanding Common Stock were as follows:
<TABLE>
<CAPTION>
Name and Address Number of Shares
of Beneficial Owner Beneficially Owned Percent
------------------- ------------------ -------
<S> <C> <C>
T. Rowe Price Associates, Inc.(1)(2)................. 2,704,100 13.1%
100 East Pratt Street
Baltimore, Maryland 21202
Robert Kamerschen(3)................................. 1,322,694 6.3%
One Univac Lane
Windsor, Connecticut 06095
</TABLE>
- --------
(1) The information relating to the ownership of the Common Stock by this
entity or individual is based on a statement filed by such entity or
individual with the Securities and Exchange Commission (the "SEC").
(2) The amount of shares beneficially owned includes 228,600 shares as to
which T. Rowe Price Associates, Inc. ("Associates") has sole voting power
and 2,704,100 shares as to which Associates has sole dispositive power.
The amount also includes 1,155,000 shares which are beneficially owned by
T. Rowe Price New Horizons Fund, Inc. ("New Horizons") as to which New
Horizons has sole voting power.
(3) Includes 235,339 shares Mr. Kamerschen has the right to acquire within 60
days of the Record Date pursuant to the exercise of options granted under
the Company's stock option plans.
GOVERNANCE OF THE COMPANY
In accordance with the Company's Bylaws, as amended, and the applicable laws
of Delaware, responsibility for the management of the Company is vested in the
Board of Directors. During the fiscal year ended September 25, 1999, the Board
of Directors met nine times. Each Director attended 100% of the aggregate
number of meetings of the Board of Directors and the total number of the
committees on which he served, except Bruce Crawford and Howard Newman who
attended 93% of the meetings, John Rockwell and David Dyer who attended 91% of
the meetings, and John Vogelstein who attended 60% of the meetings. Robert
Kamerschen retired from the Board of Directors on June 25, 1999. Jack Fritz
will retire from the Board of Directors as of January 20, 2000.
The Board has delegated responsibilities with respect to certain audit
matters to the Audit Committee. The members of the Audit Committee for the
fiscal year ended September 25, 1999 were Messrs. Fritz (Chairman), Newman,
and Crawford. The Audit Committee is responsible for reviewing the adequacy of
financial controls and the adequacy and accuracy of financial reporting. The
Audit Committee met four times during the fiscal year ended September 25,
1999, and no member of the Audit Committee missed a meeting.
The Board has delegated responsibilities with respect to certain
compensation matters to the Compensation Committee. The members of the
Compensation Committee were Messrs. Newman (Chairman), Fritz, Dyer, and
Rockwell. The Compensation Committee has the responsibility to help formulate
short and long-term compensation plans and help develop the Company's
compensation
2
<PAGE>
philosophy. The committee also reviews specific proposals regarding executive
compensation and other aspects of the terms of employment of the Company's
senior management. The Compensation Committee met twice during the fiscal year
ended September 25, 1999, and no member of the Compensation Committee missed a
meeting.
The Board has delegated responsibilities with respect to the selection of
directors and other governance issues to the Nominating Committee. The members
of the Nominating Committee were Messrs. Vogelstein (Chairman), Crawford and
Kamerschen (through June 25, 1999). The Nominating Committee held one meeting
during the fiscal year ended September 25, 1999, and no member of the
Nominating Committee missed a meeting. The Nominating Committee does not
currently have procedures in place to consider nominees recommended by
shareholders.
The Company has no executive committee or other committees, except for the
above. Total attendance was 91% for all board and committee meetings.
Directors, other than those who are full-time employees of the Company or a
subsidiary, are each currently eligible to receive an annual fee of $20,000, a
fee of $1,000 for each Board meeting attended and $500 for each committee
meeting attended. Directors serving as chairmen of any committees of the Board
of Directors receive an additional $2,000 per year for each chairmanship held.
Directors who are full-time employees of the Company receive no remuneration
for serving on the Board of Directors or its committees. All Directors'
expenses for attending Board of Directors' meetings are reimbursed by the
Company.
On December 2, 1999, the Board of Directors approved changes to the
structure of the Director's compensation effective in fiscal year 2000. The
annual fee was increased to $30,000 and meetings attended via phone will be
compensated at half of the regular meeting rate. All other fees detailed above
remain unchanged.
Under the 1990 Non-Employee Directors' Restricted Stock Plan (the "Non-
Employee Directors' Plan") restrictions lapsed in fiscal 1999 on the following
number of shares held by the following directors: 2,000 shares held by Mr.
Crawford and 2,000 shares held by Mr. Dyer. In addition, grants were made in
fiscal 1999 to each of Messrs. Fritz, Newman, Vogelstein, Rockwell, Crawford,
and Dyer of options to purchase 2,500 shares at an exercise price of $20.6875
per share. The options will become exercisable in equal annual installments
over the next four years, if the recipients remain on the Board.
In addition to the fee changes, the equity portion of the Director's
compensation for fiscal year 2000 will be comprised of an annual grant of
3,000 shares of restricted stock vesting over a one-year period. This replaces
the annual grant of stock options to Directors. Upon initial election to the
Board, a Director will be eligible to receive a grant of 10,000 shares of
options and 3,000 shares of restricted stock, both vesting over a one-year
period. Previously, Directors received 6,000 shares of restricted stock
vesting over a three-year period, upon initial election.
1. ELECTION OF DIRECTORS
The Bylaws of the Company, as amended, provide for a Board of Directors
consisting of not less than three nor more than 15 members, the exact number
to be fixed from time to time by the Board of Directors. The Board of
Directors has determined that the Company will have six Directors at this
time. Each person elected as a Director of the Company will hold office until
the next Annual Meeting of Stockholders or until his successor is duly elected
and qualified.
3
<PAGE>
All of the nominees set forth below were elected by the stockholders to
their present terms at the 1999 Annual Meeting. Each nominee has consented to
being named herein and has agreed to serve if elected. In case any such
nominee shall have become, at the time of the meeting, unable or unwilling to
serve (an event which the Board of Directors of the Company has no reason to
expect), the attorneys named in the enclosed form of proxy intend to vote for
another person designated by the Board of Directors.
