<PAGE>
SCHEDULE 14A INFORMATION
PROXY STATEMENT PURSUANT TO SECTION 14(a) OF THE SECURITIES EXCHANGE ACT OF 1934
Filed by the Registrant [X]
Filed by a Party other than the Registrant [ ]
Check the appropriate box:
[ ] Preliminary Proxy Statement
[ ] Confidential, for Use of Commission Only (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
InterTAN, Inc.
______________________________________________________________________________
(Name of Registrant as Specified in Its Charter)
InterTAN, Inc.
______________________________________________________________________________
(Name of Person(s) Filing Proxy Statement)
Payment of Filing Fee (Check the appropriate box):
[X] $125 per Exchange Act Rules 0-11(c)(1)(ii), 14a-6(i)(1), 14a-6(i)(2), or
Item 22(a)(2) of Schedule 14A.
[ ] $500 per each party to the controversy pursuant to Exchange Act Rule 14a-
6(i)(3).
[ ] Fee computed on table below per Exchange Act Rules 14a-6(i)(4) and 0-11.
1) Title of each class of securities to which transaction applies:
.........................................................................
2) Aggregate number of securities to which transaction applies:
.........................................................................
3) Per unit price or other underlying value of transaction computed pursuant
to Exchange Act Rule 0-11 (Set forth the amount on which the filing fee
is calculated and state how it was determined):
.........................................................................
4) Proposed maximum aggregate value of transaction:
.........................................................................
5) Total fee paid:
.........................................................................
[ ] Check box if any part of the fee is offset as provided by Exchange Act Rule
0-11(a)(2) and identify the filing for which the offsetting fee was paid
previously. Identify the previous filing by registration statement number,
or the Form or Schedule and the date of its filing.
1) Amount Previously Paid: ______________________________________________
2) Form Schedule or Registration Statement No.:___________________________
3) Filing Party:__________________________________________________________
4) Date Filed:____________________________________________________________
<PAGE>
[INTERTAN, INC. LOGO APPEARS HERE]
September 27, 1996
Dear Fellow Stockholders:
It is a pleasure to invite you to InterTAN's 1996 Annual Meeting at 10:00
a.m. in the Sunset and Trinity Rooms on the 12th floor of the Fort Worth Club
located at 306 West Seventh Street, Fort Worth, Texas, on Tuesday, November
12, 1996. At the meeting, stockholders will vote for the election of two
directors, to approve a new stock option plan for key employees, and on such
other business as may properly come before the meeting. In addition, you will
receive a report on the operations of your company for the 1996 fiscal year
and your management will be pleased to answer any of your questions.
I urge each of you to read the accompanying Proxy Statement and the enclosed
1996 Annual Report, particularly the letters to stockholders included in the
Annual Report, which describe the changes in both the financial structure and
operating performance of your company that occurred in fiscal 1996.
Whether you own a few or many shares of stock and whether or not you plan to
attend in person, it is important that your shares be voted on matters that
come before the meeting. I urge you to specify your choices by completing the
enclosed proxy card and returning it promptly. If you sign and return your
proxy card without specifying your choices, it will be understood that you
wish to have your shares voted in accordance with the Board of Directors'
recommendations.
I look forward to seeing you at InterTAN's 1996 Annual Meeting.
Very truly yours,
/S/ JAMES T. NICHOLS
James T. Nichols
President and Chief Executive
Officer
<PAGE>
INTERTAN, INC.
201 MAIN STREET, SUITE 1805
FORT WORTH, TEXAS 76102
----------------
NOTICE OF ANNUAL MEETING OF STOCKHOLDERS
TO BE HELD NOVEMBER 12, 1996
----------------
TO THE HOLDERS OF COMMON STOCK
OF INTERTAN, INC.
NOTICE IS HEREBY GIVEN that the Annual Meeting of Stockholders of InterTAN,
Inc. (the "Company") will be held in the Sunset and Trinity Rooms on the 12th
Floor of the Fort Worth Club located at 306 West Seventh Street, Fort Worth,
Texas, on Tuesday, November 12, 1996 at 10:00 a.m. (local time) for the
following purposes:
(1)To elect two Class I Directors to serve for a three-year term;
(2)To vote on a proposal to approve the Company's 1996 Stock Option Plan;
and
(3) To transact such other business as may properly come before the meeting
and any adjournments or postponements thereof.
The transfer books will not be closed. The date fixed by the Board of
Directors as the record date for the determination of the stockholders
entitled to notice of, and to vote at, the Annual Meeting is the close of
business on September 16, 1996.
By Order of the Board of Directors
/S/ DAVID S. GOLDBERG
David S. Goldberg
Vice President, Secretary and
General Counsel
Fort Worth, Texas
September 27, 1996
REGARDLESS OF WHETHER YOU PLAN TO ATTEND THE ANNUAL MEETING, PLEASE
COMPLETE, SIGN AND DATE THE ENCLOSED PROXY CARD AND PROMPTLY MAIL IT IN THE
ENCLOSED ENVELOPE, WHICH REQUIRES NO POSTAGE IF MAILED IN THE UNITED STATES.
IN THE EVENT YOU DECIDE TO ATTEND THE MEETING, YOU MAY, IF DESIRED, REVOKE THE
PROXY AND VOTE YOUR SHARES IN PERSON.
<PAGE>
INTERTAN, INC.
201 MAIN STREET, SUITE 1805
FORT WORTH, TEXAS 76102
----------------
PROXY STATEMENT
FOR
ANNUAL MEETING OF STOCKHOLDERS
TO BE HELD NOVEMBER 12, 1996
This Proxy Statement is furnished in connection with the solicitation by the
Board of Directors of InterTAN, Inc. (the "Company") of proxies to be voted at
the Annual Meeting of Stockholders to be held November 12, 1996 at 10:00 a.m.
(local time). The date fixed by the Board of Directors as the record date for
the determination of the stockholders entitled to notice of, and to vote at,
the Annual Meeting is the close of business on September 16, 1996 (the "Record
Date"). The solicitation of the enclosed form of proxy is made by and on
behalf of the Board of Directors.
Copies of this Proxy Statement and the form of proxy are being mailed to
stockholders on or about September 27, 1996. A copy of the Company's annual
report containing financial statements for the fiscal year ended June 30, 1996
("Fiscal 1996") is included herewith, but is not to be considered as a part of
the proxy solicitation materials.
The Annual Meeting is called for the following purposes: (i) to elect two
Class I Directors to serve for a three-year term; (ii) to vote on a proposal
(the "Stock Option Plan Proposal") to approve the Company's 1996 Stock Option
Plan; and (iii) to transact such other business as may properly come before
the meeting and any adjournments or postponements thereof.
The total number of outstanding shares of the Company's Common Stock as of
the Record Date was 11,312,427. The Common Stock is the only class of the
Company's stock outstanding, and therefore is the only class entitled to vote
at the Annual Meeting, with each share entitling the holder thereof to one
vote. A stockholder may revoke a proxy at any time before such proxy is voted
by giving written notice of such revocation, or delivering a later dated
proxy, to the Secretary of the Company at the address set forth above. A proxy
may also be revoked by attending the Annual Meeting and voting in person
(although attendance at the Annual Meeting will not in and of itself
constitute a revocation of a proxy).
The presence, either by proxy or in person, of holders of a majority of the
issued and outstanding shares of Common Stock entitled to vote at the Annual
Meeting is necessary to constitute a quorum for the Annual Meeting. Provided a
quorum is present, the election of each Class I Director nominee will be by a
plurality of the votes cast by the stockholders voting in person or by proxy
at the Annual Meeting; the Stock Option Plan Proposal will be approved if an
affirmative vote is cast by a majority of the shares of the Company present
and voting in person or by proxy at the Annual Meeting.
A validly executed proxy not marked "Withhold Vote" with respect to the
election of the Class I Director nominees or "Against" or "Abstain" with
respect to the Stock Option Plan Proposal will be treated as a vote cast in
favor of the election of the Class I Director nominees or the Stock Option
Plan Proposal, as the case may be. In determining the number of votes cast on
a matter, shares abstaining from voting on a matter and shares that are
indicated as not being voted on a matter by brokers due to a lack of
discretionary authority will not be treated as votes cast with respect to each
matter.
<PAGE>
PROXY SOLICITATION AND EXPENSE
The cost of soliciting proxies will be borne by the Company, including
expenses in connection with the preparation and mailing of this proxy
statement and all materials which now accompany or may hereafter supplement
it. The solicitation will be undertaken by mail. The Company has engaged
Beacon Hill Partners, Inc. to assist with the solicitation of proxies for an
estimated fee of $2,750, plus expenses relating to certain proxy forwarding
charges. The Company will also supply brokers, fiduciaries, custodians, or
similar persons holding stock in their names or in the names of their nominees
with such number of proxies, proxy materials and annual reports as they may
require for mailing to beneficial owners, and will reimburse them for their
expenses in accordance with the rules and regulations of the Securities and
Exchange Commission and the New York Stock Exchange.
Certain directors, officers and employees of the Company, not specifically
employed for the purpose, may solicit proxies, without remuneration therefor,
by mail, telephone, facsimile transmission, telegraph or personal interview.
ELECTION OF DIRECTORS
(ITEM 1)
BOARD OF DIRECTORS
As provided in the Restated Certificate of Incorporation and the Amended and
Restated Bylaws of the Company, the Board of Directors presently consists of
eight directors and is divided as evenly as possible into three classes, with
one class of directors to be elected at each annual meeting of stockholders to
serve for a three-year term. By letter dated August 5, 1996, Mr. Brian H.
Christopher, a director of the Company since January 1987, advised the
Chairman of his desire to retire from service on the Board of Directors. Mr.
Christopher's resignation will be effective upon the conclusion of the Annual
Meeting on November 12, 1996. Given Mr. Christopher's intention to resign, in
accordance with the Company's Restated Certificate of Incorporation and
Amended and Restated Bylaws, the Board of Directors authorized, at its regular
meeting on September 9, 1996, an increase in the size of the Board of
Directors from seven to eight, and duly nominated and elected Mr. Ron G.
Stegall to serve as a Class II Director.
The Board of Directors as of the date hereof consists of two Class I
Directors, four Class II Directors, and two Class III Directors. Two Class I
Directors are to be elected at the Annual Meeting to hold office for a three-
year term to expire at the Annual Meeting of Stockholders in 1999. Messrs.
James T. Nichols and Clark A. Johnson, the incumbent Class I Directors, have
been nominated for re-election and it is the intention of the persons named in
the accompanying form of proxy to vote for their election. Each of Messrs.
Nichols and Johnson has indicated his willingness to serve for an ensuing
term, but if one or more of such nominees is unable or should decline to serve
as a director at or prior to the Annual Meeting, which is not anticipated, it
is the intention of the persons named in the proxy to vote for such other
persons as they in their discretion shall determine.
RECOMMENDATION OF THE BOARD OF DIRECTORS
The Board of Directors of the Company recommends a vote FOR James T. Nichols
and Clark A. Johnson as Class I Directors to hold office until the 1999 Annual
Meeting of Stockholders and until their successors are elected and qualified.
Proxies received by the Board of Directors will be so voted unless
stockholders specify in their proxy a contrary choice.
