<PAGE> 1
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:
<TABLE>
<S> <C>
/ / Preliminary Proxy Statement / / Confidential, for Use of the Commission
Only (as permitted by Rule 14a-6(e)(2))
/X/ Definitive Proxy Statement
/ / Definitive Additional Materials
/ / Soliciting Material Pursuant to sec.240.14a-11(c) or sec.240.14a-12
</TABLE>
SHARPER IMAGE 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), or 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 transaction applies:
--------------------------------------------------------------------
(3) Per unit price or other underlying value of transaction computed
pursuant to Exchange Act Rule 0-11 (Set forth the amount on which the
filing fee is calculated and state how it was determined):
--------------------------------------------------------------------
(4) Proposed maximum aggregate value of transaction:
--------------------------------------------------------------------
(5) Total fee paid:
--------------------------------------------------------------------
/ / Fee paid previously with preliminary materials.
/ / Check box if any part of the fee is offset as provided by Exchange Act Rule
0-11(a)(2) and identify the filing for which the offsetting fee was paid
previously. Identify the previous filing by registration statement number,
or the Form or Schedule and the date of its filing.
(1) Amount Previously Paid:
--------------------------------------------------------------------
(2) Form, Schedule or Registration Statement No.:
--------------------------------------------------------------------
(3) Filing Party:
--------------------------------------------------------------------
(4) Date Filed:
--------------------------------------------------------------------
<PAGE> 2
THE SHARPER IMAGE(R)
April 30, 1996
TO THE STOCKHOLDERS OF
SHARPER IMAGE CORPORATION:
You are cordially invited to attend the Annual Meeting of Stockholders of
Sharper Image Corporation (the "Company") on June 10, 1996 at 2:00 p.m., which
will be held at the World Trade Center, Ferry Building, San Francisco,
California 94111.
Details of business to be conducted at the Annual Meeting are given in the
attached Notice of Annual Meeting and Proxy Statement. At the Annual Meeting, we
will present a report on the progress of the Company during the past year.
Accompanying this Proxy Statement is our 1995 Annual Report to
Stockholders.
We hope that you will attend the Annual Meeting. Whether or not you plan to
attend the meeting, please sign, date and return the enclosed proxy promptly in
the accompanying reply envelope so that your shares will be represented at the
Annual Meeting.
Sincerely yours,
RICHARD THALHEIMER
Founder, Chairman of the Board, and
Chief Executive Officer
<PAGE> 3
SHARPER IMAGE CORPORATION
650 DAVIS STREET
SAN FRANCISCO, CALIFORNIA 94111
NOTICE OF ANNUAL MEETING OF STOCKHOLDERS
TO BE HELD JUNE 10, 1996
The Annual Meeting of Stockholders of Sharper Image Corporation (the
"Company") will be held at the World Trade Center, Ferry Building, San
Francisco, California 94111, on Monday, June 10, 1996, at 2:00 p.m., for the
following purposes:
1. To elect Directors to serve until the next Annual Meeting and
until their successors have been elected and qualified;
2. To ratify the selection of Deloitte & Touche LLP as the Company's
independent auditor for the fiscal year ending January 31, 1997; and
3. To transact any other business which may properly come before the
meeting or any adjournments or postponements thereof.
The foregoing items of business are more fully described in the Proxy
Statement that accompanies this Notice.
Stockholders of record at the close of business on April 15, 1996 will be
entitled to vote at the Annual Meeting. Whether or not you plan to attend,
please sign, date, and return the enclosed proxy in the envelope provided. The
prompt return of your proxy will assist us in preparing for the Annual Meeting.
BY ORDER OF THE BOARD OF DIRECTORS
RICHARD THALHEIMER
Founder, Chairman of the Board, and
Chief Executive Officer
San Francisco, California
April 30, 1996
<PAGE> 4
THE SHARPER IMAGE(R)
PROXY STATEMENT
FOR THE
ANNUAL MEETING OF STOCKHOLDERS OF
SHARPER IMAGE CORPORATION
TO BE HELD JUNE 10, 1996
This Proxy Statement is furnished in connection with the solicitation of
proxies by the Board of Directors of Sharper Image Corporation, a Delaware
corporation (the "Company"), for the Annual Meeting of Stockholders of the
Company to be held at 2:00 p.m. on June 10, 1996 and at any adjournments or
postponements thereof, for the purposes set forth in the accompanying Notice of
Annual Meeting of Stockholders. This Proxy Statement and the proxy card were
first mailed to stockholders on or about April 30, 1996.
The address of the principal executive office of the Company is 650 Davis
Street, San Francisco, California 94111.
VOTING RIGHTS
Only stockholders of record of the Company's Common Stock ("Common Stock")
at the close of business on April 15, 1996 will be entitled to notice of and to
vote at the Annual Meeting. Each share of Common Stock entitles the holders
thereof to one vote on each matter to come before the Annual Meeting. On April
15, 1996, there were 8,254,980 shares of Common Stock outstanding.
The enclosed proxy is solicited by the Company's Board of Directors ("Board
of Directors" or "Board"), and, when returned properly completed, will be voted
as you direct on your proxy card. In the absence of contrary instructions,
shares represented by such proxies will be voted FOR the proposals discussed
herein and in the discretion of the proxy holders on other matters presented at
the Annual Meeting. Management does not know of any matters to be presented at
this Annual Meeting other than those set forth in this Proxy Statement and in
the Notice accompanying this Proxy Statement. If other matters should properly
come before the Annual Meeting, in the discretion of the proxy holder, shares
represented by such proxies will be voted upon any other business. Abstentions
and broker non-votes are each included in the number of shares present for
quorum purposes. Abstentions which may be specified on all proposals other than
the election of Directors are counted in tabulations of the votes cast on
proposals presented to stockholders; whereas broker non-votes are not counted
for purposes of determining whether a proposal has been approved.
REVOCABILITY OF PROXIES
Any proxy given pursuant to this solicitation may be revoked by the person
giving it at any time before its use by delivering to the Secretary of the
Company a written notice of revocation or a duly executed proxy bearing a later
date or by attending the Annual Meeting and voting the shares covered by the
proxy in person.
