<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)
- --------------------------------------------------------------------------------
(Name of Person(s) Filing Proxy Statement, if other than the Registrant)
Payment of Filing Fee (Check the appropriate box):
[X] No Fee Required.
[_] $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:
----------------------------------------------------------------------
[_] Fee paid previously by written preliminary materials.
[_] Check box if any part of the fee is offset as provided by Exchange
Act Rule 0-11(a)(2) and identify the filing for which the offsetting fee
was paid previously. Identify the previous filing by registration statement
number, or the Form or Schedule and the date of its filing.
1) Amount Previously Paid:_______________________________________________
2) Form Schedule or Registration Statement No.:__________________________
3) Filing Party:_________________________________________________________
4) Date Filed:___________________________________________________________
<PAGE>
[INTERTAN LOGO APPEARS HERE]
September 25, 1998
Dear Fellow Stockholders:
It is a pleasure to invite you to InterTAN's 1998 Annual Meeting at 9:00
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
10, 1998. At the meeting, stockholders will vote for the election of three
directors 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 1998 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
1998 Annual Report, particularly the letters to stockholders included in the
Annual Report, which describe the changes in the operating performance of your
company that occurred in fiscal 1998.
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 1998 Annual Meeting.
Very truly yours,
/s/ JAMES T. NICHOLS
James T. Nichols
Vice Chairman 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 10, 1998
----------------
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 10, 1998 at 9:00 a.m., local time, for the
following purposes:
(1) To elect three Class III Directors to serve for a three-year term; and
(2) 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 14, 1998. A list of stockholders of record of who may
vote at the Annual Meeting or at any adjournments or postponements will be
available during business hours for any stockholder of the Company to examine
for any purpose relevant to the Annual Meeting. The list will be available for
at least ten days before the Annual Meeting at the office of the Secretary of
the Company, 201 Main Street, Suite 1805, Fort Worth, Texas 76102.
By Order of the Board of Directors
/S/ DAVID S. GOLDBERG
David S. Goldberg
Vice President, Secretary and
General Counsel
Fort Worth, Texas
September 25, 1998
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 10, 1998
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 in Fort Worth, Texas on November
10, 1998 at 9:00 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
14, 1998 (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 25, 1998. A copy of the Company's annual
report containing financial statements for the fiscal year ended June 30, 1998
("Fiscal 1998") 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 three
Class III Directors to serve for a three-year term; and (ii) 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 12,622,642. 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). All properly executed proxies delivered
pursuant to this solicitation and not revoked will be voted at the Annual
Meeting in accordance with the directions given.
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 III Director nominee will be by
a plurality of the votes cast by the stockholders voting in person or by proxy
at the Annual Meeting.
A validly executed proxy not marked "Withhold Vote" with respect to the
election of all or any of the Class III Director nominees will be treated as a
vote cast FOR the election of the Class III Director nominees. In determining
the number of votes cast on a matter, shares abstaining from voting on a
matter and broker non-votes will not be included in vote totals and will have
no effect on the outcome of the vote respecting each matter.
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
<PAGE>
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
31, 1998, Mr. Walter F. Loeb, a director of the Company since January 1993,
advised the Chairman of his desire to retire from service on the Board of
Directors. Mr. Loeb's retirement will be effective upon the conclusion of the
Annual Meeting on November 10, 1998.
The Board of Directors presently consists of two Class I Directors, three
Class II Directors, and three Class III Directors. Three Class III 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 2001. Messrs. William C.
Bousquette, John A. Capstick and Brian E. Levy have been nominated for
election and it is the intention of the persons named in the accompanying form
of proxy to vote for their election. Each of Messrs. Bousquette, Capstick, and
Levy 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 William C.
Bousquette, John A. Capstick, and Brian E. Levy as Class III Directors to hold
office until the 2001 Annual Meeting of Stockholders and until their
successors are elected and qualified. Proxies received by the Board of
Directors will be voted FOR the director nominees unless stockholders specify
in their proxy a contrary choice.
BOARD OF DIRECTORS AND MANAGEMENT
The following table sets forth certain information regarding the current
directors and executive officers of the Company:
<TABLE>
<CAPTION>
NAME AGE POSITION
---- --- --------
<C> <C> <S>
William C. Bousquette....... 61 Director--Class III (Director Nominee--term
expiring at Annual Meeting)
John A. Capstick............ 59 Director--Class III (Director Nominee--term
expiring at Annual Meeting)
Brian E. Levy............... 39 President and Chief Operating Officer
(Director Nominee--Class III)
Walter F. Loeb.............. 73 Director--Class III (term expiring at Annual
Meeting)
Clark A. Johnson............ 67 Director--Class I (term expiring 1999)
James T. Nichols............ 55 Director--Class I (term expiring 1999) and
Vice Chairman and Chief Executive Officer
John H. McDaniel............ 80 Director--Class II (term expiring 2000)
W. Darcy McKeough........... 65 Director--Class II (term expiring 2000)
Ron G. Stegall.............. 51 Director--Class II (term expiring 2000) and
Chairman of the Board
James G. Gingerich.......... 47 Senior Vice President and Chief Financial
Officer
David S. Goldberg........... 36 Vice President, Secretary and General
Counsel
Douglas C. Saunders......... 50 Vice President and Corporate Controller
</TABLE>
WILLIAM C. BOUSQUETTE has served as a director of the Company since July
1997. Since December 1996, Mr. Bousquette has been engaged as an independent
financial consultant. From January 1995 until December 1996, Mr. Bousquette
served as Senior Vice President and Chief Financial Officer of Texaco Inc.
