INTELLIGENT ELECTRONICS, INC.
411 Eagleview Boulevard
Exton, PA 19341
(610) 458-5500
NOTICE AND PROXY STATEMENT
ANNUAL MEETING OF SHAREHOLDERS
TO BE HELD 9:30 A.M. MAY 24, 1994
To the Shareholders of Intelligent Electronics, Inc.:
NOTICE IS HEREBY GIVEN THAT the Annual Meeting of Shareholders of
Intelligent Electronics, Inc. (the "Company") will be held at Griffith Hall,
Route 100 and Nantmeal Road, Glenmoore, Pennsylvania, 19343, on May 24, 1994
at 9:30 a.m. for consideration of and action upon the following matters:
1. The election of four directors for a three-year term;
2. The election of one director for a two-year term;
3. The election of one director for a one-year term;
4. The ratification of the appointment of Price Waterhouse as the
Company's independent public accountants for the fiscal year ending January 28,
1995; and
5. The transaction of such other business as may properly come before
the Annual Meeting and any adjournment thereof, and matters incident to the
conduct of the Annual Meeting.
The Board of Directors has fixed the close of business on April 5, 1994,
as the record date for the determination of holders of Common Stock of the
Company entitled to notice of, and to vote at, the Annual Meeting. The
Company's Annual Report to Shareholders for the year ended January 29, 1994,
accompanies this Notice and Proxy Statement.
SHAREHOLDERS (WHETHER THEY OWN ONE OR MANY SHARES AND WHETHER THEY EXPECT
TO ATTEND THE ANNUAL MEETING OR NOT) ARE REQUESTED TO VOTE, SIGN, DATE AND
RETURN PROMPTLY THE ACCOMPANYING PROXY IN THE ENCLOSED ENVELOPE, WHICH REQUIRES
NO POSTAGE IF MAILED IN THE UNITED STATES.
BY ORDER OF THE BOARD OF DIRECTORS,
Stephanie Cohen, Secretary
Exton, PA
April 22, 1994
<PAGE>
INTELLIGENT ELECTRONICS, INC.
411 Eagleview Boulevard
Exton, PA 19341
(610) 458-5500
PROXY STATEMENT
This Proxy Statement is furnished and is being mailed with the
accompanying proxy on or about April 22, 1994, to each Shareholder of record
of Intelligent Electronics, Inc. (the "Company") in connection with the
solicitation of proxies by the Board of Directors of the Company, to be voted
at the Annual Meeting of Shareholders of the Company (the "Meeting") to be held
on May 24, 1994 at 9:30 a.m. at Griffith Hall, Route 100 and Nantmeal Road,
Glenmoore, Pennsylvania, 19343, and at any adjournment thereof, for the
purposes stated below.
Any person giving a proxy has the power to revoke it at any time before
its exercise by a later dated proxy, a written revocation sent to the Secretary
of the Company or attendance at the Meeting and voting in person. In the
absence of contrary instructions, properly executed proxies, received and
unrevoked, will be voted by the persons named in the proxy for: (i) the
election of four directors nominated by the Board of Directors for a three-year
term; (ii) the election of one director nominated by the Board of Directors for
a two-year term; (iii) the election of one director nominated by the Board of
Directors for a one-year term; (iv) the ratification of the appointment of
Price Waterhouse as the Company's independent public accountants; and (v) any
action, in their discretion, with respect to such other business as may
properly come before the Meeting and matters incident to the conduct of the
Meeting.
Each of the above proposals is discussed below.
VOTING SECURITIES OF THE COMPANY
Only Shareholders of record at the close of business on April 5, 1994, are
entitled to notice of, and to vote at, the Meeting. On that date, the
outstanding voting securities of the Company consisted of 35,135,024 shares of
Common Stock. Each share of Common Stock is entitled to one vote on all
matters presented to the Meeting with no right to vote cumulatively. Under
Pennsylvania law and the By-laws of the Company, the presence of a quorum is
required for each matter to be acted upon at the Meeting. The presence at the
Meeting, in person or by proxy, of shareholders entitled to cast at least a
majority of the votes that all shareholders are entitled to cast on a
particular matter shall constitute a quorum for the purposes of consideration
and action on the matter. Directors are elected by a plurality vote and
ratification of the appointment of the independent public accountants is by the
affirmative vote of a majority of the votes cast by shareholders present, in
person or by proxy, at the Meeting. Votes withheld and abstentions will be
counted in determining the presence of a quorum, but will not be voted and will
have no effect on matters to be voted on at the Meeting. Broker non-votes will
not be counted in determining the presence of a quorum and will not be voted.
<PAGE>
PRINCIPAL SHAREHOLDERS AND HOLDINGS OF OFFICERS AND DIRECTORS
The following table sets forth, as of March 30, 1994, the number and
percentage of shares of Common Stock which, according to information supplied
to the Company, are beneficially owned by:
(i) each person who is the beneficial owner of more than 5% of the Common
Stock; (ii) each of the directors and the nominees for directorship of the
Company individually; (iii) the Company's Chief Executive Officer and each of
the Company's four other most highly compensated executive officers for fiscal
year 1993; and (iv) all current directors and officers of the Company as a
group. Under rules adopted by the Securities and Exchange Commission, a person
is deemed to be a beneficial owner of Common Stock with respect to which he has
or shares voting power (which includes the power to vote or to direct the
voting of the security), or investment power (which includes the power to
dispose of, or to direct the disposition of, the security). A person is also
deemed to be the beneficial owner of shares with respect to which he has the
right to obtain voting or investment power within 60 days of March 30, 1994,
such as upon the exercise of options or warrants.