The affirmative vote of a plurality of the voting power represented at the
meeting is required for a nominee to be elected as a Director of the Company.
"Plurality" means that the nominees who receive the largest number of votes
cast "FOR" are elected as Directors up to the maximum number of Directors to
be chosen at the meeting. Votes withheld and broker non-votes are not counted
towards the plurality vote calculation.
Nominees for Election
GARY M. MULLOY, age 54. Mr. Mulloy became Chairman of the Board on June 28,
1999 and Chief Executive Officer on January 1, 1999. From November 1996 to
December 1998, he was President and Chief Operating Officer. Mr. Mulloy was
elected to the Board of Directors on December 3, 1996. From 1990 to October
1996 he was President and Chief Executive Officer of Pilkington Barnes-Hind,
Inc., a division of Pilkington Vision Care.
BRUCE CRAWFORD, age 70. Mr. Crawford has been a Director of the Company
since December 1996. Mr. Crawford is Chairman of Omnicom Group Inc., the
largest marketing communications company in the world. Mr. Crawford served as
CEO of Omnicom Group from 1989 to 1996. Mr. Crawford is also Honorary Chairman
of the New York Metropolitan Opera Association.
DAVID F. DYER, age 50. Mr. Dyer has been a Director of the Company since May
1997. Mr. Dyer is President, Chief Executive Officer of Lands' End, Inc. an
international direct merchant of apparel and home furnishings. Mr. Dyer was
the Chief Operating Officer of the Home Shopping Network, Inc. from 1994 to
1995. Previous to that, from 1989 to 1994, Mr. Dyer held senior management
positions with Lands' End, Inc.
JOHN R. ROCKWELL, age 71. Mr. Rockwell has been a Director of the Company
since May 1990. Until April 1, 1990, he was Senior Vice President, Group
Executive and a Director of Booz, Allen & Hamilton, Inc., a management
consulting firm, a position he held for more than five years. Mr. Rockwell is
also a Director of The Forum Corporation and Tom's of Maine, Inc.
HOWARD H. NEWMAN, age 52. Mr. Newman has been a Director of the Company
since August 1986. He has been associated with E.M. Warburg, a specialized
financial services company, since January 1984 and has been a Managing
Director since January 1987. Mr. Newman is also a Director of Newfield
Exploration Company, RenaissanceRe Holdings Ltd., Cox Insurance Holdings,
Plc., Eagle Family Foods Holdings, Inc., EEX Corporation, Spinnaker
Exploration, Inc. and several privately held companies.
JOHN L. VOGELSTEIN, age 65. Mr. Vogelstein has been a Director of the
Company since November 1988. Mr. Vogelstein was previously a Director of the
Company from August 1986 to December 1987. He has been Vice Chairman of the
Board of Directors of E.M. Warburg for more than the past five years and was
appointed President of E.M. Warburg on January 1, 1994. Mr. Vogelstein is also
a Director of Mattel, Inc., Journal Register Company, Knoll, Inc. and Golden
Books Family Entertainment, Inc.
4
<PAGE>
SECURITY OWNERSHIP OF MANAGEMENT
The following table sets forth certain information with respect to the
Common Stock beneficially owned by the Directors, nominees, the persons named
in the Summary Compensation Table on page 7 of this Proxy Statement and by all
Directors and executive officers as a group, as of the Record Date. Except as
otherwise indicated, each person listed has sole voting and investment power
with respect to shares beneficially owned.
<TABLE>
<CAPTION>
Number of Shares
Name of Individual of Common Stock Percent
- ------------------ ---------------- -------
<S> <C> <C>
Gary M. Mulloy........................................ 210,351(1) 1.0%
Myron L. Lubin........................................ 71,762(2) .3
Donald E. McCombs..................................... 73,104(3) .4
Henry Evans........................................... 26,025(4) .1
A. Brian Sanders...................................... 19,368(5) .1
Robert Kamerschen..................................... 1,322,694(6) 6.3
Bruce Crawford........................................ 7,875(7) *
David F. Dyer......................................... 9,875(7) *
Jack W. Fritz......................................... 46,578(8) .2
John R. Rockwell...................................... 25,500(9) .1
Howard H. Newman...................................... 33,970(10) .2
John L. Vogelstein.................................... 108,370(10) .5
All Directors and executive officers as a group (20
persons)............................................. 2,159,198(11) 10.2
</TABLE>
- --------
*Less than .1%.
(1) Includes 143,850 shares Mr. Mulloy has the right to acquire within 60
days of the Record Date pursuant to the exercise of options granted under
the Company's stock option plans.
(2) Includes 48,980 shares Mr. Lubin has the right to acquire within 60 days
of the Record Date pursuant to the exercise of options granted under the
Company's stock option plans.
(3) Includes 41,300 shares Mr. McCombs has the right to acquire within 60
days of the Record Date pursuant to the exercise of options granted under
the Company's stock option plans.
(4) Includes 15,000 shares Mr. Evans has the right to acquire within 60 days
of the Record Date pursuant to the exercise of options granted under the
Company's stock option plans.
(5) Includes 15,500 shares Mr. Sanders has the right to acquire within 60
days of the Record Date pursuant to the exercise of options granted under
the Company's stock option plans.
(6) Includes 235,339 shares Mr. Kamerschen has the right to acquire within 60
days of the Record Date pursuant to the exercise of options granted under
the Company's stock option plans.
(7) Includes 1,875 shares Mr. Crawford and Mr. Dyer have the right to acquire
within 60 days of the Record Date pursuant to option grants awarded by
the Company.
(8) Includes 6,250 shares Mr. Fritz has the right to acquire within 60 days
of the Record Date, 21,981 shares owned by a Fritz family partnership,
and 18,347 shares owned by Mr. Fritz's wife, as to which shares Mr. Fritz
disclaims beneficial ownership.