2
<PAGE>
BOARD OF DIRECTORS AND MANAGEMENT
The following table sets forth certain information regarding the directors
and executive officers of the Company:
<TABLE>
<CAPTION>
NAME AGE POSITION
---- --- --------
<C> <C> <S>
James T. Nichols............ 53 Director--Class I (Nominee Director-term
expiring at Annual Meeting) and President
and Chief Executive Officer
Clark A. Johnson............ 65 Director--Class I (Nominee Director-term
expiring at Annual Meeting)
John A. Capstick............ 57 Director--Class III (term expiring 1998) and
Chairman of the Board
Walter F. Loeb.............. 71 Director--Class III (term expiring in 1998)
Brian H. Christopher........ 64 Director--Class II (term expiring 1997)
John H. McDaniel............ 78 Director--Class II (term expiring 1997)
W. Darcy McKeough........... 63 Director--Class II (term expiring 1997)
Ron G. Stegall.............. 49 Director--Class II (term expiring 1997)
James G. Gingerich.......... 45 Senior Vice President and Chief Financial
Officer
Douglas C. Saunders......... 48 Vice President and Corporate Controller
David S. Goldberg........... 34 Vice President, Secretary and General
Counsel
J. Michael Wood............. 53 Vice President--Marketing Services
</TABLE>
JAMES T. NICHOLS has served as the President of the Company since January 1,
1995 and as a director of the Company since February 7, 1995. Since April 1,
1996, Mr. Nichols has served as the Chief Executive Officer of the Company;
from January 1, 1995 to April 1, 1996, Mr. Nichols was the Company's Chief
Operating Officer. Prior to joining the Company, Mr. Nichols was the Executive
Vice President of Retail Operations with the RadioShack division of Tandy
Corporation from January 1, 1992 until January 1, 1995. From July 1, 1985
until January 1, 1992, Mr. Nichols was the Senior Vice President USA Retail
Operations for Tandy Corporation's RadioShack division. Prior to such time,
Mr. Nichols was the Senior Vice President of Tandy International Electronics,
Inc., a subsidiary of Tandy Corporation.
CLARK A. JOHNSON has served as a director of the Company since November
1989, and has been Chairman of the Board and Chief Executive Officer of Pier 1
Imports, Inc. since August 1988. Mr. Johnson also serves as a director of
Albertson's Inc., Metro Media International Group, Heritage Media Corporation
and Anacomp, Inc.
JOHN A. CAPSTICK has served as Chairman of the Board of Directors since
January 1, 1994 and as a director of the Company since January 1987. Mr.
Capstick is presently the Chairman of Anglia Maltings Group in the United
Kingdom and a director of Beauford PLC. From January 1, 1995 to April 1, 1996,
Mr. Capstick also served as the Company's Chief Executive Officer. On December
31, 1993, Mr. Capstick retired as Group President, Global Accounts Group, of
R.R. Donnelley & Sons Company, the position he held since January 1993. From
September 1988 to January 1993, Mr. Capstick was President of the
International Group of R.R. Donnelley & Sons Company.
WALTER F. LOEB has served as a director of the Company since January 1993,
and has been President of Loeb Associates Inc. and publisher of the Loeb
Retail Letter since February 1990. From 1984 to January 1990, Mr. Loeb was
Senior Retail Analyst and Principal of Morgan Stanley & Co. Incorporated. Mr.
Loeb also serves as a director of Federal Realty Investment Trust, The Wet
Seal, Inc., Gymboree Corporation, Mothers Work, Inc. and Performance, Inc.
BRIAN H. CHRISTOPHER has served as a director of the Company since January
1987, and since 1982 has been Chairman of the Board of ASTEC PLC, an
international manufacturer of computer subassemblies and consumer electronic
products located in the British Crown Colony of Hong Kong. From 1982 to
February 1987 and from February 1990 to April 1990, Mr. Christopher also was
Chief Executive Officer of ASTEC PLC.
3
<PAGE>
JOHN H. MCDANIEL served as Chairman of the Board of Directors of the Company
from July 1991 to January 1, 1994, and has served as a director of the Company
since July 1986. Mr. McDaniel has been retired since January 1989. From 1980
to January 1989, Mr. McDaniel was Senior Vice President and Controller of
Tandy Corporation.
W. DARCY MCKEOUGH has served as a director of the Company since February
1994. Mr. McKeough has been the chairman of McKeough Investments, Ltd. for
over 10 years and serves as a director of The Canadian Imperial Bank of
Commerce and other Canadian corporations.
RON G. STEGALL has served as a director of the Company since September 9,
1996. Mr. Stegall has been the Chief Executive Officer of Arlington Equity
Partners, Inc. since February 1992. From September 1987 until December 1991,
Mr. Stegall was the Chairman and Chief Executive Officer of BizMart, Inc. Mr.
Stegall also serves as a director of O'Sullivan Industries, Inc., Hastings
Entertainment Inc., Lil' Things, Inc. and Organized Living, Inc.
JAMES G. GINGERICH has served as the Senior Vice President and Chief
Financial Officer of the Company since February 7, 1995. From May 2, 1994
until February 7, 1995, Mr. Gingerich served as the Vice President, Finance
and Administration and Chief Financial Officer of the Company. From August 29,
1994 until November 8, 1994, he also served as the Secretary of the Company.
From December 1992 until April 1994, Mr. Gingerich was Vice President of
Finance of Irving Tissue Ltd. Prior thereto Mr. Gingerich served as Vice
President, Finance and Administration of Electrohome Limited, a Canadian
public company, commencing in June 1987.
DOUGLAS C. SAUNDERS has served as Vice President and Corporate Controller of
the Company since March 1993. Mr. Saunders also served as Secretary of the
Company from November 8, 1994 until March 1, 1995. From 1980 to March 1993,
Mr. Saunders was Managing Tax Partner of the Mississauga, Ontario office of
Price Waterhouse.
DAVID S. GOLDBERG has served as the Vice President, Secretary and General
Counsel of the Company since March 1, 1995. From September 1987 until joining
the Company, Mr. Goldberg was engaged in the private practice of law in the
Fort Worth, Texas office of the international law firm of Haynes and Boone,
L.L.P.
J. MICHAEL WOOD has served as the Vice President-Marketing Services of the
Company since March 1, 1995. From November 2, 1990 until joining the Company,
Mr. Wood was the Vice President-Advertising of InterTAN Canada Ltd., the
Company's Canadian operating subsidiary. Prior to November 1990, Mr. Wood
served as the Vice President-Advertising for the RadioShack division of Tandy
Corporation.
Each executive officer is appointed annually by the Board of Directors
immediately following the Annual Meeting of Stockholders to serve for the
ensuing year, or until his successor is duly appointed.
MEETINGS AND COMMITTEES OF THE BOARD OF DIRECTORS; COMPENSATION OF DIRECTORS
The Board of Directors of the Company held four meetings during Fiscal 1996,
each by personal attendance. Each of the directors attended at least 75% of
the total number of meetings of the Board of Directors and of the committees
on which he served.
In accordance with the Amended and Restated Bylaws of the Company, the Board
of Directors has established an Executive Committee, an Audit Committee, and
an Organization and Compensation Committee.
Messrs. Capstick, Nichols and Johnson are the members of the Executive
Committee. Mr. Capstick is the Chairman of such committee. The Executive
Committee, during the intervals between meetings of the Board of Directors,
has the authority to exercise all the powers of the full Board of Directors,
with certain exceptions relating to extraordinary corporate matters. The
Executive Committee is available to management to review the
4
<PAGE>
Company's operations, and to act in an emergency or on routine matters when it
is impractical to assemble the entire Board of Directors for a meeting. The
Executive Committee held one meeting during Fiscal 1996 and acted on two other
matters by unanimous written consent.
Messrs. McKeough, Christopher, Loeb, McDaniel and Stegall, each of whom is a
non-employee director, are the members of the Audit Committee. Mr. McKeough is
the Chairman of such committee. The functions of the Audit Committee include
reviewing the Company's quarterly earnings releases; engagement of the
independent accountants; reviewing the scope and timing of the Company's audit
and certain non-audit services to be rendered by the independent accountants;
reviewing the Company's policies and procedures with respect to internal
auditing, accounting and financial controls with the independent accountants;
and reviewing the report of the independent accountants upon completion of
their audit. The Audit Committee held five meetings during Fiscal 1996, two of
which were by telephone conference.
Messrs. Johnson, Christopher, McDaniel and Stegall, each of whom is a non-
employee director, are the members of the Organization and Compensation
Committee. Mr. Johnson is the Chairman of such committee. The principal
functions of the committee are reviewing and making recommendations to the
Board of Directors concerning compensation plans, including the granting of
stock options to executive officers and other personnel; appointments and
promotions to official positions; reviewing corporate structure and making
recommendations to the Board as to alterations thereof; and making
recommendations to the Board of Directors with respect to any candidate for
director of the Company, compensation of Board members, and assignments of
directors to committees of the Board of Directors. The Organization and
Compensation Committee met twice during Fiscal 1996 and acted on three other
matters by unanimous written consent. To be considered by the committee,
stockholders who wish to suggest nominees for election to the Board of
Directors at the 1997 Annual Meeting should submit their suggestions in
writing no later than June 1, 1997 to the Secretary of the Company.
A director who is an employee of the Company is not compensated for service
as a member of the Board of Directors or any committee of the Board. In Fiscal
1996, non-employee directors received cash compensation consisting of an
annual retainer of $20,000, payable quarterly, plus $2,000 for each Board of
Directors meeting personally attended and $500 for each meeting of the Board
of Directors conducted by telephone conference call. In addition, board
members personally attending committee meetings not held in conjunction with a
board meeting receive $1,000 per committee meeting. If the committee meeting
is conducted by telephone conference call, the compensation is $500. The
Chairman of the Board is paid an additional fee of $50,000 per year for
services rendered to the Company. As stated above, in Fiscal 1996 there were
four board meetings where directors were in personal attendance. The Board of
Directors acted on one matter by unanimous written consent. There were four
committee meetings not held in conjunction with a board meeting, each where
committee members were in attendance either in person or by telephone.
Expenses of attendance at board and committee meetings are paid by the
Company.
BENEFICIAL OWNERSHIP OF VOTING SECURITIES BY EXECUTIVE OFFICERS AND DIRECTORS
Except as otherwise noted below, the following table sets forth, as of
August 31, 1996, information with respect to the beneficial ownership of
Common Stock by the Company's directors, the Chief Executive Officer, each of
the Company's four other most highly compensated executive officers, and all
present directors and executive officers as a group.
5
<PAGE>
<TABLE>
<CAPTION>
AGGREGATE NUMBER OF
SHARES PERCENT OF
NAME BENEFICIALLY OWNED(1) OUTSTANDING SHARES
- ---- --------------------- ------------------
<S> <C> <C>
John A. Capstick...................... 32,322 *
Brian H. Christopher.................. 25,000 *
Clark A. Johnson...................... 28,500 *
Walter F. Loeb........................ 25,000 *
John H. McDaniel...................... 32,000 *
W. Darcy McKeough..................... 30,000 *
Ron G. Stegall........................ 27,000(2) *
James T. Nichols...................... 83,015 *
James G. Gingerich.................... 24,932 *
David S. Goldberg..................... 1,629 *
Douglas C. Saunders................... 17,331 *
J. Michael Wood....................... 15,850 *
All Directors and Executive Officers
as a Group (12 persons)............... 342,579(3) 3.05%
</TABLE>
- --------
* less than 1% of issued and outstanding shares of Common Stock.
