<PAGE> 1
PROXY STATEMENT PURSUANT TO SECTION 14(A) OF THE SECURITIES
EXCHANGE ACT OF 1934 (AMENDMENT NO. ___________)
Filed by the Registrant: /X/
Filed by a party other than the Registrant: / /
Check the appropriate box:
/ / Preliminary Proxy Statement / / Confidential for Use of the
/X/ Definitive Proxy Statement Commission Only (as permitted
/ / Definitive Additional Materials by Rule 14a-6(e)(2))
/ / Soliciting Material Pursuant to Rule 14a-11(c) or Rule 14a-12
Davox Corporation
------------------------------------------------------------------------
(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/ $125 per Exchange Act Rules 0-11(c)(1)(ii), 14a-6(i)(1), or 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 transactions applies:
- --------------------------------------------------------------------------------
(3) Per unit price or other underlying value of transaction computed
pursuant to Exchange Act Rule 0-11 (set forth the amount on which the filing fee
is calculated and state how it was determined):
- --------------------------------------------------------------------------------
(4) Proposed maximum aggregate value of transaction:
- --------------------------------------------------------------------------------
(5) Total fee paid:
- --------------------------------------------------------------------------------
/ / Fee paid previously with preliminary materials.
- --------------------------------------------------------------------------------
/ / Check box if any part of the fee is offset as provided by Exchange
Act Rule 0-11(a)(2) and identify the filing for which the offsetting fee was
paid previously. Identify the previous filing by registration statement number,
or the form or schedule and the date of its filing.
(1) Amount Previously Paid:
- --------------------------------------------------------------------------------
(2) Form, Schedule or Registration Statement No.:
- --------------------------------------------------------------------------------
(3) Filing Party:
- --------------------------------------------------------------------------------
(4) Date Filed:
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<PAGE> 2
DAVOX CORPORATION
6 TECHNOLOGY PARK DRIVE
WESTFORD, MASSACHUSETTS 01886
NOTICE OF ANNUAL MEETING
OF STOCKHOLDERS
APRIL 18, 1996
TO THE STOCKHOLDERS:
NOTICE IS HEREBY GIVEN that the Annual Meeting of Stockholders of Davox
Corporation, a Delaware corporation (the "Company"), will be held on Thursday,
April 18, 1996 at 10:00 a.m. local time at the offices of the Company, 6
Technology Park Drive, Westford, Massachusetts, for the following purposes:
1. To fix the number of directors constituting the Board of Directors
at four and to elect a Board of Directors for the ensuing year.
2. To consider and act on a proposal to amend the 1986 Stock Plan
("1986 Plan").
3. To ratify the selection of the firm of Arthur Andersen, LLP as
auditors for the fiscal year ending December 31, 1996.
4. To transact such other business as may properly come before the
meeting and any adjournments thereof.
Only stockholders of record at the close of business on March 8, 1996
are entitled to notice of and to vote at the meeting and any adjournment
thereof.
By Order of the Board of Directors
Timothy C. Maguire,
SECRETARY
Boston, Massachusetts
March 15, 1996
WHETHER OR NOT YOU EXPECT TO ATTEND THE ANNUAL MEETING, PLEASE
COMPLETE, DATE AND SIGN THE ENCLOSED PROXY CARD AND MAIL IT PROMPTLY IN THE
ENCLOSED ENVELOPE IN ORDER TO ASSURE REPRESENTATION OF YOUR SHARES.
<PAGE> 3
DAVOX CORPORATION
6 TECHNOLOGY PARK DRIVE
WESTFORD, MASSACHUSETTS 01886
-------------------------------
PROXY STATEMENT
-------------------------------
MARCH 15, 1996
Proxies in the form enclosed with this proxy statement are solicited by
the Board of Directors of Davox Corporation (the "Company" or "Davox") for use
at the Annual Meeting of Stockholders to be held on April 18, 1996 at 10:00 a.m.
local time at the offices of the Company, 6 Technology Park Drive, Westford,
Massachusetts 01886.
Only stockholders of record as of March 8, 1996 (the "Record Date")
will be entitled to vote at the meeting and any adjournments thereof. As of that
date, 6,931,687 shares of Common Stock, $.10 par value, of the Company were
issued and outstanding. Each share of Common Stock outstanding as of the Record
Date will be entitled to one vote and stockholders may vote in person or by
proxy. Execution of a proxy will not in any way affect a stockholder's right to
attend the meeting and vote in person. Any stockholder giving a proxy has the
right to revoke it by written notice to the Secretary of the Company at any time
before it is exercised or by delivering a later executed proxy to the Secretary
of the Company at any time before the original proxy is exercised.
An Annual Report to Stockholders, containing financial statements for
the fiscal year ended December 31, 1995, is being mailed together with this
proxy statement to all stockholders entitled to vote. This proxy statement and
the form of proxy were first mailed to stockholders on or about March 15, 1996.
The persons named as attorneys in the proxies are directors and/or
officers of the Company. All properly executed proxies returned in time to be
counted at the meeting will be voted as stated below under "Election of
Directors." Any stockholder giving a proxy has the right to withhold authority
to vote for any individual nominee to the Board of Directors by writing that
nominee's name in the space provided on the proxy. In addition to the election
of directors, the stockholders will consider and vote upon a proposal to approve
an amendment to the Company's 1986 Stock Plan (the "1986 Plan") and a proposal
to ratify the selection of auditors, as further described in this proxy
statement. Where a choice has been specified on the proxy with respect to the
foregoing matters, the shares represented by the proxy will be voted in
accordance with the specifications and will be voted FOR if no specification is
indicated.
The representation in person or by proxy of at least a majority of all
shares of Common Stock issued, outstanding and entitled to vote at the meeting
is necessary to constitute a quorum for the transaction of business. Votes
withheld from any nominee for election as director, as well as abstentions and
broker "non-votes" with respect to all other matters being submitted to
stockholders, are counted as present or represented for purposes of determining
the presence or absence of a quorum for the meeting. A "non-vote" occurs when a
nominee holding shares for a beneficial owner votes on one proposal, but does
not vote on another proposal because, in respect of such other proposal, the
nominee does not have discretionary voting power and has not received
instructions from the beneficial owner.