(9) Includes 6,250 shares Mr. Rockwell has the right to acquire within 60
days of the Record Date pursuant to option grants awarded by the Company.
(10) Includes 29,625 and 104,025 shares owned directly by Mr. Newman and Mr.
Vogelstein, respectively, 625 shares Mr. Newman and Mr. Vogelstein have
the right to acquire within 60 days of the Record Date, and 4,345 shares
owned directly by Warburg, Pincus & Co., a New York general partnership
("WP"). Lionel I. Pincus is the managing partner of WP and may be deemed
5
<PAGE>
to control it. Messrs. Newman and Vogelstein are directors of the Company
and general partners of WP. As such, Messrs. Newman and Vogelstein may be
deemed to have an indirect pecuniary interest (within the meaning of Rule
16a-1 under the Securities Exchange Act of 1934) in a portion of the
shares beneficially owned by WP. Messrs. Newman and Vogelstein disclaim
"beneficial ownership" of these shares within the meaning of Rule 13d-3
under the Securities Exchange Act of 1934.
(11) Includes 621,617 shares all executive officers as a group have the right
to acquire within 60 days of the Record Date pursuant to the exercise of
options granted under the Company's stock option plans.
Section 16(a) Beneficial Ownership Reporting Compliance
Under the securities laws of the United States, the Company's Directors, its
executive (and certain other) officers and any persons holding ten percent or
more of the Company's Common Stock are required to report their ownership of
the Company's Common Stock and any changes in that ownership to the SEC.
Specific due dates for these reports have been established. In fiscal 1999,
all required reports of beneficial ownership of the Company's Common Stock
were timely filed.
6
<PAGE>
EXECUTIVE COMPENSATION
The following table shows compensation paid by the Company and its
subsidiaries for services in all capacities during fiscal 1999, 1998, and 1997
to each of the following named executive officers of the Company, including
the Chief Executive Officer.
Summary Compensation Table
<TABLE>
<CAPTION>
Long-Term
Annual Compensation Compensation Awards
------------------- ----------------------
Restricted Securities
Name and Principal Stock Underlying All Other
Position Year Salary Bonus(1) Awards(2) Options(3) Compensation(4)
------------------ ---- ------ --------- ----------- ---------- ---------------
<S> <C> <C> <C> <C> <C> <C>
Gary M. Mulloy.......... 1999 $ 501,538 $ 156,966 $650,000 35,400 $ 10,000
Chairman and Chief 1998 420,423 232,851 184,900 170,000 10,000
Executive Officer 1997 352,123 212,404 367,200 100,000 100,000
Myron L. Lubin.......... 1999 298,183 60,434 390,000 30,000 24,696
Executive Vice 1998 248,777 123,091 -- 17,000 21,273
President-- 1997 240,077 123,909 -- 24,037 14,892
Marketing and Sales
Donald E. McCombs....... 1999 257,923 51,999 -- 23,051 21,326
Executive Vice 1998 219,315 106,570 339,375 53,300 14,247
President-- 1997 151,115 51,884 -- 17,816 9,330
Chief Financial Officer
Henry Evans............. 1999 233,662 41,853 61,125 17,000 12,259
Senior Vice President-- 1998 212,200 81,467 -- 4,500 --
Strategic Business 1997 20,033 -- 186,250 20,000 20,000
Development
A. Brian Sanders........ 1999 230,061 41,196 -- 9,000 8,160
Senior Vice President-- 1998 208,100 79,872 -- 6,500 3,764
Sales and Client 1997 66,927 30,053 89,375 20,000 66,700
Marketing
Robert Kamerschen....... 1999 149,877 52,752 -- 200,000 366,453
Former Chairman and 1998 541,815 452,704 706,213 149,439 34,954
Chief 1997 507,200 440,625 -- 496,299 34,096
Executive Officer
</TABLE>
- --------
(1) Amounts for each fiscal year represent bonus compensation earned for that
year payable in the subsequent year.
(2) The number of restricted shares of Common Stock held at fiscal year end
and the value of such holdings, based on the number of restricted shares
times the closing market price at September 25, 1999, was 41,667 shares
and $776,048 for Mr. Mulloy, 15,000 shares and $279,375 for Mr. Lubin,
10,000 shares and $186,250 for Mr. McCombs, 6,334 shares and $117,971 for
Mr. Evans, and 1,667 shares and $31,408 for Mr. Sanders. During the fiscal
year, Mr. Lubin and Mr. Evans were granted 15,000 restricted shares and
3,000 restricted shares, respectively. These restricted shares vest
equally over a three-year period from the date of grant (one-third on each
anniversary date). In addition, Mr. Mulloy was granted 25,000 restricted
stock units. These units vest equally over a three-year period from the
date of grant and entitle Mr. Mulloy to receive stock at the end of a
specified deferral period. Holders of restricted shares are eligible to
receive dividends to the same extent as holders of Common Stock, when
dividends are declared and payable.
7
<PAGE>
(3) Includes reload option grants received from surrendering previously owned
shares of ADVO Common Stock to pay the exercise price on option exercises
and shares withheld to satisfy income tax withholding requirements.
(4) Amounts represent contributions made on behalf of the named executives to
the Company's 401(k) plan and non-qualified savings plan. In addition for
fiscal 1999, these amounts include $314,239 for Mr. Kamerschen which
represent consulting wages from January 1, 1999 to the end of the fiscal
year. Mr. Kamerschen's consulting agreement is detailed under "Related
Party Transactions". Also included in "All Other Compensation" for fiscal
1997 was $100,000 for Mr. Mulloy, $20,000 for Mr. Evans, and $66,700 for
Mr. Sanders which represented a cash payment upon signing of their
employment agreements.
8
<PAGE>
Options
Set forth below is certain information concerning stock options granted
during fiscal 1999 by the Company to the named executive officers.