(1) The number of shares of Common Stock beneficially owned by Messrs.
Capstick, Christopher, Johnson, Loeb, McDaniel, McKeough, Nichols,
Gingerich, Goldberg, Saunders and Wood include 25,000, 25,000, 25,000,
25,000, 25,000, 25,000, 33,333, 14,333, 833, 8,999 and 9,000 shares,
respectively, or 216,498 shares in the aggregate, which such persons have
a right to acquire within 60 days after August 31, 1996 pursuant to
certain stock options. The number of shares beneficially held by Messrs.
Nichols, Gingerich, Goldberg, Saunders and Wood include 15,439, 3,734,
386, 2,218 and 2,719 shares, respectively, indirectly held pursuant to the
Company's Employee Stock Purchase Program. The number of shares
beneficially owned by Mr. Nichols also include 1,315 shares held
indirectly under the Company's 401(k) plan.
(2) The number of shares of Common Stock beneficially owned by Mr. Stegall
include 25,000 shares which he has a right to acquire within 60 days of
September 9, 1996, the date of Mr. Stegall's election to the Board of
Directors, pursuant to a stock option granted to him on such date.
(3) Includes all shares beneficially owned by Mr. Stegall.
6
<PAGE>
PRINCIPAL STOCKHOLDERS
The Company, based upon information available to it, including from its
review of public filings with the Securities and Exchange Commission, knows of
no person who was the beneficial owner, as of August 31, 1996, of more than
five percent (5%) of its issued and outstanding Common Stock on such date
other than as set forth in the following table:
<TABLE>
<CAPTION>
NUMBER OF SHARES
NAME AND ADDRESS BENEFICIALLY OWNED* PERCENT OF CLASS
- ---------------- ------------------- ----------------
<S> <C> <C>
Trans World Electronics, Inc............... 1,449,007(1) 11.41%(1)
1800 One Tandy Center
Fort Worth, TX 76102
River Road International L.P............... 1,404,588(2) 11.10%(2)
99 River Road
Cos Cob, CT 06870
Pioneering Management Corporation.......... 1,000,000(3) 8.89%
60 State Street
Boston, MA 02109
The TCW Group, Inc......................... 903,800(4) 8.03%
865 Figueroa Street
Los Angeles, CA 90017
CL Capital Management, Inc................. 831,100 7.39%
6201 Powers Ferry Road, NW
Atlanta, GA 30339
Brinson Partners, Inc...................... 765,360(5) 6.80%
209 South LaSalle
Chicago, IL 60604
Shufro, Rose & Ehrman...................... 746,000(6) 6.63%
745 Fifth Avenue
New York, NY 10151
</TABLE>
- --------
* Unless indicated otherwise in the notes below, according to public filings
made by such beneficial owners, each beneficial owner has the sole voting
and dispositive power with respect to the indicated shares.
(1) Immediately exercisable warrants to acquire up to 1,449,007 shares of
Common Stock; Trans World Electronics, Inc. is a wholly-owned subsidiary
of Tandy Corporation; percentage calculation assumes the full exercise of
warrants and the resulting increase in outstanding shares.
(2) River Road International, L.P., River Road Capital Management, River Road
Partners, and Mr. S. Donald Sussman share voting and dispositive power
over such shares; assumes the conversion of Cdn$11,830,000 (approximately
US$8,643,000 at the August 31, 1996 exchange rate) principal amount of the
Company's convertible subordinated debentures into Common Stock;
percentage calculation assumes the full exercise of debentures owned by
the named beneficial holder only and the resulting increase in outstanding
shares.
(3) According to Amendment No. 1 to Schedule 13G dated January 26, 1996,
Pioneering Management Corporation has sole voting and shared dispositive
powers regarding such shares.
(4) According to Amendment No. 2 to Schedule 13G dated February 12, 1996, Mr.
Robert Day, an individual, may be deemed to control The TCW Group, Inc.
(5) According to Amendment No. 3 to Schedule 13G dated February 9, 1996,
Brinson Partners, Inc. ("BPI"), Brinson Holdings, Inc. ("BHI"), SBC
Holding (USA), Inc. ("SBCUSA"), and Swiss Bank Corporation ("SBC") share
voting and dispositive power over the 765,360 shares. Brinson Trust
Company ("BTC") shares voting and dispositive power only as to 206,774
shares. BTC is a wholly-owned subsidiary of BPI. BPI is a wholly-owned
subsidiary of BHI, which in turn is a wholly-owned subsidiary of SBCUSA.
SBCUSA is a wholly-owned subsidiary of SBC.
(6) According to Schedule 13G dated February 14, 1996, sole voting power only
as to 35,800 of such shares.
7
<PAGE>
EXECUTIVE COMPENSATION
The following table sets forth the total annual compensation paid, payable,
or accrued by the Company during Fiscal 1996 and the two preceding fiscal
years to or for the account of the Company's Chief Executive Officer, each of
the Company's four other most highly compensated executive officers, and Mr.
John Capstick, who served as an executive officer during Fiscal 1996.
Information set forth in the Summary Compensation Table below under the
heading "Options/SARs" refers to stock options underlying shares of Common
Stock. The Company has never granted any stock appreciation rights ("SARs").
Certain of the Company's executive officers' compensation during the subject
years was paid in Canadian dollars or a combination of Canadian and U.S.
dollars. All amounts presented are in U.S. dollars based on the average
exchange rate for the given fiscal year.
SUMMARY COMPENSATION TABLE
<TABLE>
<CAPTION>
ANNUAL COMPENSATION LONG-TERM COMPENSATION
-------------------------------- -------------------------------
SECURITIES
OTHER ANNUAL RESTRICTED UNDERLYING LTIP ALL OTHER
NAME AND PRINCIPAL FISCAL SALARY BONUS(1) COMPENSATION(2) STOCK OPTIONS/SARS PAYOUTS COMPENSATION(3)
POSITION YEAR ($) ($) ($) AWARDS ($) (#SHS) ($) ($)
------------------ ------ ------- -------- --------------- ---------- ------------ ------- ---------------
<S> <C> <C> <C> <C> <C> <C> <C> <C>
James T. Nichols (4).... 1996 447,082 189,000 12,606 -- 100,000 -- 137,865
(President and Chief 1995 230,000 94,500 4,000 -- 100,000 -- 84,316
Executive Officer) 1994 -- -- -- -- -- -- --
John A. Capstick (5).... 1996 150,000 50,000 17,500 -- -- -- 4,373
(Chairman of the Board 1995 100,000 -- 35,000 -- -- -- --
and former Chief 1994 -- -- 45,000 -- 25,000 -- --
Executive Officer)
James G. Gingerich (6).. 1996 165,000 39,000 8,000 -- 7,500 -- 19,254
(Senior Vice President 1995 117,545 48,706 4,094 -- 3,000 -- 5,955
and Chief Financial 1994 16,123 -- -- -- 20,000 -- --
Officer)
Douglas C. Saunders..... 1996 130,000 25,000 8,000 -- 5,000 -- 13,674
(Vice President and 1995 93,925 36,457 27,812 -- 3,000 -- 6,517
Corporate Controller) 1994 90,355 36,140 2,817 -- 12,000 -- 2,641
David S. Goldberg (7)... 1996 100,000 7,560 8,000 -- 5,000 -- 5,626
(Vice President, 1995 34,615 4,824 2,423 -- 2,500 -- 195
Secretary and 1994 -- -- -- -- -- -- --
General Counsel)
J. Michael Wood......... 1996 100,000 20,985 15,337 -- 3,000 -- 51,556
(Vice President-- 1995 70,000 61,055 61,319 -- 2,000 -- 40,625
Marketing Services) 1994 -- -- -- -- -- -- --
</TABLE>
- -------
(1) All bonus awards are paid in cash; estimated bonus amounts are accrued at
fiscal year end and typically paid in August. Bonus amounts for Messrs.
Nichols, Gingerich, Goldberg and Wood include the Company's matching
contribution to the Employee Stock Purchase Program of $14,000, $1,500,
$60, and $1,400, respectively. Mr. Wood's bonus amount also includes
$2,085 representing the Company's matching contribution under its 401(k)
plan.
(2) Amounts consist of the following: for Mr. Nichols in Fiscal 1996, $8,331
as a car allowance and $4,275 representing monthly dues at a country club,
and in Fiscal 1995, $4,000 as a car allowance for the period from January
1, 1995 through June 30, 1995; for Mr. Capstick in fiscal years 1996,
1995, and 1994, director's fee and chairman's fee for the period April 1,
1996 through June 30, 1996, director's fee and chairman's fee for the
period July 1, 1994 through December 31, 1994, director's fee and
chairman's fee for the period January 1, 1994 through June 30, 1994,
respectively; for Mr. Gingerich in Fiscal 1996, $8,000 as a car allowance
and in Fiscal 1995, $4,094 as a car allowance; for Mr. Saunders in Fiscal
1996, $8,000 as a car allowance and in Fiscal 1995, $9,679 as a car
allowance, and in Fiscal Year 1994, $2,817 as a car allowance;
additionally, in Fiscal 1995 a discretionary bonus of Cdn$25,000
(US$18,132.50) for service relating to the European closedown; for Mr.
Goldberg, in Fiscal 1996, $8,000 as a car allowance and in Fiscal 1995,
$2,423 as a car allowance; and for Mr. Wood in Fiscal 1996, $8,000 as a
car allowance and $7,337 as a tax equalization reimbursement for personal
income taxes payable in Canada and in Fiscal 1995, $6,227 as a car
allowance, $9,604 as a cost of living adjustment, $11,662 as a housing
allowance, and $33,826 as a tax equalization reimbursement for personal
income taxes payable in the United States (all such tax payments being
made on a calendar year, rather than fiscal year, basis). "Other Annual
Compensation" is intended to cover forms of annual compensation not
properly categorized as salary or bonus, including perquisites. Other than
as described above, no named executive received such compensation or
perquisites which exceeded a threshold level for disclosure purposes.
(3) Amounts for Fiscal 1996 consist of the following: $81,283 was accrued by
the Company for salary continuation payments under the Nichols Employment
Contract (accrual based upon maximum annual amount payable thereunder
divided into equal monthly amounts) (see "Employment Contracts--James T.
Nichols" below), $36,800 representing the Company's matching contribution
to the Employee Stock Purchase Program, and $2,832 and $8,019 representing
premiums paid, respectively, on a term life and long-term disability
insurance policy; for Mr. Capstick, $2,000 representing the Company's
matching contribution to the Employee Stock Purchase Program, and $2,373
representing premiums paid on a term life insurance policy; for Mr.