<PAGE> 4
The election of directors by the stockholders shall be determined by a
plurality of the votes cast by stockholders entitled to vote. Votes may be cast
in favor of or withheld from each nominee. On all other matters being submitted
to stockholders, an affirmative vote of a majority of the shares present in
person or by proxy and entitled to vote on each such matter is required for
approval. Abstentions and broker "non-votes" will have the practical effect of
voting against each such matter since they are included in the number of shares
present and voting on each such matter.
The Board of Directors of the Company knows of no other matters to be
presented at the meeting. If any other matter should be presented at the meeting
upon which a vote properly may be taken, shares represented by all proxies
received by the Board of Directors will be voted with respect thereto in
accordance with the judgment of the persons named as attorneys in the proxies.
MANAGEMENT AND PRINCIPAL STOCKHOLDERS
<TABLE>
The following table sets forth, as of March 8, 1996 (except as noted
below), certain information regarding the ownership of shares of the Company's
Common Stock by (i) each person who, to the knowledge of the Company, owned
beneficially more than 5% of the shares of Common Stock of the Company
outstanding at such date, (ii) each Director and nominee of the Company, (iii)
each Named Officer (as defined below) and (iv) all Directors, nominees and
Executive Officers as a group:
<CAPTION>
Name and Address of Amount and Nature of
Beneficial Owner Beneficial Ownership (1) Percent of Class
- ---------------- ------------------------ ----------------
<S> <C> <C>
Entities and individuals associated with 1,814,328 (2) 26.2%
Gilder, Gagnon, Howe & Co.
1775 Broadway
New York, NY 10019
Entities and individuals associated with 1,670,959 (3) 24.1%
MK Global Ventures
2471 East Bayshore Road, Suite 520
Palo Alto, CA 94303
Entities and individuals associated with 628,610 (4) 9.0%
Pioneer III, L.P. and Pioneer IV, L.P.
224 East 49th Street
New York, NY 10017
Alphonse M. Lucchese 194,284 (5) 2.7%
Michael D. Kaufman 1,670,959 (3) 24.1%
R. Scott Asen 628,610 (4) 9.0%
Walter J. Levison 10,000 (6) *
John E. Cambray 27,815 (7) *
John J. Connolly 32,435 (8) *
James F. Mitchell 87,074 (9) 1.2%
</TABLE>
2
<PAGE> 5
<TABLE>
<CAPTION>
<S> <C> <C>
Douglas W. Smith 38,922 (10) *
All Directors, Nominees and Executive 2,773,195 (11) 37.4%
Officers as a group (11 Persons)
<FN>
* Less than 1.0%
- ------------------------------
(1) Except as otherwise noted, each person or entity named in the table has
sole voting and investment power with respect to the shares. Includes all
shares which the named person has the right to acquire within 60 days
following March 8, 1996.
(2) Includes the following shares as to which Gilder, Gagnon, Howe & Co.
disclaims beneficial ownership: (i) 929,817 shares held in customer
accounts over which one or another of its partners or employees may have
discretion to purchase or dispose of but over which Gilder, Gagnon, Howe &
Co. does not have discretion; (ii) 868,161 shares held in accounts owned
by its partners and by its partners' families and controlled by its
partners; and (iii) 16,350 shares held in the account of its firm profit
sharing plan controlled by certain of its partners. Share ownership is as
of December 31, 1995.
(3) Includes 717,847 shares held by MK Global Ventures, 533,333 shares held by
MK GVD Fund and 248,880 shares held by MK GVS Fund, all of such shares as
to which Michael D. Kaufman, a Director of the Company, disclaims
beneficial ownership. Also includes 170,899 shares individually owned by
Mr. Kaufman. Excludes 15,000 shares subject to options held by Mr. Kaufman
which will not be exercisable within 60 days of March 8, 1996. Mr. Kaufman
is the sole general partner of MK Global Management, which is the sole
general partner of MK Global Ventures, which is the sole general partner
of MK GVS Fund. Mr. Kaufman is a general partner of MK GVD Management,
which is the sole general partner of MK GVD Fund.
(4) Includes 112,434 shares held by Pioneer III, L.P., 114,210 shares held by
Pioneer IV, L.P., 20,000 shares owned by Asen and Co. f/b/o SDFJ, Inc.,
4,000 shares owned by an individual to whom Mr. R. Scott Asen, a Director
of the Company, provides certain advisory services and 7,000 shares held
by the IRA of an individual to whom Mr. Asen provides certain advisory
services, all of such shares as to which Mr. Asen disclaims beneficial
ownership. Also includes 325,966 shares individually owned by Mr. Asen and
45,000 shares subject to options held by Mr. Asen that are exercisable
within 60 days of March 8, 1996. Excludes 5,000 shares subject to options
which will not be exercisable within 60 days of March 8, 1996. Mr. Asen
and James G. Niven are the two general partners of Pioneer III, L.P. and
Pioneer IV, L.P. They may therefore be deemed to be the beneficial owners
of shares held by such entities. No entity or individual associated with
Pioneer III, L.P. or Pioneer IV, L.P. beneficially owns in excess of 5% of
the shares of Common Stock of the Company outstanding on such date, except
for Mr. Asen who owns 5.3% including options exercisable within 60 days of
March 8, 1996.
(5) Includes 193,178 shares subject to options held by Mr. Lucchese exercisable
within 60 days following March 8, 1996. Also includes 1,106 shares held by
an immediate family member of Mr. Lucchese. Excludes 308,627 shares subject
to options held by Mr. Lucchese which will not be exercisable within 60
days of March 8, 1996.
(6) Includes 10,000 shares subject to options held by Mr. Levison which will
be exercisable within 60 days of March 8, 1996. Excludes 30,000 shares
subject to options granted to Mr. Levison which will not be exercisable
within 60 days of March 8, 1996.
