ATARI CORPORATION
1196 Borregas Avenue
Sunnyvale, California 94089-1302
_______________________________________
PROXY STATEMENT
_______________________________________
Annual Meeting of Shareholders
June 5, 1995
SOLICITATIONS OF PROXIES
This proxy statement is furnished in connection with the solicitation of
proxies by the Board of Directors of Atari Corporation, a Nevada corporation
("the Company"), for use for the purposes set forth herein and in the
accompanying Notice at the Annual Meeting of Shareholders to be held on Monday,
June 5, 1995 at 2:00 P.M. at the Company's Meeting Room, 1196 Borregas Avenue,
Sunnyvale, California 94089-1302, and all adjournments and postponements thereof
("the Meeting").
This proxy statement, the accompanying form of proxy, and the Company's
Annual Report on Form 10-K for the year ended December 31, 1994 were first
mailed to shareholders entitled to notice of and vote at the Meeting on or about
May 5, 1995.
The cost of preparing, assembling and mailing this Notice of Annual
Meeting of Shareholders, Proxy Statement and forms of proxy and the solicitation
of proxies will be paid by the Company. In addition to this solicitation,
proxies may be solicited in person or by telephone or telegraph by Directors,
officers, employees or agents of the Company who will not receive any additional
compensation for such solicitation. The Company will furnish proxy materials to
brokers, fiduciaries or custodians holding shares in their names that are
beneficially owned by others, to permit them to forward such materials to such
beneficial owners. The Company will reimburse brokers or other persons holding
stock in their names or the names of their nominees for the expenses of
forwarding soliciting material to their principals.
REVOCABILITY OF PROXIES
The enclosed Proxy is revocable at any time before its use by delivery
to the Company of a written notice of revocation or a duly executed Proxy
bearing a later date. If a person who has executed and returned a Proxy is
present at the meeting and wishes to vote in person, he or she may elect to do
so and thereby suspend the power of the proxy holders to vote his or her Proxy.
VOTING
The close of business on April 6, 1995 has been fixed as the record date
for the determination of shareholders entitled to notice of and to vote at the
Meeting. On that date, there were 63,674,785 shares of the Company's Common
Stock outstanding. Each shareholder of record on the record date is entitled to
one vote for each share of Common Stock held by such shareholder on any matter
that may be presented for consideration and action by the shareholders at the
Meeting. In the election of Directors, those Directors and nominees receiving
the most votes cast (provided a quorum is present) will be elected. Any other
action shall be authorized by a majority of the votes cast at the Meeting,
provided a quorum is present. Shareholders are not permitted to cumulate their
votes in the election of Directors.
The required quorum for the transaction of business at the Meeting is a
majority of the votes eligible to be cast by holders of shares of Common Stock
issued and outstanding on the record date. For purposes of determining the
presence of a quorum, abstentions and broker non-votes will be counted by the
Company as present at the meeting. Abstentions will also be counted by the
Company in determining the number of votes cast with respect to a proposal
(other than the election of directors). Broker non-votes will not be counted in
determining the number of votes cast.
CERTAIN OWNERSHIP OF COMMON STOCK
The following table sets forth information, as of April 6, 1995, with
respect to beneficial ownership of Common Stock (a) by persons known by the
Company to be the beneficial owners of more than 5% of the outstanding Common
Stock, (b) by each director or nominee, (c) each executive officer named in the
summary compensation table, and (d) by all directors and officers of the Company
as a group.
<TABLE>
<CAPTION>
Name of Beneficial Owner Amount and Nature Percent of
of Beneficial Outstanding
Ownership Common Stock
<S> <C> <C>
Jack Tramiel (1) 12,437,676 (2) 19.4%
Time Warner Inc., and its wholly
owned subsidiary Warner
Communications, Inc. (3) 15,571,200 24.3%
Sega Holdings USA Inc. (6) 4,705,883 7.4%
Leonard Tramiel (1) 5,254,446 (5, 7) 8.2%
Sam Tramiel (1) 5,279,297 (4, 7) 8.3%
Garry Tramiel (1) 4,175,047 (7) 6.5%
Leonard I. Schreiber 216,100 (7) *
August J. Liguori 118,250 (7) *
Michael Rosenberg 45,000 (7) *
Dean Fox - 0 - *
Laurence M. Scott, Jr. 30,500 (7) *
All directors and officers as a
group (8 persons). 23,379,269 (7) 36.5%
</TABLE>
* Less than 1% of the outstanding shares of the Company's Common
Stock.
