<PAGE> 1
SCHEDULE 14A
(RULE 14A-101)
INFORMATION REQUIRED IN PROXY STATEMENT
SCHEDULE 14A INFORMATION
PROXY STATEMENT PURSUANT TO SECTION 14(A) OF THE SECURITIES
EXCHANGE ACT OF 1934 (AMENDMENT NO. )
Filed by the registrant /X/
Filed by a party other than the registrant / /
Check the appropriate box:
/ / Preliminary proxy statement / / Confidential, for Use of the
Commission Only (as permitted by
Rule 14a-6(e)(2))
/X/ Definitive proxy statement
/ / Definitive additional materials
/ / Soliciting material pursuant to Rule 14a-11(c) or Rule 14a-12
ValueVision International, Inc.
- --------------------------------------------------------------------------------
(Name of Registrant as Specified in Its Charter)
[COMPANY NAME]
- --------------------------------------------------------------------------------
(Name of Person(s) Filing Proxy Statement, if other than the Registrant)
Payment of filing fee (Check the appropriate box):
/X/ $125 per Exchange Act Rule 0-11(c)(1)(ii), 14a-6(i)(1), or 14a-6(j)(2)
or Item 22(a)(2) of Schedule 14A.
/ / $500 per each party to the controversy pursuant to Exchange Act Rule
14a-6(i)(3).
/ / Fee computed on table below per Exchange Act Rules 14a-6(i)(4) and
0-11.
(1) Title of each class of securities to which transaction applies:
- --------------------------------------------------------------------------------
(2) Aggregate number of securities to which transaction applies:
- --------------------------------------------------------------------------------
(3) Per unit price or other underlying value of transaction computed
pursuant to Exchange Act Rule 0-11 (Set forth the amount on which the filing fee
is calculated and state how it was determined):
- --------------------------------------------------------------------------------
(4) Proposed maximum aggregate value of transaction:
- --------------------------------------------------------------------------------
(5) Total fee paid:
- --------------------------------------------------------------------------------
/ / Fee paid previously with preliminary materials.
- --------------------------------------------------------------------------------
/ / Check box if any part of the fee is offset as provided by Exchange Act
Rule 0-11(a)(2) and identify the filing for which the offsetting fee was paid
previously. Identify the previous filing by registration statement number, or
the form or schedule and the date of its filing.
(1) Amount previously paid:
- --------------------------------------------------------------------------------
(2) Form, schedule or registration statement no.:
- --------------------------------------------------------------------------------
(3) Filing party:
- --------------------------------------------------------------------------------
(4) Date filed:
- --------------------------------------------------------------------------------
<PAGE> 2
VALUEVISION INTERNATIONAL, INC.
6740 SHADY OAK ROAD
MINNEAPOLIS, MINNESOTA 55344-3433
NOTICE OF ANNUAL MEETING OF SHAREHOLDERS
August 20, 1996
TO THE SHAREHOLDERS OF VALUEVISION INTERNATIONAL, INC.:
Please take notice that the Annual Meeting of Shareholders of ValueVision
International, Inc. will be held, pursuant to due call by the Board of Directors
of the Company, at the Minneapolis Marriott Southwest, 5801 Opus Parkway,
Minnetonka, Minnesota 55343, on Tuesday, August 20, 1996 at 9:00 a.m., or at any
adjournment or adjournments thereof, for the purpose of considering and taking
appropriate action with respect to the following:
1. To elect six directors.
2. To transact any other business as may properly come before the meeting
or any adjournments thereof.
Pursuant to due action of the Board of Directors, shareholders of record on
July 17, 1996, will be entitled to vote at the meeting or any adjournments
thereof.
A PROXY FOR THE MEETING IS ENCLOSED HEREWITH. YOU ARE REQUESTED TO FILL IN
AND SIGN THE PROXY, WHICH IS SOLICITED BY THE BOARD OF DIRECTORS, AND MAIL IT
PROMPTLY IN THE ENCLOSED ENVELOPE.
By Order of the Board of Directors
VALUEVISION INTERNATIONAL, INC.
Robert L. Johander
Chairman of the Board and
Chief Executive Officer
August 2, 1996
<PAGE> 3
PROXY STATEMENT
OF
VALUEVISION INTERNATIONAL, INC.
6740 SHADY OAK ROAD
MINNEAPOLIS, MINNESOTA 55344-3433
ANNUAL MEETING OF SHAREHOLDERS TO BE HELD
AUGUST 20, 1996
PROXIES AND VOTING
This Proxy Statement is furnished in connection with the solicitation of
proxies by the Board of Directors of ValueVision International, Inc. (the
"Company") to be used at the Annual Meeting of Shareholders of the Company (the
"Annual Meeting") to be held on Tuesday, August 20, 1996. The approximate date
on which this Proxy Statement and the accompanying proxy were first sent or
given to shareholders was August 2, 1996.
VOTING OF PROXIES
All shares (the "Shares") of the Company's Common Stock, $.01 par value
(the "Common Stock"), which are entitled to vote and are represented at the
Annual Meeting by properly executed proxies received prior to or at the Annual
Meeting, and are not revoked, will be voted at such meeting and any adjournments
thereof in accordance with the instructions indicated on such proxy. If no
instructions are indicated, proxies will be voted:
FOR election of the six nominees for election as directors.
If any other matters are properly presented at the meeting for
consideration, the persons named in the enclosed form of proxy and acting
thereunder will have discretion to vote on such matters in accordance with
their best judgment. Management of the Company will not use proxies voted
against a proposal to vote for adjournment in order to permit additional
solicitation.
RECORD DATE; SHARES ENTITLED TO VOTE; QUORUM
Only shareholders of record at the close of business on July 17, 1996 (the
"Record Date") will be entitled to vote at the Annual Meeting or any
adjournments thereof. The presence, in person or by properly executed proxy, of
the holders of a majority of the outstanding Shares entitled to vote at the
Annual Meeting is necessary to constitute a quorum at the Annual Meeting.
