SCHEDULE 14A INFORMATION
Proxy Statement Pursuant to Section 14(a) of the Securities
Exchange Act of 1934 (Amendment No. )
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Check the appropriate box:
/ / 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 Section 240.14a-11(c) or Section
240.14a-12
INACOM CORP.
- --------------------------------------------------------------------------------
(Name of Registrant as Specified In Its Charter)
- --------------------------------------------------------------------------------
(Name of Person(s) Filing Proxy Statement, if other than the Registrant)
Payment of Filing Fee (Check the appropriate box):
/X/ No fee required.
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<PAGE>
NOTICE OF
ANNUAL MEETING
OF STOCKHOLDERS
PROXY STATEMENT
INACOM CORP.
FARNAM EXECUTIVE CENTER
10810 FARNAM DRIVE
OMAHA, NEBRASKA 68154
(402) 392-3900
[LOGO]
<PAGE>
[LOGO]
NOTICE OF MEETING
To InaCom Corp. Stockholders:
The annual meeting of stockholders of InaCom Corp. will be held on April
22, 1997 at 9:00 A.M. local time, at the Omaha Community Playhouse, 6915 Cass
Street, Omaha, Nebraska 68132.
We hope you will be able to attend this year's Stockholders' Meeting. If
you do not expect to be present and wish your stock to be voted, please sign,
date and mail the enclosed proxy form. If you later decide to attend the
meeting, you may withdraw your proxy at that time and vote your shares in
person.
Matters to be considered by the stockholders:
Item 1. Election of Directors.
Item 2. Approval of the appointment of independent accountants for fiscal
year 1997.
Item 3. Approval of Executive Incentive Plan
Item 4. Approval of 1997 Stock Plan
Stockholders of record as of the close of business on February 28, 1997 are
eligible to vote at the annual Stockholders' Meeting.
By order of the Board of Directors.
[SIGNATURE]
MICHAEL A. STEFFAN,
Secretary
March 21, 1997
<PAGE>
PROXY STATEMENT
ANNUAL MEETING OF STOCKHOLDERS TO BE HELD APRIL 22, 1997
To our Stockholders:
The Board of Directors of InaCom Corp. ("InaCom" or "Company") solicits
your proxy in the form enclosed for use at the Annual Meeting of Stockholders to
be held on Tuesday, April 22, 1997.
Stockholders of record at the close of business on February 28, 1997 are
entitled to vote at the meeting. The Company at February 28, 1997 had issued and
outstanding 10,850,008, shares of common stock. All holders of common stock are
entitled to one vote for each share of stock held by them. The presence of a
majority of the outstanding shares of common stock, represented in person or by
proxy at the meeting, will constitute a quorum. Shares represented by proxies
that are marked "abstain" will be counted as shares present for purposes of
determining the presence of a quorum. Proxies relating to "street name" shares
that are voted by brokers on some matters will be treated as shares present for
purposes of determining the presence of a quorum, but will not be treated as
shares entitled to vote at the annual meeting on those matters as to which
authority to vote is withheld by the broker ("broker non-votes").
The eight nominees receiving the highest vote totals will be elected as
directors of InaCom. Accordingly, abstentions and broker non-votes will not
affect the outcome of the election of directors. All other matters to be voted
on will be decided by the affirmative vote of a majority of the shares present
or represented at the meeting and entitled to vote. On any such matter, an
abstention will have the same effect as a negative vote. A broker non-vote will
not be counted as an affirmative vote or a negative vote because shares held by
brokers will not be considered entitled to vote on matters as to which the
brokers withhold authority.
A stockholder giving a proxy may revoke it before the meeting by mailing a
signed instrument revoking the proxy to: Secretary, InaCom Corp., Farnam
Executive Center, 10810 Farnam Drive, Omaha, Nebraska 68154. To be effective,
the revocation must be received by the Secretary before the date of the meeting.
A stockholder may attend the meeting in person, and at that time withdraw the
proxy and vote in person. This proxy statement is being mailed to stockholders
on or about March 21, 1997.
The cost of solicitation of proxies, including the cost of reimbursing
banks and brokers for forwarding proxies and proxy statements to their
principals, will be borne by the Company.
<PAGE>
CERTAIN STOCKHOLDERS
The following table sets forth information relating to the beneficial
ownership of the Company's common stock by each person known to the Company to
be the beneficial owner of more than 5% of the outstanding shares of common
stock, by each director, by each of the executive officers named in the Summary
Compensation Table, and by all directors and executive officers as a group.
BENEFICIAL
OWNERSHIP
AS OF FEBRUARY 28, PERCENT
NAME OF BENEFICIAL OWNER 1997 OF CLASS
- ----------------------------------------------- ------------------- --------
Legg Mason, Inc. .............................. 909,500(1) 8.4%
111 South Calvert Street
Baltimore, Maryland 21202
George D. Bjurman & Associates ................ 781,500(2) 7.2%
10100 Santa Monica Blvd. Suite 1200
Los Angeles, California 90067
Travelers Group ............................... 729,016(3) 6.7%
388 Greenwich Street
New York, NY 10013
Duncan-Hurst Capital Management ............... 727,980(4) 6.7%
4365 Executive Drive Suite 1520
San Diego, California 92121
Rick Inatome .................................. 452,216(5)(6) 4.0%
1800 West Maple Road
Troy, Michigan 48084
Joseph Inatome ................................ 452,216(5)(6) 4.0%
4957 Mt. Pleasant Lane
Las Vegas, Nevada 89113
Bill Fairfield................................. 303,025(6) 2.7%
Robert Schultz................................. 31,725(6) *
Michael Steffan................................ 60,761(6) *
George DeSola.................................. 17,000(6) *
David Guenthner................................ 66,335(6) *
All Executive Officers and Directors as a Group
(17 persons)................................... 984,852(6) 8.8%
<PAGE>
* Less than 1% of outstanding common stock. See "Election of Directors" for
stock ownership information on certain other directors.
(1) Based on a Schedule 13G, dated February 11, 1997 filed by Legg Mason,
Inc. with the Securities and Exchange Commission.
(2) Based on a Schedule 13G, dated January 10, 1997 filed by George D.
Bjurman & Associates with the Securities and Exchange Commission.
(3) Based on a Schedule 13G, dated February 6, 1997 filed by Travelers
Group with the Securities and Exchange Commission.
(4) Based on a Schedule 13G, dated February 12, 1997 filed by Duncan-Hurst
Capital Management with the Securities and Exchange Commission.
(5) Beneficial ownership for each of Rick Inatome and Joseph Inatome
includes 361,936 shares which Rick Inatome and Joseph Inatome, acting together,
are empowered to vote pursuant to the terms of a September 1993 voting agreement
(the "1993 Voting Agreement"), as reported on Schedule 13D, as amended, filed
with the Securities and Exchange Commission. The following shares are subject to
the 1993 Voting Agreement: 158,171 shares owned directly by Rick Inatome, 1,122
shares owned by Rick Inatome and Joyce Inatome, 1,122 shares owned by Joyce
Inatome under Uniform Gifts to Minors Act, 75,668 shares owned directly by
Joseph Inatome, 38,353 shares owned directly by Nan Inatome, and 87,500 shares
owned jointly by Rick Inatome and Nan Inatome. The 1993 Voting Agreement
terminates on September 30, 2003. Joseph Inatome and Nan Inatome are the parents
of Rick Inatome.
(6) Beneficial ownership includes shares which the persons indicated have,
or within sixty days of February 28, 1997 will have, the right to acquire
through the exercise of stock options as follows: Rick Inatome 89,818 shares;
Joseph Inatome 462 shares; Bill Fairfield 138,100 shares; Robert Schultz 27,600
shares; Mike Steffan 43,700 shares; George DeSola 11,000 shares; David Guenthner
54,400 shares; and all directors and executive officers as a group, 381,830
shares.
- 2 -
<PAGE>
ELECTION OF DIRECTORS
The Company's Board of Directors is elected on an annual basis. There are
currently nine directors. Durward Varner is retiring from the Board of Directors
prior to the annual meeting of stockholders. Consequently, eight directors will
be elected at the stockholders' meeting.
The following table sets forth the Company's nominees for the Board of
Directors. Each nominee is a member of the present Board of Directors.