(1) The address of Messrs. Jack Tramiel, Sam Tramiel, Leonard
Tramiel, and Garry Tramiel, is 1196 Borregas Avenue, Sunnyvale,
California 94089.
(2) The number of shares indicated as beneficially owned by Mr. Jack
Tramiel includes shares held jointly by Jack and Helen Tramiel,
his wife. Jack Tramiel disclaims beneficial ownership.
(3) The address of Time Warner Inc. is 75 Rockefeller Plaza, New
York, New York 10019.
(4) This number includes 50,708 shares held in trust for Mr. Sam
Tramiel's three minor children; however, Mr. Tramiel disclaims
beneficial ownership of the shares. This number also includes
40,000 shares owned by Tziporah Tramiel, Mr. Tramiel's wife;
however, Mr. Tramiel disclaims beneficial ownership of these
shares.
(5) This number includes 40,000 shares owned by Preeva Tramiel, wife
of Leonard Tramiel and 8,000 shares owned by minor children of
Mr. Tramiel; however, Mr. Tramiel disclaims beneficial ownership
of these shares.
(6) The address of Sega Holdings USA is c/o Sega of America, Inc.,
303 Twin Dolphin Drive, Suite 200, Redwood City, California
94065.
(7) Includes options to purchase 185,000, 10,000, 45,000, 21,250,
20,000, 20,000, 30,500, and 331,750 shares exercisable within 60
days of the date of this Proxy held by Messrs. Sam Tramiel,
Garry Tramiel, Leonard Tramiel, August Liguori, Leonard
Schreiber, Michael Rosenberg, Laurence Scott, and all directors
and officers as a group, respectively.
ELECTION OF DIRECTORS
The Company's directors are to be elected at each annual meeting of
shareholders. At this Meeting, five directors will be elected to serve until
the next annual meeting of shareholders and until their successors are elected
and qualified. The nominees for election as directors at this Meeting are set
forth in the table below. All are incumbent directors who have served as such
during the last fiscal year. Each of the nominees has consented to serve as
director if elected.
In the event that any of the nominees for directors should become unable
to serve if elected, it is intended that shares represented by proxies which are
executed and returned will be voted for such substitute nominee(s) as may be
recommended by the Company's existing Board of Directors. To the best of the
Company's knowledge, all nominees are and will be available to serve.
Nominee Age Position(s) with the Company
Jack Tramiel 66 Chairman of the Board
Sam Tramiel 45 Director, President and Chief Executive Officer
August J. Liguori 43 Director, Vice President - Finance, Chief
Financial Officer, Treasurer, and Secretary
Leonard Schreiber 80 Director
Michael Rosenberg 67 Director
Jack Tramiel founded the Company in May 1984 and has served as its
Chairman and, until May 1988, Chief Executive Officer. Mr.
Tramiel is the father of Sam, Leonard, and Garry Tramiel.
Sam Tramiel has been President and a Director of the Company since June
1984 and became Chief Executive Officer in 1988.
August J. Liguori joined the Company in April 1986 as Vice President -
Administration, Atari U.S. Corp. Mr. Liguori served as Vice
President and General Manager, Atari U.S. Corp. from October
1986 to October 1989; as Vice President, Atari Corporation,
October 1989 to October 1990; and as Vice President - Finance,
Treasurer, and Chief Financial Officer since October 1990, and
Secretary since June 1994. He became a director in 1992.
Leonard I. Schreiber has been a Director of the Company since its
formation in 1984 and served as a Vice President and Secretary
of the Company from its formation through 1986. He is a partner
of Schreiber & McBride, which serves as General Counsel to the
Company.
Michael Rosenberg was elected to the Company's Board of Directors in May
1987. Mr. Rosenberg has been Chairman and Chief Executive
Officer of Ross & Roberts, Inc., a plastics company, since he
acquired that company in September 1987. Prior to September
1987, he was employed by Ross & Roberts, Inc. He is a Certified
Public Accountant.