<TABLE>
<CAPTION>
Title of Name and Address Amount and Nature of Shares
Class of Beneficial Owner of Beneficial Ownership Outstanding
- ------------ ------------------------------ ----------------------- -----------
<S> <C> <C> <C>
Common Stock Richard D. Sanford(a) 3,735,563(b) 10.6%
411 Eagleview Blvd.
Exton, PA 19341
Common Stock Christopher T.G. Fish 1,196,986(c) 3.4%
Le Jardin, Rue du Torval
Castel, Guernsey
Channel Islands
Common Stock Arnold S. Hoffman 40,000(d) (e)
1735 Market Street
Philadelphia, PA 19103
Common Stock Roger J. Fritz 140,004(f) (e)
1113 North Loomis Street
Naperville, IL 60540
Common Stock William L. Rulon-Miller 70,136(g) (e)
1801 Market Street
Philadelphia, PA 19103
Common Stock Barry M. Abelson 425,336(h) 1.2%
3000 Two Logan Square
Philadelphia, PA 19103
Common Stock Michael R. Shabazian 40,000(d) (e)
Peked Mountain Road
Townshend, VT 05353
Common Stock James M. Ciccarelli 62,824(d) (e)
6400 S. Fiddler's Green Circle
Englewood, CO 80111
Common Stock John A. Porter 20,000 (e)
311 Lido Drive
Fort Lauderdale, FL 33301
Common Stock Alex A.C. Wilson -- (e)
39 Woodlands Park
Rosemont, Blairgowrie
Perthshire, PH106UW
Scotland
Common Stock Gregory A. Pratt 55,000(i) (e)
411 Eagleview Boulevard
Exton, PA 19341
Common Stock Robert P. May 1,000 (e)
411 Eagleview Boulevard
Exton, PA 19341
Common Stock Mark R. Briggs 42,100(j) (e)
5340 S. Quebec Street
Englewood, CO 80111
Common Stock Edward A. Meltzer 21,400(k) (e)
411 Eagleview Boulevard
Exton, PA 19341
Common Stock Twentieth Century Companies, Inc. 2,625,000(l) 7.5%
4500 Main Street
Kansas City, MO 64141-6200
Common Stock FMR Corp. 4,719,190(m) 13.4%
82 Devonshire Street
Boston, MA 02109-3614
Common Stock Nicholas-Applegate Capital Management 1,876,715(n) 5.3%
600 West Broadway
San Diego, CA 92101
Common Stock All directors and officers 5,672,966 15.9%
as a group (15 persons)
(a) Mr. Sanford is Chairman of the Board and Chief Executive Officer of the Company.
(b) Includes 60,000 shares purchasable upon the exercise of stock options granted pursuant to the Non-Qualified Stock Option
Plan for Employees and Directors (the "Plan") and 153,007 shares held by two charities established by Mr. Sanford, of which
Mr. Sanford is a director or trustee. Mr. Sanford disclaims beneficial ownership as to the shares held by the charities.
(c) Includes 60,000 shares purchasable upon the exercise of stock options granted pursuant to the Plan and 1,062,310 shares
owned by Sprint Investments, S.A. The sole shareholder of Sprint Investments, S.A. is a trust, the beneficiaries of which
are the wife and children of Mr. Fish. Also includes 70,676 shares held in a trust (the beneficiary of which is a child of Mr.
Sanford) of which Mr. Fish and Mr. Abelson are co-trustees (as to which shares Mr. Fish disclaims beneficial ownership)
and 4,000 shares held in the name of Mr. Fish's daughter.
(d) Includes 40,000 shares purchasable upon the exercise of stock options granted pursuant to the Plan.
(e) Less than 1% of the issued and outstanding Common Stock of the Company.
(f) Includes 100,000 shares purchasable upon the exercise of stock options granted pursuant to the Plan.
(g) Includes 60,000 shares purchasable upon the exercise of stock options granted pursuant to the Plan.
(h) Includes 40,000 shares purchasable upon the exercise of stock options granted pursuant to the Plan; 70,676 shares held in
a trust (the beneficiary of which is a child of Mr. Sanford) of which Mr. Abelson and Mr. Fish are co-trustees; 126,253
shares held by Mr. Abelson as custodian for the benefit of two children of Mr. Sanford; and 153,007 shares held by two
charities established by Mr. Sanford, of which Mr. Abelson is a director or trustee. Mr. Abelson disclaims beneficial
ownership as to the shares held by the trust and charities.
(i) Consists of 55,000 shares purchasable upon the exercise of stock options granted pursuant to the Plan.
(j) Includes 42,000 shares purchasable upon the exercise of stock options granted pursuant to the Plan.
(k) Includes 18,200 shares purchasable upon the exercise of stock options granted pursuant to the Plan.
(l) The information with respect to Twentieth Century Companies, Inc. was reported on a Schedule 13-G filed by Twentieth
Century Companies, Inc. with the Securities and Exchange Commission on February 10, 1994, a copy of which was received
by the Company and relied upon in making this disclosure.