VOTES REQUIRED; EFFECT OF ABSTENTIONS AND BROKER NON-VOTES
The affirmative vote of the holders of a majority of the outstanding Shares
of the Company present in person or by proxy and entitled to vote on each
Proposal is required to approve each Proposal, provided that the total vote cast
on each Proposal represents at least 50% of all Shares entitled to vote on each
Proposal. A shareholder who abstains with respect to a Proposal is considered to
be present and entitled to vote at the meeting, and is in effect casting a
negative vote, but a shareholder who does not give authority to a Proxy to vote
on the Proposal shall not be considered present and entitled to vote on the
Proposal. Accordingly, broker non-votes will not affect the outcome of the vote
on a Proposal, provided that the total vote cast on such Proposal represented at
least 50% of all Shares entitled to vote thereon.
REVOCABILITY OF PROXIES
The presence at the Annual Meeting of a shareholder will not revoke his or
her proxy. However, a proxy may be revoked with respect to any matter at any
time before the proxy is voted on such matter by delivering to an officer of the
Company written notice of such revocation or a duly executed new proxy. Such
written
1
<PAGE> 4
notice of revocation or duly executed new proxy will be effective upon filing
with an officer of the Company, either prior to or at the Annual Meeting;
however, a revocation or new proxy will not affect a vote on any matter that was
cast prior to such filing. All written notices of revocation and other
communications with respect to the revocation of proxies should be delivered to
ValueVision International, Inc., 6740 Shady Oak Road, Eden Prairie, MN
55344-3433, or may be hand-delivered to an officer of the Company at the Annual
Meeting.
BOARD OF DIRECTORS RECOMMENDATIONS
The Board of Directors recommend a vote FOR the election of the six
nominees for director.
VOTING SECURITIES AND
PRINCIPAL HOLDERS THEREOF
As of the Record Date, the Company had outstanding 29,888,298 Shares.
The following table sets forth certain information regarding the beneficial
ownership of securities of the Company as of the Record Date by (i) each person
known by the Company to be the beneficial owner of more than 5% of the
outstanding Shares, (ii) each of the directors and nominees for election to the
Board of Directors of the Company, (iii) the Chief Executive Officer and each of
the executive officers named in the Summary Compensation Table, and (iv) all
directors and executive officers of the Company as a group. Each shareholder
possesses sole voting and investment power with respect to the Shares listed
opposite the holder's name except as otherwise indicated herein.
<TABLE>
<CAPTION>
NUMBER OF SHARES
NAME AND ADDRESS BENEFICIALLY OWNED PERCENT
- --------------------------------------------------------------------- ------------------ -------
<S> <C> <C>
Robert L. Johander(1)................................................ 1,511,011 5.01
6740 Shady Oak Road
Eden Prairie, MN 55344
Nicholas M. Jaksich(2)............................................... 1,446,762 4.79
Robert J. Korkowski(3)............................................... 222,066 *
Mark A. Payne(4)..................................................... 164,700 *
Marshall S. Geller(5)................................................ 169,600 *
Edward A. Karr(6).................................................... 150,000 *
Michael L. Jones(7).................................................. 115,000 *
Paul D. Tosetti...................................................... -- *
John Workman(8)...................................................... -- *
All directors and director nominees and executive officers as a group
(twelve persons)(9)................................................ 3,824,656 12.29
</TABLE>
- -------------------------
* Less than 1%
(1) Such Shares include 437,632 Shares beneficially owned by Mr. Johander in his
capacity as General Partner to the Robert L. Johander Limited Partnership
and 300,000 Shares that are issuable upon exercise of stock options within
60 days.
(2) Such Shares include 423,632 Shares beneficially owned by Mr. Jaksich in his
capacity as General Partner to the Nicholas M. Jaksich Limited Partnership
and 300,000 Shares that are issuable upon exercise of stock options within
60 days.
(3) Includes 100,000 Shares that are issuable upon exercise of stock options
within 60 days. Includes 2,250 Shares owned by Mr. Korkowski's daughter, as
to which Shares Mr. Korkowski disclaims beneficial ownership.
(4) Includes 75,000 Shares that are issuable upon exercise of stock options
within 60 days.
2
<PAGE> 5
(5) Includes 160,000 Shares that are issuable upon exercise of stock options
within 60 days.
(6) Includes 140,000 Shares that are issuable upon exercise of stock options
within 60 days.
(7) Includes 115,000 Shares that are issuable upon exercise of stock options
within 60 days.
(8) Does not include the 1,280,000 Shares or the Warrants to purchase an
additional 25,000,000 Shares,
subject to adjustment (as of July 17, 1996, the Warrants would be adjusted
to purchase 26,295,349 Shares), purchased by Montgomery Ward pursuant to
that certain Securities Purchase Agreement dated August 8, 1995. Such Shares
and the Warrants may be deemed to be beneficially owned by Montgomery Ward.
The Schedule 13D filed by Montgomery Ward, Montgomery Ward Holding Corp.,
and Bernard F. Brennan, who is the Chairman and Chief Executive Officer of
Montgomery Ward (collectively, the "MW Filers") states that, pursuant to
Rule 13d-3(1)(i) promulgated under the Securities Exchange Act of 1934, as
amended (the "Act"), the MW Filers may be deemed to have acquired beneficial
ownership of the Shares and Warrants to purchase Shares reported therein on
March 13, 1995, pursuant to the execution of the Securities Purchase
Agreement. Notwithstanding the foregoing, each of the MW Filers disclaimed
in such Schedule 13D, as of the date thereof, beneficial ownership of all
such Shares in light of certain material conditions to the consummation of
the transactions contemplated by the Securities Purchase Agreement which are
beyond the control of the MW Filers. Mr. Workman was designated as a
director by Montgomery Ward and is an executive officer of Montgomery Ward.