<TABLE>
COMMON STOCK OWNED
BENEFICIALLY
AS OF FEBRUARY 28,
1997
--------------------
DIRECTOR NUMBER OF PERCENT
NOMINEE FOR DIRECTOR AND PRINCIPAL OCCUPATION OR EMPLOYMENT SINCE SHARES OF CLASS
- ---------------------------------------------------------------------------------- -------- --------- --------
<S> <C> <C> <C>
Joseph Auerbach, Age 80........................................................... 9/14/87 11,500 *
Professor of Business Administration, Emeritus, at the Harvard Business School;
Counsel to the firm of Sullivan & Worcester, Boston.
Mogens C. Bay, Age 48............................................................. 3/4/97 -0- *
President and Chief Executive Officer of Valmont Industries (metal fabrication);
Director, ConAgra, Inc.
Bill L. Fairfield, Age 50......................................................... 3/1/85 303,025(1) 2.7%
President and Chief Executive Officer of the Company since March 1985; Director,
Norwest Bank Nebraska, Sitel Corp., and International Computer Group (ICG) Paris.
W. Grant Gregory, Age 56.......................................................... 12/17/92 2,100 *
Chairman, Gregory & Hoenemeyer, Inc., New York (investment banking); Director,
Bozell Inc., Ambac, Inc., HCIA Health Care Inc., and Renaissance Hotel Group
N.V.
Rick Inatome, Age 43.............................................................. 8/6/91 452,216(2) 4.0%
Chairman of the Board of Directors; Co-founder Inacomp Computer Centers, Inc. in
1976 and its Chief Executive Officer from 1979 to August 1991; Director, Atlantic
Beverage, Liberty BIDCO, Action Technologies, Inc., R.L. Polk, Saturn Electronic
and Engineering, Inc., and Tripe AAA.
Joseph Inatome, Age 71............................................................ 8/6/91 452,216(2) 4.0%
Co-founder Inacomp Computer Centers, Inc., and an executive officer until July
1989, and director until August 1991; Director, American Speedy Print.
Gary Schwendiman, Age 56.......................................................... 7/8/87 5,500 *
Professor of International Studies in the College of Business at the University of
Nebraska-Lincoln; Dean of the College of Business Administration for the
University of Nebraska-Lincoln from 1977 to 1994. Director, The Gallup
Organization, Inc. and Security Mutual Life Insurance Co.
Linda S. Wilson, Age 61........................................................... 3/4/97 -0- *
President of Radcliffe College; Director, Citizens Financial Group and Trustee,
Massachusetts General Hospital Corporation
<PAGE>
* Less than 1% of outstanding common stock.
(1) Beneficial ownership for Mr. Fairfield includes 138,100 shares which he
has, or will have within sixty days of February 28, 1997, the right to acquire
through the exercise of stock options.
(2) See notes (5) and (6) under Certain Stockholders.
</TABLE>
It is intended that proxies will be voted for the election of these
nominees. In the event any nominee should become unavailable, which the Board of
Directors has no reason to believe will be the case, the proxy holders will have
discretionary authority in that instance to vote the proxies for a substitute.
- 3 -
<PAGE>
DIRECTORS MEETINGS AND COMPENSATION
The Board of Directors meets on a regularly scheduled basis. The Board of
Directors met eleven times during 1996, including four meetings via telephone
conference.
The Board of Directors has assigned certain responsibilities to committees.
The Audit Committee, which met six times in 1996, is responsible for
recommending to the Board of Directors, subject to stockholder approval, the
independent certified public accounting firm to be retained each year. The Audit
Committee meets periodically with the certified public accountants and
management to review performance. Members of the Audit Committee are Joseph
Auerbach (Chairman), Joseph Inatome, Gary Schwendiman and Durward Varner.
The Compensation Committee, which met five times in 1996 (including one
meeting via telephone conference) determines the amounts and types of
remuneration to be paid to management employees. Members of the Compensation
Committee are W. Grant Gregory (Chairman), Joseph Auerbach, Gary Schwendiman and
Durward Varner.
The Nominating Committee, which met four times in 1996, identifies and
recommends candidates for election as directors of the Company. Members of the
Nominating Committee are Joseph Auerbach (Chairman) and Durward Varner. The
Committee's policy is to consider qualified candidates, including those
submitted by stockholders. Stockholders may recommend candidates by writing to
the Corporate Secretary.
Directors who are not employees of InaCom receive fees of $20,000 per annum
plus $1,250 per meeting attended ($500 for meetings via telephone conference)
and the right to designate a charity to receive up to $20,000 of computer
equipment annually. The compensation committee chairman receives an additional
$250 per compensation committee meeting and the audit committee chairman
receives an additional $750 per audit committee meeting. Directors who are not
employees of InaCom receive 100 shares of common stock of the Company for each
regular Board meeting attended by the director subsequent to the prior annual
stockholders' meeting (other than meetings by written consent or telephone
conference). Directors Auerbach, Joseph Inatome, Varner and Schwendiman each
received 700 shares of common stock and director Gregory received 600 shares of
common stock on April 18, 1996. On April 22, 1997, for meetings attended in
1996, directors Auerbach, Joseph Inatome, and Schwendiman will each receive 700
shares of common stock and directors Varner and Gregory will receive 600 shares
of common stock.
- 4 -
<PAGE>
SUMMARY COMPENSATION TABLE
The following Summary Compensation Table shows compensation paid by the
Company for services rendered during fiscal years 1996, 1995 and 1994 for the
Chief Executive Officer and the other four most highly compensated executive
officers of the Company whose salary and bonus exceeded $100,000 in 1996.
<TABLE>
LONG-TERM COMPENSATION
-------------------------
ANNUAL COMPENSATION RESTRICTED
------------------------ STOCK AWARDS NUMBER OF ALL OTHER
NAME AND PRINCIPAL POSITION YEAR SALARY BONUS(4) AMOUNT(1) OPTIONS COMPENSATION(2)
- ------------------------------------------------ --------- ----------- ----------- ------------ ----------- ----------------
<S> <C> <C> <C> <C> <C> <C>
Bill Fairfield 1996 $ 424,035 $ 925,742 0 0 $ 59,175
President, Chief Executive 1995 $ 373,554 $ 729,261 $ 419,000 12,500 $ 43,986
Officer and Director 1994 $ 296,151 $ 175,000 0 20,000 $ 27,081
Robert Schultz 1996 $ 199,519 $ 417,526 0 0 $ 33,133
Group Executive, 1995 $ 162,500 $ 343,780 0 8,000 $ 17,733
Information Systems 1994 $ 144,231 $ 72,000 0 10,000 $ 13,379
Group
Michael Steffan 1996 $ 176,923 $ 381,572 0 0 $ 22,801
President, Distribution 1995 $ 152,885 $ 292,914 0 8,000 $ 11,333
and Operations 1994 $ 121,154 $ 63,000 0 10,000 $ 8,746
George DeSola (3) 1996 $ 200,000 $ 355,076 0 0 $ 30,892
Group Executive, 1995 $ 181,731 $ 279,040 0 8,000 $ 20,923
Technology Services 1994 $ 136,634 $ 75,000 $ 60,750 7,000 $ 5,140
Group and President,
Inacom Communications
David Guenthner 1996 $ 181,731 $ 339,260 0 0 $ 26,581
Executive Vice President 1995 $ 175,000 $ 261,502 0 8,000 $ 15,370
and Chief Financial Officer 1994 $ 171,154 $ 50,000 0 10,000 $ 15,815
<PAGE>
(1) Mr. Fairfield received restricted stock awards of 55,000 shares in 1995
which vest in installments of 10% annually beginning on January 17, 1996. Mr.
DeSola received a restricted stock award of 6,000 shares in 1994. Vesting for
the restricted stock award for Mr. DeSola occurred in two equal installments on
March 16, 1995 and 1996. At the end of fiscal 1996, Mr. Fairfield was the only
executive officer named above holding restricted shares; the aggregate value of
Mr. Fairfield's unvested restricted stock (59,500 shares) valued at the closing
price of the Company's Common Stock at December 28, 1996 without giving effect
to the diminution of value attributable to the restrictions on such stock, was
$2,290,750.
(2) Amounts reported in this column represent contributions by the Company
to the Company's 401 (k) savings plan and the related supplemental savings plan.