Gingerich, $6,600 representing the Company's matching contribution to the
Employee Stock Purchase Program, and $1,439 and $2,284 representing
premiums paid, respectively, on a term life and long-term disability
insurance policy; for Mr. Saunders, $5,200 representing the Company's
matching contribution to the Employee Stock Purchase Program, and $3,504
and $1,070 representing premiums paid, respectively, on a term life and
long-term disability insurance policy; for Mr. Goldberg, $1,231
representing the Company's matching contribution to the Employee Stock
Purchase Program, and $405 and $990 representing premiums paid,
respectively, on a term life and long-term disability insurance policy;
and for Mr. Wood, $8,000 representing the Company's matching contribution
to the Employee Stock Purchase Program, $1,455 and $1,524 representing
premiums paid, respectively, on a term life and long-term disability
insurance policy, and $37,577 representing salary continuation accrual
under the Company's Deferred Compensation Plan. Amounts also include
Company matching contributions for Messrs. Nichols, Gingerich, Saunders,
Goldberg and Wood of $8,931, $8,931, $3,900, $3,000, and $3,000,
respectively, under the Company's 401(k) plan, which is a tax-qualified
defined contribution plan intended to satisfy the requirements of Section
401(k) of the Internal Revenue Code.
(4) Mr. Nichols began employment with the Company on January 1, 1995; Fiscal
1995 amounts reflect prorated annual figures.
(5) Mr. Capstick served as Chief Executive Officer from January 1, 1995
through March 31, 1996.
(6) Mr. Gingerich began employment with the Company on May 2, 1994; Fiscal
1994 amounts reflect prorated annual figures.
(7) Mr. Goldberg began employment with the Company on March 1, 1995; Fiscal
1995 amounts reflect prorated annual figures.
8
<PAGE>
The following table sets forth information relating to stock options granted
to the individuals listed in the Summary Compensation Table during Fiscal
1996, together with related information. No SARs were granted by the Company
in Fiscal 1996.
OPTION/SAR GRANTS IN LAST FISCAL YEAR
<TABLE>
<CAPTION>
POTENTIAL
REALIZABLE VALUE
AT ASSUMED ANNUAL
RATES OF STOCK
PRICE APPRECIATION
FOR OPTION
INDIVIDUAL GRANTS TERM*(2)
---------------------------------- ------------------
SECURITIES % OF TOTAL
UNDERLYING OPTIONS/SARS EXERCISE
OPTIONS/SARS GRANTED TO OR BASE
GRANTED(1) EMPLOYEES IN PRICE EXPIRATION
NAME (#SHS) FISCAL YEAR ($/SH) DATE 5%($)(3) 10%($)(4)
---- ------------ ------------ -------- ---------- -------- ---------
<S> <C> <C> <C> <C> <C> <C>
James T. Nichols........ 100,000 47.62 7.3125 2/1/06 459,750 1,165,750
John A. Capstick........ -- -- -- -- -- --
James G. Gingerich...... 7,500 3.57 7.875 11/13/05 37,162 94,162
David S. Goldberg....... 5,000 2.38 7.875 11/13/05 24,775 62,775
Douglas C. Saunders..... 5,000 2.38 7.875 11/13/05 24,775 62,775
J. Michael Wood......... 3,000 1.43 7.875 11/13/05 14,865 37,665
</TABLE>
- --------
*The dollar gains under these columns result from calculations assuming 5%
and 10% growth rates as set by the Securities and Exchange Commission and are
not intended to forecast future price appreciation of the Common Stock of the
Company. The gains reflect a future value based upon growth, compounded
annually during the 10-year option period, at these prescribed rates. The
Company did not use an alternative formula for a grant date valuation, an
approach which would state gains at present, and therefore lower, value. The
Company is not aware of any formula which will determine with reasonable
accuracy a present value based on future unknown or volatile factors.
Consequently, the potential realizable value has not been discounted to
present value.
It is important to note that options have value to the listed executives and
to all option recipients only if the stock price advances beyond the exercise
price shown in the table during the effective option period.
(1) Options become exercisable, on a cumulative basis, in annual installments
of one-third of the total amount awarded beginning one year after the date
of grant.
(2) Assumes a rate of return based upon annually compounded values at the
beginning of each period.
(3) In order to realize these aggregate amounts, the price per share of Common
Stock would be $11.91 for the grant of 100,000 options to Mr. Nichols and
$12.83 for the options granted to Messrs. Gingerich, Goldberg, Saunders,
and Wood.
(4) In order to realize these aggregate amounts, the price per share of Common
Stock would be $18.97 for the grant of 100,000 options to Mr. Nichols and
$20.43 for the options granted to Messrs. Gingerich, Goldberg, Saunders,
and Wood.
9
<PAGE>
The following table provides information relating to the exercise of stock
options by the individuals listed in the Summary Compensation Table during
Fiscal 1996, together with related information, and the number and value of
exercisable and unexercisable options held by such individuals at June 30,
1996. The Company has never granted any SARs.
AGGREGATED OPTION/SAR EXERCISES IN
LAST FISCAL YEAR AND FISCAL YEAR-END
OPTION/SAR VALUES
<TABLE>
<CAPTION>
VALUE OF
SECURITIES UNEXERCISED
UNDERLYING IN-THE-MONEY
SHARES UNEXERCISED OPTIONS/SARS
ACQUIRED OPTIONS/SARS AT FY-END
ON AT FY-END (#) ($)(1)
EXERCISE VALUE EXERCISABLE/ EXERCISABLE/
NAME (#) REALIZED($) UNEXERCISABLE UNEXERCISABLE
---- -------- ----------- -------------- -------------
<S> <C> <C> <C> <C>
James T. Nichols.............. -- -- 33,333/166,667 0/0
John A. Capstick.............. -- -- 25,000/0 0/0
James G. Gingerich............ -- -- 14,333/16,167 0/0
David S. Goldberg............. -- -- 833/6,667 0/0
Douglas C. Saunders........... -- -- 8,999/11,001 587/293
J. Michael Wood............... -- -- 9,000/8,500 587/293
</TABLE>
- --------
(1) For purposes of determining whether an option was "In-the-Money," this
table uses the June 28, 1996 closing share price on the New York Stock
Exchange for the Company's Common Stock of $5.75. Computed as the
difference between the respective option exercise prices and $5.75.
EMPLOYMENT CONTRACTS
James T. Nichols. James T. Nichols serves as the President and Chief
Executive Officer of the Company. Mr. Nichols and the Company entered into an
employment agreement dated as of January 1, 1995 (the "Nichols Employment
Contract"). The Nichols Employment Contract commenced on January 1, 1995, and
continues through August 31, 1998.
Pursuant to the Nichols Employment Contract, Mr. Nichols' compensation
includes: (i) an annual base salary of $460,000, less an amount calculated
annually to reflect the value of certain deferred salary arrangements, such
amount not to exceed $35,000 per year; (ii) an annual fixed bonus of $175,000,
plus other bonuses as determined by the Board of Directors in its discretion;
(iii) the grant of options to purchase 100,000 shares of Common Stock pursuant
to the Company's 1986 Stock Option Plan upon commencement of his employment,
plus a further grant of options to purchase 100,000 shares of Common Stock
after the completion of the first year of the Nichols Employment Contract;
(iv) the Company's best efforts to obtain for Mr. Nichols life insurance in
the amount of $900,000 and long-term disability insurance providing for
payment of not less than 60% of his annual base salary and bonus; (v) annual
retirement payments ranging from approximately $4,830 if his retirement
commences at age 52 and increasing to approximately $110,455 if his retirement
commences on or after age 65; and (vi) payment of membership charges and
annual dues at a selected country club. Mr. Nichols also receives a car
allowance of $750 per month.
Under the Nichols Employment Contract, the Company may terminate his
employment (i) for "Cause" or (ii) upon 30 days' prior written notice to Mr.
Nichols, and Mr. Nichols may terminate his employment (iii) if the Company
materially breaches its obligations, (iv) upon 30 days' prior written notice
to the Company, or (v) for "Good Reason." Termination of Mr. Nichols'
employment by the Company without Cause or by Mr. Nichols for Good Reason or
because of a material breach by the Company under the Nichols Employment
Contract entitles Mr. Nichols to severance payments equal to his base annual
salary plus annual bonus through the end of the Nichols Employment Contract
term. "Cause" includes willful or gross misconduct on the part of the
10
<PAGE>
employee in following legitimate directions of the Board of Directors,
extensive absenteeism, or wrongful damage to a material amount of the property
of the Company. "Good Reason" includes the Company's moving its principal
office outside the Dallas/Fort Worth, Texas metropolitan area without the
employee's consent, or a material reduction in the scope or level of the
employee's duties or responsibilities.
In the event of a "Change of Control" of the Company, Mr. Nichols may resign
and receive a severance payment consisting of: (i) the amount of his base
annual salary plus annual bonus; and (ii) the full vesting of all his holdings
of options, warrants and rights to acquire capital stock of the Company. If
there were a Change of Control of the Company as of the date of this Proxy
Statement, Mr. Nichols would receive lump sum payments in an amount up to
$635,000. For purposes of the Nichols Employment Contract, "Change of Control"
of the Company occurs: (i) if any "person" (as such term is used in Section
13(d) and 14(d) of the Securities Exchange Act of 1934, as amended (the "1934
Act")), is or becomes the "beneficial owner" (as such term is used in Rule
13d-3 under the 1934 Act), of securities of the Company representing 30% or
more of the combined voting power of the Company's then outstanding
securities; or (ii) if at any time the composition of the Board of Directors
changes so that a majority of the directors who were serving at January 1,
1995 no longer constitute a majority of the Board of Directors; provided,
however, that no change to the composition of the Board of Directors shall be
deemed to occur as a result of any new director who was elected or recommended
by a majority of the Board of Directors who were serving as of January 1,
1995.
John A. Capstick. John A. Capstick served as the Chief Executive Officer of
the Company from January 1, 1995 to April 1, 1996. Mr. Capstick and the
Company entered into an employment agreement dated February 20, 1995 (the
"Capstick Employment Contract"). The term of the Capstick Employment Contract
was one year, commencing January 1, 1995 and ending December 31, 1995. On
November 14, 1995, the Organization and Compensation Committee extended the
expiration date of the Capstick Employment Contract to March 31, 1996.
Pursuant to the Capstick Employment Contract, Mr. Capstick received an annual
base salary of $200,000. The Company also agreed to reimburse Mr. Capstick for
certain costs regarding his relocation from the United States to the United
Kingdom.
James G. Gingerich. James G. Gingerich serves as the Senior Vice President
and Chief Financial Officer of the Company. Mr. Gingerich and the Company
entered into an employment agreement dated as of March 1, 1995 (the "Gingerich
Employment Contract"). Pursuant to the Gingerich Employment Contract, Mr.
Gingerich's compensation included: (i) during the period from March 1, 1995,
through April 30, 1995, an annual base salary of Cdn$145,000 and base bonus of
Cdn$60,000; and (ii) during the period from May 1, 1995, through June 30,
1996, an annual base salary of US$165,000 and base bonus of US$75,000. The
bonus payable for Fiscal 1995 was subject to increase or decrease of up to 50%
of the base commensurate with the Company's actual operating income compared
to its budget. The bonus payable for Fiscal 1996 and subsequent years is to
reflect a predetermined formula approved by the Board of Directors. Mr.
Gingerich also receives a car allowance of approximately $750 per month. In
addition, the Company agreed to reimburse Mr. Gingerich for his reasonable
expenses regarding his relocation from Canada to Texas.