(9) Includes 1,234,667 Shares that are issuable upon exercise of stock options
within 60 days and 2,250 Shares as to which the reporting person disclaims
beneficial ownership.
3
<PAGE> 6
ELECTION OF DIRECTORS
Six directors will be elected at the 1996 Annual Meeting of Shareholders,
each director to hold office until the next Annual Meeting of Shareholders and
until his or her successor is elected and shall have qualified, or his or her
earlier resignation or removal. All of the persons listed below have consented
to serve as a director, if elected. The Board of Directors proposes for election
the nominees listed below:
- --------------------------------------------------------------------------------
ROBERT L. JOHANDER Director since 1990
Age 50
Mr. Johander is a founder of the Company, and has served as Chairman of the
Board and Chief Executive Officer since June 1990. Mr. Johander's experience in
television home shopping began in 1984 as president of Telethon Marketing
Company, where he was responsible for the creation, production, and management
of Morey's Markdown Market, a half-hour national cable television home shopping
program featuring merchandise supplied by the C.O.M.B. Co. ("C.O.M.B."), a
Minneapolis-based mail order liquidator of consumer merchandise. In August 1985,
C.O.M.B. agreed to acquire Telethon Marketing Company, and Mr. Johander joined
C.O.M.B. to manage its television activities. In early 1986, Mr. Johander, as
General Manager of C.O.M.B.'s Value Network, conceived and managed the launch of
Cable Value Network, a joint-venture television home shopping network formed by
C.O.M.B. and several national cable television system operators. In 1987,
C.O.M.B. changed its name to CVN Companies, Inc. ("CVN") which was subsequently
acquired by QVC Network, Inc. and Mr. Johander was appointed internal consultant
to the Chairman of the Board of CVN, in which capacity he served until June
1989.
- --------------------------------------------------------------------------------
NICHOLAS M. JAKSICH Director since 1990
Age 51
Mr. Jaksich is a founder of the Company, and has served as President and Chief
Operating Officer and as a director of the Company since June 1990. From
February 1984 to June 1986, Mr. Jaksich was Vice President, Distribution and
Operations for Lillian Vernon Corporation, a national direct mail merchandising
firm. In July 1986, Mr. Jaksich joined C.O.M.B. to assist in the launch of its
television activities. His responsibilities included the direct day-to-day
supervision of television production and merchandising activities, the
development of various television order response, inventory, and sales tracking
systems, and supervision of on-air hosts. In 1987, Mr. Jaksich succeeded Mr.
Johander as divisional Senior Vice President of CVN Television, a division of
CVN. In March 1988, Mr. Jaksich left CVN to pursue independent business
ventures.
- --------------------------------------------------------------------------------
ROBERT J. KORKOWSKI Director since 1993
Age 55
Mr. Korkowski has been a director of the Company since May 1993. From 1989 to
1996, Mr. Korkowski was the Senior Vice President of Finance and a Director of
Opus Corporation, a privately held real estate developer and construction
company. From 1986 to 1989 Mr. Korkowski was the Vice President and Chief
Financial Officer of National Computer Systems, Inc., a publicly-held
information system company based in Minneapolis. From 1974 to 1986, Mr.
Korkowski was Executive Vice President and Chief Financial Officer of G.
Heileman Brewing Company.
4
<PAGE> 7
- --------------------------------------------------------------------------------
MARSHALL S. GELLER Director since 1993
Age 56
Mr. Geller has been a director of the Company since May 1993 and Vice Chairman
of the Board since August 1994. Mr. Geller is currently the Chairman, CEO, and
Founding Partner of Geller & Friend Capital Partners, Inc., which was formed in
November 1995. From 1991 to October 1995, Mr. Geller was the Senior Managing
Partner and founder of Golenberg and Geller, Inc., a merchant banking investment
company. From 1988 to 1990, he was Vice-Chairman of Gruntal & Co., a New York
Stock Exchange investment banking firm. Prior to 1988, Mr. Geller spent 21 years
with Bear Stearns & Co., an investment banking firm, where he served as senior
managing director of the Los Angeles, San Francisco, Chicago and Hong Kong
offices and specialized in the areas of corporate finance, public finance, and
institutional equities and debt. Marshall Geller formerly served as Interim
Co-Chairman of Hexcel Corporation and is still currently on the Board of
Directors. Mr. Geller was also Interim President and Chief Operating Officer of
Players, Inc., and now serves on their board and is Chairman of their Investment
Committee. Mr. Geller also serves on the Boards of the following companies:
Ballantyne of Omaha, Inc., Styles-on-Video, Inc. and Dycam, Inc.
- --------------------------------------------------------------------------------
JOHN WORKMAN Director since 1995
Age 45
John Workman has been a director of the Company since August 1995. Mr. Workman
has been Executive Vice President, Chief Financial Officer and Assistant
Secretary of Montgomery Ward Hold Corp. since January 1994. Prior thereto, he
served as Senior Vice President, Chief Financial Officer and Assistant Secretary
of Montgomery Ward Holding Corp. since August 1992 and Vice President and
Assistant Secretary since May 1992. Mr. Workman has been Executive Vice
President and Chief Financial Officer of Montgomery Ward since January 1994 and
served as Senior Vice President and Chief Financial Officer of Montgomery Ward
from August 1992 to January 1994. Prior thereto, he served as Vice President and
Corporate Controller of Montgomery Ward from January 1991 through August 1992
and Corporate Controller of Montgomery Ward from August 1988 through January
1991. Mr. Workman is also a director of Montgomery Ward Holding Corp.
- --------------------------------------------------------------------------------
PAUL D. TOSETTI Director -- Nominee
Age 41
Mr. Tosetti is a partner in the Los Angeles office of the law firm of Latham &
Watkins, a position he has held since 1989. Mr. Tosetti has been associated with
Latham & Watkins since 1982, and is Chairman of that firm's Mergers and
Acquisitions group and a member of its Corporate Department. His principal areas
of practice specialization are mergers and acquisitions and corporate finance.