(m) The information with respect to FMR Corp. was reported on a Schedule 13-G filed by FMR Corp. with the Securities and
Exchange Commission on February 11, 1994, a copy of which was received by the Company and relied upon in making this
disclosure.
(n) The information with respect to Nicholas-Applegate Capital Management was reported on a Schedule 13-G filed by
Nicholas-Applegate Capital Management with the Securities and Exchange Commission on February 14, 1994, a copy of
which was received by the Company and relied upon in making this disclosure.
</TABLE>
<PAGE>
1. ELECTION OF DIRECTORS
In accordance with the Company's By-laws, as amended, the Board of
Directors is classified into three classes as nearly equal in number as
possible. At the Meeting, four directors will be elected, each for a three-
year term expiring at the 1997 Annual Meeting, one director will be elected for
a two-year term expiring at the 1996 Annual Meeting, and one director will be
elected for a one-year term expiring at the 1995 Annual Meeting. The Board of
Directors has unanimously recommended six nominees for election as directors
at the Meeting. It is the intention of the persons named in the proxy, unless
otherwise directed, to vote all proxies for the election to the Board of
Directors of the nominees listed below. The Board has no reason to believe
that any of the nominees will be unable or unwilling to be a candidate for
election at the time of the Meeting. If any nominee is unable or unwilling to
serve, it is presently intended that the proxy shall be voted for the election
of a nominee who will be designated by the Board.
Following are the names of the nominees for directors of the Company to
serve for a three-year term expiring at the 1997 Annual Meeting of
Shareholders, their ages, and certain other information. The Board recommends
a vote for all nominees.
Name Age Position Term
Arnold S. Hoffman 58 Director 3 years
Roger J. Fritz 65 Director 3 years
John A. Porter 50 Director 3 years
Alex A.C. Wilson 57 Director 3 years
Following is the name of the nominee for director of the Company to serve
for a two-year term expiring at the 1996 Annual Meeting of Shareholders, his
age, and certain other information. The Board recommends a vote for the
nominee.
Gregory A. Pratt 45 Director 2 years
Following is the name of the nominee for director of the Company to serve
for a one-year term expiring at the 1995 Annual Meeting of Shareholders, his
age, and certain other information. The Board recommends a vote for the
nominee.
Robert P. May 44 Director 1 year
Arnold S. Hoffman has been a director of the Company since August 1985.
In January 1992, Mr. Hoffman became Managing Director of Legg Mason Wood Walker
Incorporated, an investment banking firm. Prior to that, since September 1990,
Mr. Hoffman was Chairman of the Middle Market Group, L.P., an investment
banking firm. Prior thereto, since August 1989, he served as a Managing
Director of the Stamford Company, Inc., an investment banking firm, and of the
Middle Market Group, Inc. From April 1985 to August 1989, Mr. Hoffman served
as Managing Director of Shearson Lehman Hutton, Inc. Mr. Hoffman is a member
of the Board of Directors of Sun Distributors, L.P.
Roger J. Fritz has been a director of the Company since its incorporation
in 1982. For more than five years, Mr. Fritz has been President of
Organization Development Consultants of Naperville, Illinois, an organizational
development/management consulting firm.
John A. Porter has been Vice Chairman of LDDS/Metro Media Communications,
the fourth largest long distance carrier, since the fall of 1993. From 1988
until its merger with Metro Media Communications in 1993, he served as Chairman
of LDDS. Mr. Porter serves on the Board of Directors of Uniroyal Technology
Corporation.
Alex A.C. Wilson has been Senior Vice President of SCI Systems, a
worldwide contract manufacturing company in the electronics industry, since
November 1993, and is General Manager for the European operations. Prior to
that he worked for IBM Corporation as Director of Manufacturing and
Distribution. In his 27-year career with IBM Corporation, Mr. Wilson worked
in various capacities. Mr. Wilson resides in Scotland and is a citizen of the
United Kingdom.
Gregory A. Pratt joined the Company in March 1992 as Executive Vice
President and was appointed to the position of President and Chief Operating
Officer shortly thereafter. Prior to joining the Company, Mr. Pratt served as
President of Atari Computer Corporation and Vice President of Finance and Chief
Financial Officer of Atari Corporation. He also served on the Board of
Directors of Atari Corporation and was a member of the Board's Executive
Committee.
Robert P. May is Senior Vice President of the Company and Chief Executive
Officer of Intelligent Distribution Services, Inc., a wholly-owned subsidiary
of the Company. Before he joined the Company in November 1993, Mr. May was a
Senior Vice President of Federal Express Corporation and was President of
Federal Express' Business Logistics Services Division. In his 20-year career
with Federal Express, Mr. May served in a number of executive operations and
corporate management positions.
The names of the other directors of the Company, their ages, the term for
which they have been elected and certain other information is set forth below:
Name Age Position Term
Richard D. Sanford 50 Chairman (1)
Christopher T.G. Fish 51 Director (1)
James M. Ciccarelli 41 Director (1)
Barry M. Abelson 47 Director (2)
William L. Rulon-Miller 45 Director (2)
Michael R. Shabazian 53 Director (2)
- ------------------------
(1) Currently serving a three-year term expiring at the 1996 Annual Meeting.
(2) Currently serving a three-year term expiring at the 1995 Annual Meeting.
Richard D. Sanford has been the Company's Chairman and Chief Executive
Officer since he founded the Company in May 1982. See "Certain Relationships
and Related Transactions."