If the Company terminates Mr. Gingerich's employment other than for "Cause"
or if Mr. Gingerich terminates his employment for "Good Reason" (each as
defined above), Mr. Gingerich is entitled to a severance payment. If such
termination occurs: (i) during calendar year 1995, the severance payment was
equal to six months of base pay and base bonus; (ii) during calendar year
1996, the severance payment will equal seven months of base pay and base
bonus; and (iii) during a year subsequent to 1996, his severance payment will
equal the amount outlined in clause (ii), plus a sum of additional month(s)
base salary and bonus equal to the number of years subsequent to 1996 after
which the termination occurs, up to a maximum of 12 months base salary and
base bonus.
If one person becomes the beneficial owner of over 40% of the voting power
of the Company ("40% Acquisition"), Mr. Gingerich will receive the maximum
severance amount if he resigns within six months of the 40% Acquisition or if
his employment is terminated other than for Cause after the 40% Acquisition,
and all of Mr. Gingerich's options to acquire Company Common Stock will fully
vest. If there were an 40% Acquisition
11
<PAGE>
as of the date of this Proxy Statement, Mr. Gingerich could receive maximum
lump sum payments in the aggregate amount of $260,000.
Douglas C. Saunders. Douglas C. Saunders serves as a Vice President and the
Corporate Controller of the Company. Mr. Saunders and the Company entered into
an employment agreement dated as of March 10, 1995 (the "Saunders Employment
Contract"). Pursuant to the Saunders Employment Contract, Mr. Saunders'
compensation included: (i) during the period from March 10, 1995, through June
30, 1995, an annual base salary of Cdn$125,000 and base bonus of Cdn$50,000;
and (ii) during the period from July 1, 1995, through June 30, 1996, a base
salary of US$130,000 and base bonus of US$50,000. The bonus payable for Fiscal
1995 was subject to increase or decrease of up to 50% of the base commensurate
with the Company's actual operating income compared to its budget. The bonus
payable for Fiscal 1996 and subsequent years is to reflect a predetermined
formula approved by the Board of Directors. Mr. Saunders also receives a car
allowance of approximately $750 per month. The Company also agreed to
reimburse Mr. Saunders for his reasonable expenses regarding his relocation
from Canada to Texas.
If the Company terminates Mr. Saunders' employment other than for "Cause" or
if Mr. Saunders terminates his employment for "Good Reason" (each as defined
above), Mr. Saunders is entitled to a severance payment. If such termination
occurs: (i) during calendar year 1995, the severance payment was equal to six
months of base pay and base bonus; (ii) during calendar year 1996, the
severance payment will equal seven months of base pay and base bonus; (iii)
during a year subsequent to 1996, his severance payment will equal the amount
outlined in clause (ii), plus a sum of additional month(s) base salary and
bonus equal to the number of years subsequent to 1996 after which the
termination occurs, up to a maximum of nine months base salary and base bonus.
Notwithstanding anything to the contrary set forth in any of the Company's
previous filings under the Securities Act of 1933, as amended, or the
Securities Exchange Act of 1934, as amended, that might incorporate future
filings, including this Proxy Statement, in whole or in part, the following
Compensation Committee Report on Executive Compensation and Stockholder Return
Performance Graph shall not be incorporated by reference into any such
filings.
COMPENSATION COMMITTEE REPORT ON EXECUTIVE COMPENSATION
This report discusses the actions of the Company's Organization and
Compensation Committee (herein, the "Compensation Committee") regarding
compensation paid to executive officers in Fiscal 1996. In writing this
report, the Compensation Committee has tried to provide stockholders with a
better understanding of the Company's executive compensation program, its
basic provisions, the purpose of such program, and how it is administered.
The role of the Compensation Committee is described under "Meetings and
Committees of the Board of Directors; Compensation of Directors." In carrying
out its responsibilities, the Compensation Committee from time to time reviews
the executive compensation programs and policies of the Company's competitors
in the retailing and consumer electronics industries to determine whether the
Company's plans and practices are competitive and appropriate based on the
Company's performance and compensation philosophy.
COMPENSATION PHILOSOPHY
The Compensation Committee believes that the primary objective of the
Company's compensation program should be to maximize stockholder value over
time. To accomplish this objective, the Company has adopted a comprehensive
business strategy. The overall goal of the Compensation Committee is to
develop executive compensation policies and practices which are consistent
with and linked to the Company's strategic business objectives. More
particularly, the Compensation Committee believes this overall goal can be
primarily accomplished by linking the financial interests of the Company's
management to the financial interests of the
12
<PAGE>
stockholders of the Company. The Company's compensation program is designed to
achieve the overall goal by (i) motivating executive officers toward effective
long-term management of the Company through prudent use of equity-based
programs that focus management attention on increasing long-term stockholder
value, (ii) rewarding effective management of the Company's operations through
annual performance incentives tied to increased performance levels of the
Company, (iii) placing at risk a portion of an executive officer's total
compensation, and (iv) providing executive officers with competitive
compensation opportunities as measured against industry norms in order to
motivate, attract and retain key executive officers. The long-term and at-risk
pay focus, orientation towards the use of equity-based compensation, and
compensation competitiveness are the general principles to which the
Compensation Committee adheres in the structuring of the compensation packages
of executive officers. However, the Compensation Committee does not follow the
principles in a mechanical fashion; rather, the Compensation Committee uses
its experience and independent judgment in determining the compensation mix
for each individual. The Compensation Committee believes that current
compensation practices and levels meet the principles described herein.
As discussed below in more detail, aside from certain benefits and "All
Other Compensation" (which are reported as required in the tables preceding
this report), an executive officer's total compensation package is comprised
of three components: (i) base salary, (ii) annual performance incentives
(i.e., bonuses), and (iii) long-term performance incentives (i.e., stock
options).
Base Salary. Base salaries for the Company's executive officers are
generally determined with reference to, and so as to fall within the
competitive range of, compensation paid to executives in similar positions at
comparable companies in the retailing and consumer electronics industries, and
with a view to setting a base salary at a sufficient level so as to provide
proper motivation for long-term performance. Base salaries are reviewed
annually by the Compensation Committee. Base salary adjustments are based on
the Company's performance, the performance of the executive's business unit,
the executive's performance, time in job, level of pay, competitive
compensation, and other factors.
For Fiscal 1997, Mr. Nichols' salary will be determined in accordance with
the Nichols Employment Contract; the base salaries of Messrs. Gingerich,
Saunders, Goldberg and Wood have been set at $175,000, $135,000, $115,000 and
$100,000, respectively.
Annual Performance Incentives. With respect to the Fiscal 1996 payments,
except for Mr. Nichols, the amount of annual incentive compensation paid to
the executive officers was calculated using a formula reflecting consolidated
growth in sales, operating income and pre-tax income. The maximum and minimum
bonus is set at 200% and 50% of the bonus base, respectively. Mr. Nichols'
bonus, as described in the Nichols Employment Contract, is fixed at $175,000
per year.
In determining the amount of the annual incentive compensation which will be
paid to the executive officers in Fiscal 1997, Messrs. Gingerich, Saunders,
Goldberg and Wood have been assigned bases of $85,000, $55,000, $25,000 and
$35,000, respectively. Mr. Nichols' bonus is fixed at $175,000 per year. In
May 1996, and in a further effort to better achieve the Company's compensation
objectives, the Compensation Committee modified its basis for awarding annual
incentives to executive officers for Fiscal 1997. The calculation formula for
Fiscal 1997 reflects a weighted average of the operating performance of each
of the Company's operating subsidiaries in Fiscal 1997. This change was made
to better align executive officers' incentives with the performance of each of
the subsidiaries. The Compensation Committee reserves the right to grant
discretionary bonuses based upon subjective evaluation of each executive
officer's individual performance.
Long-Term Performance Incentives. The form of long-term incentives currently
utilized by the Company for executive officers is stock options. The number of
stock options granted to an executive is determined by the Compensation
Committee after consultation with management. Factors which influence
decisions regarding the size of the grant to a particular executive officer
include tenure with the Company, history of past grants, time in current job
and level of, or significant changes in, responsibility, and the past and
potential future contribution of the executive to the achievement of Company
objectives. These subjective criteria are used for determining
13
<PAGE>
grants to all executive officers. Stock options previously have been granted
under the provisions of the Company's 1986 Stock Option Plan and provide the
basis for aligning the financial interests of the Company's executive officers
with the long-term financial interests of the stockholders of the Company.
Stock options are granted with an exercise price not less than the fair market
value of the Company's Common Stock on the date of such grant, generally vest
over three years and provide value to the recipient only when the price of the
Common Stock increases above the option exercise price. The Compensation
Committee believes that stock options provide executives with the opportunity
to acquire an equity interest in the Company and to share in the appreciation
of the value of the Company's Common Stock. See (Item 2) below "Proposal to
Approve the InterTAN, Inc. 1996 Stock Option Plan."
CEO COMPENSATION
The compensation of Mr. Capstick, the former Chief Executive Officer of the
Company, was paid pursuant to the Capstick Employment Contract, which is
described above. The compensation of Mr. Nichols, the President and current
Chief Executive Officer of the Company, is paid pursuant to the Nichols
Employment Contract, which is described above. Both the Capstick Employment
Contract and the Nichols Employment Contract were negotiated by the Company
and Mr. Capstick or Mr. Nichols, as the case may be. Each agreement was
considered by the Compensation Committee to be necessary to induce Messrs.
Capstick and Nichols to serve the Company and to motivate them to accept the
challenges presented by the Company's situation as it proceeds to implement
new strategic initiatives designed to enhance the Company's opportunities for
future growth and improving its operational and financial performance. In
determining Mr. Nichols' compensation, the Compensation Committee also
considered, among other things, Mr. Nichols' prior international experience in
InterTAN countries while such retail operations were owned by Tandy
Corporation.
SUMMARY
The Compensation Committee believes the executive compensation policies and
programs described above serve the interests of the stockholders and the
Company. Compensation delivered to executives is intended to be linked to, and
commensurate with, Company performance and with stockholder expectations. The
Compensation Committee cautions that the practice and the performance results
of the compensation philosophy described herein should be measured over a
period sufficiently long to determine whether strategy development and
implementation are in line with, and responsive to, stockholder expectations.
The Organization and Compensation
Committee
Clark A. Johnson, Chairman
Brian H. Christopher
John H. McDaniel
Ron G. Stegall
COMPENSATION COMMITTEE INTERLOCKS AND INSIDER PARTICIPATION
The Compensation Committee of the Company is composed entirely of the four
non-employee directors named as signatories to the above Compensation
Committee report. During Fiscal 1996, no member of the Compensation Committee
(nor any of their respective family members) was a party to any transaction
with the Company exceeding $60,000. Mr. McDaniel served as the Chairman of the
Board of Directors of the Company from July 1991 to January 1994.
14
<PAGE>
STOCKHOLDER RETURN PERFORMANCE GRAPH
Set forth below is a line graph comparing the cumulative total returns of
the Company's Common Stock, the Standard & Poor's 500 Index and the Standard &
Poor's Retail Stores-Specialty Index. The graph reflects the assumption of
$100 invested on June 30, 1991 in the Common Stock and each of the indices,
reinvestment of all dividends, and successive fiscal years ending June 30.