Director Fees
The outside directors, Michael Rosenberg and Leonard Schreiber, are paid
$500.00 per meeting. Each outside director received options to purchase 20,000
shares of Common Stock in 1992 at an exercise price of $1.75 per share, vesting
over five year period.
Board Meetings and Committees
The Company's Board of Directors met five times during 1994. Each
director attended at least 80% in aggregate of the meetings of the Board of
Directors and of the Committees on which such director served during the year.
The Board has the following Committees:
Executive Committee The members are: Jack Tramiel, Sam Tramiel, and
August Liguori. The Committee met three times during the year.
The Executive Committee reviews and recommends to the Board of
Directors action on major business activities of the Company.
Audit Committee The members are: Leonard I. Schreiber and Michael
Rosenberg. The Committee met once during the year. The Audit
Committee is primarily responsible for approving the services
performed by the Company's independent auditors and for
reviewing and evaluating the Company's accounting principles and
its system of internal accounting controls.
Compensation & Stock Option Committee The members are: Jack Tramiel,
Leonard I. Schreiber and Michael Rosenberg. The Committee met
twice during the year. The Compensation and Stock Option
Committee reviews and approves the Company's executive
compensation policy and administers the Company's stock option
and restricted stock plan.
Management recommends voting "FOR" the election of Messrs. J. Tramiel, S.
Tramiel, A. Liguori, L. Schreiber, and M. Rosenberg. Unless otherwise directed
by a shareholder, proxies will be voted "FOR" the election of such nominees.
EXECUTIVE OFFICERS OF THE COMPANY
The following table sets forth those executive officers not set forth
above as Directors:
Name Age Position(s) with the Company
Dean Fox 49 Senior Vice President, Marketing, Atari
Corporation since March 1995. From 1990
to March 1995, Mr. Fox worked as a
consultant to the entertainment software
and video game industry.
Laurence M. Scott, Jr. 49 Vice President, Manufacturing and
Operations, Atari Corporation, October
1992 to December 1994; President,
Radofin, an OEM contract manufacturer in
Japan, from May 1978 to November 1991.
Leonard Tramiel 40 Vice President - Advanced Software
Development, Atari Corporation since
March 1991; Vice President- Software
Development, Atari Corporation, July
1984 to March 1991.
COMPENSATION COMMITTEE INTERLOCKS AND INSIDER PARTICIPATION
Leonard Schreiber, a director of the Company, was a member of the
Compensation Committee during 1994. He is not a present officer or employee of
the Company or any of its subsidiaries. Mr. Schreiber served as a Vice
President of the Company from its formation in 1984 through 1986.
Michael Rosenberg, a director of the Company, was a member of the
Compensation Committee during 1994. He is not a present officer or employee of
the Company or any of its subsidiaries.
Jack Tramiel, a director of the Company, was a member of the
Compensation Committee during 1994. He was an employee and executive officer of
the Company from its inception until May 1994.
The information contained below under the captions "Compensation
Committee Report of Executive Compensation" and "Performance Graph" shall not be
deemed to be "soliciting material" or to be "filed" with the Securities and
Exchange Commission, nor shall such information be incorporated by reference
into any future filing under the Securities Act of 1933 or the Securities
Exchange Act of 1934, except to the extent that the Company specifically
incorporates it by reference into such filing.
COMPENSATION COMMITTEE REPORT OF EXECUTIVE COMPENSATION
General
How the Company compensates executives reflects how they -- and the
Company -- perform. But actually measuring performance is a complex subject,
and the Compensation Committee and the Board of Directors firmly believe that
the Company's shareholders are entitled to a detailed, clear explanation of what
is involved.
This report consists of three sections. First, the report discusses the
compensation philosophy of the Company. Simply stated, Atari believes in tying
pay to performance. Second, the report discusses the three elements which
comprise compensation -- salary, annual and long- term incentive compensation.
Third, the report discusses the Chief Executive Officer's compensation and how
his pay is tied to both his and the Company's performance.
Compensation Philosophy
The Company's compensation philosophy is designed to achieve a number of
results:
Provide a direct link between executive pay and Company performance on
behalf of its shareholders;
Attract, motivate and retain key executives;
Compensate executives for their successful long-term strategic
management of the Company; and
Establish compensation opportunities based on competitive levels among
comparably-sized companies.