- --------------------------------------------------------------------------------
All Shares represented by proxies will be voted FOR the election of the
foregoing nominees unless a contrary choice is specified. If one or more of
these nominees become unable or unwilling to serve at the time of the Annual
Meeting, the Shares represented by proxy will be voted for the remaining
nominees and for any substitute nominees designated by the Board of Directors
or, if none, the size of the Board of Directors will be reduced accordingly. The
Board of Directors does not anticipate that any nominee will be unavailable or
unable to serve.
5
<PAGE> 8
EXECUTIVE COMPENSATION
The following table sets forth certain summary information with respect to
compensation paid or accrued during the fiscal years ended January 31, 1996,
1995 and 1994 for the Company's Chief Executive Officer and each of the
Company's four other most highly compensated executive officers who were serving
as executive officers on January 31, 1996, and whose salary and bonus exceeded
$100,000 during fiscal year ended January 31, 1996:
SUMMARY COMPENSATION TABLE
<TABLE>
<CAPTION>
LONG-TERM
COMPENSATION
ANNUAL COMPENSATION ------------
--------------------------------- AWARDS
FISCAL OTHER ANNUAL SECURITIES
NAME AND PRINCIPAL POSITION YEAR SALARY COMPENSATION UNDERLYING
- ---------------------------------------------------- ------ ------- ------------ OPTIONS/SARS
($) ($) ------------
(#)
<S> <C> <C> <C> <C>
Robert L. Johander.................................. 1996 181,442 6,000(1) 0
Chief Executive Officer 1995 125,000 6,000(1) 0
and Chairman of the Board 1994 126,261 8,346(1) 750,000(3)
Nicholas M. Jaksich................................. 1996 165,635 6,000(1) 0
Chief Operating Officer 1995 115,000 6,000(1) 0
and President 1994 115,358 6,000(1) 750,000(3)
Edward A. Karr...................................... 1996 134,231 5,400(1) 100,000
Executive Vice President, 1995 125,000 3,150(1) 50,000
Merchandising & Programming 1994 47,115 0 100,000
Mark A. Payne....................................... 1996 129,616 55,400(2) 100,000
Senior Vice President, Business 1995 90,000 2,250(1) 50,000
Development and Acquisitions 1994 90,000 0 0
Michael L. Jones.................................... 1996 120,000 5,400(1) 0
Vice President, Broadcast 1995 108,462 3,150(1) 115,000
Television 1994 57,692 0 0
</TABLE>
- -------------------------
(1) Automobile allowance.
(2) Includes a $50,000 bonus and a $5,400 automobile allowance.
(3) In fiscal year 1994, pursuant to employment agreements with Messrs. Johander
and Jaksich, the Company granted to each of Messrs. Johander and Jaksich
options to purchase an aggregate of 1,000,000 shares of the Company's common
stock, which were to vest in specified amounts based upon the Company
achieving certain specified financial goals. In August 1995, the Company and
Messrs. Johander and Jaksich amended such employment agreements to, among
other things, adjust the exercise price of such options and reduce the
aggregate number of shares of the Company's common stock issuable upon
exercise of such options to 750,000. The options still vest according to the
Company achieving the same specified financial goals or in September 2003,
assuming that either Messrs. Johander or Jaksich is still an employee of the
Company. See "Employment Agreements."
6
<PAGE> 9
OPTION GRANTS DURING FISCAL YEAR ENDED JANUARY 31, 1996
The following table sets forth information with respect to options to
purchase shares of the Company's common stock granted during the fiscal year
ended January 31, 1996 to each of the executive officers in the Summary
Compensation Table above. No stock appreciation rights ("SARs") were granted to
any of the persons listed on the table below during fiscal 1996.
OPTION/SAR GRANTS IN LAST FISCAL YEAR
(INDIVIDUAL GRANTS)
<TABLE>
<CAPTION>
POTENTIAL REALIZABLE
VALUE AT ASSUMED
ANNUAL RATES OF
NUMBER OF PERCENT OF STOCK
SECURITIES TOTAL OPTIONS/ PRICES APPRECIATION
UNDERLYING SARS GRANTED EXERCISE OR FOR OPTION TERM(1)
OPTIONS/SARS TO EMPLOYEES BASE PRICE EXPIRATION --------------------
NAME GRANTED (#) IN FISCAL YEAR(3) ($/SH) DATE(2) 5% ($) 10% ($)
- ----------------------- ------------ ----------------- ----------- ----------- -------- --------
<S> <C> <C> <C> <C> <C> <C>
Robert L. Johander..... 0 0% -- -- -- --
Nicholas M. Jaksich.... 0 0% -- -- -- --
Edward A. Karr......... 100,000 29.7% $ 6.00 August 2005 $377,337 $956,246
Mark A. Payne.......... 100,000 29.7% $ 5.625 March 2005 $353,753 $896,480
Michael L. Jones....... 0 0% -- -- -- --
</TABLE>
- -------------------------
(1) The amounts shown in these columns are the result of calculations at assumed
annual rates required by the Securities and Exchange Commission and are not
intended to forecast possible future appreciation, if any, of the price of
the Company's common stock. The Company did not use an alternative formula
for a grant date valuation, as the Company is not aware of any formula that
will determine with reasonable accuracy a present value based on future
unknown or volatile factors.
(2) Options were granted at an exercise price equal to the Fair Market Value of
the Company's common stock on the date of grant and vest over a five year
term in increments of 20% each on the anniversary of the date of grant. Such
options will expire five years after vesting.
