SCHEDULE 14A INFORMATION
Proxy Statement Pursuant to Section 14(a)
of the Securities Exchange Act of 1934
Filed by the Registrant [X]
Filed by a Party other than the Registrant [ ]
Check the appropriate box:
[ ] Preliminary Proxy Statement
[ ] Confidential, for Use of the Commission only (as permitted by Rule
14a-6(e)(2))
[X] Definitive Proxy Statement
[ ] Definitive Additional Materials
[ ] Soliciting Material Pursuant to ss. 240.14a-11(c) or ss. 240.14a-12
TELESCAN, INC.
(Name of Registrant as Specified in its Charter)
_____________________________________________________________________
(Name of Person(s) Filing Proxy Statement if other than the Registrant)
Payment of Filing Fee (Check the appropriate box):
[X] No fee required.
[ ] Fee computed on table below per Exchange Act Rules 14a-6(i)(4) and 0-11.
1. Title of each class of securities to which transaction applies:
2. Aggregate number of securities to which transaction applies:
3. Per unit price or other underlying value of transaction computed
pursuant to Exchange Act Rule 0-11:
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5. Total fee paid:
[ ] Fee paid previously with preliminary materials.
[ ] Check box if any part of the fee is offset as provided by Exchange Act
Rule 0-11(a)(2) and identify the filing for which the offsetting fee was
paid previously. Identify the previous filing by registration statement
number, or the Form or Schedule and the date of its filing.
1. Amount Previously Paid:
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4. Date Filed:
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TELESCAN, INC.
5959 CORPORATE DRIVE, SUITE 2000
HOUSTON, TEXAS 77036
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PROXY STATEMENT
ANNUAL MEETING OF STOCKHOLDERS
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This Proxy Statement is being furnished to stockholders in connection with the
solicitation of proxies by the Board of Directors of Telescan, Inc., a Delaware
corporation (the "Company"), for use at the Annual Meeting of Stockholders of
the Company to be held at 5959 Corporate Drive, Houston, Texas, 77036 at 10:00
A.M. (Daylight Standard Time) on Wednesday, June 17, 1998, and at any
adjournments thereof, for the purpose of considering and voting upon the matters
set forth in the accompanying Notice of Annual Meeting of Stockholders. This
Proxy Statement and the accompanying form of Proxy are first being mailed to
stockholders on or about May 8, 1998.
The close of business on April 27, 1998 has been fixed as the record date for
the determination of stockholders entitled to notice of and to vote at the
Annual Meeting and any adjournment thereof. As of the record date, there were
11,063,191 shares of the Company's Common Stock, par value $.01 per share (the
"Common Stock"), issued and outstanding. The presence, in person or by proxy, of
a majority of the outstanding shares of Common Stock on the record date is
necessary to constitute a quorum at the Annual Meeting. Each share is entitled
to one vote on all issues requiring a stockholder vote at the Annual Meeting.
Stockholders may not cumulate their votes for the election of Directors.
Directors shall be elected by a plurality of the votes of the shares present or
represented by proxy and entitled to vote at the Annual Meeting. The affirmative
vote of a majority of the shares of Common Stock present or represented by proxy
and entitled to vote at the Annual Meeting is required for the approval of Item
2 set forth in the accompanying Notice. Shares represented by proxy that reflect
abstentions and broker non-votes will be treated as shares that are present and
entitled to vote for purposes of determining the presence of a quorum.
Abstentions will be counted in tabulations of the votes cast on Items 1 and 2
whereas broker non-votes will not be counted in tabulations of the votes cast on
Items 1 and 2.
All shares represented by properly executed proxies, unless such proxies
previously have been revoked, will be voted at the Annual Meeting in accordance
with the directions on the proxies. If no direction is indicated, the shares
will be voted (i) FOR THE ELECTION OF THE NOMINEES NAMED HEREIN and (ii) FOR THE
RATIFICATION OF HEIN + ASSOCIATES LLP INDEPENDENT ACCOUNTANTS. The enclosed
Proxy, even though executed and returned, may be revoked at any time prior to
the voting of the Proxy (a) by the execution and submission of a revised Proxy,
(b) by written notice to the Secretary of the Company or (c) by voting in person
at the Annual Meeting.
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(1) ELECTION OF DIRECTORS FOR THE ENSUING YEAR
NOMINEES FOR DIRECTORS
The persons named in the enclosed Proxy have been selected by the Board of
Directors to serve as Proxies and will vote the shares represented by valid
proxies at the Annual Meeting of Stockholders and any adjournment thereof. They
have indicated that, unless otherwise specified in the Proxy, they intend to
elect as Directors the nominees listed below. All eight (8) nominees are
presently members of the Board of Directors. Each duly elected Director will
hold office until the next annual meeting of stockholders or until his successor
shall have been elected and qualified.
Unless otherwise instructed or unless authority to vote is withheld, the
enclosed Proxy will be voted for the election of the nominees listed herein.
Although the Board of Directors of the Company does not contemplate that any of
the nominees will be unable to serve, if such a situation arises prior to the
Annual Meeting, the persons named in the enclosed Proxy will vote for the
election of such other person(s) as may be nominated by the Board of Directors.
The Board of Directors unanimously recommends a vote FOR the election of each of
the nominees listed below.