Prior thereto Mr. Bousquette served as Executive Vice President and Chief
Financial Officer of Tandy Corporation from November 1990 to January 1995.
From January 1, 1995 until January 22, 1995, Mr. Bousquette served as
Executive Vice President of Tandy Corporation. From January 1993 until January
1994, Mr. Bousquette also served as the Chief Executive Officer of TE
Electronics, a subsidiary of Tandy Corporation. Mr. Bousquette previously
served as a director of the Company from July 1991 until August 1992. Mr.
Bousquette also serves as a director of Cyprus Amax Minerals Company and
O'Sullivan Industries Holdings, Inc.
2
<PAGE>
JOHN A. CAPSTICK has served as a director of the Company since January 1987.
From January 1, 1994 until July 1, 1997, Mr. Capstick served as Chairman of
the Board of Directors. Mr. Capstick is presently the Chairman of Anglia
Maltings (Holdings) Ltd. in the United Kingdom. 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., Warnaco Group, Inc., and
Hudson's Bay Company.
CLARK A. JOHNSON has served as a director of the Company since November
1989, and has been Chairman of the Board of Pier 1 Imports, Inc. since March
1988. From March 1988 until June 25, 1998 Mr. Johnson served as the Chief
Executive Officer of Pier 1 Imports, Inc. Mr. Johnson also serves as a
director of Albertson's Inc., Metro Media International Group, Landcare, Inc.,
and Niagara Mohawk Power Corporation.
JAMES T. NICHOLS served as the President of the Company from January 1, 1995
to January 1, 1998 and has served as a director of the Company since February
7, 1995, and as Vice Chairman of the Board of Directors since January 1, 1998.
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.
JOHN H. MCDANIEL served as Chairman of the Board of Directors of the Company
from July 1991 to January 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 Supply Inc. 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. Effective July 1, 1997, Mr. Stegall became the Chairman of the Board of
Directors. 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 Holdings,
Inc., Hastings Entertainment Inc., and Organized Living, Inc.
BRIAN E. LEVY has served as President and Chief Operating Officer of the
Company since January 1, 1998. From September 1996 until December 1997 Mr.
Levy served as President of Store Operations of Levitz Furniture Incorporated.
Prior to September 1996, Mr. Levy served in various capacities for 22 years at
Tandy Corporation, most recently including Senior Vice President--Tandy
Specialty Retail Group, Vice President--Retail Operations, Incredible
Universe, and Vice President--Midwest Division, Radio Shack.
JAMES G. GINGERICH has served as the Senior Vice President and Chief
Financial Officer of the Company since February 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
3
<PAGE>
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.
DAVID S. GOLDBERG has served as Vice President, Secretary and General
Counsel of the Company since March 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, LLP.
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.
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 seven meetings during Fiscal
1998, five by personal attendance and two by telephone conference, and acted
on one other matter by unanimous written consent. 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. Stegall, Bousquette, Capstick, Johnson and Nichols are the members
of the Executive Committee. Mr. Stegall 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
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 1998.
Messrs. McKeough, Bousquette, Loeb, and McDaniel, 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 1998, two of
which were by telephone conference.
Messrs. Johnson, 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; 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 1998 and acted on one other matter 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 1999 Annual Meeting should
submit their suggestions in writing no later than August 15, 1999 to the
Secretary of the Company.
4
<PAGE>
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
1998, 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 $80,000 per year for
services rendered to the Company. As stated above, in Fiscal 1998 there were
seven board meetings, five meetings where directors were in personal
attendance and two meetings by telephone conference. There were three
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
The following table sets forth, as of August 31, 1998, 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.
<TABLE>
<CAPTION>
AGGREGATE NUMBER
OF SHARES PERCENT OF
NAME BENEFICIALLY OWNED(1) OUTSTANDING SHARES
---- --------------------- ------------------
<S> <C> <C>
William C. Bousquette................ 25,000 *
John A. Capstick..................... 32,322 *
Clark A. Johnson..................... 33,500 *
Walter F. Loeb....................... 25,000 *
John H. McDaniel..................... 42,000 *
W. Darcy McKeough.................... 30,000 *
Ron G. Stegall....................... 27,000 *
James T. Nichols..................... 295,206 2.35%
Brian E. Levy........................ 5,073 *
James G. Gingerich................... 61,002 *
David S. Goldberg.................... 11,138 *
Douglas C. Saunders.................. 37,821 *
All Directors and Executive Officers
as a Group (12 persons)............. 625,062 4.97%
</TABLE>
- --------
* less than 1% of issued and outstanding shares of Common Stock.
(1) The number of shares of Common Stock beneficially owned by each director
(excepting Mr. Nichols) includes 25,000 shares each, and by Messrs.
Nichols, Levy, Gingerich, Goldberg, and Saunders, include 183,332, -0-,
32,166, 8,333, and 20,333 shares, respectively, or 419,164 shares in the
aggregate, which such persons have a right to acquire within 60 days after
August 31, 1998 pursuant to certain stock options. The number of shares
beneficially held by Messrs. Nichols, Levy, Gingerich, Goldberg, and
Saunders include 8,923, 3,047, 4,603, 577 and 909 shares, respectively,
indirectly held pursuant to the Company's Employee Stock Purchase Program.