(7) Includes 27,087 shares subject to options held by Mr. Cambray exercisable
within 60 days following March 8, 1996. Excludes 37,086 shares subject to
options held by Mr. Cambray which will not be exercisable within 60 days
of March 8, 1996.
</TABLE>
3
<PAGE> 6
(8) Includes 32,435 shares subject to options held by Mr. Connolly exercisable
within 60 days of March 8, 1996. Excludes 54,056 shares subject to options
held by Mr. Connolly which will not be exercisable within 60 days of March
8, 1996.
(9) Includes 66,875 shares subject to options held by Mr. Mitchell exercisable
within 60 days following March 8, 1996. Also includes 143 shares held by
an immediate family member of Mr. Mitchell, as to which Mr. Mitchell
disclaims beneficial ownership. Excludes 89,375 shares subject to options
held by Mr. Mitchell which will not be exercisable within 60 days of March
8, 1996.
(10) Includes 38,922 shares subject to options held by Mr. Smith exercisable
within 60 days following March 8, 1996. Excludes 64,867 shares subject to
options held by Mr. Smith which will not be exercisable within 60 days of
March 8, 1996.
(11) Includes 480,023 shares subject to options held by officers and Directors
which are exercisable within 60 days of March 8, 1996. Also includes
shares held by entities associated with Messrs. Asen and Kaufman as
described in footnotes 3 and 4. Excludes 681,510 shares subject to options
held by officers and Directors which will not be exercisable within 60
days of March 8, 1996.
PROPOSAL I
ELECTION OF DIRECTORS
The directors of the Company are elected annually and hold office until
the next annual meeting of stockholders and until their successors shall have
been elected and shall have qualified. Shares represented by all proxies
received by the Board of Directors and not so marked as to withhold authority to
vote for any individual director or for all directors will be voted (unless one
or more nominees are unable to serve) for fixing the number of directors for the
ensuing year at four and for the election of the nominees named below. The Board
of Directors knows of no reason why any such nominee should be unable or
unwilling to serve, but if such should be the case, proxies will be voted for
the election of some other person or for fixing the number of directors at a
lesser number.
BOARD OF DIRECTORS MEETINGS AND COMMITTEES
The Board of Directors met four times, and took actions by written
consent once, during the fiscal year ended December 31, 1995. The Audit
Committee of the Board of Directors, of which R. Scott Asen, Michael D. Kaufman
and Walter J. Levison are members, oversees the accounting and tax functions of
the Company, including matters relating to the appointment and activities of the
Company's independent auditors. The Audit Committee met once during the year
ended December 31, 1995. The Compensation Committee of the Board of Directors,
of which R. Scott Asen, Michael D. Kaufman and Walter J. Levison are members,
reviews and makes recommendations concerning executive compensation. The
Compensation Committee took action by written consent four times during the year
ended December 31, 1995. The Board of Directors does not currently have a
standing nominating committee. Each of the directors attended at least 75% of
the aggregate of the total number of meetings of the Board of Directors and of
all Committees on which he serves.
4
<PAGE> 7
OCCUPATIONS OF DIRECTORS
<TABLE>
The following table sets forth the nominees for Director, their ages as
of the Record Date and their present positions with the Company.
<CAPTION>
Name Age Position
- ---- --- --------
<S> <C> <C>
Alphonse M. Lucchese 60 Chairman of the Board of Directors,
President and Chief Executive Officer
Michael D. Kaufman (1)(2) 54 Director
Walter J. Levison (1)(2) 77 Director
R. Scott Asen (1)(2) 51 Director
<FN>
- -------------------
(1) Member of Compensation Committee
(2) Member of Audit Committee
</TABLE>
The By-Laws of the Company provide that the Board of Directors shall be
elected annually. Officers are elected by, and serve at the discretion of, the
Board of Directors.
Mr. Lucchese has served as President and Chief Executive Officer of the
Company since July 1, 1994 and has served as a Director and Chairman of the
Board of the Directors since August 9, 1994. Prior to his employment with the
Company, Mr. Lucchese was President and Chief Executive Officer of Iris
Graphics, Inc., a computer graphics hardware company, from 1987 until 1994. Mr.
Lucchese is currently a director of Computer Telephone Corporation.
Mr. Kaufman has been a Director of the Company since 1982. From 1981
to 1987, he was employed by Oak Management Corporation, which provides
management and advisory services to Oak Investment Partners II, L.P. ("Oak II")
and Oak Investment Partners III, L.P. ("Oak III"). From June 1981 to September
1986, Mr. Kaufman served as a general partner of Oak II and Oak III. Mr.
Kaufman is currently serving as the managing general partner of MK Global
Ventures, an investment company, which is a stockholder of the Company. Mr.
Kaufman currently serves as a director of Document Technologies, Inc., DISC,
Inc., Proxim, Inc., Hypermedia Communications, Inc. and Asante Technologies,
Inc.
Mr. Levison has been a Director of the Company since June 1994. Mr.
Levison has been a general partner of the Aegis Venture Funds, a group of
limited partnerships, since 1982. Mr. Levison formerly served as a director of
Chipcom Corporation and Scitex Corporation, and currently serves as a director
of D.M. Management Company.
Mr. Asen has been a Director of the Company since April 1992. Mr. Asen
has been President of Asen & Co., Inc., an investment management firm, since
1983. He is also a general partner of Pioneer Associates, L.P., Pioneer III,
L.P. and Pioneer IV, L.P., each a venture capital fund. Mr. Asen currently
serves as a director of Biomagnetic Technologies, Inc.
5
<PAGE> 8
DIRECTOR COMPENSATION
All Non-employee Directors are compensated at a rate of $1,000 per
meeting attended, plus normal travel expenses incurred in connection with
attendance at such meetings. All Non-employee Directors are also compensated on
an annual basis at the rate of $8,000. Non-employee Directors are also entitled
to receive stock options pursuant to the 1988 Non-employee Director Stock Option
Plan (the "1988 Plan").