Christopher T.G. Fish has been a director of the Company since its
incorporation in 1982. For more than five years, Mr. Fish has been a principal
of Sprint Investments, S.A., an investor company which is a holder of the
Company's Common Stock. Mr. Fish resides in the Channel Islands, U.K. and is
a citizen of the United Kingdom.
James M. Ciccarelli was elected to the Company's Board of Directors in
August 1992 and was elected a Vice President of the Company in March 1990. In
August and October of 1993, he became CEO and President of Missing Link
Communications, Inc. and Wireless Telecom, Inc., respectively, wholly-owned
subsidiaries of the Company. From December 1991 through April 1993 he was
President of the Company's Systems Group (now the Reseller Network). Prior
thereto, he served in a number of executive positions in the operations and
management of Connecting Point of America, Inc. from January 1988 until January
1990. Mr. Ciccarelli is also a member of the Board of Directors of The Future
Now, Inc.
Barry M. Abelson has been a director of the Company since January 1989.
In May 1992 he joined the law firm of Pepper, Hamilton & Scheetz, Philadelphia,
Pennsylvania, as a partner. Prior thereto, Mr. Abelson had been a partner of
the law firm of Braemer Abelson & Hitchner, Philadelphia, Pennsylvania (and its
predecessor firm). During the 1993 fiscal year, Pepper, Hamilton & Scheetz
provided legal services to the Company. See "Certain Relationships and Related
Transactions." Mr. Abelson is also a member of the Board of Directors of GBC
Technologies, Inc.
William L. Rulon-Miller serves as Senior Vice President and Co-Director
of Investment Banking for Janney Montgomery Scott Inc., an investment banking
firm with which he has held several positions since 1979. Mr. Rulon-Miller was
a director of the Company from April 1983 until December 1986, and was re-
elected to the Board in November 1987. Mr. Rulon-Miller is also a member of
the Board of Directors of Mothers Work, Inc.
Michael R. Shabazian is CEO of The Mindshare Group, a consulting firm.
He has been a director of the Company since July 1990. Mr. Shabazian served
as President and Chief Operating Officer of the Company from July 1989 to May
1992. From October 1987 until he joined the Company, Mr. Shabazian served as
Senior Vice President of Sales and Marketing at Dynabook Technologies
Corporation, a computer manufacturer.
BOARD OF DIRECTORS AND COMMITTEES
The Company's Board of Directors held nine (9) meetings and acted by
unanimous consent five (5) times during the fiscal year ended January 29, 1994.
During the 1993 fiscal year, each member of the Board attended in at least 75%
of the aggregate meetings of the Board and the committees of which he is a
member, except Mr. Fish.
The Board of Directors has established audit, compensation and stock
option, investment and finance, and executive committees to devote attention
to specific subjects and to assist in the discharge of its responsibilities.
The functions of those committees, their current members and the number of
meetings held during the 1993 fiscal year are described below. The Board of
Directors has not established a nominating committee.
AUDIT COMMITTEE. The Audit Committee is presently composed of Messrs.
Fish, Fritz, Hoffman, Rulon-Miller and Shabazian. The functions of the Audit
Committee include the recommendation and selection of independent accountants,
the review of audit results and the evaluation of internal accounting procedures
of the Company. There were two (2) meetings of the Audit Committee during
the 1993 fiscal year; a majority of the members were present for the meetings.
COMPENSATION AND STOCK OPTION COMMITTEE. The Compensation and Stock
Option Committee is presently composed of Messrs. Abelson, Fritz, Hoffman, and
Rulon-Miller. The Compensation and Stock Option Committee was formally
established at a meeting of the Board of Directors on November 19, 1993 and met
one time in the 1993 fiscal year. At such meeting, the formerly separate
Compensation Committee and Stock Option Committee (which met separately two (2)
and four (4) times, respectively, in the 1993 fiscal year) were consolidated
and reconstituted as the Compensation and Stock Option Committee. The
Compensation and Stock Option Committee is responsible for determining the
annual salary, bonus and incentive compensation of the Company's executive
officers and, on the basis of recommendations received from executive officers,
awarding incentive compensation in the form of stock options to the Company's
employees generally. The Report of the Compensation and Stock Option Committee
is included later in this Proxy Statement.
INVESTMENT AND FINANCE COMMITTEE. The Investment and Finance Committee
is presently composed of Messrs. Abelson, Ciccarelli, Fish, Hoffman, and Rulon-
Miller. The functions of the Investment and Finance Committee, which did not
meet formally during the 1993 fiscal year, is to review and make
recommendations to the Board of Directors as to available investment
opportunities to the Company as well as reviewing the Company's investment
policies generally.
EXECUTIVE COMMITTEE. The Executive Committee is presently composed of
Messrs. Abelson, Fish, Fritz, Hoffman, Rulon-Miller and Sanford and has the
authority of the Board of Directors in the management of the business and
affairs of the Company, subject to applicable legal limitations.