COMPARISON OF CUMULATIVE TOTAL RETURN
FOR FIVE YEAR PERIOD ENDING JUNE 30, 1996
<TABLE>
<CAPTION>
1991 1992 1993 1994 1995 1996
---- ---- ---- ---- ---- ----
<S> <C> <C> <C> <C> <C> <C>
InterTAN, Inc..................................... $100 67 38 24 33 26
S&P 500........................................... $100 113 129 131 165 208
S&P Retail Stores--Specialty...................... $100 122 152 148 146 179
</TABLE>
CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS
TRANSACTIONS WITH MANAGEMENT AND OTHERS
There were no transactions with the Company during Fiscal 1996, nor are
there any proposed transactions with the Company, exceeding $60,000 to which
any director or executive officer of the Company or any of their family
members were a party.
15
<PAGE>
Tandy Corporation ("Tandy") performed certain services during Fiscal 1996
for the Company, principally computer services and stockholder services. The
Company paid its pro rata share of the cost of these operations, plus an
additional negotiated fee. In Fiscal 1996, the Company paid approximately
$7,600, in the aggregate, for these services. It is the opinion of management
that the amounts charged in each of the above transactions are at least as
favorable as those which might have been made by unrelated third parties.
During Fiscal 1996, the Company purchased approximately $95,144,000 of
merchandise from Tandy, its divisions or subsidiaries; such amount includes
all commissions paid to A&A International, Inc. ("A&A"), a subsidiary of
Tandy, which serves as the Company's purchasing agent for product purchases in
the Far East. The Company paid fees to A&A during Fiscal 1996 of approximately
$785,000 for purchase and export services. As of August 31, 1996, the Company
was indebted to Trans World Electronics, Inc., a subsidiary of Tandy, in the
amount of approximately $27,832,000 under the terms of a secured loan
agreement. During Fiscal 1996, the Company paid Trans World Electronics, Inc.
approximately $21,230,000, representing principal repayment and accrued
interest thereon, under the secured loan agreement. Additionally, pursuant to
the Company's credit agreement with its bank syndicate, the Company and Tandy
have entered into an inventory repurchase agreement under which, in the event
of the Company's default under the credit agreement, Tandy could be required
to purchase certain of the Company's inventory pursuant to a predetermined
formula in an amount sufficient to satisfy indebtedness owing by the Company
under the credit agreement. The inventory repurchase agreement has been
assigned to the bank syndicate to secure the credit agreement. During Fiscal
1996, the Company also paid Tandy approximately $1,260,000 as a royalty under
the license agreements for the use of certain trade names and approximately
$410,000 as a license fee under an advertising agreement for the use of
certain trade marks and service marks owned by Tandy.
CERTAIN BUSINESS RELATIONSHIPS
Mr. McKeough is a director of The Canadian Imperial Bank of Commerce. The
Canadian Imperial Bank of Commerce is a member of the bank syndicate, as well
as the agent bank for the syndicate, that provides a credit facility in an
aggregate principal amount of Cdn$60 million to the Company. As of June 30,
1996, the credit facility was still in place. The Company primarily uses this
credit facility to secure letters of credit on product orders and as a source
of funds for short-term borrowings. It is the belief of management that the
terms negotiated by the Company with the bank syndicate are at least as
favorable as those which might have been obtainable from other lenders.
PROPOSAL TO APPROVE THE INTERTAN, INC. 1996 STOCK OPTION PLAN
(ITEM 2)
On May 22, 1996, the Board of Directors unanimously adopted the InterTAN,
Inc. 1996 Stock Option Plan (the "1996 Stock Option Plan"). On September 9,
1996, the Board of Directors unanimously approved certain modifications to the
1996 Stock Option Plan designed to conform it to the new rules under Section
16 of the Securities Exchange Act of 1934 promulgated, in final form, by the
Securities and Exchange Commission on May 31, 1996. The 1996 Stock Option Plan
is subject to approval by the Company's stockholders and will be voted on at
the Annual Meeting. The terms and conditions of the 1996 Stock Option Plan are
substantially similar to those of the Company's 1986 Stock Option Plan (the
"1986 Stock Option Plan"). Because no options can be granted under the 1986
Stock Option Plan after 10 years from the date of its adoption (i.e., after
September 1996), the Board of Directors adopted the 1996 Stock Option Plan in
order to reserve shares of Common Stock for subsequent issuance upon the
future exercise of any incentive stock options and nonstatutory stock options
granted to officers and key employees of the Company and its subsidiaries. As
of the date of this Proxy Statement, no options have been granted under the
1996 Stock Option Plan. The following summary of the 1996 Stock Option Plan is
qualified in its entirety by reference to the full text of the 1996 Stock
Option Plan which is attached hereto as Exhibit A.
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SUMMARY DESCRIPTION OF THE 1996 STOCK OPTION PLAN
The Company's 1996 Stock Option Plan provides incentive stock options and
nonstatutory stock options exercisable for shares of Common Stock that may be
granted to executive officers and key employees of the Company or its
subsidiaries. Presently there are approximately 5 executive officers and up to
40 key employees who may be eligible to receive grants of options under the
1996 Stock Option Plan. Non-employee directors of the Company will not be
eligible to be granted options under the 1996 Stock Option Plan.
The Company will reserve 1,500,000 shares of Common Stock for issuance under
the 1996 Stock Option Plan. Shares issuable upon the exercise of options
granted under the 1996 Stock Option Plan may be either authorized and unissued
Common Stock, or issued Common Stock reacquired by the Company and held in
treasury. The 1996 Stock Option Plan will be administered by the Organization
and Compensation Committee.
The term of any incentive stock option will not exceed 10 years and
nonstatutory stock options will generally have a term of 10 years plus one
month. The option exercise price cannot be less than 100% of the fair market
value of the Common Stock on the date of grant. "Fair Market Value" is, as of
the grant date, the closing price per share of the Common Stock on any
national stock exchange in the United States of America on which the Common
Stock is then traded. Furthermore, the aggregate fair market value of the
Common Stock (determined at date of grant) with respect to which incentive
stock options granted under the 1996 Stock Option Plan, or all other plans of
the Company or its subsidiaries, are first exercisable by an optionee in any
one calendar year may not exceed $100,000. Payment for Common Stock issuable
upon exercise of an option may be made in the form of cash, Common Stock at
fair market value at date of payment, or any combination thereof.
No option will be exercisable until the first anniversary of the date of
grant, and unless otherwise determined by the Organization and Compensation
Committee, each option (i) in the case of incentive stock options, will be
then exercisable as to one-third of the total number of shares subject
thereto, and exercisable as to an additional one-third of the original number
granted on each of the two succeeding anniversaries, or (ii) in the case of
nonstatutory options, will be then exercisable as to one-fifth of the total
number of shares subject thereto, and exercisable as to an additional one-
fifth of the original number granted on each of the four succeeding
anniversaries. The right to purchase Common Stock with respect to options
which become exercisable in installments is cumulative. Upon the retirement of
any optionee at age 50 or older, the Organization and Compensation Committee
may accelerate the dates at which remaining options may be exercised to the
date of retirement. Notwithstanding that the grant of options is initially
exercisable in installments, upon the death or total disability of any
optionee, all options then held shall become immediately exercisable without
regard to dates at which the installments are exercisable. Furthermore, after
the first anniversary of the date of grant, the Organization and Compensation
Committee may, in its sole discretion, accelerate the exercise dates of
options held by an optionee whose employment with, or service as a director
of, the Company is terminated, if such optionee is in good standing with the
Company at the time of termination.
An option may be exercised only if the optionee, since the date the option
was granted and ending on the date that is three months before the date of
such exercise, has continuously been an employee of the Company or an employee
of any subsidiary thereof, except that in the event of death or permanent and
total disability or, in the case of nonstatutory options only, upon retirement
at age 50 or older, the three-month period shall be extended to twelve months.
In the event that the employment of any optionee is terminated for cause, any
option(s) still held by such person at such time shall automatically
terminate. In the case of the death of an optionee, options may be exercised
within the twelve months following such death by a person to whom the
optionee's rights have passed by will or the laws of descent and distribution.
In the event of the acquisition by any person or group (other than an
employee benefit plan of the Company) of 20% or more of the outstanding Common
Stock of the Company, a tender or exchange offer (other than by the Company or
a subsidiary thereof), or any merger, consolidation, sale of assets,
liquidation or reorganization as a result of which the Company will no longer
be a publicly-owned corporation, all options granted pursuant to the 1996
Stock Option Plan will become immediately exercisable on the date of the
relevant event.
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The Board of Directors may amend or terminate the 1996 Stock Option Plan as
it deems advisable; provided that no amendment can materially increase the
number of securities that may be issued or materially modify the eligibility
requirements for participation without the affirmative vote of a majority of
the shares of the Company's Common Stock present and voting at a stockholders'
meeting at which a quorum is present. No options may be granted under the 1996
Stock Option Plan after the tenth anniversary of its adoption, but options
that are outstanding on such date may be exercised subsequent to such date, in
accordance with their terms.
FEDERAL INCOME TAX CONSEQUENCES TO THE COMPANY AND THE OPTIONEES
Incentive Stock Options. Some of the options granted under the 1996 Stock
Option Plan may constitute "Incentive Stock Options" ("ISOs") within the
meaning of Section 422 of the Internal Revenue Code of 1986, as amended (the
"Code"). Under present Federal tax regulations, there will be no Federal
income tax consequences to either the Company or an optionee upon the grant of
an ISO, nor will an optionee's exercise of an ISO result in Federal income tax
consequences to the Company. Although an optionee will not realize ordinary
income upon exercise of an ISO, the excess of the fair market value of the
Common Stock acquired at the time of exercise over the option price may
constitute an adjustment in computing alternative minimum taxable income under
Section 56 of the Code and, thus, may result in the imposition of the
"alternative minimum tax" pursuant to Section 55 of the Code on the optionee.
If an optionee does not dispose of Common Stock acquired through an ISO within
one year of the ISO's date of exercise or within two years of the ISO's date
of grant, any gain realized upon a subsequent disposition of Common Stock will
constitute long-term capital gain to the optionee, and the Company will not be
entitled to any Federal tax deduction. If an optionee disposes of the Common
Stock within such one-year period, an amount equal to the lesser of (i) the
excess of the fair market value of the Common Stock on the date of exercise
over the option price or (ii) the actual gain realized upon such disposition
will constitute ordinary income to the optionee in the year of the
disposition. An additional gain upon such disposition will be taxed as short-
term capital gain. The Company will receive a deduction in an amount equal to
the amount constituting ordinary income to an optionee.
Nonstatutory Options. Certain stock options which do not constitute ISOs
("nonstatutory options") may be granted under the 1996 Stock Option Plan.
Under present Federal income tax regulations, there will be no Federal income
tax consequences to either the Company or the optionee upon the grant of a
nonstatutory option. However, the optionee will realize ordinary income upon
the exercise of a nonstatutory option in an amount equal to the excess of the
fair market value of the Common Stock acquired upon the exercise of such
option over the option price, and the Company will receive a corresponding
deduction. The gain, if any, realized upon a subsequent disposition of such
Common Stock will constitute short- or long-term capital gain, depending on
the optionee's holding period.
The Federal income tax consequences described in this section are based on
laws and regulations in effect on August 31, 1996, and there is no assurances
that the laws and regulations will not change in the future and affect the tax
consequences of the matters discussed in this section.