The hypothetical present values on the date of grant of stock options
granted in fiscal 1999 shown below are presented pursuant to the SEC proxy
rules and are calculated under the modified Black-Scholes model for pricing
options. (See footnote 3.) The actual before-tax amount, if any, realized upon
the exercise of stock options will depend upon the excess of the market price
of the Common Stock over the exercise price per share of the stock option at
the time the stock option is exercised. There is no assurance that the
hypothetical present values of the stock options reflected in this table will
be realized.
Option Grants In Last Fiscal Year
<TABLE>
<CAPTION>
Individual Grants
--------------------------------------------
Number of % of Total
Securities Options Grant
Underlying Granted to Exercise Date
Options Employees in Price Expiration Present
Name Granted Fiscal Year ($/Share) Date Value(3)
---- ---------- ------------ --------- ---------- ---------
<S> <C> <C> <C> <C> <C>
Grants(1)
Gary M. Mulloy........... 35,400 4% $25.9375 12/01/08 $ 426,216
Myron L. Lubin........... 30,000 4 26.0000 11/06/08 362,100
Donald E. McCombs........ 20,000 2 25.9375 12/01/08 240,800
Henry Evans.............. 11,000 1 25.9375 12/01/08 132,440
6,000 1 20.3750 07/21/09 61,260
A. Brian Sanders......... 9,000 1 25.9375 12/01/08 108,360
Robert Kamerschen........ 50,000 6 25.9375 12/01/08 602,000
150,000 18 25.9375 12/01/08 1,806,000
Reload Grants(2)
Donald E. McCombs........ 335 * $23.1250 04/24/01 $ 1,802
374 * 23.1250 06/12/02 2,012
153 * 23.1250 12/01/04 823
335 * 23.1250 01/24/05 1,802
154 * 23.1250 10/09/05 829
374 * 23.1250 03/12/06 2,012
1,326 * 23.1250 01/16/07 7,134
</TABLE>
- --------
* less than 1%
(1) Stock options granted in fiscal 1999 will become exercisable in 25%
increments at one-year intervals from the date of grant. All options are
subject to the reload feature of the 1998 Incentive Compensation Plan.
(2) Represent reload option grants received upon the exercise of previously
outstanding exercisable options (the "existing options"). The number of
reload options awarded upon the exercise of existing options is equal to
the number of previously held shares an optionee tenders to pay the
9
<PAGE>
exercise price of the existing options and the number of shares an optionee
elects to have withheld from the exercise of the existing options to pay
statutory tax withholding requirements. The reload options retain the
expiration date of the existing options and have an exercise price equal to
the fair market value of the Common Stock on the date of exercise of the
existing options. Reload options become exercisable on the earlier of one
year from the date of grant or termination from the Company.
(3) The present values on the grant date are calculated under the modified
Black-Scholes model, which is a mathematical formula used to value options
traded on stock exchanges, modified for pricing employee stock options.
This formula considers a number of factors in order to estimate the
option's present value, including the stock's historical volatility (42%),
the exercise period of the option, and the risk free rate of return (4.6%
- 7.9% depending on the option's grant and expiration dates).
Set forth below is certain information concerning the named executive
officers and the number of shares acquired, amounts realized on stock option
exercises during fiscal 1999, and the number and value of specified options at
September 25, 1999. The value of exercised and unexercised in-the-money stock
options at September 25, 1999 shown below is presented pursuant to SEC rules.
The actual before-tax amount, if any, realized upon exercise of stock options
will depend upon the excess, if any, of the market price of the Common Stock
over the exercise price per share of the stock option at the time the stock
option is exercised. There is no assurance that the values of unexercised in-
the-money stock options reflected in this table will actually be realized.
Aggregated Option Exercises in Last Fiscal Year and Fiscal Year-End Option
Values
<TABLE>
<CAPTION>
Number of Securities Value of Unexercised
Underlying Unexercised In-the-Money Options
Options at Year-End at Year-End (1)
------------------------- -------------------------
Shares Acquired Value
Name on Exercise Realized Exercisable Unexercisable Exercisable Unexercisable
---- --------------- -------- ----------- ------------- ----------- -------------
<S> <C> <C> <C> <C> <C> <C>
Gary M. Mulloy.......... -- -- 67,500 237,900 $320,000 $322,500
Myron L. Lubin.......... 19,455 $291,691 33,730 54,750 133,678 64,624
Donald E. McCombs....... 4,350 49,619 24,350 57,801 6,956 23,606
Henry Evans............. -- -- 11,125 30,375 -- --
A. Brian Sanders........ -- -- 11,625 23,875 7,500 7,500
Robert Kamerschen....... -- -- 156,289 285,400 357,249 211,062
</TABLE>
- --------
(1) Value is calculated by determining the difference between the fair market
value at September 25, 1999 of the securities underlying the options
($18.625 per share) and the exercise price of the options.
Report of the Compensation Committee
The role of the Compensation Committee of the Board of Directors is to
represent the Board of Directors in its dealings with management in overseeing
the process and substance of ADVO's Executive Compensation Policy and
Philosophy, aligning the interest of stockholders and the needs of
10
<PAGE>
management. The Compensation Committee believes it is generally in the
Company's best interest, and it is the Company's intent, where possible, to
preserve full compensation deductibility as permitted under Section 162(m) of
the Internal Revenue Code of 1986, as amended (the "Code"). However, the
Company recognizes that flexibility is necessary and must be maintained for
those extraordinary circumstances that may arise on occasion for which the
interests of the Company are better served by foregoing full deductibility.
The Compensation Committee is composed entirely of non-employee Directors.
Compensation Philosophy:
ADVO's compensation programs are designed to:
. Provide a fair, competitive and dynamic compensation program.
. Attract, retain and develop a highly skilled and motivated workforce.
. Tie compensation directly to the accomplishment of superior Company
performance, creation of long-term shareholder value and attainment of
specific strategic initiatives by emphasizing variable rather than fixed
compensation.
. Align stockholders' and management's interests.
To accomplish this philosophy, ADVO's executive compensation program is
composed of base salary, and short-term and long-term incentives, which taken
together provide a competitive compensation package that is highly leveraged
toward the attainment of superior Company performance.