<PAGE>
OTHER MATTERS
Section 16(a) of the Securities Exchange Act of 1934, as amended, requires
the Company's directors and officers, and persons who own more than 10% of a
registered class of the Company's equity securities, to file initial reports
of ownership and reports of changes in ownership with the Securities and
Exchange Commission (the "SEC"). Such persons are required by SEC regulation
to furnish the Company with copies of all Section 16(a) forms they file. Based
solely on its review of the copies of such forms received by it with respect
to the 1993 fiscal year, or written representations from certain reporting
persons, the Company believes that all filing requirements applicable to its
directors, officers and persons who own more than 10% of a registered class of
the Company's equity securities have been met. During the fiscal year ended
January 29, 1994, each of Messrs. Shabazian and Pratt filed one Form 4
reporting one transaction after the applicable due date.
EXECUTIVE COMPENSATION
The following table sets forth certain information concerning the
compensation paid during the year ended October 31, 1991, the three-month
transition period ended February 1, 1992, the year ended January 30, 1993 and
the year ended January 29, 1994, to the Company's Chief Executive Officer and
each of the Company's four other most highly compensated executive officers
based on salary and bonus earned during the fiscal year 1993.
<PAGE>
<TABLE>
SUMMARY COMPENSATION TABLE
<CAPTION>
Long Term Compensation
------------------------------------
Awards Payouts
------------------------------------
Annual Compensation
-----------------------------------------------
Other Annual Restricted
Name and Principal Fiscal Compen- Stock Options/ LTIP All Other
Position Year Salary($) Bonus($) sation($)(1) Awards($) SARs (#) Payouts($) Compensation ($)(1)
- ------------------- ------- --------- -------- ------------- ----------- --------- ---------- -------------------
<S> <C> <C> <C> <C> <S> <C> <S> <C>
Richard D. Sanford 1993 $850,000 $569,160 (2) None 450,000 None $47,665(3)
Chairman of the 1992 748,056 450,000 (2) None None None 98,072
Board and Chief (4) 190,386 104,000 None None None
Executive Officer 1991 735,454 350,000 None None None
Gregory A. Pratt 1993 272,500 410,000 (2) None 150,000 None 73,757(7)
President and Chief 1992 214,892(5) 0 (2) None 450,000(6) None 2,660
Operating Officer (4) None
1991
Mark R. Briggs 1993 210,000 221,900 (2) None 10,000 None 4,513(8)
Senior Vice 1992 200,833 41,800 (2) None None None 2,866
President (4) 55,769 8,350 None 50,000 None
1991 148,077 117,300 None None None
Robert P. May 1993 75,000(9) 187,500 (2) None 100,000 None 5,480(10)
Senior Vice 1992
President (4)
1991
Edward A. Meltzer 1993 130,190 50,750 (2) None 5,000 None 3,521(11)
Vice President 1992 107,105 5,690 (2) None None None 2,225
and Chief (4) 27,987 10,168 None 3,000 None
Financial Officer 1991 106,152 22,166 None None None
- --------------------------------------------
(1) In accordance with the transitional provisions applicable to the revised rules on executive officer and director
compensation disclosure adopted by the Securities and Exchange Commission, as interpreted by the Commission's Staff,
amounts of Other Annual Compensation and All Other Compensation are excluded for 1991 and the three-month transition
period ended February 1, 1992.
(2) Amount does not exceed $50,000 or 10% of the total salary and bonus.
(3) Of the amount indicated, $36,326 relates to premium payments in excess of cash values paid by the Company in connection with
certain "split dollar" life insurance agreements with a trust established by Mr. Sanford (see "Certain Relationships
and Related Transactions"), $1,152 represents the amount of life insurance premiums paid on behalf of the executive, $6,000
represents directors' fees and $4,187 represents employer matching contributions to the Company's 401(k) Plan.
(4) Transition Period from November 1, 1991 through February 1, 1992.
(5) Mr. Pratt began his employment with the Company on March 4, 1992.
(6) Of the 450,000 options identified above, 225,000 granted on March 4, 1992 were canceled in July 1992.
(7) Consists of life insurance premiums paid on behalf of the executive of $687 and payment of relocation expenses of $73,070.
(8) Consists of life insurance premiums paid on behalf of the executive of $210, and $4,303 of employer matching
contributions to the Company's 401(k) Plan.
(9) Mr. May began his employment with the Company on November 1, 1993.
(10) Consists of life insurance premiums paid on behalf of the executive of $87 and payment of relocation expenses of $5,393.
(11) Consists of life insurance premium paid on behalf of the executive of $160 and $3,361 of employer matching
contributions to the Company's 401(k) Plan.
</TABLE>
<PAGE>
<TABLE>
Option Grants During 1993 Fiscal Year
<CAPTION>
The following table provides information related to options granted to the named executive officers during fiscal 1993.
The Company does not have any outstanding stock appreciation rights.
Potential Realization Value
at Assumed Annual Rates
of Stock Price Appreciation
Options/SAR Grants in Last Fiscal Year for Option Term (1)
- -------------------------------------------------------------------------------------------------------------------------------
Number of Securities % of Total
Underlying Options/
Options/ SARs
SARs Granted to Exercise or
Granted Employees in Base Price Expiration
Name (#)(2) Fiscal Year ($/Sh) Date 5% ($) 10%($)
- ------------------- ---------- ------------- ------------ ----------------- ----------- -----------
<S> <C> <C> <C> <S> <C> <C>
Richard D. Sanford 450,000(3) 44.5% $22.875 November 19, 2003 $6,473,684 $16,405,586
Gregory A. Pratt 50,000(4) 4.9% 15.00 March 10, 2003 471,671 1,195,307
100,000(5) 9.9% 24.875 December 22, 2003 1,564,375 3,964,434
Mark R. Briggs 10,000(4) 1.0% 15.00 March 10, 2003 94,334 239,061
Robert P. May 100,000(6) 9.9% 22.625 November 1, 2003 1,422,874 3,605,842
Edward A. Meltzer 5,000(4) .5% 15.00 March 10, 2003 47,167 119,531
- ------------------------------
(1) The potential realizable value portion of the foregoing table illustrates value that might be realized upon exercise
of the options immediately prior to the expiration of their term, assuming the specified compounded rates of appreciation
of the Company's Common Stock over the term of the options.