The number of shares beneficially owned by Mr. Nichols also includes 8,262
shares held indirectly under the Company's 401(k) plan.
5
<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, 1998, 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>
Schneider Capital Management Company....... 1,900,500(1) 15.13%
460 E. Swedesford Road, Suite 1080
Wayne, PA 19087
Silverton International Fund Limited....... 1,256,649(2) 9.09%(2)
129 Front Street
Hamilton HM12 Bermuda
Pioneering Management Corporation.......... 1,090,000(3) 8.68%
60 State Street
Boston, MA 02109
The TCW Group, Inc. ....................... 921,300(4) 7.33%
865 South Figueroa Street
Los Angeles, CA 90017
Brinson Partners, Inc. .................... 791,860(5) 6.30%
209 South LaSalle
Chicago, IL 60604
Bankers Trust New York Corporation......... 688,194(6) 5.48%
130 Liberty Street
New York, NY 10006
</TABLE>
- --------
* Unless indicated otherwise in the notes below, according to public filings
made by such beneficial owners, each beneficial owner has sole voting and
sole dispositive power with respect to the indicated shares.
(1) According to Amendment No. 1 to Schedule 13G dated January 7, 1998,
Schneider Capital Management Company has sole dispositive power over all
shares but has sole voting power over only 1,139,200 shares. Certain
corporate affiliates of the Frank Russell Company have sole voting power
over 761,300 of the aggregate shares.
(2) Assumes the conversion of Cdn$10,584,000 (approximately US$6,748,358 at
the August 31, 1998 exchange rate) principal amount of the Company's
convertible subordinated debentures into Common Stock; percentage
calculation assumes the full conversion of debentures owned by the named
beneficial holder only and the resulting increase in outstanding shares.
(3) According to Amendment No. 4 to Schedule 13G dated January 21, 1998.
(4) According to Amendment No. 4 to Schedule 13G dated February 12, 1998, Mr.
Robert Day, an individual, may be deemed to control The TCW Group, Inc.
(5) According to Amendment No. 5 to Schedule 13G dated February 11, 1998,
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 791,860 shares. 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 Amendment No. 1 to Schedule 13G dated December 31, 1997,
Bankers Trust Company ("BTC") is a wholly-owned subsidiary and BT
Australia Limited ("BTAL") is an indirect, wholly-owned subsidiary of
Bankers Trust New York Corporation. BTC has sole power to vote 100 shares
and BTAL has sole power to vote and dispose of 688,094 shares.
6
<PAGE>
EXECUTIVE COMPENSATION
The following table sets forth the total annual compensation paid, payable,
or accrued by the Company during Fiscal 1998 and the two preceding fiscal
years to or for the account of the Company's Chief Executive Officer and each
of the Company's four other most highly compensated executive officers.
Information set forth in the Summary Compensation Table below under the
heading "Options/SARs" refers to shares of Common Stock underlying stock
options. The Company has never granted any stock appreciation rights ("SARs").
SUMMARY COMPENSATION TABLE
<TABLE>
<CAPTION>
ANNUAL COMPENSATION LONG-TERM COMPENSATION
--------------------------------- -------------------------------
RESTRICTED SECURITIES
OTHER ANNUAL STOCK UNDERLYING LTIP ALL OTHER
NAME AND PRINCIPAL FISCAL SALARY BONUS(1) COMPENSATION(2) AWARDS OPTIONS/SARS PAYOUTS COMPENSATION(3)
POSITION YEAR ($) ($) ($) ($) (#SHS) ($) ($)
------------------ ------ ------- --------- --------------- ---------- ------------ ------- ---------------
<S> <C> <C> <C> <C> <C> <C> <C> <C>
James T. Nichols........ 1998 444,760 189,000 11,606 -- 50,000 -- 190,979
(Vice Chairman and 1997 445,400 187,832 12,194 -- 50,000 -- 144,204
Chief Executive Officer) 1996 447,082 189,000 12,606 -- 100,000 -- 137,865
Brian E. Levy (4)....... 1998 126,923 57,526 4,154 -- 60,000 -- 15,998
(President and Chief 1997 -- -- -- -- -- -- --
Operating Officer) 1996 -- -- -- -- -- -- --
James G. Gingerich...... 1998 183,000 115,816 9,000 -- 15,000 -- 38,562
(Senior Vice President 1997 175,000 50,388 9,000 -- 12,500 -- 16,708
and Chief Financial Of-
ficer) 1996 165,000 39,000 8,000 -- 7,500 -- 19,254
Douglas C. Saunders..... 1998 140,000 66,770 9,000 -- 6,000 -- 38,042
(Vice President and 1997 135,000 30,759 9,000 -- 6,000 -- 21,557
Corporate Controller) 1996 130,000 25,000 8,000 -- 5,000 -- 13,674
David S. Goldberg....... 1998 120,000 37,076 9,000 -- 7,500 -- 12,844
(Vice President, Secre-
tary 1997 115,000 14,093 9,000 -- 7,500 -- 7,524
and General Counsel) 1996 100,000 7,560 8,000 -- 5,000 -- 5,626
</TABLE>
- --------
(1) All bonus awards are paid in cash; estimated bonus amounts are accrued at
fiscal year end and typically paid shortly thereafter. Fiscal 1998 bonus
amounts for Messrs. Nichols, Levy, Gingerich, and Goldberg include the
Company's matching contribution to the Employee Stock Purchase Program of
$14,000, $2,213, $6,556, and $656, respectively.