Company contributions to such plans for 1996, 1995 and 1994, respectively for
the named executive officers were: Mr. Fairfield, $48,861, $33,685 and $16,735;
Mr. Schultz, $26,486, $11,099 and $6,719; Mr. Steffan, $21,143, $9,715 and
$7,121; Mr. DeSola, $21,557, $11,603 and $5,140; and Mr. Guenthner, $21,302,
$10,125 and $10,554. In addition, this column also includes the amount of the
premium paid by the Company in 1996, 1995 and 1994, respectively for
split-dollar insurance on the named executive officers under the Company's
Executive Death Benefit Plan as follows: Mr. Fairfield, $10,314, $10,301 and
$10,346; Mr. Schultz, $6,647, $6,634 and $6,660; Mr. DeSola, $9,335 in 1996 and
$9,320 in 1995; Mr. Steffan, $1,658, $1,618 and $1,625; and Mr. Guenthner,
$5,279, $5,245 and $5,261.
(3) Mr. DeSola became an executive officer of the Company in 1994.
(4) Bonus compensation includes all amounts paid for 1996 services and
includes certain amounts initially based on 1995 services but conditional on
1996 performance; payment of certain bonus amounts has been deferred and is
contingent on future performance. </TABLE>
- 5 -
<PAGE>
OPTION GRANTS IN FISCAL YEAR 1996
No stock options or stock appreciation rights were granted during fiscal
1996 to the executive officers named in the Summary Compensation Table.
- 6 -
<PAGE>
OPTION EXERCISES IN FISCAL 1996 AND FISCAL YEAR-END VALUES
The following table sets forth information on aggregate option exercises in
the last fiscal year and information with respect to the value of unexercised
options to purchase the Company's Common Stock for the executive officers named
in the Summary Compensation Table. <TABLE>
NUMBER
OF NUMBER OF UNEXERCISED VALUE OF UNEXERCISED
SHARES OPTIONS HELD AT IN-THE-MONEY OPTIONS HELD
ACQUIRED DECEMBER 28, 1996 AT DECEMBER 28, 1996(1)
ON VALUE --------------------------- ---------------------------
NAME EXERCISE REALIZED EXERCISABLE UNEXERCISABLE EXERCISABLE UNEXERCISABLE
- ---------------------------------------------------- -------- -------- ----------- ------------- ----------- -------------
<S> <C> <C> <C> <C> <C> <C>
Bill Fairfield 0 0 133,100 116,250 $3,164,527 $ 2,302,125
Robert Schultz 0 0 25,100 6,500 $ 652,310 $ 192,010
Mike Steffan 0 0 41,200 6,500 $1,110,971 $ 192,010
George DeSola 0 0 9,250 5,750 $ 261,885 $ 169,135
David Guenthner 10,000 95,375 51,900 6,500 $1,375,332 $ 192,010
(1) Value is common stock closing price of $38.50 per share at 1996 fiscal
year end, less the option exercise price, multiplied by the number of shares.
</TABLE>
- 7 -
<PAGE>
EMPLOYMENT, CONSULTING AND OTHER AGREEMENTS
A consulting agreement between Rick Inatome and Inacomp Computer Centers,
Inc., which was assumed by InaCom in connection with the 1991 merger between the
Company and Inacomp Computer Centers, Inc., became effective on August 5, 1994.
The consulting agreement requires payments to Mr. Inatome for a period of five
years beginning with a fee equal to 110% of base salary as of August 5, 1994 and
increasing annually by 10% of such base salary during the term thereafter. The
Company paid Mr. Inatome $356,250 under the consulting agreement during 1996.
The Company leases certain office and warehouse space in Troy, Michigan to
an entity controlled by Rick Inatome. The lease commenced February 1, 1995,
extends through January 31, 2000, and provides certain renewal options, an
option to terminate the lease after two years, and a purchase option. The lease
requires base rental payments of $10,050 per month with the lessee paying
applicable taxes, utilities and insurance.
The Company has long-term cash incentive agreements with Messrs. Fairfield,
Guenthner and Steffan. The agreements were entered into in 1987. Under each
agreement, the executive will receive a cash incentive bonus to be established
and paid as follows: the incentive bonus will be an amount equal to $7
multiplied by the number of shares acquired by the executive upon exercise of
stock options granted to such executive under the 1987 Stock Option Plan;
provided, however, that the $7 amount will be reduced on a dollar-for-dollar
basis if the fair market value of the Company's common stock on the date of
payment is less than $12 and will be further reduced on a proportionate basis if
the Company's return on stockholders' equity is less than 20% for the fiscal
year preceding the payment date.
The Company entered into change-in-control agreements (the "Agreements") in
1994 with seven of its senior officers, including Messrs. Fairfield, Schultz,
DeSola, Steffan and Guenthner. The Agreements provide generally that, if the
officer is terminated (excluding a termination on account of death or for cause,
but including a termination by the officer for good reason, all as defined in
the Agreements) within twelve months following a change-in-control of the
Company (as defined in the Agreements), the officer will receive certain
severance benefits including (i) payment of a lump sum equal to a multiple (3.0
for Mr. Fairfield, 1.5 for Messrs. Guenthner and Steffan, and 1.0 for the other
officers) of the sum of (A) the annual rate of base salary on the date of
termination and (B) the average annual incentive bonus received by the officer
for the three fiscal years preceding the fiscal year in which the
change-in-control occurred, and (ii) certain reasonable legal fees and expenses
incurred as a result of termination.
- 8 -
<PAGE>
COMPENSATION COMMITTEE REPORT ON EXECUTIVE COMPENSATION
The Company's executive compensation program is administered by the
Compensation Committee of the Board of Directors (the "Committee"). The
Committee is composed of nonemployee directors. The Committee's executive
compensation policies are designed to provide competitive levels of compensation
that integrate pay with the Company's annual and long-term performance goals,
reward above-average corporate performance, encourage constant strategic
analysis, recognize individual initiative and achievements, and assist the
Company in attracting, motivating and retaining qualified executives.
The Committee believes that the Company's current executive compensation
program has been designed and is administered in a manner consistent with these
objectives. The Committee also intends that compensation paid under the various
programs will generally meet the requirements to be deductible under the
Internal Revenue Code's $1 million compensation limit.
The program consists of three components: base salary, annual incentives,
and long-term incentives. The Committee recommended or established the executive
compensation within each of these components during 1996. In determining
competitive levels of compensation, the Committee obtains and utilizes
information from outside compensation consultants and other sources such as
executive compensation surveys and comparative analyses of compensation data in
proxy statements of others. The Committee specifically reviews compensation data
for those companies included in the Peer Group Index used in the performance
graph.
BASE SALARY. The Committee targets base salary for executives at a level
somewhat below the competitive median for the Company's peer competitors,
intending that the Company rely to a larger degree on annual incentives and
long-term compensation to achieve its compensation goals. For the purpose of
establishing these levels, the Committee reviews available compensation
information of competitive companies and is periodically advised by independent
compensation consultants concerning salary competitiveness.
The Committee approves all salary changes for the Company's executive
officers, and bases individual salary changes on a combination of factors,
including the performance of the executive, salary level relative to the
competitive market, and the recommendations of the Company's chief executive
officer. <PAGE>
The Committee increased the Chief Executive Officer's base salary for 1996
to $425,000 following a review of chief executive officer compensation in the
computer reseller industry and the Chief Executive Officer's performance in
achieving superior results during 1995.
ANNUAL INCENTIVES. The Committee believes that an executive's contribution
to the Company's profitability should form the basis for annual incentives,
since such results maximize earnings in the best interests of the Company. The
Committee also believes that bonuses are a necessary part of the Company's
compensation structure since base compensation is maintained at levels below
competitive medians.
The Committee established during 1995 a program for paying short-term cash
bonuses based on the Company's annual "economic value added" improvement (the
"Program"). The Program defines "economic value added" as net operating profit
after tax minus a capital charge based on the Company's cost of equity and debt
capital. Bonuses are earned only if the Company's economic value added increases
over the prior year, with higher bonus levels paid if the economic value added
exceeds targets established by the Committee. If the performance targets are
exceeded, two-thirds of the bonus attributable to such excess is payable over
the following two years, subject to reduction if the Company's economic value
added drops below the prior year's performance.
The Committee selected eleven participants for the Program during 1996 and
established the portion of the total award allocable to each such participant,
the economic value added performance for 1995 and the improvement targets for
1996. The allocable share of each participant, including the Chief Executive
Officer, was generally based on the relative relationship of each such person's
base salary.