COMPENSATION AND OTHER INFORMATION
CONCERNING DIRECTORS AND OFFICERS
EXECUTIVE COMPENSATION
<TABLE>
The following table shows compensation information with respect to
services rendered to the Company in all capacities during the years ended
December 31, 1995, 1994 and 1993 for (i) the individual who served as the Chief
Executive Officer as of December 31, 1995 and (ii) the other four most highly
compensated executive officers of the Company (collectively with the Chief
Executive Officer, the "Named Officers"):
SUMMARY COMPENSATION TABLE
<CAPTION>
Long Term
Annual Compensation (1) Compensation (2)
----------------------- ------------------
Awards
------------------
Securities All Other
Name and Underlying Compensation
Principal Position Year Salary($) Bonus($)(3) Options/SARs (#) ($)
- ---------------------------- ---- --------- ------------ ------------------ ------------
<S> <C> <C> <C> <C> <C>
Alphonse M. Lucchese (4).... 1995 265,008 224,190 0 1,515 (9)
Chairman, President and 1994 131,734 202,500 (8) 501,805 1,343 (9)
Chief Executive Officer.. 1993 0 0 0 0
James F. Mitchell........... 1995 159,000 56,048 0 0
Senior Vice President 1994 149,133 22,000 150,000 0
and Chief Technical 1993 140,016 0 0 45,407 (10)
Officer
Douglas W. Smith (5)........ 1995 130,672 92,122 0 0
Vice President - Sales 1994 42,000 25,200 103,789 0
and Marketing 1993 0 0 0 0
John J. Connolly (6)........ 1995 126,250 44,502 0 0
Vice President - 1994 50,000 12,000 86,491 0
Finance and Chief 1993 0 0 0 0
Financial Officer
John E. Cambray (7)......... 1995 122,000 34,404 0 0
Vice President - 1994 117,121 0 50,000 0
Development 1993 106,988 0 10,000 0
<FN>
- --------------------
(1) Excludes perquisites and other personal benefits, the aggregate annual
amount of which for each officer was less than the lesser of $50,000 or
10% of the total salary and bonus reported.
(2) The Company did not grant any restricted stock awards or stock
appreciation rights ("SARs") or make any long term incentive plan payouts
during the fiscal years ended December 31, 1995, 1994 and 1993.
</TABLE>
6
<PAGE> 9
(3) Indicates bonus payments earned by the Named Officers in the year
indicated, for services rendered in such year, some of which were paid in
the next subsequent year.
(4) Mr. Lucchese was elected President and Chief Executive Officer effective
July 1, 1994. Mr. Lucchese was elected Chairman of the Board of
Directors on August 9, 1994.
(5) Mr. Smith was elected Vice President - Sales and Marketing effective
September 1, 1994.
(6) Mr. Connolly was elected Vice President - Finance and Chief Financial
Officer effective August 1, 1994.
(7) Mr. Cambray was elected Vice President - Development in November 1993.
(8) Includes: (i) a signing bonus of $112,500; and (ii) a performance based
bonus of $90,000.
(9) Consists of life insurance premiums paid by the Company.
(10) Consists of forgiveness of obligations under advances made in a previous
year.
OPTIONS/SAR GRANTS IN LAST FISCAL YEAR
The Company did not grant any stock options or stock appreciation
rights to any of the Named Officers during the fiscal year ended December 31,
1995.
OPTION EXERCISES AND YEAR-END VALUES
<TABLE>
Shown below is information with respect to options to purchase the
Company's Common Stock granted to the Named Officers under the Company's stock
option plans, including the number of unexercised options outstanding at
December 31, 1995 and the value of such unexercised in-the money options at
December 31, 1995.
OPTION VALUES AT DECEMBER 31, 1995
<CAPTION>
Number of Unexercised Value of Unexercised
Shares Options at In-the-money
Acquired December 31, 1995 Options at
on Value (#)(1) December 31, 1995 ($)(2)
Name Exercise(#) Realized($) Exercisable Unexercisable Exercisable Unexercisable
- ---- ----------- ----------- ----------- ------------- ----------- -------------
<S> <C> <C> <C> <C> <C> <C>
Alphonse M. Lucchese 0 0 180,452 321,353 1,679,011.50 2,974,507.80
James F. Mitchell 40,000 238,750.00 66,750 110,000 527,906.25 867,500.00
John E. Cambray 16,519 114,219.81 22,500 41,673 156,835.93 293,005.24
John J. Connolly 0 0 21,623 64,868 199,842.62 599,519.50
Douglas W. Smith 0 0 25,948 77,841 243,262.50 729,759.37
<FN>
- -----------------------
(1) Options granted to the Named Officers become fully vested immediately
prior to the merger, consolidation, liquidation or sale of substantially
all of the assets of the Company and terminate immediately after the
effective date of such merger, consolidation, liquidation or sale.
(2) Value is based on the difference between the option exercise price and
the fair market value of the Company's Common Stock on December 31, 1995
($11.875 per share, the last reported sales price of the Company's Common
Stock on the Nasdaq National Market System on December 29, 1995)
multiplied by the number of shares underlying the option.
</TABLE>
7
<PAGE> 10
COMPENSATION COMMITTEE REPORT ON EXECUTIVE COMPENSATION
The Company's executive compensation program is administered by the
three member Compensation Committee of the Board of Directors (the "Compensation
Committee"). The three members of the Compensation Committee are non-employee
Directors. Pursuant to the authority delegated by the Board of Directors, the
Compensation Committee establishes each year the compensation of the Chief
Executive Officer, and together with the Chief Executive Officer, establishes
the compensation of the other executive officers of the Company.