SOLICITATION OF PROXIES
The entire cost of soliciting proxies will be borne by the Company. The
original solicitation of proxies by mail may be supplemented by solicitation by
telephone, telegram, or other means by Directors, officers,
<PAGE> 5
employees or agents of the Company who will not receive additional compensation
for such solicitation. Copies of the solicitation material will be furnished to
brokerage firms, fiduciaries and other custodians holding shares in their names
that are beneficially owned by others to forward to such beneficial owners. Such
persons will be reimbursed by the Company for their reasonable expenses incurred
in sending proxy material to beneficial owners of the Common Stock.
PROPOSAL 1: ELECTION OF DIRECTORS
At the Annual Meeting, six (6) Directors (constituting the entire Board)
are to be elected to serve until the next Annual Meeting and until their
successors are elected and qualified. Set forth below is information regarding
the nominees to the Board of Directors for election as Directors.
It is intended that the proxies will be voted for the election as Directors
of the six nominees named below, unless authority to vote for any such nominee
is withheld. The six nominees receiving the highest number of affirmative votes
at the Annual Meeting will be elected. In the unanticipated event that a nominee
is unable or declines to serve as a Director at the time of the Annual Meeting,
the proxies will be voted for any nominee named by the present Board of
Directors to fill the vacancy. Each nominee has agreed to serve if elected, and
the Board of Directors is not aware of any nominee who is unable or will decline
to serve as a Director.
NOMINEES TO THE BOARD OF DIRECTORS
<TABLE>
<CAPTION>
NAME PRINCIPAL OCCUPATION AGE
- -------------------- ------------------------------------------------- ---
<S> <C> <C>
Richard Thalheimer Founder, Chairman of the Board and Chief 48
Executive Officer of Sharper Image Corporation
Elyse Eng Thalheimer Director, Sharper Image Corporation 48
Alan Thalheimer Retired Business Executive 70
Lawrence W. Feldman Chairman of the Board, Emeritus, San Francisco 79
Mart
Maurice Gregg Retail Financial Consultant 64
J. Gary Shansby Founder, The Shansby Group 58
</TABLE>
RICHARD THALHEIMER is the founder of the Company and has served as Chief
Executive Officer and as a Director of the Company since 1978 and as Chairman of
the Board of Directors since 1985. Mr. Richard Thalheimer also served as
President of the Company through July 1993.
ELYSE ENG THALHEIMER has been a Director of the Company since April 1987
and was Secretary of the Company from March 1987 through June 1995. Ms.
Thalheimer served as Director of Personnel at the Company from August 1981
through November 1986. Ms. Thalheimer is the wife of Mr. Richard Thalheimer.
ALAN THALHEIMER has been a Director of the Company since June 1981 and was
President of Thalheimer, Inc. or its predecessor from May 1981 through 1993.
Thalheimer, Inc. was the Company's supplier of gemstones and a major supplier of
jewelry. During 1993, Mr. Alan Thalheimer retired from Thalheimer Inc., which
has since terminated the supplier relationship with the Company. Mr. Alan
Thalheimer is the father of Mr. Richard Thalheimer.
LAWRENCE W. FELDMAN was appointed by the Board of Directors to serve as a
Director of the Company in October 1987. Mr. Feldman has served since 1966 as a
Chairman of the Board, Emeritus, of the San Francisco Mart, formerly Western
Merchandise Mart of San Francisco, which houses several hundred wholesale
furnishing tenants.
MAURICE GREGG was appointed by the Board of Directors to serve as a
Director of the Company in October 1987. Mr. Gregg is a certified public
accountant and has been a retail financial consultant since June 1986. Mr. Gregg
served as Executive Vice President, Chief Financial Officer and a director of
The Gap, Inc. from April 1980 to June 1986.
2
<PAGE> 6
J. GARY SHANSBY was appointed by the Board of Directors to serve as a
Director of the Company in November 1995. Mr. Shansby is the founder and
Managing General Partner of The Shansby Group, a Partnership which invests in
the acquisition of companies in consumer industries. Mr. Shansby served as the
Chairman of the Board of Directors and Chief Executive Officer of Shaklee
Corporation from March 1975 through December 1985.
BOARD MEETINGS AND COMMITTEES
The Board of Directors of the Company held three meetings during fiscal
1995. Each Director, with the exception of Elyse Eng Thalheimer, attended more
than seventy-five percent (75%) of the aggregate of (i) the total number of such
meetings held during the fiscal year, or a portion of the fiscal year, during
which such Director served as a member of the Board; and (ii) the total number
of meetings held by all committees of the Board on which such Director served as
a member. The Board of Directors has an Audit Committee, a Finance Committee, a
Compensation Committee and a Stock Option Committee.
The Audit Committee of the Board was established in November 1987 and
consists of Directors Maurice Gregg, Lawrence Feldman and Alan Thalheimer. The
Audit Committee is responsible for recommending engagement of the Company's
independent auditor, approving services performed by such accountants and
reviewing internal accounting controls, audit plans and results, and financial
reporting procedures. The Audit Committee held one meeting during fiscal 1995.
The Finance Committee was established in November 1987 and consists of
Directors Richard Thalheimer, Alan Thalheimer and Maurice Gregg and is
responsible for overseeing the financial condition of the Company. The Finance
Committee held no meetings during fiscal 1995. All Finance Committee matters
were conducted during the meetings of the Board of Directors.
The Compensation Committee was established in November 1987 and consists of
Directors Maurice Gregg, Lawrence Feldman, Alan Thalheimer and J. Gary Shansby.
The Compensation Committee is responsible for making and reviewing
recommendations regarding employee compensation. The Compensation Committee held
no meetings during fiscal 1995. All Compensation Committee matters were
conducted during the meetings of the Board of Directors.
The Stock Option Committee was established in October 1987 and consists of
Directors Maurice Gregg, Alan Thalheimer and Lawrence Feldman. The Stock Option
Committee is responsible for administering the Company's Amended and Restated
Stock Option Plan (the "Stock Option Plan"). The Stock Option Committee held
five meetings during fiscal 1995.
The Board of Directors does not have a nominating committee or committee
performing similar functions.