Based on these factors, following a review of the Company's 1996 financial
statements, the Committee approved the payment of bonuses totaling $1,781,620 to
the eleven senior officers based on 1996 results, and payment of previously
deferred bonuses of $1,837,289 with respect to 1995 results. The bonus payments
for the named executive officers are reflected in the Summary Compensation
Table. Potential bonus payments aggregating approximately $1,677,132 were
deferred pursuant to the terms of the Program and will be earned and paid if the
Company meets certain economic value added levels in 1997 and 1998.
- 9 -
<PAGE>
COMPENSATION COMMITTEE REPORT ON EXECUTIVE COMPENSATION
LONG-TERM INCENTIVES. The Company's long-term incentives for executive
officers are provided through restricted stock awards and stock option grants
under InaCom's 1990 and 1994 Stock Plans. The Committee did not award any
restricted stock in 1996. The Committee awarded a special restricted stock grant
to the Chief Executive Officer in 1995, vesting over ten years, and did not
issue any stock-based grants to the Chief Executive Officer in 1996.
The Committee provides long-term incentives through annual grants of stock
options. Stock options are granted at the prevailing market price of the
Company's common stock and therefore have value only if the Company's stock
price increases. Option grants generally vest over a period of two to three
years, and the executives must be employed by the Company at the time of vesting
in order to exercise the options. The size of the option grants is based upon
competitive practice and position level, the expected contribution of each
member of the executive officer group to the Company's strategic and operational
goals, and the Committee's desire to provide the executive officers with an
opportunity to build a meaningful stake in the Company with the objective of
aligning the executive officers' long-range interests with those of the Company
stockholders. Past stock option grants are not considered when determining the
number of stock options to grant in a given year.
The Committee intends to grant options averaging an aggregate of 1% to 1.5%
of the Company's outstanding common stock on an annual basis. The Committee
granted options to 30 employees in October 1996 for an aggregate of 36,500
shares of the Company's common stock, which options vest in installments over
three years.
InaCom Compensation Committee
W. Grant Gregory, Chairman
Joseph Auerbach
Gary Schwendiman
Durward B. Varner
- 10 -
<PAGE>
APPROVAL OF THE INACOM EXECUTIVE INCENTIVE PLAN
The Board of Directors has unanimously approved the InaCom Executive
Incentive Plan (the "Plan"). The Plan is designed to provide incentives to
executive officers of InaCom who have significant responsibility for the success
and growth of InaCom and to assist InaCom in attracting, motivating and
retaining executive officers on a competitive basis.
Stockholder approval of the Plan is required if payments under the Plan are
to be tax deductible as performance-based compensation under Section 162(m) of
the Internal Revenue Code. Section 162(m) generally disallows a tax deduction
for compensation over $1 million paid to an executive officer named in the
Summary Compensation Table, unless such compensation qualifies as
performance-based. No payments will be made under the Plan if the stockholders
do not approve the Plan.
The principal features of the Plan are described below:
ADMINISTRATION OF THE PLAN
The Plan will be administered by the Compensation Committee of the Board of
Directors (the "Committee"). The Committee will have the sole discretion to
interpret the Plan; approve a pre-established objective performance measure or
measures annually; certify the level to which each performance measure was
attained prior to any payment under the Plan; approve the amount of awards made
under the Plan; and determine who shall receive any payment under the Plan.
The Committee will have full power and authority to administer and
interpret the Plan and to adopt such rules, regulations and guidelines for the
administration of the Plan and for the conduct of its business as the Committee
deems necessary or advisable. The Committee's interpretations of the Plan, and
all actions taken and determinations made by the Committee pursuant to the
powers vested in it, will be conclusive and binding on all parties concerned,
including InaCom, its stockholders and any person receiving an award under the
Plan.
ELIGIBILITY
Executive officers and other key management personnel of InaCom will be
eligible to receive awards under the Plan. The Committee will designate the
executive officers and other key management personnel who will participate in
the Plan each year. <PAGE>
AWARDS
The Committee will establish annual and/or long-term incentive award
targets for participants within ninety days after the commencement of each
fiscal year (or such later date as may be permitted under Section 162(m) of the
Internal Revenue Code); provided, if an individual becomes an executive officer
during the year, such individual may be granted eligibility for an incentive
award for that year upon such individual becoming an executive officer. Since
the number of participants may change over time and the selection of
participants is discretionary, it is not possible to determine the number of
persons who will be eligible for awards under the Plan during its term. However,
it is anticipated that approximately thirteen individuals, including InaCom's
Chief Executive Officer, will be eligible to participate in the Plan.
The Committee will also establish annual and/or long-term performance
targets which must be achieved in order for an award to be earned under the
Plan. Such targets will be based on cash earnings, earnings per share, growth in
cash earnings per share, achievement of annual operating profit plans, return on
equity performance, economic value added or similar financial performance
measures as may be determined by the Committee. The specific performance targets
for each participant will be established in writing by the Committee within
ninety days after the commencement of the fiscal year to which the performance
target relates. The performance target will be established in such a manner that
a third party having knowledge of the relevant facts could determine whether the
performance goal has been met.
Awards will be payable following the completion of the applicable fiscal
year upon certification by the Committee that InaCom achieved the specified
performance targets established for the participant. Notwithstanding the
attainment by InaCom of the specified performance targets, the Committee has the
discretion, for each participant, to reduce some or all of an award that would
otherwise be paid. In no event may a participant receive an award of more than
$2,500,000 in any fiscal year under the Plan.
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<PAGE>
EFFECTIVE DATE, AMENDMENTS AND TERMINATION
The Plan becomes effective beginning with fiscal 1997, upon approval by the
stockholders of InaCom. The Committee may at any time terminate or from time to
time amend the Plan in whole or in part, but no such action shall adversely
affect any rights or obligations with respect to any awards theretofore made
under the Plan. However, unless the stockholders of InaCom shall have first
approved thereof, no amendment of the Plan shall be effective which would
increase the maximum amount which can be paid to any one executive officer under
the Plan in any fiscal year, which would change the specified performance goals
for payment of awards, or which would modify the requirement as to eligibility
for participation in the Plan.
VOTE REQUIRED FOR APPROVAL
The favorable vote of the holders of a majority of the outstanding shares
of InaCom's common stock present in person or represented by proxy at the
meeting is required for approval of the Plan.
THE BOARD OF DIRECTORS RECOMMENDS A VOTE FOR THE APPROVAL OF
THE INACOM EXECUTIVE INCENTIVE PLAN.
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<PAGE>
APPROVAL OF THE INACOM 1997 STOCK PLAN
GENERAL
InaCom's Board of Directors has adopted the InaCom 1997 Stock Plan (the
"Plan"), subject to stockholder approval. The Board of Directors recognizes the
value of stock incentives in assisting InaCom in the hiring and retaining of
management personnel and in enhancing of the long-term mutuality of interest
between InaCom stockholders and its directors, officers and employees. Since
fewer than 100,000 shares of common stock remain available for grant under
InaCom's current stock plans, the Board of Directors has approved the Plan.
Assuming exercise of all outstanding stock options and assuming conversion of
all outstanding convertible debentures, InaCom would have approximately
13,800,000 shares of common stock outstanding. The Board intends that the common
stock available under the Plan shall be used for two purposes. First, an
aggregate of 1,100,000 shares may be used as stock incentives for officers and
other employees of the Company. Second, up to 300,000 shares may be used solely
for the purpose of granting stock options exercisable at fair market value to
substantially all of the Company's 3,100 employees (excluding executive
officers) as a special one-time grant on the Company's tenth anniversary as a
public company in 1997.
Under the Plan, the Compensation Committee (the "Committee") of the Board
may grant stock options, stock appreciation rights, restricted stock and stock
bonuses to officers and other employees of InaCom and its subsidiaries. The
number of grantees may vary from year to year. The number of employees eligible
to participate in the Plan is estimated to be approximately 3,100. The Committee
administers the Plan and its determinations are binding upon all persons
participating in the Plan.