(3) Percentage calculations in this column are based solely on the number of
options granted to employees of the Company and do not take into account
options granted to non-employee consultants or directors of the Company.
OPTION EXERCISES AND YEAR-END VALUE TABLE
The following table sets forth information with respect to the unexercised
options held by each of the executive officers named in the Summary Compensation
Table above, as of January 31, 1996. None of such persons exercised any options
during fiscal 1996.
AGGREGATED OPTION/SAR EXERCISES IN LAST FISCAL YEAR
AND FISCAL YEAR-END OPTION/SAR VALUES
<TABLE>
<CAPTION>
NUMBER OF SECURITIES VALUE OF UNEXERCISED
UNDERLYING UNEXERCISED IN-THE-MONEY
OPTIONS/SARS OPTIONS/SARS
AT JANUARY 31, 1996 (#) AT JANUARY 31, 1996 ($)
--------------------------- ------------------------------
NAME (EXERCISABLE/UNEXERCISABLE) (EXERCISABLE/UNEXERCISABLE)(1)
- --------------------------------------------- --------------------------- ------------------------------
<S> <C> <C>
Robert L. Johander........................... 300,000/450,000 0/0
Nicholas M. Jaksich.......................... 300,000/450,000 0/0
Edward A. Karr............................... 86,667/163,333 65,833/77,917
Mark A. Payne................................ 55,000/100,000 91,562/50,000
Michael L. Jones............................. 115,000/0 119,437/0
</TABLE>
- -------------------------
(1) The dollar amount represents the positive spread between the exercise price
of the options and the closing price per share of the Company's common stock
on the Nasdaq National Market of $6.125 on January 31, 1996.
7
<PAGE> 10
TEN-YEAR OPTION/SAR REPRICINGS
<TABLE>
<CAPTION>
NUMBER OF
SECURITIES MARKET PRICE
UNDERLYING OF STOCK AT EXERCISE PRICE
OPTIONS/SARS TIME OF AT TIME OF NEW LENGTH OF ORIGINAL
REPRICED OR REPRICING OR REPRICING OR EXERCISE OPTION TERM REMAINING
AMENDED AMENDMENT AMENDMENT PRICE AT DATE OF REPRICING
DATE (#) ($) ($) ($) OR AMENDMENT
-------- ------------ ------------ -------------- -------- ---------------------
<S> <C> <C> <C> <C> <C> <C>
Robert L. Johander... 8/8/95 375,000 6.25 10.00 8.50 8 years
Robert L. Johander... 8/8/95 375,000 6.25 25.00 10.50 8 years
Nicholas M.
Jaksich............ 8/8/95 375,000 6.25 10.00 8.50 8 years
Nicholas M.
Jaksich............ 8/8/95 375,000 6.25 25.00 10.00 8 years
Mark A. Payne........ 10/21/94 50,000 4.75 7.50 4.75 10 years
Michael L. Jones..... 10/21/94 86,863 4.75 7.50 4.75 10 years
</TABLE>
EMPLOYMENT AGREEMENTS
The Company has entered into employment agreements with each of Robert L.
Johander and Nicholas M. Jaksich which expire on January 31, 1999. Effective
July 1, 1995, the annual base salaries for Messrs. Johander and Jaksich were
$220,000 and $200,000 respectively. Messrs. Johander and Jaksich are eligible to
receive discretionary bonuses, as determined by the Board of Directors. Their
base salaries will be increased by 5% annually, or by a higher amount if the
Company achieves certain pre-tax net income goals. The base salaries of both
Messrs. Johander and Jaksich were increased to $237,500 on January 31, 1996, due
to the Company achieving minimum pre-tax income of at least $7.25 million, for
the fiscal year ended on such date (the "Fiscal 1996 Net Income Goals"). The
base salaries of Messrs. Johander and Jaksich will be increased to $293,750 and
$350,000 on January 31, 1997 and 1998, respectively, if the Company achieves
minimum pre-tax income of at least $8.5 million and $11.75 million in the fiscal
year ending on such date (together with the fiscal 1996 Net Income Goals, the
"Net Income Goals"). Messrs. Johander and Jaksich cannot be terminated except
for disability or cause. Messrs. Johander and Jaksich have agreed not to compete
in the television home shopping business or in any other business in which the
Company has engaged during the six months prior to the employee's termination,
during the term of the employment agreement and for the period ending (i) one
year after the expiration of the employment agreement and any extension thereof,
(ii) two years after termination for cause due to a willful failure to perform
under the terms of the employment agreement, or (iii) five years after
termination for any other reason other than cause, including the employee's
voluntary termination.
In September 1993 and in connection with entering into employment
agreements with Messrs. Johander and Jaksich, the employment agreements provided
the grant of options to purchase 100,000 shares of common stock at $15.00 (in
excess of the then fair market value) per share exercisable until January 31,
2002 and 100,000 shares of common stock at $25.00 (in excess of the then fair
market value) per share exercisable until January 31, 2005 on each of January
31, 1995, 1996, 1997, 1998 and 1999 if the Company achieved certain pre-tax
income goals, as defined. In the event that the Company fails to achieve a Net
Income Goal in any year, Messrs. Johander and Jaksich will vest in the options
attributable to such "missed" year if in a subsequent year the Company's pre-tax
net income is greater than or equal to such subsequent year's Net Income Goal
plus the Net Income Goal for the missed year. In August 1995, pursuant to an
independent compensation study and the recommendation of the Compensation
Committee, the Board of Directors approved an amendment to such employment
agreements whereby the exercise price of the granted options with original
exercise prices of $15.00 and $25.00 per share were repriced to $8.50 and $10.50
per share (in excess of the then fair market value), respectively. In addition,
the number of shares available per each respective grant was reduced from
100,000 to 75,000 options and the options vest and become exercisable at the
earlier of meeting the Net Income Goal or in September 2003, assuming that
either of Messrs. Johander or Jaksich is still an employee of the Company.