DAVID L. BROWN, age 57, Chairman of the Board and CEO, has served as a director
of the Company since 1989. Mr. Brown is co-author of CYBER-INVESTING: CRACKING
WALL STREET WITH YOUR PERSONAL COMPUTER, a book on computerized investing and
WALL STREET CITY, a book on investing on the Internet, both published by John
Wiley & Sons, Inc. From 1978 to 1986, Mr. Brown was president and from 1992 to
1993, a director of Time Energy Systems, Inc., a public company, which changed
its name to ACR Group, Inc. He has served as chairman of the U.S. Science and
Technology Commission for the Emerging Leaders Summit Conference series with the
USSR. For the past ten years, he has served as a director of the Alliance for
Aging Research, based in Washington, D.C. He has also served as chairman of the
New Millennium Committee of the Planetary Society, a group based in Pasadena,
California, which supports space exploration. He has served as chairman of the
Advisory Board of the Southwest Council of Public CEOs and on the boards of
several banks and financial institutions. Mr. Brown began his career in the
space program at NASA, where he headed the team of engineers who designed the
landing gear for the first lunar module. Mr. Brown holds a B.S. degree in
mechanical engineering from the University of Pittsburgh and an M.B.A. from the
University of Houston.
DR. RICHARD K. CARLIN, age 42, Vice Chairman of the Board and Chief Technology
Officer, was one of the founders of Telescan and has served as a director of the
Company since 1989. From 1988 to April 1990, Dr. Carlin served as the director
of Technology Information Center, a subsidiary of Maxwell Communications, where
he managed the development and maintenance of a technology transfer online
database. From 1983 to 1988, he was with D.B. Technology, Inc., the predecessor
to the Company. From 1981 to 1983, Dr. Carlin was assistant professor at
Rockefeller University. Dr. Carlin holds a B.S. degree in biophysical sciences
from the University of Houston and a Ph.D. in biochemistry, also from the
University of Houston. Dr. Carlin also is co-inventor of the technology for a
`multi-provider online communications system' for which the Company received a
patent in 1997.
ROGER C. WADSWORTH, age 50, Senior Vice President, has served as a director
since 1989. From 1988 to 1990, Mr. Wadsworth served as President of the Company.
From 1983 to 1988, Mr. Wadsworth was employed as vice president of Information
Management Services, Inc., in Houston, Texas, where he provided management
services to investment vehicles such as limited partnerships and joint ventures.
From 1979 to 1983, he served as co-owner of D. Russell Smith Associates, a
restaurant and tenant finish general contractor. Mr. Wadsworth holds a B.B.A.
degree from the University of Houston.
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DR. RONALD W. HART, age 56, has been a Distinguished Scientist in Residence for
the Food and Drug Administration, Public Health Service, since 1992. From 1980
to 1992, he was the director for the National Center for Toxicological Research,
Food and Drug Administration, Public Health Service, Department of Health and
Human Services in Jefferson, Arkansas. From 1987 to 1993, Dr. Hart served on the
Board of Directors of First Commercial Bank Corporation of Little Rock,
Arkansas. Dr. Hart has received over 30 awards and recognition for his research
and administrative accomplishments and is an internationally recognized
scientist and science manager holding the position of distinguished professor at
a number of universities and colleges, including Cairo University, Cairo, Egypt;
Gangzou University, Gangzou, China; and Moscow State University, Moscow, Russia.
Dr. Hart also serves as a professor at the University of Arkansas for Medical
Sciences and the University of Tennessee Center for Health Sciences. Dr. Hart
has published over 500 manuscripts on various topics, including research
management and administration and is a fellow of the American College of
Toxicology, American Association for the Advancement of Science, and the
Gerontology Society of America. Dr. Hart received his B.A. in 1967 from Syracuse
University, an M.S. in 1970 and a Ph.D. in 1971 at the University of Illinois,
Urbana. Dr. Hart has been a director since 1990.
BURT H. KEENAN, age 59, is Chairman and Chief Executive Officer of Independent
Energy Holdings, plc, a London Stock Exchange listed company, which is the
largest non-privatized generator/supplier of electricity in the deregulated
markets of the United Kingdom. He was appointed to the Board of Directors in
1988. From 1969 to 1986, Mr. Keenan was the founder, Chairman and Chief
Executive Officer of Offshore Logistics, Inc., a Nasdaq quoted marine and
aviation oil and gas service company. Mr. Keenan is a director of Halter Marine,
Inc., an American Stock Exchange listed company engaged in U.S. shipbuilding. He
has a bachelors and masters degree from Tulane University and resides in London.
RUSSELL I. PILLAR, age 32, was appointed to the Board of Directors in February
1997. Mr. Pillar joined the Prodigy, Inc. Board of Directors in October 1996 as
part of the group which purchased the pioneer online service provider from IBM
and Sears, and became president and chief executive officer of its Prodigy
Internet operating company subsidiary in September 1997. Since October 1991, Mr.
Pillar has served as managing partner of Critical Mass, a private investment
firm that provides capital and strategic planning services to companies in the
information technology industry. From December 1993 through October 1996, he
served as president, chief executive officer and director of Precision Systems,
Inc., a publicly traded provider of voice, data and video-based enhanced service
communications software. In addition to his service on a number of private
corporate boards of directors, Mr. Pillar is a director of Summa Four, Inc. Mr.
Pillar graduated Phi Beta Kappa, cum laude from Brown University with an A.B. in
East Asian Studies, where he was a Japan Airlines International Scholar, a
Harold T. Wilson Award winner and a national finalist in the Rhodes Scholarship
Competition.