(2) Amounts consist of the following: for Mr. Nichols in fiscal 1998, $9,000
as a car allowance and $2,606 representing monthly country club dues, in
fiscal 1997, $9,000 as a car allowance and $3,194 representing monthly
country club dues, and in fiscal 1996, $8,331 as a car allowance and
$4,275 representing monthly country club dues; for Mr. Levy in fiscal
1998, $4,154 as a car allowance; for Mr. Gingerich in fiscal 1998, $9,000
as a car allowance, in fiscal 1997, $9,000 as a car allowance and in
fiscal 1996, $8,000 as a car allowance; for Mr. Saunders in fiscal 1998,
$9,000 as a car allowance, in fiscal 1997, $9,000 as a car allowance and
in fiscal 1996, $8,000 as a car allowance; for Mr. Goldberg, in fiscal
1998, $9,000 as a car allowance, in fiscal 1997, $9,000 as a car allowance
and in fiscal 1996, $8,000 as a car allowance. "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 1998 consist of the following: for Mr. Nichols,
$132,424 was accrued for salary continuation payments under the Amended
Nichols Employment Contract (see "Employment Contracts--James T. Nichols"
below), $35,581 representing the Company's matching contribution to the
Employee Stock Purchase Program ("SPP"), and $2,832 and $13,742
representing premiums paid, respectively, on a term life and a long-term
disability insurance policy; for Mr. Levy, $8,849 was accrued for salary
continuation payments under the Company's Deferred Compensation Plan
("DCP"), $3,173 representing the Company's matching contribution to the
SPP, and $435 and $1,003 representing premiums paid, respectively, on a
term life and long-term disability insurance policy; for Mr. Gingerich,
$10,192 representing the Company's matching contribution to the SPP,
$18,581 was accrued for salary continuation payments under the DCP, and
$1,568 and $1,821 representing premiums paid, respectively, on a term life
and a long-term disability insurance policy; for Mr. Saunders, $8,387
representing the Company's matching contribution to the SPP, $18,452 was
accrued for salary continuation payments under the DCP, and $3,569 and
$1,349 representing premiums paid, respectively, on a term life and a
long-term disability insurance policy; and for Mr. Goldberg, $1,124
representing the Company's matching contribution to the SPP, $3,780 was
accrued for salary continuation payments under the DCP, and $567 and
$1,058 representing premiums paid, respectively, on a term life and a
long-term disability insurance policy. Amounts also include Company
matching contributions for Messrs. Nichols, Levy, Gingerich, Saunders and
Goldberg of $6,400, $2,538, $6,400, $6,285, and $6,315, respectively,
under the Company's 401(k) plan, which is a tax-qualified defined
contribution plan intended to satisfy the requirements of Section 401(k)
of the Internal Revenue Code.
(4) Mr. Levy began employment with the Company on January 1, 1998; Fiscal 1998
Annual Compensation amounts reflect prorated annual figures.
7
<PAGE>
The following table sets forth information relating to stock options granted
to the individuals listed in the Summary Compensation Table during Fiscal
1998, together with related information. No SARs were granted by the Company
in Fiscal 1998.
OPTION/SAR GRANTS IN LAST FISCAL YEAR
<TABLE>
<CAPTION>
POTENTIAL REALIZABLE
VALUE AT ASSUMED
ANNUAL RATES OF STOCK
PRICE APPRECIATION
INDIVIDUAL GRANTS FOR OPTION TERM*(2)
------------------------------------- -----------------------
SECURITIES % OF TOTAL
UNDERLYING OPTIONS/SARS
OPTIONS/SARS GRANTED TO EXERCISE OR
GRANTED(1) EMPLOYEES IN BASE PRICE EXPIRATION
NAME (#SHS) FISCAL YEAR ($/SH) DATE 5%($)(3) 10%($)(4)
---- ------------ ------------ ----------- ---------- ---------- -----------
<S> <C> <C> <C> <C> <C> <C>
James T. Nichols........ 50,000 19.84 5.50 12/10/07 173,000 438,500
Brian E. Levy........... 55,813 22.15 5.375 1/1/08 188,927 478,038
4,187 1.66 5.375 2/1/08 14,173 35,862
James G. Gingerich...... 15,000 5.95 5.50 11/10/07 51,900 131,550
David S. Goldberg....... 7,500 2.98 5.50 11/10/07 25,950 65,775
Douglas C. Saunders..... 6,000 2.38 5.50 11/10/07 20,760 52,620
</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
volatility 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 market price of the Common Stock
increases above 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 market price per share of
Common Stock would have to equal $8.76 for the options granted to Mr. Levy
and $8.96 for the options granted to Messrs. Nichols, Gingerich, Goldberg,
and Saunders.
(4) In order to realize these aggregate amounts, the market price per share of
Common Stock would have to equal $13.94 for the options granted to Mr.