Under the supervision of the Compensation Committee, the Company
developed and implemented the 1995 Management Compensation Plan for the Chief
Executive Officer and certain of the executive officers of the Company (the
"Plan"). The Plan is designed to reward executive officers whose performance
yields improvement in corporate operating results, market share and shareholder
value. The ultimate goal of the Plan is to align the interests of management
with those of the stockholders. Compensation under the Plan is comprised of cash
compensation in the form of annual base salary, incentive compensation in the
form of performance-based cash bonuses, and long-term incentive compensation in
the form of stock options.
In setting cash compensation levels for executive officers (including
the Chief Executive Officer), the Compensation Committee takes into account such
factors as: (i) the Company's past financial performance and future
expectations, (ii) the general and industry-specific business environment, (iii)
annual performance goals and (iv) corporate and individual performance. The base
salaries are established at levels comparable to the amounts paid to senior
executives with comparable qualifications, experience and responsibilities at
other companies located in the northeastern United States of similar size and
engaged in a similar business to that of the Company.
Incentive compensation in the form of performance-based bonuses for the
Chief Executive Officer and the Company's other executive officers is based upon
management's success in meeting the Company's financial and strategic goals.
Target levels of revenue and net income were set at the time the Plan was
established, and bonuses were allocated to the Chief Executive Officer and
certain other executive officers contingent upon the achievement of the target
levels. In addition, based on the Company's exceeding both target revenues and
target net income, the Compensation Committee determined that it was appropriate
to award discretionary bonuses to certain executive officers in the same
proportion as bonuses were allocated under the plan.
Incentive compensation in the form of stock options is designed to
provide long term incentives to executive officers and other employees, to
encourage the executive officers and other employees to remain with the Company
and to enable optionees to develop and maintain a significant, long-term stock
ownership position in the Company's Common Stock. The Compensation Committee
grants stock options to the Company's executive officers in consideration of the
strategic goals and direction of the Company. The 1986 Plan, administered by the
Board of Directors, is the vehicle for the granting of stock options.
The 1986 Plan permits the Board of Directors to grant stock options to
eligible employees, including executive officers. In 1995, the Board of
Directors granted stock options to various employees and granted 10,000 options
to Philip Tolman, Treasurer, but did not make any grants to any of the Named
Officers. Options become exercisable in increments over time, contingent upon
continued employment. The value realizable from exercisable options is dependent
upon the extent to which the Company's performance is reflected in the market
price of the Company's Common Stock at any particular point in time.
8
<PAGE> 11
The Company also maintains the 1991 Employee Stock Purchase Plan (the
"Stock Purchase Plan") in which all executives may participate on the same terms
as non-executive employees who meet applicable eligibility criteria. The Stock
Purchase Plan provides for the sale of shares of the Company's Common Stock to
full-time employees of the Company pursuant to nontransferable options at less
than fair market value. Employees who own 5% or more of the Common Stock of the
Company and non-employee directors are not eligible to participate in the Stock
Purchase Plan. As of the date hereof, 24,009 shares of Common Stock have been
issued under the Stock Purchase Plan.
The Revenue Reconciliation Act of 1993 generally limits the Company's
ability to deduct for federal income tax purposes compensation in excess of
$1,000,000 per executive for the Chief Executive Officer and four additional
executive officers who are highest paid and employed at year end, except to the
extent such excess constitutes performance-based compensation. The policy of the
Board of Directors and the Compensation Committee is to qualify future
compensation arrangements to ensure deductibility, except in those cases where
the Board of Directors determines it is advantageous to use an alternative
approach.
The Compensation Committee is satisfied that the executive officers of
the Company are dedicated to achieving significant improvements in the long-term
financial performance of the Company and that the compensation policies and
programs implemented and administered have contributed and will continue to
contribute towards achieving this goal.
This report has been submitted by the members of the Compensation Committee:
R. Scott Asen
Michael D. Kaufman
Walter J. Levison
PERFORMANCE GRAPH
The following graph compares the yearly percentage change in the
cumulative total stockholder return on the Company's Common Stock for the five
fiscal years ended December 31, 1995, with the cumulative total return on (i)
the Nasdaq Market Value Index, (ii) a broad peer group index prepared by Media
General consisting of Nasdaq listed companies grouped under SIC Code 366,
Communications Equipment (the "Discontinued Peer Group") and (iii) a broad peer
group index prepared by Media General consisting of Nasdaq listed companies
grouped under SIC Code 7373, Computer Integrated Systems Design (the "Current
Peer Group"). There has been a gradual change in the business activity of the
Company and as a result, (i) SIC Code 366, the Company's original
classification, no longer accurately describes the business of the Company, and
(ii) a comparison of the Company's performance with that of the Discontinued
Peer Group is not meaningful. The Company has determined that SIC Code 7373 is
the most applicable classification of the Company's current business, and has
decided to include the Current Peer Group for comparison purposes in this and
future proxy statements. The comparison assumes $100 was invested on December
31, 1990 in the Company's Common Stock and in each of the foregoing indices and
assumes reinvestment of dividends, if any.
9
<PAGE> 12
<TABLE>
COMPARISON OF FIVE YEAR CUMULATIVE TOTAL RETURN AMONG DAVOX CORPORATION,
NASDAQ MARKET INDEX, CURRENT PEER GROUP INDEX AND DISCONTINUED PEER GROUP INDEX
<CAPTION>
Fiscal Year Ending
<S> <C> <C> <C> <C> <C> <C>
Company 1990 1991 1992 1993 1994 1995
Davox Corporation 100 97.30 97.30 216.22 232.43 513.51
Nasdaq Market Index 100 128.38 129.64 155.50 163.26 211.77
Current Peer Group 100 154.86 169.63 188.84 180.66 291.33
Discontinued Peer Group 100 117.83 141.32 202.01 228.85 255.45
</TABLE>
SEVERANCE ARRANGEMENTS
Pursuant to the terms of Mr. Lucchese's 1994 Executive Compensation
Plan, if Mr. Lucchese is terminated without cause he will receive 12 monthly
severance payments totaling the greater of (i) Mr. Lucchese's annual base salary
in the year of termination; or (ii) Mr. Lucchese's prior year base salary plus
any bonus earned in the prior year.