WILLIAM D. SAVOY, age 33, currently serves as vice president of Vulcan Ventures
Incorporated, a venture capital fund wholly-owned by Paul G. Allen, co-founder
of Microsoft Corporation. From 1987 until November 1990, Mr. Savoy was employed
by Layered, Inc., a company controlled by Mr. Allen, and became its president in
1988. From November 1990 until the present, Mr. Savoy has served as president
for Vulcan Northwest Inc., a company which manages the personal financial
activities of Mr. Allen. Mr. Savoy serves on the Advisory Board of Dream Works
SKG of Los Angeles, California and serves on the Board of Directors of CNET,
Inc. of San Francisco, California, Harbinger Corporation of Atlanta, Georgia,
Metricom, Inc. of Los Gatos, California, Ticketmaster Corporation of Los
Angeles, USA Networks, Inc. of St. Petersburg, Florida and U.S. Satellite
Broadcasting of Minneapolis, Minnesota. He also represents Mr. Allen in a wide
variety of other personal financial transactions. Mr. Savoy holds a B.S. in
Computer Science, Accounting and Finance from Atlantic Union College. Mr. Savoy
was appointed as a director of the Company in 1993.
STEPHEN C. WOOD, age 46, is currently president and chief executive officer of
Wireless Services Corporation based in Bellevue, Washington. Until May 1996, Mr.
Wood was president and CEO of Notable Technologies, L.L.C., which filed for
bankruptcy in 1996. From 1993 through 1994, Mr. Wood served as vice president of
Information Broadcasting for McCaw Development Corporation located in Kirkland,
Washington. Until February 1993, he was president of Starwave Corporation, a
company he formed in 1991 with Microsoft Corporation co-founder Paul G. Allen to
develop and market data and information products. From 1986 through 1991, Mr.
Wood served in several executive positions at Asymetrix Corporation, a software
development and marketing firm founded by Mr. Allen. From 1980 until 1985, Mr.
Wood was in charge of building a microcomputer software development organization
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for Datapoint Corporation in Austin, Texas, after serving in Research &
Development and marketing positions. Mr. Wood began his career in 1976 when he
became the sixth employee of Microsoft Corporation, where he was general manager
from 1977 to 1980. Mr. Wood holds a B.S. in Computer Engineering from Case
Western Reserve University and an M.S. in Electrical Engineering from Stanford
University. Mr. Wood is a member of the Board of Directors of CyberAction
Limited, a Bermuda-based company that intends to market online services
internationally, including services licensed from Telescan. Mr. Wood was
appointed to the Board of Directors in 1992.
MEETINGS AND COMMITTEES OF THE BOARD OF DIRECTORS
The Company has an audit committee and a compensation committee of the Board of
Directors. The Audit Committee currently consists of Mr. Wood (Chairman), Dr.
Hart, Mr. Keenan, Mr. Pillar and Mr. Savoy. The Compensation Committee currently
consists of Mr. Wood (Chairman), Dr. Hart, Mr. Keenan, Mr. Pillar and Mr. Savoy.
The Company does not presently have a nominating committee of the Board of
Directors.
The primary purpose of the Audit Committee is to oversee the Company's financial
reporting process on behalf of the Board of Directors. The Audit Committee meets
privately with the Chief Financial Officer and with the Company's independent
public accountants and evaluates the responses by the Chief Financial Officer
both to the facts presented and to the judgments made by the outside independent
accountants. The Audit Committee reports its activities to the full Board after
each such meeting so that the Board is kept informed of its activities on a
current basis. In addition, the activities and responsibilities of the Audit
Committee include the nomination or selection of the independent auditors,
review of results of the audit and a detailed review of the overall Company and
the adequacy of the Company's internal controls. There were four Audit Committee
meetings during fiscal 1997.
The primary purpose of the Compensation Committee is to evaluate and recommend
the compensation which the corporate officers as well as the directors should
receive. This evaluation includes, in addition to the cash compensation which
the committee recommends for the Company's officers and/or directors,
recommendations for cash bonuses, and other non-cash compensation to be paid or
distributed during the last fiscal year or to be distributed in the future. The
Compensation Committee met four times during fiscal 1997.
The Company held five meetings of its Board of Directors during the fiscal year
ended December 31, 1997. Mr. Savoy attended 50% of the Audit Committee meetings
and 50% of the Compensation Committee meetings. Mr. Pillar and Mr. Keenan
attended 50% of the Compensation Committee meetings. Except as set forth in the
previous sentences, no director attended fewer than 75% of the aggregate of the
meetings of the Board of Directors and the meetings of any committee of the
Board of Directors on which he served.
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COMPENSATION OF EXECUTIVE OFFICERS AND DIRECTORS
EXECUTIVE OFFICERS:
The following persons are the executive officers of the Company:
NAME POSITION
David L. Brown Chairman of the Board and Chief Executive
Officer
Dr. Richard K. Carlin Vice Chairman of the Board and Chief
Technology Officer
Luiz V. Alvim Executive Vice President and Chief
Operating Officer
Ronald Warren Chief Financial Officer
Roger C. Wadsworth Senior Vice President
Joseph F. Frantz II Vice President
Daniel C. Hollander Vice President
Danny E. Hoover Vice President
William T. Melton Vice President
Jerrold B. Smith Vice President
Neil S. Waldman Vice President
Information concerning the business experience of Messrs. Brown, Carlin and
Wadsworth is provided under the section entitled "Nominees for Directors."