Levy and $14.27 for the options granted to Messrs. Nichols, Gingerich,
Goldberg, and Saunders.
8
<PAGE>
The following table provides information relating to the exercise of stock
options by the individuals listed in the Summary Compensation Table during
Fiscal 1998, together with related information, and the number and value of
exercisable and unexercisable options held by such individuals at June 30,
1998. The Company has never granted any SARs.
AGGREGATED OPTION/SAR EXERCISES IN
LAST FISCAL YEAR AND FISCAL YEAR-END
OPTION/SAR VALUES
<TABLE>
<CAPTION>
SECURITIES
UNDERLYING VALUE OF UNEXERCISED
SHARES UNEXERCISED IN-THE-MONEY
ACQUIRED OPTIONS/SARS AT OPTIONS/SARS
ON FY-END (#) AT FY-END ($)(1)
EXERCISE VALUE EXERCISABLE/ EXERCISABLE/
NAME (#) REALIZED ($) UNEXERCISABLE UNEXERCISABLE
---- -------- ------------ --------------- --------------------
<S> <C> <C> <C> <C>
James T. Nichols.... -- -- 183,332/116,668 0/0
Brian E. Levy....... -- -- 0/60,000 0/0
James G. Gingerich.. -- -- 32,166/25,834 0/0
David S. Goldberg... -- -- 8,333/14,167 0/0
Douglas C. Saun-
ders............... -- -- 20,333/11,667 130/0
</TABLE>
- --------
(1) For purposes of determining whether an option was "In-the-Money," this
table uses the June 30, 1998 closing share price on the New York Stock
Exchange for the Company's Common Stock of $5.375. Computed as the
difference between the respective option exercise prices and $5.375.
EMPLOYMENT CONTRACTS
James T. Nichols. James T. Nichols serves as the Vice Chairman 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
was to continue through August 31, 1998. Effective July 1, 1998, the Nichols
Employment Contract was amended so as to expire on December 31, 1998 (the
"Amended Nichols Employment Contract").
Pursuant to the Amended Nichols Employment Contract, Mr. Nichols'
compensation from July 1, 1998 through December 31, 1998 includes: (i) an
annualized 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) a fixed bonus of $87,500, plus other bonuses as
may be determined by the Board of Directors in its discretion; (iii) 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; and (iv) payment of membership charges and annual dues at a selected
country club. Mr. Nichols also receives a car allowance of $750 per month.
Commencing January 1, 1999, Mr. Nichols will be entitled to receive an annual
retirement payment of $85,455.48 payable for a period of ten (10) years. In
accordance with the terms of the Company's 1986 Stock Option Plan and 1996
Stock Option Plan, each as amended, effective July 1, 1998, the outstanding
options held by Mr. Nichols were modified, upon approval of the Board of
Directors, in order to extend the post-retirement exercise period for such
options. The options presently held by Mr. Nichols will be exercisable for a
period of two years commencing on January 1, 1999 and terminating on January
1, 2001. As permitted under each stock option plan, the Board of Directors
approved that any unvested options held by Mr. Nichols on January 1, 1999 will
be immediately accelerated and thereby become fully vested. Any vested but
unexercised options held by Mr. Nichols on January 1, 2001 will lapse and
become immediately unexercisable.
Under the Amended 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
9
<PAGE>
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 Amended Nichols Employment Contract entitles Mr. Nichols to severance
payments equal to his annualized base salary and bonus through the end of the
Amended Nichols Employment Contract term. "Cause" includes willful or gross
misconduct on the part of the 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 prior to January 1,
1999, if (i) Mr. Nichols' employment is involuntarily terminated prior to such
change of control, or (ii) Mr. Nichols' employment is terminated, whether
voluntarily or involuntarily, after such change of control, Mr. Nichols will
be entitled to receive under the Amended Nichols Employment Contract (i) a
payment in the amount of $2,750,000 payable in 120 equal monthly installments,
and (ii) the full vesting of all his holdings of options to acquire capital
stock of the Company. For purpose of the Amended Nichols Employment Contract,
a "change of control" occurs if (a) any person, corporation, partnership,
association, joint stock company, trust, unincorporated organization, or
government, including a political subdivision thereof (or any combination
thereof acting for the purpose of acquiring, holding, voting, or disposing of
equity securities of the Company), acquires beneficial ownership of at least
twenty percent (20%) of the then issued and outstanding Common Stock of the
Company; (b) on any day more than fifty percent (50%) of the members of the
Board of Directors of the Company (excluding those members replacing deceased
directors) were not directors two (2) years prior to such date; or (c)
substantially all the assets of the Company are sold or the Company is merged
or consolidated or otherwise acquired by or with another corporation (other
than a subsidiary of the Company) unless, as the result of any such merger,
consolidation, or acquisition, (i) the Company is the surviving entity, and
(ii) not more than twenty percent (20%) of the Company's then issued and
outstanding Common Stock is sold or exchanged as the result of such merger,
consolidation, or acquisition.
Brian E. Levy. Brian E. Levy serves as the President and Chief Operating
Officer of the Company. On January 1, 1999, Mr. Levy will assume the
responsibilities of Chief Executive Officer of the Company. Mr. Levy and the
Company entered into an employment agreement dated November 29, 1997; such
agreement becoming effective January 1, 1998 (the "Levy Employment Contract").