Cash Compensation:
ADVO's philosophy is to pay competitive cash compensation as compared with a
broad spectrum of organizations. To assess its competitive position, ADVO
participates in and reviews salary surveys with participant companies from
multiple industry segments. These companies represent a cross section of
organizations in all industries and are of similar size and scope to ADVO.
These companies may or may not be included in the peer group analysis under
"Company Financial Performance," since many of the Company's competitors for
executive talent are outside the Company's business competitor peer group of
companies or are privately held companies. The surveys are professionally
administered by third parties and represent the different functional areas of
ADVO's organization. In general, ADVO's cash compensation position is within
the third quartile of the marketplace (better than the bottom 50% and less
remunerative than the top 25%). Based on these surveys, ADVO annually reviews
its salary and incentive structure and adjusts it as necessary to reflect the
market.
Base Pay:
Individual base pay is determined by considering:
. The individual's background, experience and current salary in relation to
the market (as represented by the salary range assigned to the
individual's position).
. Accomplishments as determined by the individual's performance appraisal.
. The financial spending guidelines of the Company.
11
<PAGE>
Short-Term Incentive:
ADVO's philosophy is to provide significant financial incentives for key
managers to attain and exceed the Company's financial objectives. These
incentives are made under the 1998 Incentive Plan, approved by stockholders in
1999, and the Management Incentive Plan. These plans provide a strong link
between the associate's accountabilities, scope of impact and business
performance through the use of operationally tailored measurement criteria
focusing on margin improvement and/or operating income goals. These plans
provide a competitively benchmarked target award based on the level of the
individual's job. The target awards range from 15% to 75% of salary. To
realize the target award, certain Company financial performance objectives
must be attained. These objectives include corporate, regional and business
unit measures, and are measured in terms of achievement versus the annually
established plan. The corporate measure is based on consolidated operating
income. Regional and business unit objectives incorporate profitability
objectives that are margin-based in the form of operating income or margin.
The mix and weighting of these objectives is dependent on the organizational
role of the individual. All individuals have at least a portion of their
incentive based on the corporate measure as described above. The specific plan
targets are not disclosed herein because they are considered confidential and
disclosure of such could competitively injure ADVO's business. The performance
attainment and resulting payout for each objective is evaluated and calculated
independently. Performance below plan results in ratably lower payouts, and
performance above plan results in ratably higher payouts. The combined payout
percentages based upon these results are limited only by the combined business
performance. A minimum threshold of plan attainment is in place, below which
no payout is made. The Compensation Committee has the discretion to modify the
actual awards. The bonuses of the CEO and any associate subject to Section
162(m) of the Code are based solely on corporate consolidated operating income
financial results as defined above, and are subject to a capped individual
payout.
The Company's financial performance for the fiscal 1999 year did not meet
its operating income target. This resulted in adjusted corporate awards which
were, on average, lower than target awards. Regional performance varied, with
results both above and below target levels set under the plan. After adjusting
for corporate, regional and business unit financial results, individual award
payouts ranged from 14.25% to 155.65% (to participants in a specific business
unit who greatly exceeded plan) of target awards. Approved awards for those
disclosed in the Summary Compensation Table were 47.5% of target awards.
Long-Term Incentive:
The 1998 Incentive Plan, is the primary vehicle for long-term incentives.
The plan is meant to:
. Link compensation opportunities to Company achievements.
. Balance annual results with ADVO's long-term performance.
. Strengthen the partnership between ADVO's executives and stockholders.
Participation is limited to key management and executives in the Company.
Long-term compensation targets vary by the level of the individual's position
and were established based on market analysis provided from third party
external consultants. Periodically these targets will be
reviewed. These targets are expressed as a percentage of base pay. The
resulting target values are translated into shares based on the market value
of the shares. Stock options granted in fiscal 1999 were granted at market
price with 10-year terms.
12
<PAGE>
Service-based options are also used for hiring, promotion and retention
situations and are determined in the same manner as described above.
The Company's executives were also given the opportunity to receive "reload
options". To receive such options, the plan requires executives to exercise
their options by tendering mature shares of stock to "pay" for the underlying
cost of the options and withholding shares to meet mandatory federal tax
obligations. In return, they receive reload options in the same number as the
number of shares utilized in the exercise. Any profit that results from the
exercise is returned to the executive in the form of stock, which is to be
retained for two years.
Restricted stock may also be granted under the plan. While the governing
plan allows for broader usage, historically, this plan has been used for
hiring, promotion and retention situations. The Company granted restricted
stock for the purposes of hiring and promotion to a limited number of key
positions during fiscal 1999. When these situations arise, the number of
shares granted is based upon the level of the job.
To foster greater alignment with stockholders, ADVO expects that executives
who receive stock options should also make a personal financial commitment to
acquire and hold significant amounts of ADVO stock. Effective with the
beginning of the 1997 calendar year, these persons were asked to acquire a
portion or multiple of their salary in ADVO stock over a four-year period.
These guidelines range from 150% of base salary for the CEO to 12.5% of base
salary for entry level stock option recipients. This plan covers approximately
130 persons.
CEO Compensation and Company Performance:
As discussed on pages 18 and 19, the Company and Mr. Kamerschen entered into
an employment agreement on December 1, 1998 outlining the conditions of
employment in his role as consultant. He left the role of CEO on December 31,
1998 and the Chairman's role on June 25, 1999. He remains an employee in a
non-executive role, as outlined by the agreement.
As discussed on page 16, the Company and Mr. Mulloy entered into an
employment agreement on July 31, 1998 outlining the conditions of employment
in his role as CEO. Under this agreement, Mr. Mulloy received 100,000 options
upon execution of the agreement and a salary of $500,000 upon his succession
to CEO.
The agreement also provided for the granting of 25,000 shares of restricted
stock to Mr. Mulloy. These shares were granted as restricted stock units in
January 1999, vesting over a 3-year period in equal installments. These units
have a deferral feature which allows ADVO to maximize the full deductibility
of compensation under Section 162(m) of the Code, which otherwise may have
been at risk as a result of this grant.