LUIZ V. ALVIM, age 67, was appointed Chief Operating Officer in May 1996. He was
named Executive Vice President and "Acting" Chief Operating Office of Telescan
in March 1996, after having served as the Company's Director of Financial
Research and Chairman of the International Committee since 1994. From 1975 to
1977 Mr. Alvim was the director of special operations at A. Schulman, Inc. From
1977 through 1987, Mr. Alvim served as president of Intergulf, Inc. In 1987, Mr.
Alvim joined Telescan as the Special Assistant to the CEO where he served until
1988 when he joined PanAtlantica SA. as executive vice president and chief
operating officer. Mr. Alvim returned to Telescan in 1994. Mr. Alvim holds a
Masters degree in civil engineering from the University of Porto in Portugal.
RONALD WARREN, age 51, was appointed Chief Financial Officer of Telescan in
October 1996. From 1986 to 1996, Mr. Warren served as vice president and chief
financial officer of CogniSeis Development, Inc., a multinational company that
developed and sold computer software, hardware and systems to a worldwide
customer base. From 1975 to 1985, Mr. Warren held various financial management
positions at Sonat Offshore Drilling, Inc., a large international drilling
contractor, including treasurer and controller. Mr. Warren holds M.B.A. and B.A.
degrees from Hofstra University and is a Certified Public Accountant.
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JOSEPH F. FRANTZ II, age 34, Vice President of the Company since May 1995,
previously held the positions of Computer Operations Manger, End-User Software
Product Manager and Senior Programmer. Mr. Frantz joined the Company in 1987 as
a Technical Support Representative. Mr. Frantz holds a B.S. in Applied
Mathematics from the University of Houston and a M.S. in Management Computing
and Systems from Houston Baptist University. He is co-inventor of the technology
for a `multi-provider online communications system' for which the Company
received a patent in 1997.
DANIEL C. HOLLANDER, age 41, was appointed Vice President in November 1996.
Prior to the appointment, he held the position of Director of Client Services.
Before joining the Company in March 1995, Mr. Hollander served as regional
technology manager for Ernst & Young and manager of information systems support
for Ericsson Radio Systems. Mr. Hollander holds a B.S. in Civil Engineering from
Ohio State University.
DANNY E. HOOVER, age 50, Vice President since September 1996, previously held
the positions of Manager of Development, Manager of Windows Development and
Senior Windows Programmer. Before joining the Company in 1992, Mr. Hoover was
employed as operations manager for Praxis Incorporated, a supervisory control
automation company in Houston, Texas. Mr. Hoover holds a B.S. in Electrical
Engineering from Texas A&M University.
WILLIAM T. MELTON, age 61, Vice President since January 1995, previously held
the position of Manager of Project Development. Before joining the Company in
October 1993, Mr. Melton served as a project manager with IBM, having previously
served in other sales positions as a 30-year employee of that company. Mr.
Melton holds both a B.S. in Business Administration and an M.B.A. from the
University of Arkansas.
JERROLD B. SMITH, age 45, Vice President since March 1998, has been with the
Company since 1995. Mr. Smith previously held the positions of Business
Development Manager for Telescan's Internet site, Wall Street City(R), and
Technical Support Supervisor. From 1976 to 1986, Mr. Smith was a salesman and
ultimately regional vice president of Donmoor, Inc. of New York, a wholesale
apparel manufacturer. From 1986 to 1988, Mr. Smith was national sales manager
for USOne Apparel, also of New York. Prior to joining the Company, Mr. Smith
practiced financial planning and asset management in Houston, Texas. Mr. Smith
holds a B.S. in Business Administration from the University of Houston.
NEIL S. WALDMAN, age 41, Vice President since May 1995, previously held the
position of Director of Institutional Sales. Before joining the Company in 1993,
Mr. Waldman was employed as manager of business development for IDD Information
Services, Inc., where he was instrumental in the introduction of three new
products for the investment management and brokerage communities. From 1989 to
1991, Mr. Waldman served as vice president of sales and marketing for Vista
Computer, Inc., where he directed sales and marketing for the developer of
integrated software solutions targeted at international commodities traders. Mr.
Waldman holds a B.S. in Business Administration from Northeastern University.
EXECUTIVE COMPENSATION
The following table reflects all forms of compensation for services to the
Company for the years ended December 31, 1997, 1996 and 1995, of the Chief
Executive Officer and the Company's other most highly compensated executive
officers who were serving as executive officers at the end of 1997 and who
earned more than $100,000 that year. No other executive officers of the Company
received compensation which exceeded $100,000 during 1997.
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SUMMARY COMPENSATION TABLE
LONG-TERM
ANNUAL COMPENSATION COMPENSATION
---------------------------------- ---------------------
SECURITIES
NAME YEAR SALARY BONUS UNDERLYING OPTIONS
David L. Brown 1997 $138,425 --- 31,443
Chief Executive 1996 $124,906 --- 12,000
Officer 1995 $107,625 --- 11,740
Richard K. Carlin 1997 $101,598 $2,911 15,941
Chief Technology 1996 $89,257 --- 7,500
Officer 1995 $78,875 --- 7,340
Luiz V. Alvim 1997 $105,404 --- 16,505
Chief Operating 1996 $87,894 --- 22,000
Officer 1995 $61,405 --- 8,000
Neil S. Waldman 1997 $111,755 $6,267 7,474
Vice President 1996 $103,216 --- 2,500
1995 $117,072 --- 10,000
DIRECTOR COMPENSATION
The Company does not currently pay any cash directors' fees, but it reimburses
expenses incurred by its directors to attend board meetings. Directors who are
not officers of the Company were granted stock options on February 1, 1998 for
5,000 shares at an exercise price of $6.44 exercisable until January 31, 2008
for services provided to the Company as directors.