Pursuant to the Levy Employment Contract, Mr. Levy's compensation includes an
annual base salary of $275,000 and base bonus of $125,000. The prorated bonus
payable to Mr. Levy for Fiscal 1998 was calculated using a formula
commensurate with consolidated achievement of budgeted operating income. The
bonus payable in subsequent years is to reflect a predetermined formula
approved by the Board of Directors. Mr. Levy also receives a car allowance of
$750 per month. Under the Levy Employment Contract, on January 1, 1998 Mr.
Levy was granted an option to purchase 60,000 shares of the Company's Common
Stock under the terms of the Company's 1996 Stock Option Plan. In addition,
the Company agreed to reimburse Mr. Levy for his reasonable expenses incurred
in relocating from Florida to Texas.
If the Company terminates Mr. Levy's employment other than for his "gross
misconduct," Mr. Levy is entitled to receive severance benefits equal to
twelve (12) months of his then current base salary and bonus; such amount to
be paid out in twelve (12) equal monthly installments. "Gross misconduct"
means a conviction of, or the entry of a plea of nolo contendere or similar
plea arrangement relating to a felony, whether relating to Company business or
not, or the finding of reckless or willful misconduct in the performance of
Mr. Levy's duties.
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 March 1, 1995 (the "Gingerich
Employment Contract"). Pursuant to the Gingerich Employment Contract, if the
Company terminates Mr. Gingerich's employment other than for "Cause" or if Mr.
Gingerich terminates his employment
10
<PAGE>
for "Good Reason" (each as defined above), Mr. Gingerich is entitled to a
severance payment. If such termination occurs during a year subsequent to
1996, his severance payment will equal seven months of base pay and base
bonus, 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. Mr. Gingerich would also be
entitled to reimbursement of certain expenses if he chooses to relocate under
specified circumstances.
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 as of the date of this Proxy Statement,
Mr. Gingerich could receive maximum lump sum payments in the aggregate amount
of $286,000.
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 March 10, 1995 (the "Saunders Employment
Contract"). Pursuant to the Saunders Employment Contract, 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. Such payment is formula based and
has reached its maximum of nine months base salary and base bonus. Mr.
Saunders would also be entitled to reimbursement of certain expenses if he
chooses to relocate under specified circumstances.
DEFERRED COMPENSATION PLAN
In fiscal year 1989, the Board of Directors approved the InterTAN, Inc.
Deferred Compensation Plan ("DCP"). Under the DCP, the Board of Directors has
the authority to select full-time executive employees for participation
therein. During Fiscal 1998, the Board of Directors selected Messrs. Levy,
Gingerich, Saunders and Goldberg as DCP participants. Under the DCP, the Board
of Directors determines, in its discretion, the "plan benefit amount" for each
participant; these amounts were established for Messrs. Levy, Gingerich,
Saunders and Goldberg at $2,000,000, $1,365,000, $975,000 and $750,000
respectively. Mr. Nichols is not a DCP participant; all payments to be made to
Mr. Nichols will be made pursuant to the Amended Nichols Employment Agreement.
The DCP is designed to provide benefits to a participant following
retirement between the ages of 55 and 75. A participant's plan benefit amount
is designed to represent his age 65 "normal" retirement payment. "Normal"
retirement is from age 65 through 70. The earliest a participant may retire
and receive benefits under the DCP is at age 55. A participant retiring
"early" at age 55 is only entitled to one-half of his then current plan
benefit amount; such amount cumulatively increasing by 10% for each year after
age 55 (up to age 64) in which "early" retirement occurs. A participant
retiring "late," between ages 71 and 75, will have his plan benefit amount
cumulatively reduced 20% per year for each year, commencing at age 71, in
which "late" retirement occurs. All retirement payments required to be made by
the Company to a participant retiring between the ages of 55 and 75 are
required to be paid in equal monthly installments over a period of 120 months.
If a participant dies prior to age 55 while being employed full-time by the
Company, the full plan benefit amount is required to be paid, in a lump sum,
to the participant's designated beneficiary. To the greatest extent
practicable, the Company intends to maintain corporate-owned life insurance on
each participant in order to fund any required death payment. If a participant
dies at or after age 55, and is then receiving payments under the DCP, such
payments will continue to be paid to the participant's designated beneficiary.
In the event a participant leaves the Company's employ for any reason prior to
age 55, the participant will no longer be entitled to any benefits, at any
time, under the DCP, except as described below. All payment obligations of the
Company under the DCP are deemed to be unsecured and payable from the
Company's general assets.
The DCP contains a change of control provision. In the event of a change of
control of the Company, a participant's plan benefit amount vests at the full
amount (age 65 amount) regardless of the participant's actual
11
<PAGE>
age at the time of the change of control event. Subsequently, if a
participant's employment with the Company terminates, whether voluntarily or
involuntarily, during a three year period commencing on the date of the change
of control event, the participant will be entitled to be paid his full plan
benefit amount in equal monthly installments over a period of 120 months.