Mr. Mulloy's salary will be reviewed annually and may be increased, but not
decreased, by the committee. The committee will review Mr. Mulloy's salary at
the beginning of the calendar year using the same base salary guidelines
utilized for other executives as discussed in the "Base Pay" section on page
11.
13
<PAGE>
As provided in the agreement, Mr. Mulloy's short-term incentive is
determined under the 1998 Incentive Plan. Under this plan, the CEO's bonus is
determined based solely on financial results and is awarded at the discretion
of the Board of Directors. Consistent with the plan as described above, as
measured by Company performance in fiscal 1999, Mr. Mulloy was granted an
incentive award of $156,966, representing 47.5% of his target award. This
award reflects the accountabilities of both positions held during the year.
Mr. Mulloy was awarded 35,400 options in the annual grant using the approach
described above.
Benefits:
ADVO offers benefits to its key executives, serving a different purpose than
do the above described elements of compensation. In general, these benefits
provide a level of security against financial misfortune which may result from
illness, disability or death. The benefits are principally those that are
offered to all ADVO employees, with some variations, and generally promote tax
efficiency and replacement of benefit opportunities afforded other employees,
but which are lost to executives due to regulatory limits.
COMPENSATION COMMITTEE:
Howard H. Newman (Chair)
Jack W. Fritz
David F. Dyer
John R. Rockwell
14
<PAGE>
Company Financial Performance
The following graph compares the performance of the Company's Common Stock
with the S&P 500 Index and a Selected Peer Group Index constructed by the
Company. The comparison of total return for each of the years assumes $100 was
invested on October 1, 1994 in each of the Company, the S&P 500 Index and the
Selected Peer Group Index with investment return weighted on the basis of
market capitalization. The Peer Group is comprised of Acxiom Corp., Catalina
Marketing, R.R. Donnelley & Sons Co., Dunn & Bradstreet, Information Resources,
Inc., Knight-Ridder, Inc., Readers Digest, Scholastic Corp., Times Mirror Co.,
Tribune Co., Valassis Communications and the Washington Post. The Peer Group
represents a mix of newspaper, publishing, database and marketing services
companies that ADVO competes with in several of its major markets.
Comparison of Five Year Cumulative Total Return*
Among ADVO, Inc., S&P 500 Index and a Selected Peer Group**
[LINE GRAPH APPEARS HERE]
1994 1995 1996 1997 1998 1999
------- ------- ------- ------- ------- -------
ADVO, Inc. $100.00 $140.42 $142.35 $218.78 $292.96 $239.01
S&P 500 100.00 129.74 156.12 219.27 239.11 305.19
Peer Group 100.00 115.47 127.85 154.90 152.05 195.80
Assumes $100 invested October 1, 1994 in ADVO, Inc. Common Stock, S&P 500
Index and the Peer Group Index.
* Total return assumes reinvestment of dividends.
** ADVO's fiscal year ends on the last Saturday in September.
15
<PAGE>
Executive Agreements
Employment Agreement--Mulloy
On July 31, 1998, the Company entered into an employment agreement with Mr.
Mulloy, pursuant to which he is employed as Chief Executive Officer of the
Company. The employment agreement has a term of six years from its effective
date on January 1, 1999. The salary per the employment agreement is $500,000
per year, subject to increases as determined by the Board of Directors (or the
Compensation Committee) plus bonuses pursuant to the Company's bonus plan.
Per the employment agreement, Mr. Mulloy received options under the 1988
Non-Qualified Stock Option Plan and 1993 SubPlan, as amended, to purchase
100,000 shares of the Company's Common Stock at a price of $27.063 per share,
such options becoming exercisable in installments of one-fourth each year
commencing on January 1, 2000, 2001, 2002, and 2003. Mr. Mulloy was also
granted 25,000 shares of restricted stock units. Under the terms of the
agreement, the restrictions will lapse one-third each year on January 1, 2000,
2001, and 2002.
The employment agreement also provides that if the Company terminates Mr.
Mulloy's employment for any reason other than for Cause (as defined), the
Company shall continue to pay a salary to Mr. Mulloy at the same rate, plus a
bonus of 75% of such salary, and allow him to continue to participate in other
benefit programs for two years after the date of termination. In addition, Mr.
Mulloy receives a housing allowance of $2,000 per month throughout the
employment period.
Executive Severance Agreements
The Board of Directors authorized the Company to enter into individual
Executive Severance Agreements (the "Agreements") with Messrs. Mulloy, Lubin,
McCombs, Evans, and Sanders (the "Executives"). These Agreements were dated as
follows:
<TABLE>
<S> <C>
Mr. Mulloy............................................... November 4, 1996
Mr. Lubin................................................ October 17, 1995
Mr. McCombs.............................................. November 7, 1997
Mr. Evans................................................ July 30, 1997
Mr. Sanders.............................................. May 19, 1997
</TABLE>
The structure of the Agreements is substantially similar, but the terms of
the individual Agreements differ in some important respects as noted below.
The Agreements' provisions become effective upon the occurrence of a Change
of Control (as described below) and continue for the duration of the Severance
Period. With regard to Mr. Mulloy, the Severance Period is two years following
a Change of Control. With regard to Messrs. Lubin, McCombs, Evans, and
Sanders, the Severance Period is one and one-half years following a Change of
Control. In all cases, the Severance Period ends with the death of the
Executive. If, during the Severance Period, an Executive's employment is
terminated by the Company for any reason other than death, disability or Cause
(as described below), or if the Executive terminates his employment for Good
reason (as described below) the Company must pay to the Executive a lump sum
severance payment. With regard to Mr. Mulloy, the severance payment due upon
such a termination of employment is equal to two times the sum of (i) the
Executive's annual base pay at the highest rate in effect at any time within
the 90-day period preceding the date a notice of termination of employment is
given or, if higher, at the highest
16
<PAGE>
rate of base pay in effect within the 90-day period immediately preceding the
Change of Control and (ii) the greatest amount of incentive (bonus) pay
received by the Executive for any calendar year or portion thereof from and
including the third year prior to the first occurrence of a Change of Control.