On September 1, 1995 the Company entered into an employment agreement with
Edward A. Karr (the "Karr Employment Agreement") and continuing on a full-time
basis for a period of thirty-six (36) months. Pursuant to the Karr Employment
Agreement, the Company has agreed to pay Mr. Karr $150,000 annually,
8
<PAGE> 11
reimburse him for reasonable and necessary business expenses and granted him
options to purchase 100,000 shares of the Company's common stock. Mr. Karr has
agreed not to compete with the Company in the television home shopping business
for a period of thirty-six (36) months following termination of Mr. Karr's
employment by the Company.
The Company has also entered into any employment agreement with Michael L.
Jones (the "Jones Employment Agreement") commencing on September 1, 1993 and
continuing on a full time basis for a period of twenty-one (21) months. Pursuant
to the Jones Employment Agreement, the Company agreed to pay Mr. Jones $120,000
annually, reimburse him for certain office expenses and granted him options to
purchase 115,000 shares of the Company's common stock. Mr. Jones could not be
terminated during the term of the Jones Employment Agreement except for cause.
Mr. Jones agreed not to compete in the television home shopping business for a
period commencing on June 1, 1995 and ending on the last day of the twelve (12)
full months after the date on which Mr. Jones ceases to be employed by the
Company. Such non-compete period may be extended for up to six (6) months based
upon the number of stock options of the Company exercised by Mr. Jones.
DIRECTOR COMPENSATION
During the first quarter of the fiscal year ended January 31, 1996, the
Company paid non-employee directors $500 for each board of directors and
committee meetings attended, and $250 for each board of directors and committee
meeting in which such director participated by telephone. Commencing in the
second quarter of the fiscal year ended January 31, 1996, the Company paid
non-employee directors (except Mr. Workman) a $20,000 annual retainer (paid
quarterly on a pro rata basis), plus $1,000 for each board of directors and
committee meeting attended, and $750 for each board of directors and committee
meeting in which such director participates by telephone. The Company also
reimburses directors for costs and expenses they incur to attend board of
directors and committee meetings. Pursuant to its agreements with Montgomery
Ward, the Company does not pay any cash compensation or issue any stock options
to Mr. Workman, a director named by Montgomery Ward. On August 8, 1995 the
Company granted each of Messrs. Geller and Korkowski, options to purchase 10,000
shares at an exercise price of $6.1875. Such options vest on August 8, 1996 and
expire on August 8, 2005.
COMPENSATION COMMITTEE INTERLOCKS AND INSIDER PARTICIPATION
During fiscal 1996, the Company's Compensation Committee consisted of two
non-employee directors, Marshall S. Geller and Arthur B. Laffer. Mr. Laffer is
not standing for re-election as a director of the Company at the 1996 Annual
Meeting of Shareholders.
BOARD COMPENSATION COMMITTEE REPORT ON EXECUTIVE COMPENSATION
Decisions on compensation of the Company's executives generally have been
made by the Compensation Committee. Each member of the Compensation Committee is
a non-employee director. All decisions by the Compensation Committee relating to
the compensation of the Company's executive officers are reviewed by the full
Board. Pursuant to rules designed to enhance disclosure of the Company's
policies toward executive compensation, set forth below is a report prepared by
the Compensation Committee addressing the compensation policies for the Company
and its subsidiaries for the year ended January 31, 1996 as they affected the
Company's executive officers.
The Compensation Committee's executive compensation policies are designed
to provide competitive levels of compensation that integrate pay with the
Company's annual objectives and long-term goals, reward above-average corporate
performance, recognize individual initiative and achievements, and assist the
Company in attracting and retaining qualified executives. Executive compensation
is set at levels that the Compensation Committee believes to be consistent with
others in the Company's industry.
The three elements in the Company's executive compensation program, all
determined by individual and corporate performance, are base salary
compensation, annual incentive compensation and stock options. Total
compensation opportunities are generally competitive with those offered by
employers of comparable size, growth and profitability in the Company's
industry.
9
<PAGE> 12
Base salary compensation is determined by the potential impact the
individual has on the Company, the skills and experiences required by the job,
and the performance and potential of the incumbent in the job. Annual incentive
compensation for executives of the Company is based primarily on corporate
operating results and revenue growth and the Company's positioning for future
results, but also includes an overall assessment of executive management's
performance, as well as market conditions. Awards of stock grants under the
Company's Second Amended 1990 Stock Option Plan (the "Stock Option Plan") are
designed to promote the identity of long-term interests between the Company's
executives and its shareholders and assist in the retention of executives. The
Stock Option Plan also permits the granting of stock options to key personnel.
Options become exercisable based upon criteria established by the Company. The
Compensation Committee granted stock options to acquire 100,000 shares of Common
Stock to Mr. Edward A. Karr, the Company's Executive Vice President,
Merchandising and Programs, and stock options to acquire 100,000 shares of
Common Stock to Mr. Mark A. Payne, the Company's Senior Vice President, Business
Development and Acquisitions, during the fiscal year ended January 31, 1996.
Messrs. Karr and Payne were the only named executive officers to receive any
stock options this past fiscal year.
The Compensation Committee surveys employee stock option programs of
companies with similar capitalization to the Company prior to recommending the
grant of options to executives. While the value realizable from exercisable
options is dependent upon the extent to which the Company's performance is
reflected in the market price of the Company's common stock at any particular
point in time, the decision as to whether such value will be realized in any
particular year is determined by each individual executive and not by the
Compensation Committee. Accordingly, when the Committee recommends that an
option be granted to an executive, that recommendation does not take into
account any gains realized that year by that executive as a result of his or her
individual decision to exercise an option granted in a previous year.