Additionally, in the event a participant is involuntarily terminated and,
within one year of such termination date, there occurs a change of control
event, the participant will be entitled to be paid his full plan benefit
amount in equal monthly installments over a period of 120 months. Under the
DCP, a "change of control" occurs if (a) any person, corporation, partnership,
association, joint stock company, trust, unincorporated organization, or
government, including a political subdivision thereof (or any combination
thereof acting for the purpose of acquiring, holding, voting, or disposing of
equity securities of the Company), acquires beneficial ownership of at least
twenty percent (20%) of the then issued and outstanding Common Stock of the
Company; or (b) on any day more than fifty percent (50%) of the members of the
Board of Directors of the Company (excluding those members replacing deceased
directors) were not directors two (2) years prior to such date; or (c)
substantially all the assets of the Company are sold or the Company is merged
or consolidated or otherwise acquired by or with another corporation (other
than a subsidiary of the Company) unless, as the result of any such merger,
consolidation, or acquisition, (i) the Company is the surviving entity, and
(ii) not more than twenty percent (20%) of the Company's then issued and
outstanding Common Stock is sold or exchanged as the result of such merger,
consolidation, or acquisition. If there were a change of control (as defined
under the DCP) as of the date of this Proxy Statement, each of Messrs. Levy,
Gingerich, Saunders and Goldberg would only be entitled to payments under the
DCP if his employment with the Company was terminated as described above;
assuming such a termination, no lump sum payments would be required, rather
all payments would be made over a 10 year period as described above.
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 1998. 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 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
12
<PAGE>
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 executive's performance, time in job, level of
pay, competitive compensation, and other factors.
For fiscal year 1999, Mr. Nichols' salary will be determined in accordance
with the Amended Nichols Employment Contract; the base salaries of Messrs.
Levy, Gingerich, Saunders, and Goldberg have been set at $275,000, $186,000,
$144,000, and $125,000, respectively.
Annual Performance Incentives. With respect to the Fiscal 1998 payments,
except for Mr. Nichols and Mr. Levy, the amount of annual incentive
compensation paid to the executive officers was calculated using a formula
reflecting a weighted average of the operating performance of each of the
Company's operating subsidiaries in Fiscal 1998. This formulation is designed
to better align executive officers' incentives with the performance of the
operating subsidiaries. Mr. Nichols' Fiscal 1998 bonus, as described in the
Nichols Employment Contract, was fixed at $175,000. Mr. Levy's bonus for
Fiscal 1998 was calculated using a formula commensurate with consolidated
achievement of budgeted operating income.
In determining the amount of the annual performance incentive compensation
which will be paid to the executive officers in fiscal year 1999, Messrs.
Levy, Gingerich, Saunders, and Goldberg have been assigned bases of $125,000,
$100,000, $55,000, and $32,500, respectively. Under the Amended Nichols
Employment Contract, Mr. Nichols' bonus for fiscal year 1999 is fixed at
$87,500. 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 performance
incentives currently utilized by the Company for executive officers is stock
options. The number of stock options granted to an executive (other than the
Chief Executive Officer) is determined by the Compensation Committee after
consultation with the Chief Executive Officer. The Compensation Committee, in
its sole discretion, determines the number of stock options to be granted to
the Chief Executive Officer. 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 grants to all executive officers.
Stock options previously have been granted under the provisions of the
Company's 1986 Stock Option Plan and 1996 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
13
<PAGE>
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 market 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.
CEO COMPENSATION
For Fiscal 1998, the compensation of Mr. Nichols, the Vice Chairman and
Chief Executive Officer of the Company, was paid pursuant to the Nichols
Employment Contract. The Nichols Employment Contract was negotiated by the
Company and Mr. Nichols. The agreement was considered by the Compensation
Committee to be necessary to induce Mr. Nichols to serve the Company and to
motivate him to accept the challenges presented by the Company's situation as
it proceeded 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. As discussed above, effective July 1, 1998,
the options held by Mr. Nichols under the Company's stock option plans were
modified in order to extend the post-retirement exercise period thereof. The
Board of Directors of the Company, upon the recommendation of the Compensation
Committee, approved the modification of Mr. Nichols' options after
consideration of, among other things, the efforts made by Mr. Nichols on
behalf of the Company since January 1, 1995 and that such efforts may affect
the stock price of the Company's Common Stock during the two year period
commencing January 1, 1999.
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.
ORGANIZATION AND COMPENSATION COMMITTEE
Clark A. Johnson, Chairman
John H. McDaniel
Ron G. Stegall
COMPENSATION COMMITTEE INTERLOCKS AND INSIDER PARTICIPATION
The Compensation Committee is composed entirely of the three non-employee
directors named as signatories to the above Compensation Committee report.
During Fiscal 1998, 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.
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 SmallCap 600 Index, and the
Standard & Poor's Retail Stores--Specialty Index. The graph reflects the
assumption of $100 invested on June 30, 1993 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, 1998
[PERFORMANCE GRAPH APPEARS HERE]
Cumulative Total Return
<TABLE>
<CAPTION>
1993 1994 1995 1996 1997 1998
---- ------ ------ ------ ------ ------
<S> <C> <C> <C> <C> <C> <C>
InterTAN, Inc.......................... $100 63.77 86.96 66.67 42.75 62.32
S&P SmallCap 600....................... $100 101.87 122.61 154.50 188.01 224.60
S&P Retail Stores--Specialty........... $100 97.03 95.93 117.21 127.74 114.11
</TABLE>
15
<PAGE>
SECTION 16(A) BENEFICIAL OWNERSHIP
REPORTING COMPLIANCE
Section 16(a) of the Securities Exchange Act of 1934 requires the Company's
executive officers, directors and persons who own more than 10% of the
Company's Common Stock to file reports of ownership and changes in ownership
with the Securities and Exchange Commission ("SEC"). These reports are also
filed with the New York Stock Exchange. A copy of each report is required to
be furnished to the Company.