DIRECTOR REMUNERATION
During fiscal 1995, each of the Company's non-employee Directors was paid
an annual retainer of $5,000 plus $1,000 for attending each regular meeting of
the Board of Directors. The general policy of the Company is to reimburse
Directors for all reasonable expenses incurred to attend each meeting of the
Board of Directors. All Directors are also eligible to participate in certain of
the Company's employee benefit plans. Under the 1994 Non-Employee Directors
Stock Option Plan, each individual who first becomes an eligible non-employee
Board member will be automatically granted an option to purchase 2,000 shares of
Common Stock. In addition, on the date of each Annual Stockholders Meeting, each
individual re-elected as a non-employee Board member at that Annual Meeting will
receive an automatic option grant to purchase 1,000 shares of Common Stock,
provided such individual has served as a Board member for at least six (6)
months. The exercise price will be 100% of the fair market value of the Common
Stock on the automatic grant date. The options are immediately exercisable and
the option shares will vest upon the optionee's completion of one (1) year of
Board service measured from the grant date. Any unvested shares purchased under
the option will be subject to repurchase by the Company upon the optionee's
cessation of Board service prior to vesting in those shares. Mr. Shansby
received, in connection with his appointment to the Board in November 1995, an
automatic option grant for 2,000 shares of Common Stock with an exercise price
of $6.125 per share, and the four non-employee Board members re-elected to the
Board at the 1995 Annual Meeting,
3
<PAGE> 7
Messrs. A. Thalheimer, Feldman and Gregg and Ms. E. Thalheimer, each received at
that time an automatic option grant for 1,000 shares of Common Stock with an
exercise price of $5.875 per share.
SECURITY OWNERSHIP
The following table sets forth the beneficial ownership of the Company's
Common Stock as of April 15, 1996 by (i) all persons known by the Company to
beneficially own five percent (5%) or more of its outstanding Common Stock, (ii)
each Director, (iii) each of the Company's executive officers named in the
Summary Compensation Table below, and (iv) all Directors and executive officers
as a group. All shares are subject to the named person's sole voting and
investment power except where otherwise indicated or where subject to applicable
community property laws.
<TABLE>
<CAPTION>
AMOUNT AND
NATURE OF
BENEFICIAL PERCENT
NAME OWNERSHIP OF CLASS
------------------------------------------------------ ---------- --------
<S> <C> <C>
Richard Thalheimer.................................... 5,731,987 (1) 68.3
Elyse Eng Thalheimer.................................. 260,528 (2) 3.1
Alan Thalheimer....................................... 28,351 (3) *
Lawrence W. Feldman................................... 12,000 (4) *
Maurice Gregg......................................... 11,000 (5) *
J. Gary Shansby....................................... 2,000 (6) *
Craig Womack.......................................... 158,000 (7) 1.9
Vincent Barriero...................................... 25,000 (8) *
Sydney Klevatt........................................ 54,200 (9) *
Tracy Wan............................................. 26,300 (10) *
All Directors and executive officers as a group (11
persons)............................................ 6,115,588 (11) 70.3
</TABLE>
- ---------------
* Less than one percent of class.
(1) Does not include 45,500 shares owned by Ms. Elyse Eng Thalheimer, Mr.
Richard Thalheimer's wife. Includes 4,482,665 shares owned by The Richard
J. Thalheimer Revocable Trust, of which Mr. Richard Thalheimer is trustee
and sole beneficiary; 212,028 shares owned by The Richard J. Thalheimer and
Elyse M. Thalheimer Family Trust, of which Mr. Richard Thalheimer is a
co-beneficiary; 368,000 shares owned by The Richard J. Thalheimer
Children's Trust; 173,294 shares owned by the Richard J. Thalheimer 1994
Annuity Trust, of which Mr. Richard Thalheimer is trustee; 6,000 shares
owned by the Richard and Elyse Thalheimer Irrevocable Trust of 1995;
350,000 shares owned by the Richard J. Thalheimer 1995 Annuity Trust, of
which Mr. Richard Thalheimer is trustee and 140,000 shares issuable upon
exercise of options, which are currently exercisable or will become
exercisable within 60 days after April 15, 1996. Mr. Thalheimer's address
is The Sharper Image, 650 Davis Street, San Francisco, California 94111.
(2) Does not include 4,482,665 shares owned by Mr. Richard Thalheimer, Ms.
Elyse Eng Thalheimer's husband. Includes 212,028 shares owned by The
Richard J. Thalheimer and Elyse M. Thalheimer Family Trust, of which Ms.
Elyse Eng Thalheimer is a co-beneficiary. Includes 3,000 shares issuable
upon exercise of options, which are currently exercisable or will become
exercisable within 60 days after April 15, 1996.
(3) Does not include 83,800 shares owned by Mr. Alan Thalheimer's wife.
Includes 5,000 shares owned by the Alan Thalheimer individual retirement
account. Does not include 368,000 shares owned by The Richard J. Thalheimer
Children's Trust, or 6,000 shares owned by the Richard and Elyse Thalheimer
Irrevocable Trust of 1995, of which Mr. Alan Thalheimer is Trustee.
Includes 3,000 shares issuable upon exercise of options, which are
currently exercisable or will become exercisable within 60 days after April
15, 1996.
(4) Includes 2,000 shares owned by the L.W. and Marie Feldman Trust and 10,000
shares issuable upon exercise of options, which are currently exercisable
or will become exercisable within 60 days after April 15, 1996.
(5) Includes 10,000 shares issuable upon exercise of options, which are
currently exercisable or will become exercisable within 60 days after April
15, 1996.
4
<PAGE> 8
(6) Includes 2,000 shares issuable upon exercise of options, which are
currently exercisable or will become exercisable within 60 days after April
15, 1996.
(7) Includes 146,400 shares issuable upon exercise of options, which are
currently exercisable or will become exercisable within 60 days after April
15, 1996.
(8) Includes 25,000 shares issuable upon exercise of options, which are
currently exercisable or will become exercisable within 60 days after April
15, 1996.
(9) Includes 53,800 shares issuable upon exercise of options, which are
currently exercisable or will become exercisable within 60 days after April
15, 1996.