Pursuant to the terms of Mr. Mitchell's 1994 Executive Compensation
Plan, the Company shall continue Mr. Mitchell's base salary and medical benefits
for a period of 12 months if Mr. Mitchell is terminated due to an economic
layoff, a downsizing that eliminates his position or a reorganization that would
require Mr. Mitchell to relocate.
Pursuant to the terms of the 1994 Executive Compensation Plan for John
J. Connolly, Vice President Finance and Chief Financial Officer, the Company
shall continue Mr. Connolly's base salary and medical benefits for a period of 6
months if Mr. Connolly is terminated due to an economic layoff, a downsizing
that eliminates his position or a reorganization of the finance department that
would require Mr. Connolly to relocate.
Pursuant to the terms of the Severance Agreement with Edward D. Kay,
Vice President Customer Service, the Company shall continue Mr. Kay's base
salary and medical benefits for a period of 6 months if Mr. Kay is terminated
due to an economic layoff, a downsizing that eliminates his position or a
reorganization of the customer service department that would require Mr. Kay to
relocate.
Pursuant to the terms of the 1994 Executive Compensation Plan for
Douglas W. Smith, Vice President Sales and Marketing, the Company shall continue
Mr. Smith's base salary and medical benefits for a period of 6 months if Mr.
Smith is terminated due to an economic layoff, a downsizing that eliminates his
position or a reorganization of the sales department that would require Mr.
Smith to relocate.
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<PAGE> 13
CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS
The Company has adopted a policy that all transactions between the
Company and its officers, directors, principal stockholders and their affiliates
be on terms no less favorable to the Company than could be obtained from
unrelated third parties and that any loans by the Company to officers,
directors, principal stockholders and their affiliates must be approved by a
majority of the outside independent and disinterested directors. Mr. Paul
Lucchese, Esq., son of Mr. Alphonse M. Lucchese, is a member of the Company's
legal staff and received $65,554 in compensation during the fiscal year ended
December 31, 1995.
SECTION 16 REPORTING
Section 16(a) of the Exchange Act requires the Company's directors,
executive officers and holders of more than 10% of the Company's Common Stock
(collectively, "Reporting Persons") to file with the Commission initial reports
of ownership and reports of changes in ownership of Common Stock of the Company.
Such persons are required by regulations of the Commission to furnish the
Company with copies of all such filings. Based solely on its review of the
copies of such filings received by it with respect to 1995, the Company believes
that all Reporting Persons complied with all Section 16(a) filing requirements
in 1995 with the following exception: Edward D. Kay filed one late Form 3
reporting initial ownership of securities.
PROPOSAL II
PROPOSAL TO AMEND THE 1986 PLAN
The 1986 Plan was adopted by the Company's Board of Directors and
approved by the Company's stockholders in September 1986. A maximum of 1,114,286
shares of Common Stock were originally reserved for issuance under the 1986 Plan
upon the exercise of options or in connection with awards of stock of the
Company ("Awards") or the opportunity to make direct stock purchases of shares
of the Company ("Purchases"). In 1994, the Company's stockholders approved
amendments to the 1986 Plan (i) to increase the number of shares authorized for
issuance pursuant to the 1986 Plan by 1,000,000 to 2,114,286 and (ii) to qualify
options granted under the 1986 Plan as performance-based compensation under
Section 162(m) of the Internal Revenue Code of 1986, as amended (the "Code") and
thereby preserve certain tax benefits for the Company. This year, the Board of
Directors has approved and recommended to the stockholders that they approve an
amendment to increase the number of shares authorized for issuance pursuant to
the 1986 Plan by 350,000 shares to 2,464,286 shares.
The Company's management relies on stock options as essential parts of
the compensation packages necessary for the Company to attract and retain
experienced officers and employees. The Board of Directors of the Company
believes that the proposed increase in the number of shares available under the
1986 Plan is essential to permit the Company's management to continue to provide
long-term, equity-based incentives to present and future key employees.
The Company has not at the time of this Proxy Statement determined who
will receive options to purchase the remaining shares of Common Stock that will
be authorized for issuance under the Plan, if the proposed amendment is
approved.
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<PAGE> 14
Description of the 1986 Plan
- ----------------------------
The purpose of the 1986 Plan is to provide incentives to officers and
other employees of the Company by providing them with opportunities to purchase
stock of the Company.
Under the 1986 Plan, employees and officers of the Company may be
awarded incentive stock options ("ISO" or "ISOs"), as defined in Section 422(b)
of the Code, and directors, officers, employees and consultants of the Company
may be granted (i) options which do not qualify as ISOs ("Non-Qualified Option"
or "Non-Qualified Options"), (ii) Awards, and (iii) Purchases. ISOs,
Non-Qualified Options, Awards and Purchases are sometimes collectively referred
to as "Stock Rights" and ISOs and Non-Qualified Options are sometimes
collectively referred to as "Options."
The 1986 Plan is administered by the Compensation Committee (the
"Committee") of the Board of Directors of the Company. As amended, the 1986 Plan
requires that it be administered by a Compensation Committee comprised of, to
the extent required by applicable regulations under Section 162(m) of the Code,
two or more outside directors, as defined in applicable regulations thereunder.
The Compensation Committee is currently comprised of three outside directors,
Michael D. Kaufman, R. Scott Asen and Walter J. Levison. Subject to the terms of
the 1986 Plan, the Committee has the authority to determine the persons to whom
Stock Rights are granted, the number of shares covered by each Stock Right, the
exercise price per share and other terms and provisions governing the Stock
Rights, including restrictions, if any, applicable to the shares of Common Stock
issuable upon exercise of Stock Rights.