The maximum number of shares of InaCom's common stock that may be issued
under the Plan is 1,400,000. Any shares of common stock subject to an award
which for any reason are canceled, terminated or otherwise settled without the
issuance of any common stock are again available for awards under the Plan. The
maximum number of shares of common stock which may be issued under the Plan to
any one employee shall not exceed 20% of the aggregate number of shares of
common stock that may be issued under the Plan. The shares may be unissued
shares or treasury shares. If there is a stock split, stock dividend,
recapitalization or other relevant change affecting InaCom's common stock,
appropriate adjustments may be made by the Committee in the number of shares
issuable in the future and in the number of shares and price under all
outstanding grants made before the event.
<PAGE>
GRANTS UNDER THE PLAN
STOCK OPTIONS FOR EMPLOYEES. The Committee may grant employees nonqualified
options and options qualifying as incentive stock options. The option price of
either a nonqualified stock option or an incentive stock option will be the fair
market value of the common stock on the date of grant. Options qualifying as
incentive stock options must meet certain requirements of the Internal Revenue
Code, including the requirement that the aggregate fair market value of the
common stock (determined at the time of the grant of the option) with respect to
which such options are exercisable for the first time by an employee during any
calendar year shall not exceed $100,000. To exercise an option, an employee may
pay the option price in cash, or if permitted by the Committee, by withholding
shares otherwise issuable on exercise of the option or by delivering other
shares of common stock if such shares have been owned by the optionee for at
least six months. The term of each option will be fixed by the Committee but may
not exceed ten years from the date of grant. The Committee will determine the
time or times when each option is exercisable. Options may be made exercisable
in installments, and the exercisability of options may be accelerated by the
Committee. All outstanding options become immediately exercisable in the event
of a change-in-control of InaCom.
STOCK APPRECIATION RIGHTS. The Committee may grant a stock appreciation
right (an "SAR") in conjunction with an option granted under the Plan or
separately from any option. Each SAR granted in tandem with an option may be
exercised only to the extent that the corresponding option is exercised, and
such SAR terminates upon termination or exercise of the corresponding option.
Upon the exercise of an SAR granted in tandem with an option, the corresponding
option will terminate. SAR's granted separately from options may be granted on
such terms and conditions as the Committee establishes. If an employee exercises
an SAR, the employee will generally receive a payment equal to the excess of the
fair market value at the time of exercise of the shares with respect to which
the SAR is being exercised over the price of such shares as fixed by the
Committee at the time the SAR was granted. Payment may be made in cash, in
shares of InaCom common stock, or any combination of cash and shares as the
Committee determines.
RESTRICTED STOCK. The Committee may grant awards of restricted stock to
employees under the Plan. The restrictions on such shares shall be established
by the Committee, which may include restrictions relating to
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<PAGE>
continued employment and InaCom financial performance. The Committee may issue
such restricted stock awards without any cash payment by the employee, or with
such cash payment as the Committee may determine. The Committee has the right to
accelerate the vesting of restricted shares and to waive any restrictions. All
restrictions lapse in the event of a change-in-control of InaCom.
STOCK BONUSES. The Committee may grant a bonus in shares of InaCom common
stock to employees under the Plan. Such stock bonuses may be in lieu of cash
compensation otherwise payable to such employee, or may be in addition to such
cash compensation.
DIRECTOR PARTICIPATION. Each non-employee director will receive under the
Plan (i) an annual grant of 150 shares of common stock for each board meeting
attended by such director (other than meetings by written consent or telephone
communications) and (ii) an annual grant of a nonstatutory stock option to
acquire 1,000 shares of common stock exercisable at the fair market value of the
common stock on the date of grant. The per meeting grants under the Plan will
commence at the time of the 1998 annual stockholders' meeting (with respect to
meetings held subsequent to the 1997 annual stockholders' meeting), and the
annual stock option grant will first be made immediately following the 1997
annual stockholders' meeting. In addition, each non-employee director who first
becomes a director on or after January 1, 1997 will receive a one-time grant of
a nonstatutory stock option to acquire 5,000 shares of common stock exercisable
at the fair market value on the date on which such person first becomes a
director of the Company, with such options becoming exercisable in one-third
increments beginning on the first anniversary of the date of grant. Pursuant to
this provision, directors Bay and Wilson received option grants for 5,000 shares
each on March 4, 1997, contingent upon stockholder approval of the Plan.
TAX WITHHOLDING. The Committee may permit an employee to satisfy applicable
federal, state and local income tax withholding requirements through the
delivery to InaCom of previously-acquired shares of common stock or by having
shares otherwise issuable under the Plan withheld by InaCom.
OTHER INFORMATION. The Board may terminate the Plan at any time but such
termination shall not affect any stock options, SAR's, restricted stock or stock
bonuses then outstanding under the Plan. Unless terminated by action of the
Board, the Plan will continue in effect until December 31, 2006, but awards
granted prior to such date will continue in effect until they expire in
accordance with their terms. The Board may also amend the Plan as it deems
advisable. Amendments which materially modify the requirements for participation
in the Plan or increase the number of shares of common stock subject to issuance
under the Plan must be submitted to stockholders for approval.
<PAGE>
FEDERAL INCOME TAX CONSEQUENCES
With respect to incentive stock options, if the holder of an option does
not dispose of the shares acquired upon exercise of the option within one year
from the transfer of such shares to such employee, or within two years from the
date the option to acquire such shares is granted, for federal income tax
purposes (i) the optionee will not recognize any income at the time of the
exercise of the option; (ii) the excess of the fair market value of the shares
as of the date of exercise over the option price will constitute an "item of
adjustment" for purposes of the alternative minimum tax; and (iii) the
difference between the option price and the amount realized upon the sale of the
shares by the optionee will be treated as a long-term capital gain or loss.
InaCom will not be allowed a deduction for federal income tax purposes in
connection with the granting of an incentive stock option or the issuance of
shares thereunder.
With respect to the grant of options which are not incentive stock options,
the person receiving an option will recognize no income on receipt thereof. Upon
the exercise of the option, the optionee will recognize ordinary income in the
amount of the difference between the option price and the fair market value of
the shares on the date the option is exercised. InaCom will receive an
equivalent deduction at that time.
With respect to restricted stock awards and bonuses of common stock, an
amount equal to the fair market value of the InaCom shares distributed to the
employee (in excess of any purchase price paid by the employee) will be
includable in the employee's gross income at the time of receipt unless the
award is not transferable and subject to a substantial risk of forfeiture as
defined in Section 83 of the Internal Revenue Code (a "Forfeiture Restriction").
If an employee receives an award subject to a Forfeiture Restriction, the
employee may elect to include in gross income the fair market value of the
award. In the absence of such an election, the employee will include in gross
income the fair market value of the award subject to a Forfeiture Restriction on
the earlier of the date such restrictions lapse or the date the award becomes
transferable. InaCom is entitled to a deduction at the time and in the amount
income is included in the gross income of an employee.
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<PAGE>
With respect to stock appreciation rights, the amount of any cash (or the
fair market value of any common stock) received upon the exercise of a stock
appreciation right will be subject to ordinary income tax in the year of receipt
and InaCom will be entitled to a deduction for such amount.
VOTE REQUIRED
The favorable vote of the holders of a majority of the outstanding shares
of InaCom's common stock present in person or represented by proxy at the
meeting is required for approval of the Plan.
THE BOARD OF DIRECTORS RECOMMENDS A VOTE FOR THE APPROVAL
OF THE INACOM 1997 STOCK PLAN.
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<PAGE>
STOCK PRICE PERFORMANCE GRAPH
The following performance graph compares the performance of the Company's
common stock to the Total Return Index for the NASDAQ Stock Market-United States
Companies (Broad Market Index) and a Peer Group Index developed by the Company.
The Peer Group Index consists of Intelligent Electronics, Inc., CompuCom
Systems, Inc., MicroAge, Inc. and Dataflex Corporation. The performance graph
shows cumulative, five-year stockholder returns with the returns of the Peer
Group weighted according to each such company's stock market capitalization. The
graph assumes that the value of the investment in the Company's common stock and
each Index was $100 at December 31, 1991 and that any dividends were reinvested.