(10) Includes 26,300 shares issuable upon exercise of options, which are
currently exercisable or will become exercisable within 60 days after April
15, 1996.
(11) Includes 450,000 shares issuable upon exercise of options, which are
currently exercisable or will become exercisable within 60 days after April
15, 1996.
EXECUTIVE COMPENSATION AND OTHER INFORMATION
SUMMARY OF CASH AND CERTAIN OTHER COMPENSATION
The following table provides certain summary information concerning
compensation paid or accrued by the Company to or on behalf of the Company's
Chief Executive Officer and each of the four other most highly compensated
executive officers of the Company (determined as of the end of the last fiscal
year) (hereafter referred to as the "named executive officers") for the three
fiscal years ended January 31, 1996, 1995 and 1994:
SUMMARY COMPENSATION TABLE
<TABLE>
<CAPTION>
FISCAL LONG-TERM
YEAR ANNUAL COMPENSATION COMPENSATION
ENDED ---------------------- --------------------- ALL OTHER
NAME AND PRINCIPAL POSITION JAN. 31 SALARY($) BONUS($) OPTIONS (# OF SHARES) COMPENSATION($)
- ---------------------------------- ------- ---------- --------- --------------------- ----------------
<S> <C> <C> <C> <C> <C>
Richard Thalheimer 1996 541,406 -0- 300,000 shares(2) 42,118(1)
Founder, Chairman of the Board, 1995 480,540 247,500 300,000 shares(2) 19,668
and Chief Executive Officer 1994 450,000 22,500 -0- 17,320
Craig Womack 1996 280,192 -0- 50,000 shares 4,014(1)
President and Chief 1995 261,731 51,000 -0- 1,869
Operating Officer 1994 238,077 12,250 25,000 shares 504
Vincent Barriero 1996 165,961 -0- 20,000 shares 780(1)
Senior Vice President, 1995 153,654 25,000 -0- 1,501
Chief Information Officer 1994 150,000 8,000 5,000 shares 646
Sydney Klevatt 1996 153,485 -0- 12,000 shares 2,387(1)
Senior Vice President, 1995 137,788 20,000 -0- 2,300
Marketing 1994 141,345 6,250 3,000 shares 1,414
Tracy Wan 1996 137,383 -0- 15,000 shares 451(1)
Senior Vice President, 1995 105,529 14,000 -0- 884
Chief Financial Officer 1994 90,000 4,500 2,000 shares 239
</TABLE>
- ---------------
(1) Represents the following amounts for the named executive officers for the
fiscal year ended January 31, 1996: (i) the premiums paid on the life
insurance coverage provided such individuals, (ii) the contribution made by
the Company to match the salary deferral contribution made by the officer to
the Company's 401(k) Savings plan, up to a maximum of $250, (iii) the
imputed value for goods and services provided by the Company, and (iv) the
cash value compensation of the split-dollar life insurance policy maintained
for Mr. Thalheimer. The clause (iv) dollar value was determined by the
demand loan
5
<PAGE> 9
approach for the benefit provided by the whole life portion of the premium
paid by the Company, projected on an actuarial basis (see "Life Insurance
Agreement".)
<TABLE>
<CAPTION>
SPLIT-DOLLAR
LIFE INSURANCE
LIFE INSURANCE MATCHING 401(k) VALUE OF GOODS "CASH VALUE"
NAME PREMIUM($) CONTRIBUTION($) AND SERVICES($) COMPENSATION($)
--------------------------------- --------------- ---------------- ---------------- ---------------
<S> <C> <C> <C> <C>
Richard Thalheimer............... 530 250 26,620 14,718
Craig Womack..................... 530 250 3,234 0
Vincent Barriero................. 530 250 0 0
Sydney Klevatt................... 2,137 250 0 0
Tracy Wan........................ 201 250 0 0
</TABLE>
(2) This option was granted on April 12, 1995 with an exercise price of $5.625
per share in cancellation of an option previously granted for the same
number of shares on October 7, 1994 but with an exercise price of $6.875 per
share.
EMPLOYMENT AGREEMENT AND CHANGE IN CONTROL ARRANGEMENTS
During fiscal 1994, the Company adopted a Compensation Program for Mr.
Richard Thalheimer, the Company's Founder, Chief Executive Officer and Chairman
of the Board. The Compensation Program provides for the payment of base salary
to Mr. Thalheimer in respect of each fiscal year based on the Company's
performance during the prior fiscal year, and provides for the payment of a
bonus to Mr. Thalheimer in respect of each fiscal year based on the Company's
performance during that fiscal year. Specifically, the Compensation Program
provides that Mr. Thalheimer's base salary for any fiscal year will be increased
in the event the Company's earnings per share for the prior fiscal year has
increased as compared to the fiscal year preceding the prior fiscal year, and
will be reduced in the event that the Company's earnings per share for the
fiscal year has decreased as compared to the fiscal year preceding such prior
fiscal year. The Compensation Program also provides for bonus payments as a
percentage of base salary based on specific target percentage increases in the
Company's earnings per share for such fiscal years. The Compensation Program
provides that Mr. Thalheimer will not, in any event, be paid a base salary less
that the minimum base salary established by the Compensation Committee for each
fiscal year. The minimum base salary for fiscal 1996 has been established at
$495,000.00.
None of the Company's executive officers have employment agreements with
the Company, and their employment may be terminated at any time at the
discretion of the Board of Directors. The Stock Option Committee as
administrator of the Company's Stock Option Plan has the authority to provide
for the accelerated vesting of the shares of Common Stock subject to outstanding
options held by the Chief Executive Officer and the Company's other executive
officers or any unvested shares actually held by those individuals under the
Option Plan, in the event their employment were to be terminated (whether
involuntarily or through a forced resignation) following an acquisition of the
Company by merger or asset sale.