In August 1995, pursuant to an independent compensation study, the
Compensation Committee recommended and the Board of Directors approved, a
repricing of options previously granted to Messrs. Johander and Jaksich, with
original exercise prices of $15.00 and $25.00 per share, respectively, to $8.50
and $10.50 per share (in excess of the then fair market value), respectively. In
addition, the number of shares available per each respective grant was reduced
from 100,000 to 75,000 options and the options vest and become exercisable at
the earlier of meeting the Net Income Goal (as defined in the employment
agreements with Messrs. Johander and Jaksich) or in September 2003, assuming
that either of Messrs. Johander or Jaksich is still an employee of the Company.
The Board of Directors repriced the exercise price of the options granted
because the Board of Directors believed that, due to the decline in the
Company's stock price since the grant of the options, the options did not
provide sufficient long-term stock based incentive and such incentive would be
provided by the repricings. The Board of Directors believes that the option
grants with deferred vesting to executive officers are important in retaining
executive officers and providing them with incentives consistent with the
shareholders' objections for appreciation in the value of the Company's stock.
The Compensation Committee established a compensation structure and entered
into an employment agreement with Mr. Johander that provided for a base salary
and the granting of stock options. The contract provided for a base salary of
$237,500 for the year ended January 31, 1996, and the vesting of 75,000 options
exercisable at $8.50 and 75,000 options exercisable at $10.50, based on
achieving a pretax income of at least $5,250,000. As the Company exceeded this
target for the year ended January 31, 1996, the base salary has increased and
the options mentioned were vested. The Compensation Committee believes that the
continued growth, expansion and profitablility of the Company during fiscal 1996
was due it large part to Mr. Johander's efforts.
In 1993, Section 162(m) of the Internal Revenue Code was adopted which,
beginning in 1994, imposed an annual deduction limitation of $1.0 million on the
compensation of certain executive officers of publicly traded companies. The
Company does not believe that the Section 162(m) limitation will materially
affect the Company in the near future as of date, no executive officer of the
Company has received compensation that is nearing $1 million per year.
Marshall S. Geller
Arthur B. Laffer
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<PAGE> 13
STOCK PERFORMANCE GRAPH
The Securities and Exchange Commission requires that the Company include in
this Proxy Statement a line-graph presentation comparing cumulative, five-year
return to the Company's shareholders (based on appreciation of the market price
of the Company's Common Stock) on an indexed basis with (i) a broad equity
market index and (ii) an appropriate published industry or line-of-business
index, or peer group index constructed by the Company. The following
presentation compares the Company's Common Stock price in the period from June
28, 1991 (the date of the Company's initial public offering) to January 31,
1996, to the Nasdaq National Market stock index and to a "peer group" index
created by the Company over the same period. The "peer group" index consists of
the common stock of: Home Shopping Network, Inc., Damark International, Inc.,
Land's End, Inc., Hanover Direct, Inc., Lillian Vernon Corp., National Media
Corporation and Fingerhut Companies, Inc. These corporations are involved in
various aspects of direct marketing to customers industry. The presentation
assumes that the value of an investment in each of the Company's Common Stock,
the S&P 500 Index, and the peer group index was $100 on June 28, 1991, and that
any dividends paid were reinvested in the same security.
<TABLE>
<CAPTION>
VALUEVISION
IN-
Measurement Period TERNATIONAL, NASDAQ STOCK
(Fiscal Year Covered) INC. PEER GROUP MARKET- US
<S> <C> <C> <C>
6/28/91 100 100 100
1/92 135 130 132
1/93 282 149 150
1/94 1152 259 172
1/95 470 148 164
1/96 576 140 232
</TABLE>
11
<PAGE> 14
CERTAIN TRANSACTIONS
During the year ended January 31, 1996 the Company lent $550,000 to
Nicholas M. Jaksich, the Company's President and Chief Operating Officer, in the
form of two promissory notes. The first promissory note of $50,000 in principal
is due May 15, 1997 and bears interest at 6.80%. Mr. Jaksich has pledged stock
as collateral against the note. The second promissory note of $500,000 in
principal is due November 20, 1996, bears interest at 5 7/8% and the promissory
note is secured by a security interest in certain shares of common stock of the
Company owned by Mr. Jaksich and by a Mortgage on certain real property. As of
April 30, 1996 principal and accrued interest thereon of approximately $567,000
remained outstanding under these notes.
As of January 31, 1996 the Company lent $206,000 in the form of various
promissory notes to Mark A. Payne, Senior Vice President of Business Development
and Acquisitions. The promissory notes bear interest of 6.80% to 8.0% and are
due no later than April 15, 1997. As collateral for the promissory notes, Mr.
Payne has pledged all current and future vested but unexercised stock options
and all common stock of the Company owned by him personally. As of April 30,
1996, principal and accrued interest thereon of approximately $226,000 remained
outstanding under these notes.
Telethon Television, Inc. ("Telethon") and Television Interests, Inc.
("Television, Inc.") are corporations controlled by each of Messrs. Johander and
Jaksich, respectively, who are directors and officers of the Company. The
Company has previously entered into financing and affiliation agreements (the
"Financing Agreements") for the construction of an aggregate of four lower power
television stations (the "LPTV Stations") with Telethon and Television, Inc.