SEC regulations require the Company to identify anyone who filed a required
report late during the most recent fiscal year. Based solely upon a review of
reports furnished to the Company during and with respect to Fiscal 1998 and
written representations that no other reports were required during Fiscal
1998, all Section 16(a) filing requirements were met except that, regarding
the cancellation of warrants to acquire 1,449,007 shares of the Company's
Common Stock, Trans World Electronics, Inc., a former more than 10% beneficial
owner, filed the required Form 4 with the SEC one day late.
CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS
TRANSACTIONS WITH MANAGEMENT AND OTHERS
There were no transactions with the Company during Fiscal 1998, 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, or are proposed to be, a party.
Tandy Corporation ("Tandy") performed certain services during Fiscal 1998
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 1998, the Company paid approximately
$5,000, 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 1998, the Company purchased approximately $82,054,000 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 1998 of approximately
$885,000 for purchase and export services. As of December 30, 1997, the
Company was indebted to Trans World Electronics, Inc. ("TWE"), a subsidiary of
Tandy, in the amount of approximately $20,874,000 under the terms of a secured
loan agreement. On December 30, 1997, the Company repaid TWE $21,446,437.25,
representing the entire outstanding principal, and accrued interest thereon,
under the secured loan agreement. Upon repayment of this indebtedness, TWE
surrendered to the Company for cancellation warrants which it held and which
were exercisable for 1,449,007 shares of the Company's Common Stock. During
Fiscal 1998, the Company also paid Tandy approximately $3,929,000 as a royalty
under the license agreements for the use of certain trade names and incurred
expenses of approximately $209,000 as a license fee under an advertising
agreement for the use of certain advertising initiatives developed and related
trade marks and service marks owned by Tandy.
CERTAIN BUSINESS RELATIONSHIPS
Mr. McKeough is a director of The Canadian Imperial Bank of Commerce. Until
December 30, 1997, The Canadian Imperial Bank of Commerce was a member of the
bank syndicate, as well as the agent bank for the syndicate, that provided a
credit facility in an aggregate principal amount of Cdn$60,000,000 to the
Company.
INDEPENDENT AUDITORS
PricewaterhouseCoopers LLP has served as independent auditors of the Company
since 1986 and is considered by management to be well qualified. The Board of
Directors, upon the recommendation of the Audit
16
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Committee, plans to reappoint the firm of PricewaterhouseCoopers LLP as
independent auditors for the Company's current fiscal year. Representatives of
PricewaterhouseCoopers 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.
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
Corporate Investor Communications, Inc. to assist with the solicitation of
proxies for an estimated fee of $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.
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 1999 Annual Meeting of Stockholders must be received by the Company no
later than May 28, 1999. 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 25, 1998
----------------
THE ANNUAL REPORT TO STOCKHOLDERS OF THE COMPANY FOR THE FISCAL YEAR ENDED
JUNE 30, 1998, 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.
----------------
17
<PAGE>
INTERTAN, INC.
c/o Boston EquiServe
P.O. Box 8040 THIS IS YOUR PROXY.
Boston, MA 02266-8040 YOUR VOTE IS IMPORTANT.
Regardless of whether you plan to attend the Annual Meeting of
Stockholders, you can be sure your shares are represented at the Annual
Meeting by promptly returning your proxy in the enclosed envelope.
Please mark
[X] votes as in
this example
This Proxy when executed will be voted in the manner directed herein. If no
direction is made this Proxy will be voted FOR the election of the Director
Nominees.
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1. Election of Directors.
Class III Nominees: William C. Bousquette, John A. Capstick and
Brian E. Levy
[ ] FOR all nominees [ ] WITHHOLD VOTE [ ] WITHHOLD VOTE
as to all nominees only as to:
_______________
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MARK HERE FOR ADDRESS CHANGE AND NOTE AT LEFT [ ]
IMPORTANT: Whether or not you expect to attend the
Annual Meeting in person, please date, sign and
return this proxy. Please sign EXACTLY as your
name appears hereon. Joint owners should EACH
sign. When signing as partner, corporate officer,
attorney, executor, administrator, trustee or
guardian, please give full title as such.
Signature: Date: Signature: Date:
--------------- ------- --------------- -----------
<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 Ron G. Stegall, Clark A. Johnson and W. Darcy
McKeough, and each or any of them, attorneys and proxies for and in the name 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 14, 1998 and which the undersigned is entitled to vote
on all matters which may come before the 1998 Annual Meeting of Stockholders of
InterTAN, Inc. to be held in Fort Worth, Texas on November 10, 1998 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 by a
reasonable time before the proxy solicitation was made, and are further
authorized to vote on other matters which may properly come before the 1998
Annual Meeting and any adjournments or postponements thereof. If no directions
are given, this Proxy will be voted "FOR" Item 1.
Please Sign, Date and Promptly Return This Proxy In the Enclosed Envelope.
The Proxies Cannot Vote Your Shares Unless You Sign on the Reverse Side and
Return This Card.
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