Elements of Executive Compensation
Executives are compensated with a base salary, stock options and a bonus
plan. This combination is intended to provide executives with a base salary
that is competitive in the industry, with short-term incentives through a bonus
plan based on annual profitability, and long-term incentives based on the value
of stock through holdings or options. This plan means that the Company's
compensation for its executives in the near term is salary and, if the Company
is profitable, a bonus, while in the longer term the executives will
significantly increase their overall income by achieving and sustaining
profitability that is reflected in the value of the Company's stock in the open
market.
Salary
Base salaries are generally positioned at approximately the Company's
perception of the market rate in the multimedia industry. Total compensation,
which includes base salary plus incentives, is positioned at the average of
general industry median pay levels. Both categories are used to ensure that if
the Company engages in any future executive recruitment, compensation accurately
reflects the marketplace.
In 1994, the Compensation Committee approved an offer to officers and
others that were subject to a salary cut in May, 1993. The offer took the form
of a choice of (i) reinstatement of salary to amounts earned prior to May, 1993;
or (ii) in lieu of reinstatement of salary, receiving options to purchase two
(2) shares, exercisable at the fair market value on the grant date ($5.25 per
share) for each dollar of salary cut; or (iii) a combination of reinstatement of
a portion of salary and a portion of stock options. All officers (except Sam
Tramiel, President and CEO) elected a reinstatement of salary to amounts earned
prior to May, 1993; Mr. Sam Tramiel selected a combination of reinstatement of a
portion of salary and a portion of stock options.
Bonus Plan and Special Bonus
The Company has a bonus plan whereby a bonus pool equal to 10% of the
yearly increase in after-tax profits, exclusive of extraordinary and
non-recurring items, is made available for distribution on a discretionary
basis. The Board of Directors feels that such a plan is necessary to attract
and keep qualified employees. In 1994, the Company distributed no bonus
payments other than as specified below. Since the Company has made no
distribution under this plan, the Compensation Committee has not formalized
performance standards and related distribution.
In addition, in 1994 the Compensation Committee (Mr. Jack Tramiel
abstaining) elected to grant to Mr. Sam Tramiel a bonus of $250,000 and Mr.
Liguori a bonus of $50,000 following the execution of certain agreements with
Sega Enterprises, Ltd. ("Sega") in which the Company received from Sega $69.8
million as follows:
$40.0 million from the sale to Sega of 4,705,883 common shares at a
purchase price of $8.50 per Share; and
$29.8 million ($50.0 million net of $20.2 million of legal fees and
associated costs) in exchange for a grant of a comprehensive license by
the Company to Sega of a library of Atari patents issued between 1977
through 1984 (excluding certain of the Company's Jaguar and Lynx
patents) through the year 2001.
The Compensation Committee granted such bonus in recognition of
outstanding performance with respect to work in connection with the sale of the
stock and grant of the license to Sega.
Chief Executive Officer Compensation
As already discussed, the Company's executive compensation program is
based on performance. The Chief Executive Officer's total 1994 compensation was
designed to be equal to the multimedia industry median pay levels. During 1994,
Mr. Tramiel received a salary of $150,000, a bonus specified above, and options
to purchase 25,000 shares of Common Stock in lieu of a complete reinstatement of
salary as described above.
COMPENSATION COMMITTEE
Jack Tramiel
Leonard I. Schreiber
Michael Rosenberg
<PAGE>
PERFORMANCE GRAPH
Comparison of Five Year Cumulative Total Return
Between Atari Corporation, AMEX Composite Index and Chips & Technologies, Inc.
PERFORMANCE GRAPH submitted on printed preliminary Definitive 14A Proxy
Statement, filed with the SEC on May 9, 1995.