EDGAR REPRESENTATION OF DATA POINTS USED IN PRINTED GRAPHIC
NASDAQ STOCK MARKET SELF-DETERMINED
InaCom Corp (US Companies) Peer Group
----------- -------------- ----------
1991 100.00 100.00 100.00
1992 146.20 118.60 72.70
1993 133.30 135.00 180.00
1994 71.80 135.30 74.50
1995 144.90 191.40 86.60
1996 394.90 235.70 111.20
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<PAGE>
COMPLIANCE WITH SECTION 16(A) OF THE SECURITIES EXCHANGE ACT
Section 16 (a) of the Securities Exchange Act of 1934 requires executive
officers and directors to file reports of changes in ownership of InaCom's
common stock with the Securities and Exchange Commission. Executive officers and
directors are required by SEC regulations to furnish InaCom with copies of all
Section 16 (a) forms they file. Based solely on a review of the copies of such
forms furnished to InaCom and written representations from InaCom's executive
officers and directors, InaCom believes that all persons subject to these
reporting requirements filed the required reports on a timely basis during 1996,
except that Joseph Inatome, a director, did not timely report one transaction.
INDEPENDENT PUBLIC ACCOUNTANTS
The firm of KPMG Peat Marwick LLP has been appointed by the Board of
Directors to conduct the 1997 audit of the Company's financial statements. The
same firm conducted the 1996 audit. The Board of Directors requests stockholder
approval of their appointment. A representative from KPMG Peat Marwick LLP will
be present at the Stockholders' Meeting and will have the opportunity to make a
statement and to respond to appropriate questions.
STOCKHOLDER PROPOSALS
Stockholder proposals intended to be presented at the next annual
stockholders' meeting must be received by the Company no later than November 20,
1997 in order for such proposals to be considered for inclusion in the Company's
proxy statement relating to such meeting.
The Company's bylaws set forth certain procedures which stockholders must
follow in order to nominate a director or present any other business at an
annual stockholders' meeting. Generally, a stockholder must give timely notice
to the Secretary of the Company. To be timely, such notice must be received by
the Company at 10810 Farnam Drive, Omaha, Nebraska, 68154, not less than sixty
nor more than ninety days prior to the meeting. The bylaws specify the
information which must accompany any such stockholder notice. Details on the
provision of the bylaws may be obtained by any stockholder from the Secretary of
the Company.
OTHER MATTERS
The Board of Directors does not know of any matter, other than those
described above, that may be presented for action at the annual meeting of
stockholders. If any other matter or proposal should be presented and should
properly come before the meeting for action, the persons named in the
accompanying proxy will vote upon such matter and upon such proposal in
accordance with their best judgment.
By Order of the Board of Directors
[SIGNATURE]
MICHAEL A. STEFFAN
Secretary
InaCom Corp.
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<PAGE>
I N A C O M C O R P.
PROXY FOR ANNUAL MEETING OF STOCKHOLDERS APRIL 22, 1997
The undersigned hereby constitutes and appoints Bill L. Fairfield and David C.
Guenthner, or either of them, with full power of substitution in each of them,
for and on behalf of the undersigned to vote as proxies, as directed and
permitted herein at the annual meeting of stockholders of the Company to be held
at the Omaha Community Playhouse, 6915 Cass Street, Omaha, Nebraska 68132, on
April 22, 1997 at 9:00 a.m. and at any adjournment thereof, upon matters set
forth in the Proxy Statement, and, in their judgment and discretion, upon such
other business as may properly come before the meeting.
ITEM 1.
Election of Directors - for the following nominees for Director:
Joseph Auerbach, Mogens C. Bay, Bill L. Fairfield, W. Grant Gregory, Joseph T.
Inatome, Rick Inatome, Gary Schwendiman and Linda S. Wilson.
/ / Vote For All Nominees
/ / Withhold Vote For All Nominees
Withhold Vote For Only The Following Nominee(s) ________________________________
ITEM 2.
Approval of appointment of independent accountants KPMG Peat Marwick LLP for
fiscal 1997.
/ / For / / Against / / Abstain
ITEM 3.
Approval of the Inacom Executive Incentive Plan.
/ / For / / Against / / Abstain
ITEM 4.
Approval of the 1997 Inacom Stock Plan.
/ / For / / Against / / Abstain
THIS PROXY IS SOLICITED ON BEHALF OF THE BOARD OF DIRECTORS. 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, 3 and 4.
Dated this _____ day of _________________________________________________,
1997.
Signature______________________________________________________________________
Signature______________________________________________________________________
(When signing as attorney, executor, administrator, trustee, guardian
or conservator, designate full title. All joint tenants must sign.)
<PAGE>
Appendix
Pursuant to Instructions to Item 10 of Rule 14a-101
INACOM 1997 STOCK PLAN
SECTION 1
NAME AND PURPOSE
1.1 Name. The name of the plan shall be the InaCom 1997
Stock Plan (the "Plan").
1.2. Purpose of Plan. The purpose of the Plan is to foster and promote
the long-term financial success of the Company and increase stockholder value by
(a) motivating superior performance by means of stock incentives, (b)
encouraging and providing for the acquisition of an ownership interest in the
Company by Employees and (c) enabling the Company to attract and retain the
services of a management team responsible for the long-term financial success of
the Company.
SECTION 2
DEFINITIONS
2.1 Definitions. Whenever used herein, the following terms
shall have the respective meanings set forth below:
(a) "Act" means the Securities Exchange Act of 1934, as
amended.
(b) "Award" means any Option, Stock Appreciation Right, Restricted
Stock, Stock Bonus, or any combination thereof, including
Awards combining two or more types of Awards in a single
grant.
(c) "Board" means the Board of Directors of the Company.
(d) "Code" means the Internal Revenue Code of 1986, as
amended.
(e) "Committee" means the Compensation Committee of the Board,
which shall consist of two or more members, each of whom shall
be a "non-employee director" within the meaning of Rule 16b-3
as promulgated under the Act.
(f) "Company" means InaCom Corp., a Delaware corporation (and
any successor thereto) and its Subsidiaries.
(g) "Director Award" means an award of Stock and a grant of stock
options granted to each Eligible Director pursuant to Section
7.1 without any action by the Board or the Committee.
<PAGE>
(h) "Eligible Director" means a person who is serving as a
member of the Board and who is not an Employee.
(i) "Employee" means any employee of the Company or any of
its Subsidiaries.
(j) "Fair Market Value" means, on any date, the average of
the high and low sales prices of the Stock as reported on
the National Association of Securities Dealers Automated
Quotation system (or on such other recognized market or
quotation system on which the trading prices of the Stock
are traded or quoted at the relevant time) on such date.
In the event that there are no Stock transactions
reported on such system (or such other system) on such
date, Fair Market Value shall mean the average of the
high and low sale prices on the immediately preceding
date on which Stock transactions were so reported.
(k) "Option" means the right to purchase Stock at a stated price
for a specified period of time. For purposes of the Plan, an
Option may be either (i) an Incentive Stock Option within the
meaning of Section 422 of the Code or (ii) a Nonstatutory
Stock Option.
(l) "Participant" means any Employee designated by the
Committee to participate in the Plan.
(m) "Plan" means the InaCom Corp. 1997 Stock Plan, as in
effect from time to time.
(n) "Restricted Stock" shall mean a share of Stock granted to
a Participant subject to such restrictions as the
Committee may determine.
(o) "Stock" means the Common Stock of the Company, par value
$.10 per share.
(p) "Stock Appreciation Right" means the right, subject to
such terms and conditions as the Committee may determine,
to receive an amount in cash or Stock, as determined by
the Committee, equal to the excess of (i) the Fair Market
Value, as of the date such Stock Appreciation Right is
exercised, of the number shares of Stock covered by the
Stock Appreciation Right being exercised over (ii) the
aggregate exercise price of such Stock Appreciation
Right.
(q) "Stock Bonus" means the grant of Stock as compensation from
the Company, which may be in lieu of cash compensation
otherwise receivable by the Participant or in addition to such
cash compensation.
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<PAGE>
(r) "Subsidiary" means any corporation or partnership in which the
Company owns, directly or indirectly, 50% or more of the total
combined voting power of all classes of stock of such
corporation or of the capital interest or profits interest of
such partnership.
2.2 Gender and Number. Except when otherwise indicated by the context,
words in the masculine gender used in the Plan shall include the feminine
gender, the singular shall include the plural, and the plural shall include the
singular.
SECTION 3
ELIGIBILITY AND PARTICIPATION
Except as otherwise provided in Section 7.1, the only persons eligible to
participate in the Plan shall be those Employees selected by the Committee as
Participants.