LIFE INSURANCE AGREEMENT
Richard J. Thalheimer, the Company's Founder, Chairman of the Board, and
Chief Executive Officer, is presently the owner and holder of 5,591,987 shares
of the Company's Common Stock. The Company has been advised that on the death of
the last to die of Richard J. Thalheimer and his wife Elyse Eng Thalheimer (a
director of the Company) the estate of such last to die may be required to
publicly sell all or substantially all of such shares to satisfy estate tax
obligations. The public sale of such number of shares in all probability would
destabilize the market for the Company's publicly traded stock. Accordingly, in
May 1995, an agreement was entered into (commonly known as a split-dollar life
insurance agreement) under the terms of which the Company will pay the premiums
for certain survivorship life insurance policies with an aggregate face value of
$20,000,000 on the lives of Richard J. and Elyse E. Thalheimer. Insurance
benefits become payable when both have died, and the Company will have an
interest in the insurance policies equal to the amount of premiums it has paid
with the balance payable to a trust created by Richard J. and Elyse E.
Thalheimer. To secure the repayment of the advances, the trust has assigned the
life insurance policies to the Company as collateral.
6
<PAGE> 10
OPTION GRANTS IN LAST FISCAL YEAR
The following table sets forth the information noted for all grants of
stock options made to the named executive officers listed in the Summary
Compensation Table during the fiscal year ended January 31, 1996. No stock
appreciation rights were granted during such fiscal year.
<TABLE>
<CAPTION>
POTENTIAL REALIZABLE
INDIVIDUAL GRANTS VALUE AT
---------------------------------------------------- ASSUMED ANNUAL
PERCENTAGE RATES OF
OF TOTAL STOCK PRICE
OPTIONS APPRECIATION FOR
GRANTED TO EXERCISE OR OPTION TERM(4)
OPTIONS EMPLOYEES IN BASE PRICE EXPIRATION ---------------------
NAME GRANTED(#) FISCAL YEAR ($/Sh)(3) DATE 5%($) 10%($)
---- ---------- ------------ ----------- ---------- --------- ---------
<S> <C> <C> <C> <C> <C> <C>
Richard Thalheimer........... 300,000(1) 47.6% $ 5.625 4/12/05 $1,061,260 $2,689,440
Craig Womack................. 50,000(2) 7.9% 5.625 4/12/05 176,877 448,240
Vincent Barriero............. 20,000(2) 3.2% 5.625 4/12/05 70,751 179,296
Sydney Klevatt............... 12,000(2) 1.9% 5.625 4/12/05 42,450 107,578
Tracy Wan.................... 15,000(2) 2.4% 5.625 4/12/05 53,063 134,472
</TABLE>
- ---------------
(1) The option grant to Mr. Richard Thalheimer has a maximum term of ten years,
subject to earlier termination upon the optionee's cessation of service. The
option grant reflected in the table is exercisable as follows: 140,000
shares became exercisable on January 31, 1996 and the remaining shares will
become exercisable in four successive equal annual installments beginning
January 31, 1997, provided he continued in service. The option will be
subject to full and immediate acceleration in the event the Company is
acquired by merger or asset sale, unless the option is assumed or replaced
by the acquiring entity.
(2) The option grants have a maximum term of ten years, subject to earlier
termination upon the optionee's cessation of service. The option grants will
become exercisable in three successive equal annual installments beginning
January 31, 1998, provided the optionee continued in service.
(3) The exercise price may be paid in cash or in shares of common stock valued
at fair market value on the exercise date or through a cashless exercise
procedure involving the same-day sale of the purchased shares.
(4) There is no assurance that the actual stock price appreciation over the
ten-year option term will be at those assumed rates or at any other level.
Unless the market price of the Company's common stock does in fact
appreciate over the option term, no value will be realized from the option
grants.
OPTION EXERCISES AND HOLDINGS
The following table provides information with respect to the named
executive officers concerning the exercise of options during the last fiscal
year and unexercised options held as of the end of the fiscal year. No stock
appreciation rights have been granted under the Stock Option Plan.
AGGREGATED OPTION EXERCISES IN LAST FISCAL YEAR
AND FISCAL YEAR-END OPTION VALUES
<TABLE>
<CAPTION>
VALUE OF UNEXERCISED IN-THE-
MONEY OPTIONS AT FISCAL
YEAR-END (MARKET PRICE OF
NUMBER OF UNEXERCISED SHARES AT FISCAL YEAR-END
VALUE REALIZED OPTIONS AT FISCAL ($4.625) LESS EXERCISE
SHARES (MARKET PRICE AT YEAR-END(#) PRICE)($)
ACQUIRED ON EXERCISE DATE LESS --------------------------- ----------------------------
NAME EXERCISE(#) EXERCISE PRICE)($) EXERCISABLE UNEXERCISABLE EXERCISABLE UNEXERCISABLE
---- ------------ ------------------- ----------- ------------- ----------- -------------
<S> <C> <C> <C> <C> <C> <C>
Richard Thalheimer....... -- -- 140,000 160,000 $ -0- $ -0-
Craig Womack............. 10,000 $ 48,750 146,400 69,000 392,475 47,375
Vincent Barriero......... 30,000 $ 135,000 25,000 25,000 67,250 13,375
Sydney Klevatt........... -- -- 53,800 16,200 168,020 11,175
Tracy Wan................ -- -- 26,300 17,700 67,000 7,188
</TABLE>
7
<PAGE> 11
OPTION REPRICING
The following table sets forth information with respect to the
participation by the Company's current and former executive officers in all
option repricing programs implemented by the Company during the period
commencing May 5, 1987, the date the Company completed the initial public
offering of its common stock and ending April 30, 1996.