MARKET PRICE OF THE COMPANY'S COMMON STOCK
The average of the high and low market price of the Company's Common Stock
as reported on the New York Stock Exchange for September 16, 1996 was $6.31
per share.
RECOMMENDATION OF THE BOARD OF DIRECTORS
The Board of Directors of the Company recommends a vote FOR the proposal to
approve the InterTAN, Inc. 1996 Stock Option Plan. Proxies received by the
Board of Directors will be so voted unless stockholders specify in their proxy
a contrary choice.
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INDEPENDENT AUDITORS
Price Waterhouse LLP has served as independent auditors of the Company for
many years and is considered by management to be well qualified. The Board of
Directors, upon the recommendation of the Audit Committee, plans to reappoint
the firm of Price Waterhouse LLP as independent auditors for the Company's
current fiscal year. Representatives of Price Waterhouse LLP are expected to
be present at the Annual Meeting and will be given an opportunity to make a
statement and to respond to appropriate questions.
STOCKHOLDER PROPOSALS
From time to time, qualifying stockholders present proposals which may be
proper items for inclusion in the proxy statement and for consideration at an
annual meeting. To be considered, proposals must be duly submitted on a timely
basis in accordance with the Company's Amended and Restated Bylaws and the
rules and regulations of the Securities and Exchange Commission. Proposals for
the 1997 Annual Meeting of Stockholders must be received by the Company no
later than June 1, 1997. Any such proposals, as well as any questions related
thereto, should be directed to the Secretary of the Company at 201 Main
Street, Suite 1805, Fort Worth, Texas 76102.
OTHER INFORMATION
As of the date of this Proxy Statement, management has no knowledge of any
other business to be presented at the Annual Meeting; but if other business is
properly brought before the meeting, the persons named in the enclosed form of
proxy will vote according to their discretion.
The form of proxy and this Proxy Statement have been approved by the Board
of Directors and are being mailed and delivered to stockholders by its
authority.
InterTAN, Inc.
Fort Worth, Texas
September 27, 1996
----------------
THE ANNUAL REPORT TO STOCKHOLDERS OF THE COMPANY FOR THE FISCAL YEAR ENDED
JUNE 30, 1996, WHICH INCLUDES FINANCIAL STATEMENTS, HAS BEEN MAILED TO
STOCKHOLDERS OF THE COMPANY CONTEMPORANEOUSLY WITH THE MAILING OF THIS PROXY
STATEMENT. THE ANNUAL REPORT DOES NOT FORM ANY PART OF THE MATERIAL FOR THE
SOLICITATION OF PROXIES.
----------------
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EXHIBIT A
INTERTAN, INC.
1996 STOCK OPTION PLAN
SECTION 1. ESTABLISHMENT.
InterTAN, Inc., a Delaware corporation ("Company"), hereby establishes a
stock option plan, to be named the InterTAN, Inc. 1996 Stock Option Plan
("Plan"), for officers and key employees of the Company and its subsidiaries.
SECTION 2. PURPOSE.
(a) The purpose of the Plan is to induce officers and key employees of the
Company and its subsidiaries who are in a position to contribute materially to
the prosperity thereof to remain with the Company or its subsidiaries, to
offer them incentives and rewards in recognition of their contributions to the
Company's success and to encourage them to continue to promote the best
interests of the Company and its subsidiaries. The Plan will also aid the
Company and its subsidiaries in competing with other enterprises for the
services of new key personnel needed to ensure the continued development of
the Company and its subsidiaries.
(b) Options granted under the Plan shall be either Incentive Stock Options
within the meaning of Section 422 of the Internal Revenue Code of 1986, as
amended (the "Code"), or Nonstatutory Stock Options; provided that no
Incentive Stock Option shall be granted in excess of the calendar year
limitations per optionee set forth in Section 6. Options granted to an
optionee in excess of such calendar year limitations per optionee shall be
Nonstatutory Stock Options.
SECTION 3. ADMINISTRATION.
(a) The Plan shall be administered by a committee of the Board of Directors
(the "Committee"), which shall be composed of at least two directors of the
Company who are "Non-Employee Directors" within the meaning of Rule 16b-3
under the Securities Exchange Act of 1934, as amended (the "Exchange Act"),
and "outside directors" within the meaning of Section 162(m) of the Code, as
such Rule and Section, respectively, may be amended. The Committee is
authorized to determine the individuals to receive options, the time when they
shall receive them, the number of shares to be subject to each option, and the
designation of any such option as an Incentive Stock Option or a Nonstatutory
Stock Option. In making such determinations, the Committee may take into
consideration the value of the services rendered by the respective
individuals, their present and potential contributions to the success of the
Company and its subsidiaries and such other factors as the Committee may deem
relevant in accomplishing the purposes of the Plan.
(b) The Committee shall have the authority to (i) exercise all of the powers
granted to it under the Plan, (ii) construe, interpret and implement the Plan
and any Stock Option Agreements executed pursuant to Section 14, (iii)
prescribe, amend and rescind rules and regulations relating to the Plan, (iv)
make all determinations necessary or advisable in administering the Plan, and
(v) correct any defect, supply any omission and reconcile any inconsistency in
the Plan.
(c) The determination of the Committee on all matters relating to the Plan
or any Plan agreement shall be conclusive.
(d) No member of the Board of Directors or the Committee shall be liable for
any action or determination made in good faith with respect to the Plan or any
award thereunder.
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SECTION 4. TOTAL NUMBER OF SHARES TO BE OPTIONED.
(a) The number of shares of common stock, par value $1.00 per share ("Common
Stock"), that the Company may issue upon exercise of options granted under the
Plan shall not exceed one million five hundred thousand (1,500,000) shares
(subject to adjustments as provided in Section 11 hereof). The shares issued
under the Plan may be either issued shares reacquired by the Company at any
time or authorized but unissued shares, as the Board of Directors from time to
time may determine.
(b) In the event that any outstanding options under the Plan expire or are
terminated for any reason, the shares of Common Stock allocable to the
unexercised portion of all of such options may again be subject to the grant
of options under the Plan.
SECTION 5. ELIGIBILITY.
(a) Options shall be granted only to officers and key employees of the
Company or its subsidiaries.
(b) No director of the Company who is not also an employee of the Company or
one of its subsidiaries will be eligible for grant of any options.
SECTION 6. LIMITATION ON INCENTIVE STOCK OPTIONS.
(a) The aggregate fair market value of Common Stock (determined as of the
time the option is granted) with respect to which Incentive Stock Options are
exercisable for the first time by any optionee in any one calendar year, under
all plans of the Company and its subsidiaries, shall not exceed $100,000.
(b) Fair Market Value means, on any date, the closing price per share of the
Common Stock on any national stock exchange in the United States of America on
which such Common Stock is traded on such date, or if no sale of the Company's
Common Stock shall have been made on that day, the preceding day on which
there was a sale of such Common Stock.
(c) The Company intends that Incentive Stock Options granted under the Plan
will qualify as "incentive stock options" within the meaning of Section 422 of
the Code.
(d) Ten Percent Owner means a person who owns, or is deemed within the
meaning of Section 422(b)(6) of the Code to own, stock possessing more than
10% of the total combined voting power of all classes of stock of the Company
(or its parent or subsidiary corporations, within the meaning of Sections
424(e) and 424(f) of the Code). Whether a person is a Ten Percent Owner will
be determined with respect to each option based on the facts existing
immediately prior to the grant date of such option.
SECTION 7. TERMS AND CONDITIONS OF OPTIONS.
Each option granted under the Plan shall be evidenced by a Stock Option
Agreement in such form consistent with the Plan as the Committee shall
determine; provided that such Stock Option Agreement clearly and separately
identifies Nonstatutory Stock Options and Incentive Stock Options and that the
substance of the following terms and conditions be included therein:
(a) Option Price. The price at which each share of Common Stock covered
by such option may be purchased shall be determined by the Committee and
shall be no less than one hundred percent (100%) of the fair market value
of the Common Stock on the date the option is granted, or less than 110% of
the fair market value of the Common Stock on the date the option is granted
if such optionee is a "Ten Percent Owner". Fair market value shall be
determined as provided in Section 6(b). The term "Ten Percent Owner" shall
have the meaning set forth in Section 6(d).
(b) Transferability of Options.
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(i) Incentive Stock Options. Incentive Stock Options may not be
transferred or assigned other than by will or the laws of descent and
distribution and may be exercised during the lifetime of the optionee only
by the optionee or by the optionee's legally authorized representative, and
each Stock Option Agreement in respect of an Incentive Stock Option shall
so provide. The designation by an optionee of a beneficiary will not
constitute a transfer of the option.
(ii) Nonstatutory Stock Options. With respect to Nonstatutory Stock
Options granted hereunder, the Committee may, in its sole discretion,
provide in any Stock Option Agreement (or in an amendment to any existing
Stock Option Agreement) such provisions regarding transferability of the
Nonstatutory Stock Options as the Committee, in its sole discretion, deems
appropriate.
(c) Exercise of Option. The option and any right related thereto, if
exercised by the optionee, may be exercised (subject, however, to time
provisions of Section 9) only if the optionee has been an employee of the
Company or an employee of any subsidiary thereof at all times during the
period beginning with the date of the granting of the option and ending on
the day three (3) months before the date of such exercise; provided,
however, that in the case of an optionee who becomes permanently and
totally disabled or, in the case of Nonstatutory Stock Options only, upon
retirement at age 50 years or older, the three (3) months shall be extended
to twelve (12) months. Options granted to an employee under the Plan shall
not be affected in any manner by any change of duties, position or status
of employment of the optionee, so long as the optionee continues to be an
employee of the Company or an employee of a subsidiary. Except in the case
of the death or disability of an optionee or as otherwise provided in
Section 9(a), only those options exercisable at the date the optionee's
employment is terminated may be exercised during the period following such
termination, whether such termination is by retirement or otherwise.
(d) Term of Options. An Incentive Stock Option shall not be exercisable
after the expiration of ten (10) years from the date the option was
granted, or if the optionee is a Ten Percent Owner, not later than the
fifth anniversary of the date of grant. A Nonstatutory Stock Option shall
not be exercisable after the expiration of ten (10) years and one (1) month
after the date the option was granted.
(e) Death of Optionee. In the event of the death of an optionee while the
optionee is in the employ of the Company or any subsidiary thereof, the
outstanding options then held by such person and any rights related thereto
shall be exercisable only within the twelve (12) month period following
such death, and then only by the executor or administrator of the
optionee's estate or by the person or persons to whom the optionee's rights
under the option shall pass by the optionee's will or the laws of descent
and distribution; provided that in no event shall an Incentive Stock Option
be exercisable more than ten (10) years, or a Nonstatutory Stock Option
more than ten (10) years and one (1) month, after the date it was granted.
(f) In the event that any optionee shall be dismissed from the employ of
the Company or any of its subsidiaries for any reason which in the opinion
of the Committee shall constitute good cause for dismissal, any option
still held by such person at such time shall automatically terminate. The
decision of the Committee in so acting as to what shall constitute good
cause for dismissal shall be final and binding upon all concerned.
SECTION 8. EMPLOYMENT AT WILL.