SECTION 4
POWERS OF THE COMMITTEE
4.1 Power to Grant. The Committee shall determine the Participants to whom
Awards shall be granted, the type or types of Awards to be granted, and the
terms and conditions of any and all such Awards. The Committee may establish
different terms and conditions for different types of Awards, for different
Participants receiving the same type of Awards, and for the same Participant for
each Award such Participant may receive, whether or not granted at different
times.
4.2 Administration. The Committee shall be responsible for the
administration of the Plan. The Committee, by majority action thereof, is
authorized to prescribe, amend, and rescind rules and regulations relating to
the Plan, to provide for conditions deemed necessary or advisable to protect the
interests of the Company, and to make all other determinations necessary or
advisable for the administration and interpretation of the Plan in order to
carry out its provisions and purposes. Determinations, interpretations, or other
actions made or taken by the Committee pursuant to the provisions of the Plan
shall be final, binding, and conclusive for all purposes and upon all persons.
SECTION 5
STOCK SUBJECT TO PLAN
5.1 Number. Subject to the provisions of Section 5.3, the number of shares
of Stock subject to Awards (including Director
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<PAGE>
Awards) under the Plan may not exceed 1,400,000 shares of Stock. The shares to
be delivered under the Plan may consist, in whole or in part, of treasury Stock
or authorized but unissued Stock, not reserved for any other purpose. The
maximum number of shares of Stock with respect to which Awards may be granted to
any one Employee under the Plan is 20% of the aggregate number of shares of
Stock available for Awards under Section 5.1.
5.2 Cancelled, Terminated or Forfeited Awards. Any shares of Stock subject
to an Award which for any reason are cancelled, terminated or otherwise settled
without the issuance of any Stock shall again be available for Awards under the
Plan.
5.3 Adjustment in Capitalization. In the event of any Stock dividend or
Stock split, recapitalization (including, without limitation, the payment of an
extraordinary dividend), merger, consolidation, combination, spin-off,
distribution of assets to stockholders, exchange of shares, or other similar
corporate change, (i) the aggregate number of shares of Stock available for
Awards under Section 5.1 and (ii) the number of shares and exercise price with
respect to Options and the number, prices and dollar value of other Awards, may
be appropriately adjusted by the Committee, whose determination shall be
conclusive. If, pursuant to the preceding sentence, an adjustment is made to the
number of shares of Stock authorized for issuance under the Plan, a
corresponding adjustment shall be made with respect to Director Awards granted
pursuant to Section 7.1.
SECTION 6
STOCK OPTIONS
6.1 Grant of Options. Options may be granted to Participants at such time
or times as shall be determined by the Committee. Options granted under the Plan
may be of two types: (i) Incentive Stock Options and (ii) Nonstatutory Stock
Options. The Committee shall have complete discretion in determining the number
of Options, if any, to be granted to a Participant. Each Option shall be
evidenced by an Option agreement that shall specify the type of Option granted,
the exercise price, the duration of the Option, the number of shares of Stock to
which the Option pertains, the exercisability (if any) of the Option in the
event of death, retirement, disability or termination of employment, and such
other terms and conditions not inconsistent with the Plan as the Committee shall
determine.
6.2 Option Price. Nonstatutory Stock Options and Incentive Stock Options
granted pursuant to the Plan shall have an exercise price which is not less than
the Fair Market Value on the date the Option is granted.
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<PAGE>
6.3 Exercise of Options. Options awarded to a Participant under the Plan
shall be exercisable at such times and shall be subject to such restrictions and
conditions as the Committee may impose, subject to the Committee's right to
accelerate the exercisability of such Option in its discretion. Notwithstanding
the foregoing, no Option shall be exercisable for more than ten years after the
date on which it is granted.
6.4 Payment. The Committee shall establish procedures governing the
exercise of Options, which shall require that written notice of exercise be
given and that the Option price be paid in full in cash or cash equivalents,
including by personal check, at the time of exercise or pursuant to any
arrangement that the Committee shall approve. The Committee may, in its
discretion, permit a Participant to make payment (i) in Stock already owned by
the Participant valued at its Fair Market Value on the date of exercise (if such
Stock has been owned by the Participant for at least six months) or (ii) by
electing to have the Company retain Stock which would otherwise be issued on
exercise of the Option, valued at its Fair Market Value on the date of exercise.
As soon as practicable after receipt of a written exercise notice and full
payment of the exercise price, the Company shall deliver to the Participant a
certificate or certificates representing the acquired shares of Stock.
6.5 Incentive Stock Options. Notwithstanding anything in the Plan to the
contrary, no term of this Plan relating to Incentive Stock Options shall be
interpreted, amended or altered, nor shall any discretion or authority granted
under the Plan be so exercised, so as to disqualify the Plan under Section 422
of the Code, or, without the consent of any Participant affected thereby, to
cause any Incentive Stock Option previously granted to fail to qualify for the
Federal income tax treatment afforded under Section 421 of the Code.
SECTION 7
DIRECTOR AWARDS
7.1 Amount of Award. Each Eligible Director shall receive an annual grant
of Stock in the amount of 150 shares of Stock for each Board meeting attended by
such Eligible Director (other than meetings by written consent or telephone
communications); such grants shall be made on the date of and immediately
following the annual meeting of stockholders (beginning with the 1998 annual
stockholders' meeting) based on the number of Board meetings attended subsequent
to the prior annual stockholders' meeting. In addition, each Eligible Director
shall receive an annual grant of a Nonstatutory Stock Option to acquire 1,000
shares of Stock exercisable at the Fair Market Value of the Company's common
stock on the date of grant; such grant shall be made on the date of and
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<PAGE>
immediately following the annual meeting of stockholders (beginning with the
1997 Annual Stockholders' Meeting). Furthermore, each Eligible Director who
becomes an Eligible Director for the first time on or after January 1, 1997
shall receive a one-time grant of a Nonstatutory Stock Option to acquire 5,000
shares of Stock exercisable at the Fair Market Value of the Company's common
stock on the date on which such person first becomes a director of the Company;
such options shall become exercisable in one-third increments beginning on the
first anniversary of the date of grant. The Stock and Nonstatutory Stock Options
awarded to a director hereunder shall be appropriately adjusted in the event of
any stock changes as described in Section 5.3.
SECTION 8
STOCK APPRECIATION RIGHTS
8.1 SAR's In Tandem with Options. Stock Appreciation Rights may be granted
to Participants in tandem with any Option granted under the Plan, either at or
after the time of the grant of such Option, subject to such terms and
conditions, not inconsistent with the provisions of the Plan, as the Committee
shall determine. Each Stock Appreciation Right shall only be exercisable to the
extent that the corresponding Option is exercisable, and shall terminate upon
termination or exercise of the corresponding Option. Upon the exercise of any
Stock Appreciation Right, the corresponding Option shall terminate.
8.2 Other Stock Appreciation Rights. Stock Appreciation Rights may also be
granted to Participants separately from any Option, subject to such terms and
conditions, not inconsistent with the provisions of the Plan, as the Committee
shall determine.
SECTION 9
RESTRICTED STOCK
9.1 Grant of Restricted Stock. The Committee may grant Restricted Stock to
Participants at such times and in such amounts, and subject to such other terms
and conditions not inconsistent with the Plan as it shall determine. Each grant
of Restricted Stock shall be subject to such restrictions, which may relate to
continued employment with the Company, performance of the Company, or other
restrictions, as the Committee may determine. Each grant of Restricted Stock
shall be evidenced by a written agreement setting forth the terms of such Award.
9.2 Removal of Restrictions. The Committee may accelerate or waive such
restrictions in whole or in part at any time in its discretion.
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SECTION 10
STOCK BONUSES
10.1 Grant of Stock Bonuses. The Committee may grant a Stock Bonus to a
Participant at such times and in such amounts, and subject to such other terms
and conditions not inconsistent with the Plan, as it shall determine.
10.2 Effect on Compensation. The Committee may from time to time determine
to grant a Stock Bonus in lieu of salary or cash bonuses otherwise payable to a
Participant.