STOCK OPTIONS
The following tables set forth information relating to the named executive
officers with respect to (i) stock options granted in 1997, (ii) the total
number of unexercised options through 1997 and (iii) the value of the
unexercised in-the-money options. Stock options were exercised by David L.
Brown, Chief Executive Officer, during 1997. During 1997, David L. Brown, Chief
Executive Officer, exercised 113,738 stock options, including 9,435 shares that
had not vested, as to which the Board of Directors gave early dispensation to
exercise.
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OPTION GRANTS IN LAST FISCAL YEAR
(Individual Grants)
<TABLE>
<CAPTION>
PERCENT POTENTIAL REALIZABLE
OF TOTAL VALUE AT ASSUMED
OPTIONS ANNUAL RATE OF
NUMBER OF GRANTED STOCK PRICE
SECURITIES TO EXERCISE APPRECIATION FOR
UNDERLYING EMPLOYEES PRICE OPTION TERM
OPTIONS IN FISCAL PER EXPIRATION -----------
NAME GRANTED(1) YEAR SHARE DATE 5% 10%
- ---- ------- ---- ----- ---- --- ---
<S> <C> <C> <C> <C> <C> <C> <C>
David L. Brown 19,500(1) 9.6% $4.75 8/13/2000 $17,504 $37,337
Chief Executive 11,933(2) 5.8% $5.13 8/13/2000 $7,074 $20,602
Officer
Richard K. Carlin 12,188(1) 6.0% $4.75 8/13/2000 $10,940 $23,336
Chief Technology 3,753(2) 1.8% $5.13 8/13/2000 $3,081 $6,479
Officer
Luiz V. Alvim 11,375(1) 5.6% $4.75 8/13/2000 $10,211 $21,780
Chief Operating 5,130(2) 2.5% $5.13 8/13/2000 $4,212 $8,857
Officer
Neil S. Waldman 5,000(1) 2.4% $4.75 8/13/2000 $4,488 $9,574
Vice President 2,474(2) 1.2% $5.13 8/13/2000 $2,031 $4,271
</TABLE>
(1) Options vest 33% annually beginning 12 months after the date of grant.
(2) Options vest immediately upon grant date.
AGGREGATED OPTION EXERCISES IN LAST FISCAL YEAR AND
FISCAL YEAR END OPTION VALUES
NUMBER OF VALUE OF
SECURITIES UNEXERCISED
UNDERLYING IN-THE-MONEY
UNEXERCISED OPTIONS
OPTIONS AT AT
FISCAL YEAR END FISCAL YEAR END
SHARES ____________ ______________
ACQUIRED VALUE EXERCISABLE/ EXERCISABLE/
NAME ON EXERCISE REALIZED UNEXERCISABLE UNEXERCISABLE
David L. Brown,
CHIEF EXECUTIVE
OFFICER 113,738 $513,690 18,000/29,935 ---- /$37,670
Richard K. Carlin
CHIEF TECHNOLOGY
OFFICER None None 78,048/24,733 $337,358/$37,443
Luiz V. Alvim
CHIEF OPERATING
OFFICER None None 27,776/28,729 $31,337/$33,183
Neil S. Waldman
VICE PRESIDENT None None 13,099/11,875 $16,511/$23,450
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COMPARISON OF FIVE YEAR CUMULATIVE TOTAL RETURN
The following graph compares the Company's total stockholder return over the
last five years to the Standard & Poor's Computer Software and Service Index and
the NASDAQ Stock Market Index. Cumulative total return values are based on
annual total return values which assume reinvestment of dividends. The
stockholder return shown on the graph below is not necessarily indicative of
future performance.
[LINEAR GRAPH PLOTTED FROM DATA IN TABLE BELOW]
1992 1993 1994 1995 1996 1997
---- ---- ---- ---- ---- ----
TELESCAN, INC. COMMON STOCK 100 500 229 436 265 407
NASDAQ STOCK MARKET INDEX 100 115 112 159 195 240
S & P COMPUTER SOFTWARE &
SERVICE INDEX 100 128 151 212 330 459
REPORT FROM THE COMPENSATION COMMITTEE REGARDING EXECUTIVE COMPENSATION
During 1997, the Compensation Committee of the Board of Directors consisted of
Dr. Ronald W. Hart, Mr. Burt H. Keenan, Mr. William D. Savoy and Mr. Stephen C.
Wood as Chairman.
The goal of the Compensation Committee is to develop compensation policies to
attract and retain highly qualified officers, directors and middle managers for
the Company, consistent with maintaining a strong competitive incentive
environment and instilling a clear sense of dedication to total stockholder
return.
Components of executive compensation include base salary, incentive bonus and
stock options. Salary levels for executive officer positions reflect the duties
and levels of responsibilities inherent in the position. Salaries of executive
officers are reviewed annually and the primary criteria influencing salary
adjustments is the individual's performance and contribution to the Company.