(2) Options to acquire shares of Common Stock.
(3) The options become exercisable as follows: 103,334 on November 19, 1994; 103,333 on November 19, 1995; and 243,333 on
November 19, 1996.
(4) The options become exercisable in five equal annual installments beginning March 10, 1994.
(5) The options become exercisable in three equal installments beginning December 22, 1994.
(6) The options become exercisable in five equal annual installments beginning November 1, 1994.
</TABLE>
<TABLE>
Option Exercises During 1993 Fiscal Year
and Fiscal Year-End Option Values
<CAPTION>
The following table provides information related to options exercised by the named executive officers during fiscal 1993
and the number and value of options held at fiscal year-end.
Value of Unexercised
Number of Unexercised In-the-Money
Options/SARs Options/SARs
at FY-End (#) at FY-End ($)(2)
Shares Acquired Value --------------------------- ---------------------------
Name on Exercise(#) Realized ($)(1) Exercisable Unexercisable Exercisable Unexercisable
- ---------------------- --------------- --------------- ----------- ------------- ----------- -------------
<S> <C> <C> <C> <C> <C> <C>
Richard D. Sanford 120,000 $782,500 20,000 510,000 $353,750 $2,987,500
Gregory A. Pratt 45,000 189,375 -- 330,000 -- 3,827,500
Mark R. Briggs 60,000 457,500 -- 120,000 -- 2,040,000
Robert P. May -- -- -- 100,000 -- 437,500
Edward A. Meltzer 32,000 246,000 1,200 22,800 13,800 419,700
- -------------------------------
(1) Represents the difference between the exercise price and the market value on the date of exercise.
(2) Value based on the closing price of $27.00 per share on January 28, 1994.
</TABLE>
<PAGE>
Compensation Committee Interlocks and Insider Participation
- -----------------------------------------------------------
Mr. Abelson, a member of the Compensation and Stock Option Committee, is a
partner in the law firm of Pepper, Hamilton & Scheetz, which provided legal
services to the Company.
Stock Performance Chart
- -----------------------
The following chart compares the yearly percentage change in the cumulative
total shareholder return on the Company's Common Stock during the five fiscal
years ended January 29, 1994, with the cumulative total return on the S&P Mid
Cap 400 Index and a peer index comprised of eleven companies (1). The
comparison assumes $100 was invested on January 31, 1989, in the Company's
Common Stock and in each of the foregoing indices and assumes reinvestment of
dividends.
COMPARISON OF FIVE-YEAR CUMULATIVE TOTAL RETURN
AMONG THE COMPANY, S&P MID-CAP 400, AND PEER GROUP
MEASUREMENT PERIOD S&P INTELLIGENT
FISCAL YEAR ENDED: PEER GROUP MID-CAP 400 ELECTRONICS
JANUARY 1989 $100.00 $100.00 $100.00
JANUARY 1990 83.90 116.16 137.50
JANUARY 1991 85.95 129.91 350.00
JANUARY 1992 163.48 183.92 521.87
JANUARY 1993 196.33 204.78 362.50
JANUARY 1994 290.49 235.83 773.91
(1) Assumes $100 invested on January 31, 1989 in the Company's Common Stock,
the S&P Mid Cap 400 Index and a composite index, weighted by market
capitalization, of the following eleven companies: Compucom Systems, Inc.,
Dataflex Corporation, The Future Now, Inc., Gates/FA Distributing, Inc.,
Government Technology Services, Inc., Inacom Corp., Merisel, Inc., MicroAge,
Inc., Random Access, Inc., Robec, Inc., and Tech Data Corporation.
<PAGE>
COMPENSATION AND STOCK OPTION COMMITTEE
REPORT ON EXECUTIVE COMPENSATION
The Compensation and Stock Option Committee (the "Committee") consists of
four non-employee directors. The Committee was formally established at a
meeting of the Board of Directors on November 19, 1993. At such meeting, the
formerly separate Compensation Committee and Stock Option Committee were
consolidated and reconstituted as the Committee.
The Committee is responsible for determining the annual salary, bonus and
incentive compensation of the Company's executive officers and, on the basis
of recommendations received from executive officers, awarding incentive
compensation in the form of stock options to the Company's employees generally.
This report describes the policies of the Committee in establishing the
principal components of executive compensation for fiscal 1993.
The Committee's compensation policies for executive officers reflect a
commitment to attract and retain quality executives, to provide incentives to
the executives to achieve performance objectives that enhance shareholder value
and to reward executives for operational excellence. The Committee believes
that its policies are best served by a compensation program that provides
executives a competitive base salary, annual incentive bonuses in amounts that
reflect achievement of prescribed financial targets and long-term incentives
in the form of stock options.