Stock Rights may be granted under the 1986 Plan at any time prior to
September 18, 1996. The exercise price per share of Non-Qualified Options
granted, and the purchase price per share of stock granted in any Award or
authorized as a Purchase, under the 1986 Plan cannot be less than the lesser of
(i) the book value per share of Common Stock as of the end of the fiscal year of
the Company immediately preceding the date of such grant, or (ii) 50 percent of
the fair market value per share of Common Stock on the date of such grant. The
exercise price per share of ISOs cannot be less than the fair market value of
the Common Stock on the date of grant (or, in the case of ISOs granted to
employees holding more than 10% of the voting stock of the Company, 110% of the
fair market value of the Common Stock on the date of grant). The 1986 Plan
provides that each option shall expire on the date specified by the Committee,
but not more than ten years from its date of grant in the case of ISOs, and five
years in the case of ISOs granted to an employee or officer holding more than
ten percent of the voting stock of the Company.
Each Option granted under the 1986 Plan may either be fully exercisable
at the time of grant or may become exercisable in such installments as the
Committee may specify. Each Option may be exercised from time to time, in whole
or in part, up to the total number of shares with respect to which it is then
exercisable. The Committee has the right to accelerate the date of exercise of
any installment of any option (subject to the $100,000 per year limitation on
the fair market value of stock subject to ISOs granted to any employee which
first become exercisable in any calendar year).
Payment of the exercise price of an option granted under the 1986 Plan
may be made in cash or by check or, if authorized by the Committee in its
discretion in writing at the time of grant, in full or in part by a personal
recourse, interest bearing note, or by tendering shares of Common Stock of the
Company having fair market value equal as of the date of the exercise to the
cash exercise price of the Option.
12
<PAGE> 15
The 1986 Plan limits to 500,000 shares the number of shares of Common
Stock that any employee may acquire under the 1986 Plan in any one calendar
year.
The 1986 Plan restricts the Company's ability to grant discount options
(options with an exercise price below the fair market value on the date of
grant) unless either certain performance-based compensation requirements are
satisfied (such as objective performance goals are properly established by the
Compensation Committee and approved by the stockholders) or the Committee with
respect to a particular grant determines that such grant will not comply with
the requirements for performance-based compensation.
Only the optionee may exercise an option; no assignments or transfers
of options are permitted except by will or by the laws of descent and
distribution.
If an ISO optionee ceases to be employed by the Company other than by
reason of death or retirement, no further installments of his or her ISOs will
become exercisable, and vested ISOs shall terminate after the passage of 30 days
from the date of termination of employment (but no later than their specified
expiration dates), except to the extent that such ISOs shall have been converted
into Non-Qualified Options. If an ISO optionee retires, no further ISOs will
become exercisable, and the ISOs shall terminate after the passage of 90 days
from the date of retirement (but no later than their specified expiration
dates), except to the extent that such ISOs shall have been converted into
Non-Qualified Options. If an optionee dies, any ISO held by the optionee may be
exercised, to the extent exercisable on the date of disability or death, by the
optionee or the optionee's estate, personal representative or beneficiary, at
any time within 180 days from the date of the optionee's disability or death
(but not later than the specified expiration date of the ISO). Non-Qualified
Options are subject to such termination and cancellation provisions as may be
determined by the Committee.
Option holders are protected against dilution in the event of a stock
dividend, recapitalization, stock split, merger or similar transaction. The
Board of Directors may from time to time adopt amendments to the 1986 Plan,
certain of which are subject to stockholder approval, and may terminate the 1986
Plan, at any time (although such action shall not affect options previously
granted). Any shares subject to an option granted under the 1986 Plan, which for
any reason expire or terminate unexercised, may again be available for future
option grants. Unless terminated sooner, the 1986 Plan will terminate on
September 17, 1996.
Federal Tax Considerations
- --------------------------
The following general rules are applicable under current federal income
tax law to ISOs under the 1986 Plan:
1. In general, no taxable income results to the optionee upon the grant
of an ISO or upon the issuance of shares to him or her upon the exercise of the
ISO, and no federal income tax deduction is allowed to the Company upon either
grant or exercise of an ISO.
2. If shares acquired upon exercise of an ISO are not disposed of
within (i) two years following the date the option was granted or (ii) one year
following the date the shares are issued to the optionee pursuant to the ISO
exercise (the "Holding Periods"), the difference between the amount realized on
any subsequent disposition of the shares and the exercise price will generally
be treated as capital gain or loss to the optionee.
13
<PAGE> 16
3. If shares acquired upon exercise of an ISO are disposed of before
the expiration of one or both of the requisite Holding Periods (a "Disqualifying
Disposition"), then in most cases the lesser of (i) any excess of the fair
market value of the shares at the time of exercise of the ISO over the exercise
price or (ii) the actual gain on disposition will be treated as compensation to
the optionee and will be taxed as ordinary income in the year of such
disposition.
4. In any year that an optionee recognizes compensation income on a
Disqualifying Disposition of stock acquired by exercising an ISO, the Company
generally should be entitled to a corresponding deduction for federal income tax
purposes.
5. Any excess of the amount realized by the optionee as the result of a
Disqualifying Disposition over the sum of (i) the exercise price and (ii) the
amount of ordinary income recognized under the above rules will be treated as
capital gain.
6. Capital gain or loss recognized on a disposition of shares will be
long-term capital gain or loss if the optionee's holding period for the shares
exceeds one year.
7. An optionee may be entitled to exercise an ISO by delivering shares
of the Company's Common Stock to the Company in payment of the exercise price,
if the optionee's ISO agreement so provides. If an optionee exercises an ISO in
such fashion, special rules will apply.
8. In addition to the tax consequences described above, the exercise of
ISOs may result in a further "minimum tax" under the Code. The Code provides
that an "alternative minimum tax" (at a maximum rate of 28%) will be applied
against a taxable base which is equal to "alternative minimum taxable income,"
reduced by a statutory exemption. In general, the amount by which the value of
the Common Stock received upon exercise of the ISO exceeds the exercise price is
included in the optionee's alternative minimum taxable income. A taxpayer is
required to pay the higher of his regular tax liability or the alternative
minimum tax. A taxpayer who pays alternative minimum tax attributable to the
exercise of an ISO may be entitled to a tax credit against his or her regular
tax liability in later years.