In 1996, the Company implemented a cash bonus plan based on revenue and profit
performance relative to budgeted goals. No bonuses were paid in 1996. In 1997,
officers received a bonus and could elect payment in the form of cash, stock
options or a combination thereof. Pursuant to the bonus plan, approximately
$22,000 was paid in cash and 33,086 options were granted, which vested
immediately upon the date of grant.
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Stock options are used by the Company as a long-term incentive plan and allow
executives the opportunity to acquire and build an ownership in the Company. In
February 1997, the executive officers combined with all active employees were
awarded stock options. The award level is based upon the position held and the
employee's ability to influence the Company's long-term performance. Options
were granted with an exercise price of $4.75, the price on the date of
grant, and executive officers options vest ratably over three years beginning
twelve months after the grant date. Additionally, as part of the bonus plan, an
aggregate of 33,086 options were granted in July 1997.
As one of the factors in determining executive compensation, the Compensation
Committee considers the anticipated tax treatment to the Company and to the
executive officers of various types of compensation and benefits. From time to
time, interpretations of and changes in the tax laws affect the deductibility of
compensation. The Compensation Committee currently does not anticipate that
compensation paid to the executive officers will exceed the amounts specified as
deductible pursuant to Section 162(m) of the Internal Revenue Code.
The compensation for the Chief Executive Officer is generally determined using
the same evaluation criteria used for other officers and managers of the
Company. The Chief Executive Officer received a base salary in fiscal 1996 of
$124,906. The Committee increased the Chief Executive Officer's base salary in
fiscal 1997 to $138,425. In addition, the Committee approved the grant of a
stock option to acquire 19,500 shares to the Chief Executive Officer to provide
him an additional equity interest in the Company. Further, the Chief Executive
Officer elected to receive his bonus in 1997 in the form of stock options;
accordingly, an additional 11,933 options were granted. The Chief Executive
Officer has fully met Board and Committee expectations with respect to the
growth and development of the Company.
Stephen C. Wood, Chairman Burt H. Keenan
William D. Savoy Dr. Ronald W. Hart
Russell I. Pillar
COMPENSATION COMMITTEE INTERLOCKS AND INSIDER PARTICIPATION
No member of the Compensation Committee of the Board of Directors of the Company
was, during fiscal 1997, an officer or employee of the Company or any of its
subsidiaries, or was formerly an officer of the Company or any of its
subsidiaries or had any relationship requiring disclosure by the Company. During
1997, no executive officer of the Company served as (i) a member of the
compensation committee (or other board committee performing equivalent
functions) of another entity, one of whose executive officers served on the
Compensation Committee of the Board of Directors, (ii) a director of another
entity, one of whose executive officers served on the Compensation Committee of
the Board of Directors, or (iii) a member of the compensation committee (or
other board committee performing equivalent functions) of another entity, one of
whose executive officers served as a director of the Company.
EMPLOYMENT AGREEMENT
The Chief Executive Officer has an employment agreement which renews
automatically each year on March 10. Upon termination of the agreement, Mr.
Brown would be entitled to a continuation of his compensation and related
benefits for the remainder of the term or six months, which ever is longer.
SECTION 16(A) BENEFICIAL OWNERSHIP REPORTING COMPLIANCE
Section 16(a) of the Securities Exchange Act of 1934 requires the Company's
directors, executive officers and persons who own more than ten percent of the
Company's Common Stock (collectively, "Filing Persons") to file with the SEC
initial reports of ownership (Form 3), reports in changes of ownership (Form 4),
or annual report of ownership (Form 5). All Filing Persons are required by SEC
regulations to furnish the Company with copies of all Section 16(a) forms they
file.
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To the Company's knowledge, based on its review of the copies of such reports
furnished to the Company and upon certain other representations made by Filing
Persons, Roger C. Wadsworth failed to timely file one (1) Form 4 which form was
subsequently filed.
CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS
In the normal course of business some members of the Board of Directors have
proposed business alliances with companies with which they are associated. In
the opinion of management, each of these transactions or arrangements were
entered into on terms as favorable to the Company as could have been obtained in
transactions or arrangements with unaffiliated third parties.
VULCAN VENTURES, INCORPORATED
Pursuant to the terms of a May 20, 1992 stock purchase agreement between Vulcan
and the Company, Vulcan has the right to designate one director to the Company's
Board of Directors for as long as Vulcan (or its affiliate) owns at least
540,000 shares of Common Stock of the Company. In addition, the Company has
agreed not to take any corporate action to increase its number of directors
without the unanimous written consent of all directors for as long as Vulcan (or
its affiliate) owns at least 540,000 shares of Common Stock of the Company.
KNOWLEDGE EXPRESS DATA SYSTEMS, L.C.
Knowledge Express Data Systems, L.C. ("KE"), of which the Company owns 55.58%,
is 30% owned by GRF Interests, Inc. ("GRF"), a company controlled by G. Robert
Friedman, a significant stockholder and a former director of the Company. The
Company provides computer hardware, programming, systems maintenance, data
loading, telecommunications and certain administrative services to KE. The
Company charges KE a fixed monthly fee for the use of its systems operations
plus 140% of the actual salaries for personnel working on KE services.