In establishing compensation for executive officers, the Committee
considers industry data generally, the Company's financial performance and
industry position and the recommendations of the Chairman of the Board and
Chief Executive Officer. The Committee exercises judgment and discretion in
the information and analyses it reviews and considers.
In 1993, the Committee adopted a formal incentive plan for each of the
Chairman of the Board and Chief Executive Officer and the President and Chief
Operating Officer. The plans tie the amount of the bonus opportunity to Mr.
Sanford and Mr. Pratt to the Company's achievement of budgeted pre-tax earnings
from continuing operations. Additionally, for the President and Chief
Operating Officer, certain focus areas have been separately identified to
incent performance of specific operational and financial objectives. Further,
at the discretion of the Committee, additional bonuses may be paid.
The Committee believes that Mr. Sanford's 1993 compensation as Chairman
of the Board and Chief Executive Officer appropriately reflects the strong
performance of the Company in 1993 (including a 31% increase in revenues and
a 69% increase in income from continuing operations before provision for income
taxes) and Mr. Sanford's short and longer terms contributions to the Company.
As indicated above, Mr. Sanford's $569,160 bonus for 1993 (representing a 26.5%
increase over his 1992 bonus) was determined pursuant to an incentive plan
adopted by the Committee in 1993 that ties the amount of Mr. Sanford's bonus
to the Company's achievement of budgeted pre-tax earnings from continuing
operations. The Committee also awarded Mr. Sanford options to purchase 450,000
shares of Common Stock, at a per share exercise price equal to the market price
of the Common Stock on the award date, in recognition of his substantial past
contributions to the Company and as an incentive to his continuing efforts on
behalf of the Company. Of the 450,000 options, 70,000 will vest on each of the
first and second anniversaries of the grant date (November 19, 1993) and
210,000 will vest on the third anniversary of the grant date. The vesting
period for the remaining 100,000 options was tied to the Company's achievement
of budgeted pre-tax earnings from continuing operations for 1993 and, based on
the Company's achievement, these options will vest ratably over three years
from their grant date.
William L. Rulon-Miller
Barry M. Abelson
Roger J. Fritz
Arnold S. Hoffman
<PAGE>
DIRECTOR COMPENSATION
Directors received $500 for each Board meeting attended during the fiscal
year ended January 29, 1994. Directors are also reimbursed for expenses in
attending Board meetings. There was no additional compensation for
participation in or attendance at Committee meetings.
CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS
Barry M. Abelson is a partner in the law firm of Pepper, Hamilton &
Scheetz, which provided legal services to the Company. The Company believes
that the fees charged by Pepper, Hamilton & Scheetz are comparable to those
charged by other law firms for comparable services.
The Company is a party to certain "split dollar" life insurance agreements
(the "Agreements") with a trust established by Mr. Sanford (of which Mr.
Abelson is the trustee) pursuant to which the Company pays a portion of the
premiums on permanent life insurance policies insuring the life of Mr. Sanford.
Pursuant to the Agreements, the trust annually pays the portion of the total
policy premiums that are attributable to the death benefit owned by the trust
as determined by the insurers' term insurance rates for such coverage, and the
Company pays the balance of the premium. The Company has interests in the
policies' cash values equal to the cumulative premiums paid by the Company.
The Company also has interests in the policies' excess death benefits. The
Company's interests in the policies are secured by a collateral assignment of
each policy. During the fiscal year ended January 29, 1994, the amount paid
by the Company with respect to the policies in excess of cash values
accumulated during the year was $36,326, which amount is guaranteed by Mr.
Sanford. This split dollar life insurance arrangement is in addition to the
life insurance program maintained by the Company during fiscal 1993 for all
employees, in which Mr. Sanford participates.
2. RATIFICATION OF APPOINTMENT
OF INDEPENDENT PUBLIC ACCOUNTANTS
The Board of Directors has appointed the Company's present independent
public accountants, Price Waterhouse, for the fiscal year ending January 28,
1995. This appointment will be submitted to the shareholders for ratification
at the Meeting.
The submission of the appointment of Price Waterhouse is not required by
law nor by the By-laws of the Company. The Board of Directors is nevertheless
submitting it to the shareholders to ascertain their views. If the
shareholders do not ratify the appointment, the selection of other independent
public accountants will be considered by the Board of Directors. If Price
Waterhouse shall decline to accept or become incapable of accepting its
appointment, or if its appointment is otherwise discontinued, the Board of
Directors will appoint other independent public accountants.
Representatives of Price Waterhouse are expected to be present at the
Meeting to respond to appropriate questions and will have the opportunity to
make a statement if they so desire.
OTHER BUSINESS
The Company knows of no business which will be presented at the Meeting
other than that set forth in this Proxy Statement and Notice of the Annual
Meeting. However, if other matters should properly come before the Meeting,
it is the intention of the persons named in the enclosed proxy to vote in
accordance with their best judgment on such matters.
EXPENSES OF SOLICITATION
This solicitation of proxies is being made on behalf of the Board of
Directors. All expenses in connection therewith will be paid by the Company.
Request will be made of brokerage houses and other custodians, nominees and
fiduciaries to forward the solicitation material, at the expense of the
Company, to the beneficial owners of stock held of record by such persons.
SHAREHOLDER PROPOSALS
Proposals by shareholders intended to be presented at the next Annual
Meeting of Shareholders of the Company must be received by the Company at its
executive offices at 411 Eagleview Boulevard, Exton, PA 19341, on or before
January 25, 1995, to be included in the Company's Proxy Statement and Form of
Proxy for the 1995 Annual Meeting.