With regard to Messrs. Lubin, McCombs, Evans, and Sanders, the severance
payment is equal to one and one-half times the foregoing sum. Additionally,
upon termination, Mr. Mulloy will be entitled to receive medical and life
insurance benefits for the period of two years from the date of the
termination or cash in lieu thereof. Messrs. Lubin, McCombs, Evans, and
Sanders will be entitled to receive medical and life insurance benefits for
the period of one and one-half years from the date of termination or cash in
lieu thereof.
Under the Agreements, "Cause" means an Executive's intentional act of fraud,
embezzlement, theft, damage to Company property or disclosure of confidential
information that causes material harm to the Company. "Good reason" means (i)
an adverse change in the Executive's responsibilities; (ii) a reduction in the
Executive's base pay, bonus pay, or benefits; (iii) a failure of any successor
to the Company to assume the obligations under the Agreement; (iv) any
material breach of the Agreement by the Company; or (v) any action of the
Company requiring the Executive to perform his or her services at a location
which is more than thirty-five miles from the location where the Executive was
employed immediately preceding the date of the Change in Control.
A "Change in Control" means the occurrence of any of the following events:
(i) Any Person (other than the Company, any trustee or other fiduciary
holding securities under any employee benefit plan of the Company, or any
company owned, directly or indirectly, by the stockholders of the Company
immediately prior to the occurrence with respect to which the evaluation is
being made in substantially the same proportions as their ownership of the
common stock of the Company) acquires securities of the Company and
immediately thereafter is the beneficial owner (except that a person shall
be deemed to be the beneficial owner of all shares that any such person has
the right to acquire pursuant to any agreement or arrangement or upon
exercise of conversion rights, warrants or options or otherwise, without
regard to the sixty day period referred to in Rule 13d-3 under the
Securities and Exchange Act of 1934, as amended ("Exchange Act")), directly
or indirectly, of securities of the Company representing 30% or more of the
combined voting power of the Company's then outstanding securities (except
that an acquisition of securities directly from the Company shall not be
deemed an acquisition for purposes of this clause (i));
(ii) During any period of two consecutive years, individuals who at the
beginning of such period constitute the Board, and any new director (other
than a director designated by a person who has entered into an agreement
with the Company to effect a transaction described in clause (i), (iii) or
(iv) of this paragraph) whose election by the Board or nomination for
election by the Company's stockholders was approved by a vote of at least
two-thirds of the directors then still in office who either were directors
at the beginning of the two-year period or whose election or nomination for
election was previously so approved by excluding for this purpose any such
new director whose initial assumption of office occurs as a result of
either an actual or threatened election contest (as such terms as used in
Rule 14a-11 of Regulation 14A promulgated under the Exchange Act) or other
actual or threatened solicitation of proxies or consents by or on behalf of
an individual, corporation, partnership, group, associate or other entity
or Person other than the Board, cease for any reason to constitute at least
a majority of the Board;
17
<PAGE>
(iii) The consummation of a merger or consolidation of the Company with
any other entity, other than (i) a merger or consolidation which would
result in the voting securities of the Company outstanding immediately
prior thereto continuing to represent (either by remaining outstanding or
by being converted into voting securities of the surviving or resulting
entity) more than 50% of the combined voting power of the surviving or
resulting entity outstanding immediately after such merger or consolidation
or (ii) a merger or consolidation in which no premium is intended to be
paid to any shareholder participating in the merger or consolidation;
(iv) The stockholders of the Company approve a plan or agreement for the
sale or disposition of all or substantially all of the consolidated assets
of the Company (other than such a sale or disposition immediately after
which such assets will be owned directly or indirectly by the stockholders
of the Company in substantially the same proportions as their ownership of
the common stock of the Company immediately prior to such sale or
disposition) in which case the Board shall determine the effective date of
the Change in Control resulting therefrom; or
(v) any other event occurs which the Board determines, in its discretion,
would materially alter the structure or its ownership.
Each Executive is solely responsible for all federal, state, local or
foreign taxes due with respect to any payment received under the Agreements,
including, without limitation, any excise tax imposed by Section 4999 of the
Code. However, all payments under the Agreements would be reduced to the
extent necessary so that no portion of the payments would be subject to the
excise tax imposed by Section 4999 of the Code, but only if, by reason of such
reduction, the net after-tax benefit received by the Executive exceeds the net
benefit received by the Executive if no such reduction was made.
If the Company fails to comply with any of its obligations under the
Agreements or in the event that the Company or any other person takes or
threatens to take action to declare the Agreements void or unenforceable, or
institutes any litigation or other action or proceeding designed to deny, or
to recover from the Executive, the benefits provided or intended to be
provided to the Executive by the Company, the Executive is authorized by the
Agreements to retain counsel of the Executive's choice, at the expense of the
Company, to advise and represent the Executive in connection with any such
interpretation, enforcement, or defense, including without limitation the
initiation or defense of any litigation or other legal action, whether by or
against the Company or any member of the Board of Directors, officer,
stockholder, or other person or entity affiliated with the Company, in any
jurisdiction.
Benefits under the Agreements are in addition to severance amounts payable
under an Executive's employment agreement.
RELATED PARTY TRANSACTIONS
Consulting Agreement--Robert Kamerschen
On December 1, 1998, the Company entered into a consulting agreement (the
"Consulting Agreement") with Mr. Kamerschen pursuant to which he is employed
as an internal consultant to the Company. The Consulting Agreement has a term
of ten years from its effective date on January 1, 1999 (the "Agreement
Period").
18
<PAGE>
Under the Consulting Agreement, Mr. Kamerschen receives an annual salary of
$350,000 per year which shall not be increased or decreased during the
Agreement Period. Mr. Kamerschen is entitled to participate in and receive
employee benefits generally available to senior executives of the Company.