Non-personnel expenditures are billed at the Company's actual cost. During 1997,
the maximum indebtedness of KE to the Company was approximately $490,000,
representing the amount due under the service contract and amounts loaned to KE
for operating expenses. As of December 31, 1997 KE had no indebtedness to the
Company. For the year ended December 31, 1997, KE had a net loss of $921,000, of
which $512,000 was recognized by the Company. The operating results of KE for
the year have been included in the financial statements as discontinued
operations.
TELEBUILD, L.C.
Friedman Interests, Inc., a company controlled by G. Robert Friedman, owns
45.42% of Telebuild, L.C. ("Telebuild"). The Company and the Brown Family
Partnership own 14.168% and 25.44%, respectively of Telebuild. The Brown Family
Partnership is owned by David L. Brown, the Company's Chairman and Chief
Executive Officer and other members of the Brown family. The Company performs
services under contract for Telebuild which consist primarily of the
development, maintenance and operation of the Telebuild database system and the
provision of office space, equipment and furniture. The Company charges
Telebuild for its personnel at a stipulated rate which reflects the full
absorption of overhead costs to the Company plus an appropriate profit margin
determined by management and approved by the outside directors. Non-personnel
expenditures under the agreement are billed at actual cost. For the year ended
December 31, 1997, $1,322,000, or 8.8% of the Company's total revenue was from
services provided to Telebuild. Telebuild paid the Company approximately
$1,094,000 for these services during 1997. As of December 31, 1997, Telebuild
owed the Company $266,000.
CYBERACTION LIMITED
During 1996, the Company entered into a marketing license and revenue sharing
agreement with CyberAction Limited. Dr. Ronald W. Hart and Mr. Stephen C.
Wood are on the Board of Directors of CyberAction. No royalties were paid to
CyberAction in 1997 and none are expected to be paid in 1998.
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NOTABLE TECHNOLOGIES, L.L.C.
During 1997, the Company acquired the assets of Notable Technologies, L.L.C. for
$100,000 through the issuance of 25,197 shares of restricted stock. Stephen C.
Wood, a director of the Company, served as President and Chief Executive Officer
of Notable Technologies, L.L.C., which filed for bankruptcy in April 1996.
WIRELESS SERVICES CORPORATION
The Company has entered into a service agreement with Wireless Services
Corporation. Stephen C. Wood, a director of the Company, is the Chief Executive
Officer of Wireless Services Corporation. Dr. Ronald W. Hart, also a director of
the Company, serves on the Board of Directors for Wireless Services Corporation.
The service became operational during 1997 and the Company does not expect to
pay minimum fees or royalties in excess of $60,000 in 1998.
SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT
The following table sets forth information, as of April 27, 1998, unless
otherwise indicated with respect to the number of shares of Common Stock
beneficially owned by (1) each director and/or named executive officer
individually, (2) all executive officers and directors of the Company as a
group, and (3) each stockholder known by the Company to be the beneficial owner
of more than 5% of the Company's Common Stock. The number of shares is exclusive
of shares allocated to the person's account through the Company's 401(k) plan.
Except as noted below, each stockholder has sole voting and investment power
with respect to the shares shown.
NUMBER OF
SHARES
BENEFICIALLY
OWNERS OWNED % OF CLASS
- ---------------------- -------------- ----------
David L. Brown 932,056(1) 8.4
Dr. Richard K. Carlin 295,806(2) 2.7
Luiz V. Alvim 43,504(3) 0.4
Roger C. Wadsworth 121,953(4) 1.1
Neil S. Waldman 13,750(5) 0.1
Dr. Ronald W. Hart 49,500(6) 0.4
Burt H. Keenan 126,500(7) 1.1
William D. Savoy 44,277(8) 0.4
Stephen C. Wood 31,100(9) 0.3
Paul G. Allen 1,290,000(10) 11.7
Vulcan Ventures Incorporated
110 110th Avenue N.E.,
Suite 685
Bellevue, WA 98004-5840
G. Robert Friedman 1,053,919 9.5
Friedman & Associates
Five Post Oak Park,
Suite 1800
Houston, Texas 77027
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NUMBER OF SHARES
BENEFICIALLY
OWNERS (CONTINUED) OWNED % OF CLASS
Paul F. Glenn 588,861 5.3
Paul F. Glenn Revocable Trust
P.O. Box 50310
Santa Barbara, CA 93108
Lacy J. Harber 1,150,500 10.4
Route 2, Box 49Y
Denison, Texas 75020
WisdomTree Capital Management, Inc. 592,100(11) 5.4
1633 Broadway, 38th Floor
New York, New York 10019
All directors and executive
officers as a group (16 persons) 1,703,884 15.0
(1) Includes 702,818 shares owned by the Brown Family Partnership. David L.
Brown has shared voting and investment power in the Brown Family
Partnership along with other family members who are not officers and/or
directors of the Company. Includes 185,738 shares owned by David L. Brown
personally. Also includes options to purchase 26,000 shares which are
exercisable within the next sixty days.
(2) Includes options to purchase 30,030 shares which are exercisable within
the next sixty days.
(3) Includes options to purchase 41,504 shares which are exercisable within
the next sixty days.
(4) Includes options to purchase 12,885 shares which are exercisable within
the next sixty days.
(5) Includes options to purchase 13,750 shares which are exercisable within
the next sixty days.
(6) Includes options to purchase 20,500 shares which are exercisable within
the next sixty days.
(7) Includes options to purchase 55,500 shares which are exercisable within
the next sixty days.