TEN-YEAR OPTION REPRICING
<TABLE>
<CAPTION>
LENGTH OF
NUMBER OF MARKET ORIGINAL
SECURITIES PRICE OF EXERCISE OPTION TERM
UNDERLYING STOCK AT PRICE AT REMAINING
OPTIONS TIME OF TIME OF AT DATE OF
REPRICED REPRICING OR REPRICING OR NEW REPRICING OR
OR AMENDMENT AMENDMENT EXERCISE AMENDMENT
NAME AND POSITION DATE AMENDED(#) ($) ($) PRICE($) (YEARS)
----------------- -------- ---------- ------------ ------------ -------- ------------
<S> <C> <C> <C> <C> <C> <C>
Richard Thalheimer............... 4/12/95 300,000 5.625 6.875 5.625 4.8
Founder, Chairman of the Board,
and Chief Executive Officer
Craig Womack..................... 9/25/90 10,000 1.875 4.125 1.875 3.1
President and Chief 9/25/90 7,000 1.875 4.750 1.875 3.3
Operating Officer 9/25/90 16,000 1.875 5.375 1.875 3.8
9/25/90 7,400 1.875 4.750 1.875 3.9
9/25/90 13,000 1.875 4.875 1.875 4.3
9/25/90 27,000 1.875 7.375 1.875 5.2
9/25/90 15,000 1.875 6.000 1.875 5.5
4/29/93 10,000 1.875 2.875 1.875 4.8
Vincent Barriero................. 9/25/90 10,000 1.875 8.875 1.875 4.9
Senior Vice President, 9/25/90 5,000 1.875 6.000 1.875 5.5
Chief Information Officer 4/29/93 5,000 1.875 2.875 1.875 4.8
Tracy Wan........................ 9/25/90 1,000 1.875 6.375 1.875 4.6
Senior Vice President, 9/25/90 3,000 1.875 7.500 1.875 4.8
Chief Financial Officer 9/25/90 2,000 1.875 6.000 1.875 5.5
4/29/93 2,000 1.875 2.875 1.875 4.8
Shannon King..................... 9/25/90 1,500 1.875 4.125 1.875 3.1
Senior Vice President, 9/25/90 3,000 1.875 5.375 1.875 3.8
Merchandising 9/25/90 4,000 1.875 4.875 1.875 4.3
9/25/90 3,000 1.875 7.500 1.875 4.8
4/29/93 4,000 1.875 2.875 1.875 4.8
Sydney Klevatt................... 4/29/93 3,000 1.875 2.875 1.875 4.8
Senior Vice President,
Marketing
</TABLE>
COMPLIANCE WITH SECTION 16(A) OF THE SECURITIES ACT OF 1934
Section 16(a) of the Securities Exchange Act of 1934 requires the Company's
Directors and executive officers, and persons who own more than ten percent of a
registered class of the Company's equity securities, to file with the Securities
and Exchange Commission initial reports of ownership and reports of changes in
ownership of Common Stock and other equity securities of the Company. Officers,
Directors and greater than ten-percent stockholders are required by regulation
of the Securities and Exchange Commission to furnish the Company with copies of
all Section 16(a) forms they file.
To the Company's knowledge, based solely on review of the copies of such
reports furnished to the Company and written representations that no other
reports were required, during the fiscal year ended January 31, 1996, a Form 3,
reporting Mr. J. Gary Shansby as a new member of the Board of Directors, was not
filed on a timely basis; all other Section 16(a) filing requirements applicable
to its officers, Directors and greater than ten-percent beneficial owners were
complied with.
8
<PAGE> 12
COMPENSATION AND STOCK OPTION COMMITTEE REPORT
ON EXECUTIVE COMPENSATION
The Compensation and Stock Option Committees of the Board of Directors (the
"Committees") administer the Company's compensation policies and programs. The
Compensation Committee has responsibility for executive compensation matters,
including setting the base salaries of the Company's executive officers,
approving individual bonuses and bonus programs for executive officers, and
administering certain of the Company's employee benefit programs. The Stock
Option Committee has sole responsibility for the administration of the Company's
Stock Option Plan, under which grants may be made to executive officers and
other key employees. The following is a summary of policies of the Committees
that affect the compensation paid to executive officers, as reflected in the
tables and text set forth elsewhere in this Proxy Statement.
GENERAL COMPENSATION POLICY. The overall policy of the Committees is to
offer the Company's executive officers competitive compensation opportunities
based upon their personal performance, the financial performance of the Company
and their contribution to that performance. One of the primary objectives is to
have a substantial portion of each executive officer's compensation contingent
upon the Company's financial success as well as upon such executive officer's
own level of performance. Each executive officer's compensation package is
generally comprised of three elements: (i) base salary, which is determined
primarily on the basis of the individual's position and responsibilities and the
level of the individual's performance, (ii) incentive performance awards payable
in cash and tied to the Company's financial performance and individual
performance, and (iii) long-term stock-based incentive awards designed to
strengthen the mutuality of interests between the executive officers and the
Company's stockholders. Generally, as an executive officer's level of
responsibility increases, a greater portion of such executive officer's total
compensation will be dependent upon Company performance and stock price
appreciation rather than base salary.
FACTORS. The principal factors considered in establishing the components
of each executive officer's compensation package for the fiscal year ended
January 31, 1996 are summarized below. The Committees may in their discretion
apply entirely different factors, such as different measures of financial
performance, for future fiscal years.
BASE SALARY. The base salary for each officer is set primarily on the
basis of personal performance, level of responsibility, salary levels for
comparable positions of other retailers (as estimated based on the
Committee's knowledge of the retail industry), internal comparability
considerations, and, to a lesser extent, on the financial performance of
the Company.
INCENTIVE COMPENSATION. Annual bonuses are earned by an executive
officer on the basis of the Company's financial performance and the base
salary, personal performance and level of responsibility of such executive
officer. The specific amounts paid to each executive officer, other than
the Chief Executive Officer, was determined by the Company's Chief
Executive Officer on the basis of personal performance and level of
responsibility of each such executive officer, subject to the Compensation
Committee's approval. No bonuses were paid by the Company to any executive
officer during the fiscal year ended January 31, 1996, as a result of the
Company's financial performance during that year.
LONG-TERM STOCK-BASED INCENTIVE COMPENSATION. Generally, the Stock
Option Committee approves annual grants of stock options to each of the
Company's executive officers under the Stock Option Plan. The grants are
designed to align the interests of each executive officer with those of the
stockholders and provide each individual with a significant incentive to
manage the Company from the perspective of an owner with an equity stake in
the business. Each grant generally allows the officer to acquire shares of
the Company's common stock at a fixed price per share (the market price on
the grant date) over a specified period of time (up to 10 years), thus
providing a return to the executive officer only if the market price of the
shares appreciates over the option term. The size of the option grant to
each executive officer generally is designed to create a meaningful
opportunity for stock ownership and is based upon the executive officer's
current position with the Company, internal comparability considerations
regarding option grants made to other executive officers of the Company,
the executive officer's current
9
<PAGE> 13
level of performance and the executive officer's potential for future
responsibility and promotion over the option term. The Stock Option
Committee also considers the number of vested and unvested options held by
the executive officer at the time of the proposed grant in order to
maintain an appropriate level of equity incentive for that individual.