SECTION 11
AMENDMENT, MODIFICATION, AND TERMINATION OF PLAN
11.1 General. The Board may from time to time amend, modify or terminate
any or all of the provisions of the Plan, subject to the provisions of this
Section 11.1. The Board may not change the Plan in a manner which would prevent
outstanding Incentive Stock Options granted under the Plan from being Incentive
Stock Options without the consent of the optionees concerned. Furthermore, the
Board may not make any amendment which would (i) materially modify the
requirements for participation in the Plan or (ii) increase the number of shares
of Stock subject to Awards under the Plan pursuant to Section 5.1, in each case
without the consent and approval of the holders of a majority of the outstanding
shares of Stock entitled to vote thereon. No amendment or modification shall
affect the rights of any Employee with respect to a previously granted Award,
nor shall any amendment or modification affect the rights of any Eligible
Director pursuant to a previously granted Director Award.
11.2 Termination of Plan. No further Options shall be granted under the
Plan subsequent to December 31, 2006, or such earlier date as may be determined
by the Board.
SECTION 12
MISCELLANEOUS PROVISIONS
12.1 Beneficiary Designation. Each Participant under the Plan may from time
to time name any beneficiary or beneficiaries (who may be named contingent or
successively) to whom any benefit under the Plan is to be paid or by whom any
right under the Plan is to be exercised in case of his death. Each designation
will revoke all prior designations by the same Participant shall be in a form
prescribed by the Committee, and will be effective only when filed
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in writing with the Committee. In the absence of any such designation, Awards
outstanding at death may be exercised by the Participant's surviving spouse, if
any, or otherwise by his estate, subject to the terms and conditions of the
Award.
12.2 No Guarantee of Employment or Participation. Nothing in the Plan shall
interfere with or limit in any way the right of the Company or any Subsidiary to
terminate any Participant's employment at any time, nor confer upon any
Participant any right to continue in the employ of the Company or any
Subsidiary. No Employee shall have a right to be selected as a Participant, or,
having been so selected, to receive any future Awards.
12.3 Tax Withholding. The Company shall have the power to withhold, or
require a Participant or Eligible Director to remit to the Company, an amount
sufficient to satisfy federal, state, and local withholding tax requirements on
any Award under the Plan, and the Company may defer issuance of Stock until such
requirements are satisfied. The Committee may, in its discretion, permit a
Participant to elect, subject to such conditions as the Committee shall impose,
(i) to have shares of Stock otherwise issuable under the Plan withheld by the
Company or (ii) to deliver to the Company previously acquired shares of Stock,
in each case having a Fair Market Value sufficient to satisfy all or part of the
Participant's estimated total federal, state and local tax obligation associated
with the transaction.
12.4 Change of Control. On the date of a Change of Control, all outstanding
options and stock appreciation rights shall become immediately exercisable and
all restrictions with respect to Restricted Stock shall lapse. "Change of
Control" shall mean:
(i) The acquisition (other than from the Company) by any
person, entity or "group", within the meaning of Section
13(d)(3) or 14(d)(2) of the Act (excluding any
acquisition or holding by (i) the Company or its
subsidiaries or (ii) any employee benefit plan of the
Company or its subsidiaries which acquires beneficial
ownership of voting securities of the Company) of
beneficial ownership (within the meaning of Rule 13d-3
promulgated under the Act) of 50% or more of either the
then outstanding shares of common stock or the combined
voting power of the Company's then outstanding voting
securities entitled to vote generally in the election of
directors; or
(ii) Individuals who, as of the date hereof, constitute the Board
(as of the date hereof the "Incumbent Board") cease for any
reason to constitute at least a majority of the Board,
provided that any person becoming a director subsequent to the
date hereof whose election, or nomination for the election by
the Company's
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stockholders, was approved by a vote of at least a majority of
the directors then comprising the Incumbent Board shall be,
for purposes of this Plan, considered as though such person
were a member of the Incumbent Board; or
(iii) Approval by the stockholders of the Company of a
reorganization, merger or consolidation, in each case,
with respect to which persons who were the stockholders
of the Company immediately prior to such reorganization,
merger or consolidation do not, immediately thereafter,
own more than 50% of the combined voting power entitled
to vote generally in the election of directors of the
reorganized, merged or consolidated company's then
outstanding voting securities, or a liquidation or
dissolution of the Company or of the sale of all or
substantially all of the assets of the Company.
12.5 Company Intent. The Company intends that the Plan comply in all
respects with Rule 16b-3 under the Act, and any ambiguities or inconsistencies
in the construction of the Plan shall be interpreted to give effect to such
intention.
12.6 Requirements of Law. The granting of Awards and the issuance of shares
of Stock shall be subject to all applicable laws, rules, and regulations, and to
such approvals by any governmental agencies or securities exchanges as may be
required.
12.7 Effective Date. The Plan shall be effective upon its adoption by the
Board subject to approval by the affirmative vote of the holders of a majority
of the shares of Stock present in person or by proxy at a stockholders' meeting.
12.8 Governing Law. The Plan, and all agreements hereunder, shall be
construed in accordance with and governed by the laws of the State of Delaware.
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INACOM EXECUTIVE INCENTIVE PLAN
1. Purpose. The principal purpose of the InaCom Corp. Executive Incentive
Plan (the "Plan") is to provide incentives to executive officers of InaCom Corp.
("InaCom") who have significant responsibility for the success and growth of
InaCom and to assist InaCom in attracting, motivating and retaining executive
officers on a competitive basis.
2. Administration of the Plan. The Plan shall be administered by the
Compensation Committee of the Board of Directors (the "Committee"). The
Committee shall have the sole discretion to interpret the Plan; approve a
pre-established objective performance measure or measures annually; certify the
level to which each performance measure was attained prior to any payment under
the Plan; approve the amount of awards made under the Plan; and determine who
shall receive any payment under the Plan.
The Committee shall have full power and authority to administer and
interpret the Plan and to adopt such rules, regulations and guidelines for the
administration of the Plan and for the conduct of its business as the Committee
deems necessary or advisable. The Committee's interpretations of the Plan, and
all actions taken and determinations made by the Committee pursuant to the
powers vested in it hereunder, shall be conclusive and binding on all parties
concerned, including InaCom, its stockholders and any person receiving an award
under the Plan.
3. Eligibility. Executive officers and other key management personnel of
InaCom shall be eligible to receive awards under the Plan. The Committee shall
designate the executive officers and other key management personnel who will
participate in the Plan each year.
4. Awards. The Committee shall establish annual and/or long-term incentive
award targets for participants. If an individual becomes an executive officer
during the year, such individual may be granted eligibility for an incentive
award for that year upon such individual becoming an executive officer.
The Committee shall also establish annual and/or long-term performance
targets which must be achieved in order for an award to be earned under the
Plan. Such targets shall be based on earnings, earnings per share, growth in
earnings per share, achievement of annual operating profit plans, return on
equity performance, economic value added or similar financial performance
measures as may be determined by the Committee. The specific performance targets
for each participant shall be established in writing by the Committee within
ninety days after the commencement of the fiscal year (or within such other time
period as may be required by Section 162(m) of the Internal Revenue Code) to
which the performance target relates. The performance target shall be
established in such a manner than a third party having knowledge of
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the relevant facts could determine whether the performance goal has been met.
Awards shall be payable following the completion of the applicable fiscal
year upon certification by the Committee that InaCom achieved the specified
performance target established for the participant. Notwithstanding the
attainment by InaCom of the specified performance targets, the Committee has the
discretion, for each participant, to reduce some or all of an award that would
otherwise be paid. However, in no event may a participant receive an award of
more than $2,500,000 under the Plan in any fiscal year.
5. Miscellaneous Provisions. InaCom shall have the right to deduct from all
awards hereunder paid in cash any federal, state, local or foreign taxes
required by law to be withheld with respect to such awards. Neither the Plan nor
any action taken hereunder shall be construed as giving any employee any right
to be retained in the employ of InaCom. The costs and expenses of administering
the Plan shall be borne by InaCom and shall not be charged to any award or to
any participant receiving an award.
6. Effective Date, Amendments and Termination. The Plan shall become
effective on March 4, 1997 subject to approval by the stockholders of InaCom at
the 1997 Annual Meeting of Stockholders. The Committee may at any time terminate
or from time to time amend the Plan in whole or in part, but no such action
shall adversely affect any rights or obligations with respect to any awards
theretofore made under the Plan. However, unless the stockholders of InaCom
shall have first approved thereof, no amendment of the Plan shall be effective
which would increase the maximum amount which can be paid to any one executive
officer under the Plan in any fiscal year, which would change the specified
performance goals for payment of awards, or which would modify the requirement
as to eligibility for participation in the Plan.
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