(8) Includes options to purchase 14,277 shares which are exercisable within
the next sixty days.
(9) Includes options to purchase 25,500 shares which are exercisable within
the next sixty days.
(10) Vulcan is owned 100% by Paul G. Allen.
(11) Pursuant to Schedule 13G filed February 26, 1998, reporting entity is the
general partner of WisdomTree Associates, L.P. and the investment manager
of WisdomTree Offshore Ltd., and may be deemed to have direct beneficial
ownership of each of their shares.
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- ------------------------------------------------------------------------------
(2) RATIFICATION OF INDEPENDENT AUDITORS FOR 1998
- ------------------------------------------------------------------------------
The Board of Directors appointed the Company's existing certified public
accountant, Hein + Associates LLP, as the independent auditors of the Company
for the fiscal year ending December 31, 1998, and such appointment is hereby
submitted to the stockholders for ratification. Such ratification requires the
affirmative vote of a majority of the shares of Common Stock present or
represented by proxy and entitled to vote at the Annual Meeting.
In the event the appointment of Hein + Associates LLP, as independent auditors
for 1998 is not ratified by the stockholders, the adverse vote will be
considered as a direction to the Board of Directors to select other auditors for
the fiscal year ending December 31, 1998.
A representative of Hein + Associates LLP is expected to be present at the
Annual Meeting and will not make a statement, but will be available to respond
to appropriate stockholder questions.
The Board of Directors unanimously recommends a vote FOR ratification of the
Board's appointment of Hein + Associates LLP as auditors for 1998.
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MATTERS TO BE PRESENTED
As of the date of this Proxy Statement, the only matters which management
intends to present, or is informed that others will present, for action at the
Annual Meeting, are the election of the Board of Directors and the ratification
of Hein + Associates LLP as the Company's independent auditors for 1998. If any
other matters are presented to the meeting, the accompanying Proxy will be voted
in accordance with the best judgment of the Proxy holders.
STOCKHOLDER PROPOSALS
Any proposal of an eligible stockholder intended to be presented at the
Company's 1999 Annual Meeting must be received in writing by the Secretary of
the Company on or before January 8, 1999 if the proposal is to be considered by
the Board of Directors for inclusion in the Company's Proxy material for that
meeting.
EXPENSES OF SOLICITATION
The Company will bear the expense of preparing and mailing this Proxy material,
as well as the cost of any required solicitation. In addition to this
solicitation of Proxies, the officers, directors and regular employees of the
Company, without receiving any additional compensation therefor, may solicit
Proxies by mail, telephone, or personal contact. The Company will also request
stockholders, banks and other fiduciaries to forward Proxy material to their
principals or customers who are the beneficial owners of shares and will
reimburse them for reasonable out-of-pocket expenses incurred.
BY ORDER OF THE BOARD OF DIRECTORS
David L. Brown
Chairman of the Board and CEO
May 8, 1998
Houston, Texas
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TELESCAN , INC.
Solicited by the Board of Directors
The undersigned hereby David L. Brown and Roger C. Wadsworth, each with full
power of substitution as proxies and authorizes them to vote as designated below
all the shares of Common Stock of Telescan, Inc., held of record by the
undersigned on April 27, 1998, at the Annual Meeting of Stockholders to be held
on June 17,1998, and at any adjournment thereof.
This Proxy, when properly executed, will be voted in the manner directed herein
by the Stockholder, IF NO DIRECTION IS MADE, THIS PROXY WILL BE VOTED FOR THE
NOMINEES LISTED IN ITEM 1, FOR ITEM 2, AND IN THE DISCRETION OF THE PROXIES FOR
SUCH OTHERS BUSINESS AS MAY PROPERLY COME BEFORE THE MEETING. If more than one
of the proxies designated hereby shall be present in person at the Annual
Meeting, or at any adjournments thereof, each of said proxies present and
voting, either in person or by substitution shall exercise all the powers herein
given.
ITEM 1. Election of Directors
__FOR all nominees listed below __WITHHOLD AUTHORITY
(except as marked to the contrary below) to vote for all nominees below
NOMINEES: David L. Brown, Dr. Richard K. Carlin, Dr. Ronald W. Hart, Burt H.
Keenan, Russell I. Pillar, William D. Savoy, Roger C. Wadsworth and Stephen C.
Wood
INSTRUCTION: To withold authority for any individual nominee, strike a line
through the nominee's name above.
(continued and to be signed on the reverse side)
________________________________________________________________________________
(continued from the other side)
ITEM 2. Vote to ratify Hein + Associates LLP as auditors for the year ending
1998.
__FOR __AGAINST __ABSTAIN
ITEM 3.
In their discretion the proxies are authorized to vote upon such other
business as may be properly come before the meeting.
Date:______________________________1998
_______________________________________
Signature
_______________________________________
(Typed or Printed Name)
_______________________________________
(Signature (if held jointly)
Please sign exactly as name appears hereon. When
shares are held by joint tenents, both should
sign. When signing as attorney, administrator,
trustee or guardian, give full title as such. If
a corporation, please sign in full corporate
name by President or other authorized officer.
If partnership, please sign in partnership name
by authorized personnel.
THIS PROXY MAY BE REVOKED AT ANY TIME BEFORE IT IS VOTED AT THE MEETING. PLEASE
MARK, SIGN, DATE AND RETURN THIS PROXY PROMPTLY IN THE ENVELOPE PROVIDED.