THE COMPANY WILL PROVIDE TO EACH PERSON SOLICITED, WITHOUT CHARGE
EXCEPT FOR EXHIBITS, UPON REQUEST IN WRITING, A COPY OF ITS ANNUAL REPORT ON
FORM 10-K, INCLUDING THE FINANCIAL STATEMENTS AND FINANCIAL STATEMENT
SCHEDULES, AS FILED WITH THE SECURITIES AND EXCHANGE COMMISSION FOR THE FISCAL
YEAR ENDED JANUARY 29, 1994. REQUESTS SHOULD BE DIRECTED TO STEPHANIE COHEN,
SECRETARY, INTELLIGENT ELECTRONICS, INC., 411 EAGLEVIEW BOULEVARD, EXTON, PA
19341.
BY ORDER OF THE BOARD OF DIRECTORS,
Stephanie Cohen
Secretary
DATE: April 22, 1994
<PAGE>
GRAPHIC MATERIAL CROSS-REFERENCE PAGE
A stock performance graph comparing the performance for the Company's Common
Stock with the Standard & Poor's Mid-Cap 400 Composite Stock Price Index (the
"S&P Mid-Cap 400") and a peer group index by measuring the changes in common
stock price from January 31, 1989 through January 29, 1994, plus assumed
reinvested dividends. Figures indicating the cumulative total return for the
Company's Common Stock, the S&P Mid-Cap 400 and the peer group index are shown
on page 12.
<PAGE>
INTELLIGENT ELECTRONICS, INC.
PROXY SOLICITED BY THE BOARD OF DIRECTORS
Annual Meeting of Shareholders - May 24, 1994
The undersigned shareholder of INTELLIGENT ELECTRONICS, INC. (the
"Company"), revoking all previous proxies, hereby appoints STEPHANIE COHEN and
BARRY M. ABELSON, and each of them acting individually, as the attorney and
proxy of the undersigned, with full power of substitution, to vote all shares
of stock of the Company which the undersigned would be entitled to vote if
personally present at the Annual Meeting of Shareholders of the Company, to be
held at Griffith Hall, Route 100 and Nantmeal Road, Glenmoore, Pennsylvania
19343, on May 24, 1994 at 9:30 a.m., and at any adjournment or postponement
thereof; provided that said proxies are authorized and directed to vote as
indicated with respect to the following matters:
1. ELECTION OF DIRECTORS
Election of four directors for
a term of three years expiring WITHHOLD
at the 1997 Annual Meeting FOR AUTHORITY
Arnold S. Hoffman [ ] [ ]
Roger J. Fritz [ ] [ ]
John A. Porter [ ] [ ]
Alex A.C. Wilson [ ] [ ]
2. Election of one director for
a term of two years expiring WITHHOLD
at the 1996 Annual Meeting FOR AUTHORITY
Gregory A. Pratt [ ] [ ]
3. Election of one director for
a term of one year expiring WITHHOLD
at the 1995 Annual Meeting FOR AUTHORITY
Robert P. May [ ] [ ]
4. RATIFICATION OF APPOINTMENT OF
INDEPENDENT PUBLIC ACCOUNTANTS FOR AGAINST ABSTAIN
Ratification of the appointment [ ] [ ] [ ]
of Price Waterhouse as the
Company's independent public
accountants for the fiscal year
ending January 28, 1995.
THIS PROXY IS SOLICITED ON BEHALF OF THE BOARD OF DIRECTORS. UNLESS
OTHERWISE SPECIFIED, THE SHARES WILL BE VOTED "FOR" ELECTION OF NOMINEES FOR
DIRECTORS LISTED ON THE REVERSE SIDE HEREOF AND "FOR" RATIFICATION OF
APPOINTMENT OF PRICE WATERHOUSE AS THE COMPANY'S INDEPENDENT PUBLIC
ACCOUNTANTS. THIS PROXY ALSO DELEGATES DISCRETIONARY AUTHORITY WITH RESPECT
TO ANY OTHER BUSINESS WHICH MAY PROPERLY COME BEFORE THE MEETING OR ANY
ADJOURNMENT OR POSTPONEMENT THEREOF.
THE UNDERSIGNED HEREBY ACKNOWLEDGES RECEIPT OF THE NOTICE OF ANNUAL
MEETING AND PROXY STATEMENT.
Dated: __________________________, 1994
-----------------------------------
Signature of Shareholder
-----------------------------------
Signature of Shareholder
NOTE: PLEASE SIGN THIS PROXY EXACTLY AS NAME(S) APPEAR ON YOUR STOCK
CERTIFICATE. WHEN SIGNING AS ATTORNEY-IN-FACT, EXECUTOR, ADMINISTRATOR,
TRUSTEE OR GUARDIAN, PLEASE ADD YOUR TITLE AS SUCH, AND IF SIGNER IS A
CORPORATION, PLEASE SIGN WITH FULL CORPORATE NAME BY A DULY AUTHORIZED
OFFICER OR OFFICERS AND AFFIX THE CORPORATE SEAL. WHERE STOCK IS ISSUED
IN THE NAME OF TWO (2) OR MORE PERSONS, ALL SUCH PERSONS SHOULD SIGN.