However, the Stock Option Committee does not adhere to any specific
guidelines as to the relative option holdings of the Company's executive
officers.
CEO COMPENSATION. During fiscal 1995, the Company adopted a Compensation
Program for Mr. Richard Thalheimer, the Company's Founder, Chief Executive
Officer and Chairman of the Board. The Compensation Program provides for the
payment of base salary to Mr. Thalheimer in respect of each fiscal year based on
the Company's performance during the prior fiscal year, and provides for the
payment of a bonus to Mr. Thalheimer in respect of each fiscal year based on the
Company's performance during that fiscal year. Specifically, the Compensation
Program provides that Mr. Thalheimer's base salary for any fiscal year will be
increased in the event the Company's earnings per share for the prior fiscal
year has increased as compared to the fiscal year preceding the prior fiscal
year, and will be reduced in the event that the Company's earnings per share for
the fiscal year has decreased as compared to the fiscal year preceding such
prior fiscal year. The Compensation Program also provides for bonus payments as
a percentage of base salary based on specific target percentage increases in the
Company's earnings per share for such fiscal years. The Compensation Program
provides that Mr. Thalheimer will not, in any event, be paid a base salary less
that the minimum base salary established by the Compensation Committee for each
fiscal year. The minimum base salary for fiscal 1996 has been established at
$495,000.00. On the basis of the earnings per share for the fiscal year ended
January 31, 1996, Mr. Thalheimer did not receive a bonus. The Committee has also
established a split-dollar life insurance arrangement for Mr. Thalheimer as
discussed above under "Life Insurance Agreement."
During the 1996 fiscal year, the Stock Option Committee concluded that the
300,000-share option grant made to Mr. Thalheimer in October 1994 had lost its
incentive value by reason of the decline in the market price of the Company's
common stock. The grant was intended to serve as a significant component of Mr.
Thalheimer's total compensation package and to provide him with a meaningful
incentive to continue in the Company's employ and contribute to the Company's
financial success. In order to assure that these objectives would be achieved,
the Stock Option Committee believed it necessary to reprice Mr. Thalheimer's
stock option grant to reflect the decline in the market price of the common
stock. The Stock Option Committee felt that such decline was the result of
market factors which affected stock prices throughout the retail industry and
did not necessarily reflect the market's particular assessment of the Company's
financial performance. Accordingly, on April 12, 1995, Mr. Thalheimer's
300,000-share option grant was repriced from $6.875 per share to the current
market price of $5.625 per share. The repriced option will continue to become
exercisable in accordance with the original vesting schedule, namely 140,000
shares became exercisable on January 31, 1996 and the remaining shares will
become exercisable beginning on January 31, 1997, in a series of four successive
equal annual installments.
TAX LIMITATION. As a result of Section 162(m) of the Internal Revenue
Code, which was enacted into law in 1993, the Company will not be allowed a
federal income tax deduction for compensation paid to certain executive
officers, to the extent that compensation exceeds $1 million per officer in any
one year. This limitation will be in effect for each fiscal year of the Company
beginning after December 31, 1993 and will apply to all compensation paid to the
covered executive officers which is not considered to be performance based.
Compensation which does qualify as performance-based compensation will not have
to be taken into account for purposes of this limitation.
The Company's Stock Option Plan is structured so that any compensation
deemed paid to an executive officer in connection with the exercise price of
option grants made under that plan will qualify as performance-based
compensation which will not be subject to the $1 million limitation. Because it
is very unlikely that the cash compensation payable to any of the Company's
executive officers in the foreseeable future will approach the $1 million limit,
the Committee has decided at this time not to take any other action to limit or
restructure the elements of cash compensation payable to the Company's executive
officers. The Committee will reconsider this decision should the individual cash
compensation of any executive officer ever approach the $1 million level.
10
<PAGE> 14
Submitted by the Company's Compensation Committee and Stock Option
Committee of the Board of Directors:
Alan Thalheimer, Member, Compensation and Stock Option Committees
Lawrence Feldman, Member, Compensation and Stock Option Committees
Maurice Gregg, Member, Compensation and Stock Option Committees
J. Gary Shansby, Member, Compensation Committee
COMPENSATION AND STOCK OPTION COMMITTEE INTERLOCKS
AND INSIDER PARTICIPATION
No executive officer of the Company serves as a member of the board of
directors or compensation committee of any entity which has one or more
executive officers serving as a member of the Company's Board of Directors or
Compensation Committee. No member of the Compensation Committee is a former or
current officer or employee of the Company.
11
<PAGE> 15
PERFORMANCE GRAPH
COMPARISON OF FIVE-YEAR CUMULATIVE TOTAL RETURNS*
OF THE COMPANY, THE NASDAQ STOCK MARKET (U.S.) INDEX,
AND THE NASDAQ RETAIL INDEX
The following graph compares the yearly percentage changes in the
cumulative total stockholder return on the Company's Common Stock with the
cumulative total return on the Nasdaq Stock Market (U.S.) Index and the Nasdaq
Retail Trade Stocks Index during the five fiscal years ended January 31, 1996.
The comparison assumes that $100 was invested on January 31, 1991 in the
Company's Common Stock and in each of the foregoing indices and assumes
reinvestment of dividends.
<TABLE>
<CAPTION>
Sharper Nasdaq Stock Nasdaq
Measurement Period Image Market (U.S.) Retail Trade
(Fiscal Year Covered) Corporation Index Stocks Index
<S> <C> <C> <C>
1/91 $100 $100 $100
1/92 $242 $153 $175
1/93 $263 $173 $158
1/94 $526 $199 $169
1/95 $579 $190 $149
1/96 $389 $268 $169
</TABLE>
* $100 INVESTED ON 01/31/91 IN STOCK OR INDEX-
INCLUDING REINVESTMENT OF DIVIDENDS,
FISCAL YEAR ENDING JANUARY 31.