<TABLE>
<CAPTION>
Cumulative Total Return
<S> <C> <C> <C> <C> <C> <C> <C>
1988 1989 1990 1991 1992 1993 1994
Atari Corp $100 $153 $31 $27 $21 $102 $68
AMEX $100 $124 $101 $129 $130 $156 $142
CHPS $100 $136 $55 $58 $34 $49 $53
</TABLE>
<TABLE>
<CAPTION>
Percent Annual Change
<S> <C> <C> <C> <C> <C> <C> <C>
1988 1989 1990 1991 1992 1993 1994
Atari Corp $100 53% -80% -14% -21% 384% -34%
AMEX $100 24% -18% 28% 1% 20% -9%
CHPS $100 36% -60% 7% -42% 44% 8%
</TABLE>
Selection of Peer Company
During 1994, the Company's principal products were the Jaguar video game
console, associated games, the Lynx handheld console and associated games, and
personal computers. Revenues from the video game and personal computer segments
represented 84% and 16%, respectively, of total revenue. The Company does not
believe it can reasonably identify a peer group and/or a peer company because
the Company's competition were in two different lines of business, and therefore
a fair comparison cannot be made. The Company believes that a fair peer
comparison is Chips & Technologies, Inc. which develops technology for similar
lines of business for broader applications, i.e., microprocessors and customized
chips. In addition, Chips & Technologies has a similar market capitalization to
the Company.
EXECUTIVE COMPENSATION
The following table sets forth all compensation earned during the past
three fiscal years by the Chief Executive Officer of the Company and the three
current and former executive officers of the Company other than the Chief
Executive Officer that were most highly compensated for service rendered to the
Company during the last fiscal year (collectively, Executive Officers) :
SUMMARY COMPENSATION TABLE
<TABLE>
<CAPTION>
Annual Compensation Long Term
Comp Awards
Name & Year Salary ($) Bonus ($) Other Options (#)
Principal Annual
Position Comp ($)1
<S> <C> <C> <C> <C> <C>
Sam Tramiel 1994 150,000 250,000 206 25,000
President and 1993 166,346 - 0 - 239 25,000
Chief 1992 207,692 - 0 - 306 - 0 -
Executive
Officer
August J.
Liguori 1994 142,834 50,000 190 - 0 -
Chief 1993 134,856 - 0 - 175 36,250
Financial 1992 155,769 - 0 - 206 - 0 -
Officer
Laurence Scott,
Jr. 1994 133,425 - 0 - 291 - 0 -
Vice President, 1993 131,250 - 0 - 2,247 10,500
Manufacturing 1992 24,231 - 0 - 684 50,000
and Operations
Richard Miller 1994 142,644 - 0 - 93 - 0 -
Vice President, 1993 140,625 - 0 - 108 66,250
Technology (2) 1992 150,000 - 0 - 108 - 0 -
</TABLE>
(1) Group term life insurance benefits.
(2) Mr. Miller resigned in November 1994.
Stock Options
The following table sets forth information as to options to purchase
Common Stock granted to each of the Executive Officers:
Option Grants in Last Fiscal Year
<TABLE>
<CAPTION>
Potential Realizable
Value at Assumed
Annual Rates of Stock
Price Appreciation for
Individual Grants Option Term (1)
- --------------- -------------------------------------- ----------------------
Name Number of % of Total Exer- Expir- 5% 10%
Securities Options cise ation
Underlying Granted To Price Date
Options Employees ($$ /Sh)
Granted (#) in Fiscal
Year
- --------------- ----------- ---------- ------- ------- ------- -------------
<S> <C> <C> <C> <C> <C> <C>
Sam Tramiel 25,000 (2) 8% (3) $5.25 May $36,262 $80,129
1999
Laurence Scott - 0 - - 0 - N / A N / A N / A N / A
August Liguori - 0 - - 0 - N / A N / A N / A N / A
Richard Miller - 0 - - 0 - N / A N / A N / A N / A
(departed)
</TABLE>
(1) The 5% and 10% assumed annual rates of appreciation are mandated by the
rules of the Securities and Exchange Commission and do not represent the
Company's estimate or projection of future Common Stock prices. The "potential
realizable value" at the assumed rates of appreciation were calculated using, as
the base, the exercise price of $5.25 per share.
(2) This option was granted pursuant to the Company's 1986 Stock Option Plan
as amended in 1989. The exercise price of the option was equal to the fair
market value of the Company's Common Stock on the date of grant, as determined
by the Company's Board of Directors. The option expires five years from the
date of grant. The option vests as follows: 25% per quarter over the 12 months
following the date of grant.