Nothing contained in the Plan, or in any option granted pursuant to the
Plan, or in any agreement made pursuant to the provisions of this Section 8,
shall confer upon any optionee any right with respect to continuance of
employment by the Company or its subsidiaries, nor interfere in any way with
the right of the Company or its subsidiaries to terminate the optionee's
employment at will or change the optionee's compensation at any time.
SECTION 9. EXERCISE OF OPTIONS; PURCHASE OF SHARES.
(a) No option shall be exercisable until the expiration of one year from
date of grant and, unless otherwise determined by the Committee, shall (i) in
the case of Incentive Stock Options, be then exercisable as to 33 1/3% of the
total number of shares subject thereto, and exercisable as to an additional 33
1/3% of the original number
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granted on each of the two succeeding anniversaries and (ii) in the case of
Nonstatutory Stock Options, be then exercisable as to 20% of the total number
of shares subject thereto, and exercisable as to an additional 20% of the
original number granted on each of the four succeeding anniversaries; provided
that after the first anniversary of the date of grant, the Committee may, in
its sole discretion, accelerate the exercise dates of options held by an
optionee whose employment with the Company is terminated, if such optionee is
in good standing with the Company at the time of termination notwithstanding
the last sentence of Section 7(c) above. The right to purchase shares with
respect to options which become exercisable in installments shall be
cumulative. Notwithstanding the grant of options initially exercisable in
installments, upon the death or total disability of any optionee, all options
then held shall become immediately exercisable without regard to dates at
which the installments are exercisable, and upon the retirement of any
optionee at age 50 or older the Committee may in its discretion accelerate the
dates at which remaining installments of options may be exercised on the date
of retirement.
(b) An option shall be exercisable for the purchase of shares only upon
payment to the Company of the full purchase price of the shares with respect
to which the option is exercised as provided elsewhere herein; provided that
the Company shall not be required to issue or deliver any certificates for
shares of stock purchased upon the exercise of an option prior to (i) the
obtaining of any approval from any governmental agency which the Company
shall, in its sole discretion, determine to be necessary or advisable, and
(ii) the completion of any registration or other qualification of such shares
under any state or federal law or ruling or regulations of any governmental
body which the Company shall, in its sole discretion, determine to be
necessary or advisable and, in addition, if the issuance of shares upon
exercise of options shall not then be registered under the Securities Act of
1933, as amended, the Company may, upon exercise of an option, require the
holder thereof (or a purchaser acting under Section 7(e) hereof) to represent
in writing that he is acquiring the shares for investment and not with a view
to distribution thereof, and may mark the certificate(s) for the shares with a
legend restricting transfer and may issue stop transfer orders relating to
such certificate to the Company's transfer agent.
(c) Payment for the shares shall be either in United States dollars, payable
in cash or by check, or by surrender of stock certificates representing Common
Stock having an aggregate fair market value, determined as of the date of
exercise, equal to the number of shares with respect to which such option is
exercised multiplied by the option price per share, or a combination of cash
and Common Stock; provided that the Committee may in the Stock Option
Agreements impose whatever restrictions it deems necessary or advisable,
including Committee approval prior to any Reporting Optionee surrendering
stock certificates to pay for an option exercise (or to satisfy any tax
withholding liability). For purposes of this Section, the term "Reporting
Optionee" shall mean any optionee who is subject to the reporting requirements
of Section 16 of the Exchange Act. All such payments shall be accompanied by a
written request for the shares to be purchased. An option shall be deemed
exercised on the date such payment and written request are received by the
Secretary of the Company.
SECTION 10. ACCELERATION OF EXERCISABILITY; CHANGE OF CONTROL.
(a) Notwithstanding anything in the Plan or in the Stock Option Agreement
evidencing any option to the contrary, in the event a Change of Control
occurs, then each option shall become immediately exercisable for the purchase
of the full number of shares subject to such option on the date of the
occurrence of such Change of Control.
(b) "Change of Control" shall mean the occurrence of any of the following
events:
(i) any "person" or "group" of persons, as such terms are used in
Sections 13 and 14 of the Exchange Act, other than (i) any person meeting
the requirements of clauses (i) and (ii) of Rule 13d--1(b)(1) or its
successors promulgated under the Exchange Act, or (ii) any employee benefit
plan sponsored by the Company, becomes the "beneficial owner" (as such term
is used in Section 13 of the Exchange Act) of twenty percent (20%) or more
of the outstanding shares of the Common Stock entitled to vote for the
election of directors;
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(ii) any shares of any class of the Company's capital stock are purchased
pursuant to a tender or exchange offer (other than an offer by the Company
or a subsidiary); or
(iii) the approval by the requisite vote of the Company's stockholders of
any merger, consolidation, sale of assets, liquidation or reorganization as
a result of which the Company will not survive as a publicly-owned
corporation.
SECTION 11. CHANGE IN STOCK, ADJUSTMENTS, ETC.
(a) In the event that the outstanding shares of Common Stock are hereafter
increased or decreased or changed into or exchanged for a different number of
shares or kind of shares or other securities of the Company or of another
corporation, by reason of reorganization, merger, consolidation,
recapitalization, reclassification, stock split up, combination of shares, or
a dividend payable in Common Stock, the number and kind of shares for the
purchase of which options may be granted under the Plan shall be automatically
adjusted to reflect the change. In addition, there shall be an appropriate
adjustment in the number and kind of shares as to which outstanding options,
or portions thereof then unexercised, shall be exercisable, to the end that
the optionee's proportionate interest shall be maintained as before the
occurrence of such event, and such adjustment of outstanding options shall be
made without change of the total price applicable to the unexercised portion
of the option and with a corresponding adjustment in the option price per
share; provided that each such adjustment in the number and kind of shares
subject to outstanding Incentive Stock Options, including any adjustment in
the option price, shall be made in such manner as not to constitute a
modification as defined in Section 424 of the Code. The determination of any
adjustment by the Board of Directors or the Committee shall be conclusive.
(b) The grant of an option pursuant to the Plan shall not affect in any way
the right or power of the Company to make adjustments, reclassifications,
reorganizations or changes of its capital or business structure or to merge or
to consolidate or to dissolve, liquidate or sell or transfer all or any part
of its business or assets.
SECTION 12. DURATION, AMENDMENT AND TERMINATION.
(a) The Board of Directors of the Company may at any time terminate the Plan
or make such amendments thereof as it shall deem advisable and in the best
interests of the Company, without further action on the part of the
stockholders of the Company; provided that no such termination or amendment
shall, without the consent of the individual to whom any option shall
theretofore have been granted, affect or impair the rights of such individual
under such option, and provided further, that unless the stockholders of the
Company by the affirmative vote of a majority of the shares of the Company
present and voting at a meeting of stockholders at which a quorum is present
shall have first approved thereof, no amendment of this Plan shall be made
whereby:
(i) the total number of securities which may be issued under the Plan
shall be materially increased, except by operation of the adjustment
provisions of Section 11 hereof; or
(ii) the eligibility requirements for participation in the Plan shall be
materially modified.
(b) No options shall be granted under the Plan after the 10th anniversary of
the date of its adoption, but options granted prior to or as of such date may
extend beyond such date in accordance with the provisions hereof.
SECTION 13. EFFECTIVENESS OF PLAN.
The Plan shall be deemed adopted and become effective upon the approval
thereof by the Board of Directors of the Company; provided that,
notwithstanding any other provision of the Plan, no Incentive Stock Option
granted hereunder shall be exercisable unless the Plan is approved by the
affirmative vote of a majority of the shares of the Company present and voting
at a meeting of stockholders at which a quorum is present within one (1) year
after its adoption by the Board of Directors.
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SECTION 14. DATE OF GRANTING OPTIONS.
The granting of an option pursuant to the Plan shall take place on any date
the Committee decides to grant the option. Thereafter, the Company shall
notify the optionee of the grant of the option and submit to the optionee a
Stock Option Agreement duly executed by and on behalf of the Company, with the
request that the optionee execute and return the agreement within ninety (90)
days thereafter. If the optionee shall fail to return the executed Stock
Option Agreement within such ninety (90) day period, such person's option
shall be automatically terminated.
SECTION 15. APPLICATION OF FUNDS.
The proceeds received by the Company from the sale of Common Stock upon the
exercise of options granted under the Plan shall be added to the general funds
of the Company and used for its corporate purposes as the Board of Directors
shall determine.
SECTION 16. NO OBLIGATION TO EXERCISE OPTION.
Granting of an option shall impose no obligation on the optionee to exercise
such option.
A-6
<PAGE>
INTERTAN, INC./PROXY
THIS PROXY IS SOLICITED ON BEHALF OF THE BOARD OF DIRECTORS OF INTERTAN, INC.
The undersigned, having received the Notice of Annual Meeting and Proxy
Statement, hereby appoints John A. Capstick, Clark A. Johnson and W. Darcy
McKeough, and each or any of them, attorneys and proxies of the undersigned,
with full power of substitution, to vote in person or by proxy all the shares
of common stock of InterTAN, Inc. held of record by the undersigned on
September 16, 1996 and which the undersigned is entitled to vote on all
matters which may come before the 1996 Annual Meeting of Stockholders of
InterTAN, Inc. at Fort Worth, Texas on November 12, 1996 and any adjournments
or postponements thereof, as indicated on this proxy. The proxies, in their
discretion, are further authorized to vote for the election of a person to the
Board of Directors if any nominee named herein becomes unable to serve or for
good cause will not serve, are further authorized to vote on any matters which
the Board of Directors did not know would be presented at the meeting, and are
further authorized to vote on other matters which may properly come before the
meeting and any adjournments or postponements thereof. IF NO DIRECTIONS ARE
GIVEN, THIS PROXY WILL BE VOTED "FOR" ITEM 1 AND ITEM 2.
Please sign exactly as your name(s) appear(s)
on this Proxy. Joint owners should each sign.
If signing for a corporation or partnership,
or as agent, attorney, fiduciary, or similar
capacity, please indicate your full title as
such.
----------------------------------------------
----------------------------------------------
Signature(s) Date
PLEASE SIGN, DATE AND PROMPTLY RETURN THIS PROXY IN THE ENCLOSED ENVELOPE.
THE PROXIES CANNOT VOTE YOUR SHARES UNLESS YOU SIGN AND RETURN THIS CARD.
<PAGE>
INTERTAN, INC./PROXY
TO VOTE IN ACCORDANCE WITH THE BOARD OF DIRECTORS'
RECOMMENDATIONS, JUST SIGN ON THE REVERSE SIDE --
NO BOXES NEED TO BE CHECKED.
THE BOARD OF DIRECTORS RECOMMENDS A VOTE FOR THE NOMINEES LISTED IN ITEM 1 AND
FOR THE PROPOSAL SET FORTH IN ITEM 2. Please mark your votes as in this
example. [ X ]
<TABLE>
<S> <C> <C> <C>
ITEM 1. Election of Directors [ ] FOR all nominees [ ] WITHHOLD VOTE [ ] WITHHOLD VOTE
Nominees for Class I Directors: as to all nominees only as to:
JAMES T. NICHOLS
CLARK A. JOHNSON -----------------
ITEM 2. Approval of InterTAN, Inc. [ ] FOR [ ] AGAINST [ ] ABSTAIN
1996 Stock Option Plan
</TABLE>