12
<PAGE> 16
CERTAIN TRANSACTIONS
In October 1993, Mr. Alan Thalheimer, a Director of the Company, made a
loan to the Company for the purpose of refinancing the existing mortgage loan on
the Company's distribution center property in Little Rock, Arkansas. The loan
balance of $255,551 was paid in full in December 1995.
In May 1995, the Company made a loan to Mr. Vincent J. Barriero, an
executive officer of the Company, in the amount of $100,000 for the purpose of
purchasing a residence. Pursuant to this loan, $3,389 of interest was paid
during the 1995 fiscal year and in December 1995 the loan balance was paid in
full.
PROPOSAL 2: RATIFICATION OF SELECTION OF INDEPENDENT AUDITOR
The firm of Deloitte & Touche LLP served as independent auditor for the
Company for the fiscal year ended January 31, 1996. The Board of Directors has
selected the firm to continue in this capacity for the current fiscal year.
Accordingly, the Company is asking the stockholders to ratify the selection of
Deloitte & Touche LLP as independent auditor.
Although the selection of Deloitte & Touche LLP is not required to be
submitted to a vote of the stockholders, the Board of Directors believes it
appropriate as a matter of policy to request that the stockholders ratify the
selection of the independent auditor for the fiscal year ending January 31,
1997. In the event the stockholders fail to ratify the appointment, the Audit
Committee of the Board of Directors will consider it as a direction to select
other auditors for the subsequent year. Even if the selection is ratified, the
Board in its discretion may direct the appointment of a different independent
accounting firm at any time during the year if the Board feels that such a
change would be in the best interests of the Company and its stockholders.
The Company anticipates that a representative of Deloitte & Touche LLP will
be present at the Annual Meeting. Such representative will be given the
opportunity to make a statement if he or she desires to do so, and is expected
to be available to respond to questions at the meeting.
The Board of Directors recommends a vote FOR ratification of the selection
of Deloitte & Touche LLP as the Company's independent auditor for the fiscal
year ending January 31, 1997.
STOCKHOLDER PROPOSALS
Stockholder proposals intended to be considered for inclusion in the
Company's Proxy Statement for the Annual Meeting of Stockholders to be held in
1997 must be received by the Company no later than December 31, 1996. The
proposal must be mailed to the Company's principal executive offices at 650
Davis Street, San Francisco, California 94111. Such proposals may be included in
next year's Proxy Statement if they comply with certain rules and regulations
promulgated by the Securities and Exchange Commission.
OTHER BUSINESS
The Board of Directors is not aware of any other matter which may be
presented for action at the meeting. Should any other matter requiring a vote of
the stockholders arise, the enclosed proxy card gives authority to the persons
listed on the card to vote at their discretion on such matters.
BY ORDER OF THE BOARD OF DIRECTORS
Richard Thalheimer
Founder, Chairman of the Board, and
Chief Executive Officer
April 30, 1996
San Francisco, California
13
<PAGE> 17
PROXY
SHARPER IMAGE CORPORATION
650 DAVIS STREET, SAN FRANCISCO, CA 94111
THIS PROXY IS SOLICITED ON BEHALF OF THE BOARD OF DIRECTORS
The undersigned hereby appoints Richard Thalheimer and Tracy Wan, and each of
them, with full power of substitution, the proxy or proxies of the undersigned
to vote all shares of Common Stock of Sharper Image Corporation which the
undersigned is entitled to vote at the Annual Meeting of Stockholders of Sharper
Image Corporation to be held on June 10, 1996 at 2:00 p.m., and at any
adjournments or postponements thereof, with the same force and effect as the
undersigned might or could do if personally present thereat:
(Continued and to be signed on the other side)
- --------------------------------------------------------------------------------
- FOLD AND DETACH HERE -
<PAGE> 18
Please mark your vote as
indicated in this example. /X/
1. ELECTION OF DIRECTORS
INSTRUCTION: AUTHORITY TO VOTE FOR ANY NOMINEE MAY BE WITHHELD BY LINING
THROUGH SUCH NOMINEE'S NAME BELOW.
WITHHOLD
AUTHORITY
FOR to vote for
all nominees all nominees
listed below listed below
/ / / /
THE BOARD OF DIRECTORS RECOMMENDS A VOTE FOR
Nominees: RICHARD J. THALHEIMER LAWRENCE W. FELDMAN
ALAN R. THALHEIMER MAURICE GREGG
ELYSE ENG THALHEIMER J. GARY SHANSBY
2. PROPOSAL TO RATIFY THE SELECTION OF DELOITTE & TOUCHE LLP AS THE COMPANY'S
INDEPENDENT AUDITOR. (The Board of Directors recommends a vote FOR.)
FOR AGAINST ABSTAIN
/ / / / / /
3. In their discretion, the proxies are authorized to vote upon such other
business as may properly come before the meeting and at any adjournments or
postponements thereof.
FOR AGAINST ABSTAIN
/ / / / / /
THIS PROXY WHEN PROPERLY EXECUTED WILL BE VOTED IN THE MANNER DIRECTED HEREIN BY
THE UNDERSIGNED STOCKHOLDER. IF NO DIRECTION IS MADE, THIS PROXY WILL BE VOTED
FOR PROPOSALS 1, 2 AND 3 IN THE DISCRETION OF THE PROXY HOLDERS, UPON SUCH OTHER
BUSINESS AS MAY PROPERLY COME BEFORE THE MEETING AND AT ANY ADJOURNMENTS OR
POSTPONEMENTS THEREOF.
PLEASE MARK, SIGN, DATE AND RETURN THE PROXY CARD PROMPTLY USING THE ENCLOSED
ENVELOPE
Signatures(s) ____________________________________ DATED: _______________, 1996
Please sign exactly as name appears above. when shares are held jointly, every
holder should sign. When signing as attorney, executor, administrator, trustee
or guardian, please give full title as such. If a corporation, please sign in
full corporate name by president or other authorized officer. If a partnership,
please sign in partnership name by authorized person.
- --------------------------------------------------------------------------------
- FOLD AND DETACH HERE -