Pursuant to the Consulting Agreement, Mr. Kamerschen received options under
the 1988 Non-Qualified Stock Option Plan and 1993 SubPlan, as amended, to
purchase 150,000 shares of the Company's Common Stock at a price of $25.9375
per share. Such options become exercisable in installments of one-quarter each
year commencing on the first anniversary of the grant. Other than this grant,
Mr. Kamerschen will not participate in any incentive or stock award programs.
Mr. Kamerschen is entitled to maintain an office at the Company's
headquarters until January 1, 2000 and a housing allowance for that period of
$3,346 per month. Commencing on January 1, 2000 and ending December 21, 2001,
Mr. Kamerschen shall receive a stipend of $75,000 per year to secure an office
from which to work and related services, such as secretarial services. If Mr.
Kamerschen vacates his office at Corporate headquarters prior to January 1,
2000, his housing allowance will terminate and the stipend shall be initiated
on a pro rata basis.
The Consulting Agreement can only be terminated for Cause (as defined). If
Mr. Kamerschen should die prior to the end of the Agreement Period, his
surviving spouse shall be paid $175,000 annually until the earlier of the end
of the Agreement Period or her death.
Other
At November 26, 1999, the Company had $5,475,000 invested in money market
mutual funds managed by Warburg, Pincus Counsellors, Inc. ("Counsellors").
Income earned on such investments during fiscal 1999 amounted to approximately
$300,000. Counsellors is controlled by WP, an affiliate which is a stockholder
of the Company. The Company bases all investment decisions upon the available
rates of return, and the investments described above were made because of the
competitive rates available from Counsellors. Two Directors of the Company are
general partners of WP and one other Director is a Director of the various
Counsellors managed mutual funds.
2.APPOINTMENT OF INDEPENDENT AUDITORS
The Board of Directors recommends that proxies be voted in favor of the
ratification of the appointment of Ernst & Young LLP, certified public
accountants, as independent auditors for the fiscal year ending September 30,
2000.
Representatives of Ernst & Young LLP are expected to be present at the
Annual Meeting where they will have an opportunity to make a statement if they
desire to do so and are expected to be available to answer appropriate
questions.
THE BOARD OF DIRECTORS RECOMMENDS A VOTE "FOR" PROPOSAL 2.
19
<PAGE>
OTHER BUSINESS
The Board of Directors does not know of any matters to be presented at the
Annual Meeting other than those set forth in the Notice of Annual Meeting of
Stockholders. However, if any other matters properly come before such meeting,
the persons named in the enclosed form of proxy will have discretionary
authority to vote all proxies on such matters in accordance with their
judgment.
STOCKHOLDER PROPOSALS
In order to be considered for inclusion in the Company's proxy statement and
form of proxy for the 2001 Annual Meeting of Stockholders, any stockholder
proposal must be received by the Secretary of the Company prior to August 17,
2000. In addition, the form of proxy issued with the Company's 2001 proxy
statement will confer discretionary authority to vote for or against any
proposal made by a stockholder at the 2001 Annual Meeting and which is not
included in the Company's proxy statement. However, under the rules of the
SEC, such discretionary authority may not be exercised if the stockholder
proponent has given the Secretary of the Company notice of such proposal prior
to October 31, 2000, and certain other conditions provided for in the
Commission's rules have been satisfied.
/s/ David M. Stigler
David M. Stigler
Secretary
December 16, 1999
20
<PAGE>
PROXY ADVO, INC. PROXY
One Univac Lane, P.O. Box 755, Windsor, Connecticut 06095-0755
PROXY SOLICITED BY THE BOARD OF DIRECTORS
The undersigned hereby appoints David M. Stigler and Julie A. Abraham, and
each of them, with full power of substitution, the proxies of the undersigned to
vote all the shares of the Common Stock of ADVO, Inc. which the undersigned is
entitled to vote at the Annual Meeting of Stockholders to be held on January 20,
2000 at the Sheraton Hotel at Bradley International Airport, Windsor Locks, CT,
commencing at 10:30 a.m. (EST) or any adjournment thereof.
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. If no direction is made, this proxy will be
voted "FOR" ALL NOMINEES FOR DIRECTOR AND WILL BE VOTED "FOR" Proposal 2.
The undersigned hereby acknowledges receipt of the Notice of Annual Meeting of
Stockholders and the related Proxy Statement.
(PLEASE VOTE, SIGN AND DATE ON REVERSE SIDE)
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FOLD AND DETACH HERE
<PAGE>
<TABLE>
<CAPTION>
<S> <C> <C>
The Board of Directors recommends that you vote "FOR" Items 1 and 2. PLEASE MARK YOUR CHOICE LIKE I Plan to [ ]
THIS X IN BLUE OR BLACK INK. attend the
meeting
<CAPTION>
<S> <C>
1. Election of Directors: Nominees for election by holders of Common Stock: Bruce Crawford, David F. Dyer, Gary M. Mulloy,
Howard H. Newman, John R. Rockwell, John L. Vogelstein.
<CAPTION>
<S> <C> <C>
FOR all nominees WITHHOLD
listed to the right AUTHORITY INSTRUCTION: To withhold your vote for any nominee(s), write that nominee's
(except as marked to vote for all nominees name on the line below.
to the contrary) listed to the right
[ ] [ ] ---------------------------------------------------------------------------------
<CAPTION>
<S> <C>
2. Ratification of the Appointment of Ernst & Young LLP as the Company's PLEASE MARK, SIGN, DATE AND RETURN THE PROXY CARD
Independent Auditors for fiscal 2000. PROMPTLY USING THE ENCLOSED ENVELOPE.
FOR AGAINST ABSTAIN
[ ] [ ] [ ]
</TABLE>
Signature Signature Date
---------------------- ------------------------- -----------
Please sign exactly as name appears above. When shares are held by joint
tenants, both should sign. When signing as attorney, executor, administrator,
trustee or guardian, please give full title as such. If a corporation, please
sign in full corporate name by President or other authorized officer. If a
partnership, please sign in partnership name by authorized person.
- --------------------------------------------------------------------------------
FOLD AND DETACH HERE