Each Financing Agreement provides among other things, that the Company: (1) will
have the right, but not the obligation, to finance the cost of construction of
and equipment for the LPTV Stations, not to exceed $86,000 or certain lessor
amounts, (2) will make its programming available to such station, which has the
right, but not the obligation to carry the Company's programming, (3) will pay
such station a programming fee up to $4,600 per month for broadcast of the
Company's programming, (4) for three stations, has an option to purchase the
station for $5,000 each, together with assumption of any construction debt owed
by such station to the Company, and for the fourth station, a right of first
refusal to purchase such station, and (5) will provide for termination by the
holder of the construction permit if the Company does not commit to finance
construction of such station within the time period set forth in the Financing
Agreement. In the case of the station subject to a right of first refusal, the
Company may be required to pay a substantial amount to purchase a station for
which it has already financed construction costs, which may result in
substantial profit to the owner of the station. The Company's acquisition of a
station pursuant to the exercise of an option or right of first refusal be
subject to FCC approval. In the event of a default by Telethon or Television,
Inc., the Company's only recourse will be against the station equipment, which
generally represents approximately 75% of the construction loan. Accordingly,
the event of a default by Telethon or Television, Inc., the Company may not
recover 25% or more of its construction loan.
COMPLIANCE WITH SECTION 16(A) OF
THE SECURITIES EXCHANGE ACT OF 1934
Based solely upon a review of Forms 3, 4 and 5 and amendments thereto
pursuant to Rule 16a-3(e) furnished to the registrant with respect to fiscal
year 1996, or written representations from such persons that no Form 5 was
required, the Company is not aware of any late reports except with respect to
Mr. Mark Payne and Mr. Scott Linquist, the Company's Senior Vice President,
Business Development and Acquisitions and Vice President, Administration,
respectively, each of who filed one late report.
PROPOSALS OF SHAREHOLDERS
All proposals of shareholders intended to be presented at the 1997 Annual
Meeting of Shareholders of the Company must be received by the Company at its
executive offices on or before April 4, 1997.
12
<PAGE> 15
OTHER MATTERS
Board of Directors and Committees
The Board of Directors held three meetings and six telephonic meetings
during the fiscal year ended January 31, 1996. The Company's audit committee,
which consisted of Messrs. Korkowski and Laffer in fiscal 1996, held one meeting
in fiscal 1996. The audit committee recommends to the board the engagement of
the independent accountants, reviews the audit plan and results of the audit
engagement, reviews the independence of the auditors, and reviews the adequacy
of the Company's system of internal accounting controls. The Company's
compensation committee, which consisted of Messrs. Geller and Laffer in fiscal
1996, held one meeting in fiscal 1996. The compensation committee reviews the
Company's remuneration policies and practices, makes recommendations to the
board in connection with the compensation matters concerning the Company. The
Company's stock option committee during fiscal 1996 consisted of Robert L.
Johander and Nicholas M. Jaksich. The stock option committee administers the
Company's Second Amended 1990 Stock Option Plan.
Independent Accountants
Arthur Andersen LLP has been the independent accountant for the Company
since 1990 and has been retained for fiscal 1997. Representatives of Arthur
Andersen LLP will attend the 1996 Annual Meeting, will have an opportunity to
make a statement if they desire to do so and will be available to answer
questions of the shareholders.
Solicitation
The Company will bear the cost of preparing, assembling and mailing the
proxy, Proxy Statement, Annual Report and other material which may be sent to
the shareholders in connection with this solicitation. Brokerage houses and
other custodians, nominees and fiduciaries may be requested to forward
soliciting material to the beneficial owners of stock, in which case they will
be reimbursed by the Company for their expenses in doing so. Proxies are being
solicited primarily by mail, but, in addition, officers and regular employees of
the Company may solicit proxies personally, by telephone, by telegram or by
special letter. The Company intends to use the services of Beacon Hill Partners,
Inc. to aid in the solicitation of proxies at an anticipated fee of $2,000 plus
reasonable expenses.
The Board of Directors does not intend to present to the meeting any other
matter not referred to above and does not presently know of any matters that may
be presented to the meeting by others. However, if other matters come before the
meeting, it is the intent of the persons named in the enclosed proxy to vote the
proxy in accordance with their best judgment.
By Order of the Board of Directors
VALUEVISION INTERNATIONAL, INC.
Robert L. Johander
Chairman of the Board
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<PAGE> 16
FORM OF PROXY CARD--
PROXY PROXY
VALUEVISION INTERNATIONAL, INC.
PROXY FOR ANNUAL MEETING OF SHAREHOLDERS
THIS PROXY IS SOLICITED ON BEHALF OF THE BOARD OF DIRECTORS.
THE BOARD OF DIRECTORS RECOMMENDS A VOTE FOR ALL PROPOSALS
The undersigned, a shareholder of ValueVision International, Inc.,
hereby appoints Robert L. Johander and Nicholas M. Jaksich, and each
of them, as proxies, with full power of substitution, to vote on
behalf of the undersigned the number of Shares which the undersigned
is then entitled to vote, at the Annual Meeting of Shareholders of
ValueVision International, Inc. to be held at the Minneapolis Marriott
Southwest, 5801 Opus Parkway, Minnetonka, Minnesota 55343 on Tuesday,
August 20, 1996 at 9:00 a.m., and at any and all adjournments thereof,
with all the powers which the undersigned would possess if personally
present, upon the matters set forth herein. When properly executed,
this proxy will be voted on the proposals set forth herein as directed
by the shareholder, but if no direction is made in the space provided,
the proxies will vote FOR all proposals and at their discretion on any
other business as may properly come before the meeting.
The undersigned hereby revokes all previous proxies relating to the
Shares covered hereby and acknowledges receipt of the Notice and Proxy
Statement relating to the Annual Meeting of Shareholders.
To be Signed on Reverse Side
(1) Election of Directors:
Nominees: Marshall S. Geller, Nicholas M. Jaksich, Robert L.
Johander, Robert J. Korkowski, Paul D. Tosetti, and John Workman.
----------------------------------------------------------------------
For, except vote withheld from the following nominees:
----------------------------------------------------------------------
(2) Upon such other business as may properly come before the meeting
or any adjournments thereof.
NOTE: Please sign exactly as
name appears hereon. Joint
owners should each sign.
Signature(s) ___________ Date __________
Signature(s) ___________ Date __________