The following general rules are applicable under current federal income
tax law to Non-Qualified Options under the 1986 Plan:
1. The optionee generally does not realize any taxable income upon the
grant of a Non-Qualified Option, and the Company is not allowed a federal income
tax deduction by reason of such grant.
2. The optionee generally will recognize ordinary compensation income
at the time of exercise of the Non-Qualified Option in an amount equal to the
excess, if any, of the fair market value of the shares on the date of exercise
over the exercise price. The Company may be required to withhold income tax on
this amount.
3. When the optionee sells the shares acquired through the exercise of
a Non-Qualified Option, he or she generally will recognize a capital gain or
loss in an amount equal to the difference between the amount realized upon the
sale of the shares and his or her basis in the stock (generally, the exercise
price plus the amount taxed to the optionee as compensation income). If the
optionee's holding period for the shares exceeds one year, such gain or loss
will be a long-term capital gain or loss.
14
<PAGE> 17
4. The Company generally should be entitled to a federal income tax
deduction when compensation income is recognized by the optionee.
5. An optionee may be entitled to exercise a Non-Qualified Option by
delivering shares of the Company's Common Stock to the Company in payment of the
exercise price. If an optionee exercises a Non-Qualified Option in such fashion,
special rules will apply.
Under current federal income tax law, persons receiving Common Stock
pursuant to an award of stock or a grant of an opportunity to purchase stock
will generally recognize ordinary compensation income equal to the fair market
value of the shares received, reduced by any purchase price paid. The Company
should generally be entitled to a corresponding federal income tax deduction.
When such Common Stock is sold, the seller generally will recognize capital gain
or loss. Special rules apply if the stock acquired is subject to vesting, or is
subject to certain restrictions on resale under federal securities laws
applicable to directors, officers or 10% stockholders.
This amendment requires approval by an affirmative vote of the holders
of a majority of the Company's stock present, or represented, and voting at the
Annual Meeting. See "Voting Procedures."
The Board of Directors recommends a vote FOR Proposal II to amend the
Company's 1986 Plan to increase to 2,464,286 the number of shares authorized for
issuance thereunder.
PROPOSAL III
RATIFICATION OF SELECTION OF AUDITORS
The Board of Directors has selected the firm of Arthur Andersen, LLP
independent certified public accountants, to serve as auditors for the fiscal
year ending December 31, 1996. Arthur Andersen, LLP has served as the Company's
auditors since fiscal year ended December 31, 1983. It is expected that a member
of the firm will be present at the meeting with the opportunity to make a
statement if so desired and will be available to respond to appropriate
questions. The Board of Directors recommends a vote FOR the ratification of this
selection.
STOCKHOLDER PROPOSALS
Proposals of stockholders intended for inclusion in the proxy statement
to be furnished to all stockholders entitled to vote at the next annual meeting
of stockholders of the Company must be received at the Company's principal
executive offices not later than November 14, 1996. In order to curtail
controversy as to the date on which a proposal was received by the Company, it
is suggested that proponents submit their proposals by Certified Mail, Return
Receipt Requested.
EXPENSES AND SOLICITATION
The cost of solicitation of proxies will be borne by the Company, and
in addition to soliciting stockholders by mail through its regular employees,
the Company may request banks, brokers and other custodians, nominees and
fiduciaries to solicit their customers who have stock of the Company registered
in the names of a nominee and, if so, will reimburse such banks, brokers and
other custodians, nominees and fiduciaries for their reasonable out-of-pocket
costs. Solicitation by officers and employees of the Company may also be made of
some stockholders in person or by mail, telephone or telegraph following the
original solicitation.
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<PAGE> 18
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DAVOX CORPORATION
PROXY SOLICITATION ON BEHALF OF THE BOARD OF DIRECTORS
The undersigned hereby appoints Alphonse M. Lucchese and James F.
Mitchell and each or either of them, proxies with full power of substitution to
vote all shares of stock of Davox Corporation (the "Company") which the
undersigned is entitled to vote at the Annual Meeting of Stockholders of
the Company to be held on Thursday, April 18, 1996, at 10:00 a.m. at the offices
of the Company, 6 Technology Park Drive, Westford, Massachusetts, and at any
adjournment thereof, upon matters set forth in the Notice of Annual Meeting and
Proxy Statement dated March 15, 1996, a copy of which has been received by the
undersigned. THIS PROXY WHEN PROPERLY EXECUTED WILL BE VOTED IN ACCORDANCE
WITH YOUR INDICATED DIRECTIONS. IF NO DIRECTION IS MADE, THIS PROXY WILL BE
VOTED FOR THE ELECTION OF DIRECTORS AND FOR PROPOSALS 2 AND 3.
-----------
(TO BE SIGNED ON REVERSE SIDE) SEE REVERSE
SIDE
-----------
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
/X/ PLEASE MARK YOUR
VOTES AS IN THIS
EXAMPLE.
FOR WITHHELD Nominees: A.M. Lucchese
1. To fix the num- / / / / M.D. Kaufman
ber of directors W.J. Levison
constituting the R.S. Asen
Board of Directors
at four and to elect a Board of Directors for the ensuing year.
INSTRUCTIONS: To withhold for a specific nominee, write
that nominee's name on the space provided.
- -------------------------------------------------------
FOR AGAINST ABSTAIN
2. Approval of proposal to increase the / / / / / /
number of shares available for issuance
under the Company's 1986 Stock Plan.
3. To ratify the selection of the firm of / / / / / /
Arthur Andersen LLP as auditors for the
Company for the fiscal year ending
December 31, 1996
SIGNATURE(S) Dated: 1996
------------------- ------------------------- -------------
SIGNATURE IF HELD JOINTLY
Note: Please sign exactly as your name appears hereon. Joint owners should each
sign. When signing as attorney, executor, administrator, trustee or guardian,
please give full title as such.
- --------------------------------------------------------------------------------