(3) Based on options to purchase an aggregate of 289,500 shares granted in
1994 by the Company under the 1986 Stock Option Plan as amended in 1989.
The following table is a summary of the stock options of the Executive
Officers as of December 31, 1994.
<PAGE>
<TABLE>
<CAPTION>
Shares Value Number of Securities Value of Unexercised
Acquired Realized Underlying Unexercised in the Money options at
on ($) options at Fiscal Fiscal year-end($)(1)
Exercise year-end
(#)
NAME Exercisable Unexercis'ble Exercisable Unexercis'ble
- -------------- ------ -------- ----------- ------------- ----------- -------------
<S> <C> <C> <C> <C> <C> <C>
Sam Tramiel - 0 - - 0 - 132,500 92,500 $97,560 $64,800
August Liguori - 0 - - 0 - 16,250 20,000 34,914 16,200
Laurence Scott - 0 - - 0 - 30,500 30,000 77,109 69,200
Richard Miller 66,000 $201,975 26,250 40,000 60,834 72,400
</TABLE>
__________________________________
(1) Value of underlying securities at year end ($3.81 on December 31, 1994),
minus the exercise price per share.
CERTAIN TRANSACTIONS
Loans were outstanding from the following Executive Officers of the
Company and are repayable on demand:
Purpose Highest Outstanding
Name of Loan During Year April, 1995 Rate
August J. Liguori Personal Loan $76,000 $56,000 7%
In addition, the Company sold 1,500,000 shares of common stock to Time
Warner Inc. at a price of $8.50 per share. The Company also issued 70,000
shares of common stock to Atari Games Corporation, a subsidiary of Time Warner
Inc. to extinguish accrued royalty liabilities and minimum guarantees. These
transactions closed on April 19, 1994.
SHAREHOLDER PROPOSALS
Shareholders intending to offer proposals for consideration at the
Company's 1996 Annual Meeting of Shareholders must deliver the proposal to the
Company no later than January 10, 1996 to be included in its proxy statement and
form of proxy relating to that meeting. Such proposals must comply with
applicable corporation laws and with regulations of the Securities and Exchange
Commission with respect to matters which may properly be submitted for action by
the shareholders, and should be addressed to the Secretary of the Company at
1196 Borregas Avenue, Sunnyvale, California 94089.
RATIFICATION OF APPOINTMENT OF AUDITORS
Deloitte & Touche LLP has served as the Company's independent auditors
since 1984. The Board of Directors has again selected such firm to audit the
financial statements of the Company for the year ending December 31, 1995 and
submits this selection for shareholder approval. If the shareholders reject
this selection, the Board will consider other firms of independent auditors. A
representative of Deloitte & Touche LLP will be present at the Annual Meeting
and may make a statement and respond to appropriate shareholder questions.
Management recommends voting "FOR" the election of Deloitte & Touche LLP
as auditors. Unless otherwise directed by a shareholder, proxies will be voted
"FOR" the election of Deloitte & Touche LLP as independent auditors.
ANNUAL REPORTS
The Company is using its Annual Report on Form 10-K, which is filed with
the Securities and Exchange Commission, as its Annual Report to Shareholders for
the fiscal year-ended December 31, 1994. Such report is being mailed to
shareholders with these proxy materials; however, such report is not
incorporated in this Proxy Statement and shall not be deemed to be a part of the
Proxy solicitation material.
COMPLIANCE WITH SECTION 16(a) OF
THE SECURITIES EXCHANGE ACT OF 1934
To the Company's knowledge, based solely on a review of the copies of
such reports furnished to the Company, all directors, officers and 10%
shareholders of the Company filed with the Securities and Exchange Commission on
a timely basis all reports required by Section 16(a) of the Securities Exchange
Act of 1934 during or with respect to the Company's most recent fiscal year.
OTHER BUSINESS AND DIRECTOR NOMINATIONS
At the time of the preparation of this Proxy Statement, the Company's
Board of Directors had not been informed of any other matters which would be
presented for action at the Annual Meeting. If any other matters are properly
presented, the person named in the accompanying form of Proxy will vote or
refrain from voting in accordance with his or her best judgment.
By Order of the Board of Directors
/S/ August Liguori
August Liguori, Secretary
