<PAGE>
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 Section 240.14a-11(c) or Section 240.14a-12
AMERICAN BUSINESS INFORMATION, 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:
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(2) Aggregate number of securities to which transaction applies:
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(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):
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(4) Proposed maximum aggregate value of transaction:
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(5) Total fee paid:
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[_] 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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(2) Form, Schedule or Registration Statement No.:
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(3) Filing Party:
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(4) Date Filed:
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Notes:
<PAGE>
AMERICAN BUSINESS INFORMATION, INC.
NOTICE OF ANNUAL MEETING OF STOCKHOLDERS
MAY 23, 1997
TO THE STOCKHOLDERS:
NOTICE IS HEREBY GIVEN that the 1997 Annual Meeting of Stockholders of
American Business Information, Inc., a Delaware corporation (the "Company"),
will be held on May 23, 1997, at 10:00 a.m. local time, at the Marriott Hotel,
10220 Regency Circle, Omaha, Nebraska, for the following purposes as more fully
described in the Proxy Statement accompanying this Notice:
1. To elect three directors to the Board of Directors for a term of three
years;
2. To increase the number of shares of Common Stock reserved for issuance
under the Company's 1992 Stock Option Plan from 4,000,000 to 5,000,000
shares and to make certain other changes;
3. To ratify the appointment of Coopers & Lybrand L.L.P. as the Company's
independent public accountants for the fiscal year ending December 31,
1997; and
4. To transact such other business as may properly come before the
meeting or any adjournment thereof.
Only stockholders of record at the close of business on April 4, 1997, are
entitled to receive notice of and to vote at the meeting.
All stockholders are cordially invited to attend the meeting in person.
However, to assure your representation at the meeting, you are urged to mark,
sign, date and return the enclosed Proxy card as promptly as possible in the
postage-prepaid envelope for that purpose. Stockholders attending the meeting
may vote in person even if they have returned a Proxy.
Sincerely,
JON H. WELLMAN
President and Secretary
Omaha, Nebraska
April 22, 1997
<PAGE>
AMERICAN BUSINESS INFORMATION, INC.
PROXY STATEMENT
INFORMATION CONCERNING SOLICITATION AND VOTING
GENERAL
The enclosed Proxy is solicited on behalf of American Business Information,
Inc., a Delaware corporation (the "Company"), for use at its 1997 Annual Meeting
of Stockholders to be held on May 23, 1997, at 10:00 a.m., local time, or at any
adjournments or postponements thereof, for the purposes set forth in this Proxy
Statement and in the accompanying Notice of Annual Meeting of Stockholders. The
Annual Meeting will be held at the Marriott Hotel, 10220 Regency Circle, Omaha,
Nebraska. The Company's principal executive offices are located at 5711 South
86th Circle, Omaha, Nebraska 68127. The Company's telephone number is (402) 593-
4500.
These proxy solicitation materials were mailed on or about April 22, 1997,
to all stockholders entitled to vote at the meeting.
RECORD DATE; OUTSTANDING SHARES
Stockholders of record at the close of business on April 4, 1997 (the
"Record Date"), are entitled to receive notice of and vote at the meeting. On
the Record Date, 24,314,507 shares of the Company's Common Stock, $.0025 par
value, were issued and outstanding. For information regarding holders of more
than five percent of the outstanding Common Stock, see "Election of Directors --
Security Ownership."
REVOCABILITY OF PROXIES
Proxies given pursuant to this solicitation may be revoked at any time
before they have been used. Revocation will occur by delivering a written notice
of revocation to the Company or by duly executing a proxy bearing a later date.
Revocation will also occur if the individual attends the meeting and votes in
person.
VOTING AND SOLICITATION
Every stockholder of record on the Record Date is entitled, for each share
held, to one vote on each proposal or item that comes before the meeting. In the
election of directors, each stockholder will be entitled to vote for three
nominees and the three nominees with the greatest number of votes will be
elected.
The cost of this solicitation will be borne by the Company. The Company may
reimburse expenses incurred by brokerage firms and other persons representing
beneficial owners of shares in forwarding solicitation material to beneficial
owners. Proxies may be solicited by certain of the Company's directors, officers
and regular employees, without additional compensation, personally, by telephone
or by telegram.
DEADLINE FOR RECEIPT OF STOCKHOLDER PROPOSALS
Stockholder proposals which are intended to be presented at the Company's
1998 Annual Meeting must be received by the Company no later than December 24,
1997 in order that they may be included in the proxy statement and form of proxy
for that meeting.
1
<PAGE>
PROPOSAL ONE:
ELECTION OF DIRECTORS
GENERAL
The Company's Board of Directors is divided into three classes, each of
which has three directors, with the term of office of one class expiring each
year. The terms of office of directors Vinod Gupta, Jon D. Hoffmaster and George
F. Haddix expire at the 1997 annual meeting. The terms of office of directors
Harold W. Andersen, Jon H. Wellman and Elliot S. Kaplan expire at the 1998
annual meeting and the terms of office of directors Gautam Gupta, Paul A.
Goldner and George J. Kubat expire at the 1999 annual meeting. The Company is
proposing that shareholders elect three directors at the 1997 Annual Meeting.
VOTE REQUIRED
The three nominees receiving the highest number of affirmative votes of the
shares present in person or represented by proxy at the Annual Meeting and
entitled to vote on the election of directors shall be elected to the Board of
Directors. Votes withheld from any director are counted for purposes of
determining the presence or absence of a quorum, but have no legal effect under
Delaware law. While there is no definitive statutory or case law authority in
Delaware as to the proper treatment of abstentions and broker non-votes in the
election of directors, the Company believes that both abstentions and broker
non-votes should be counted for purposes of whether a quorum is present at the
Annual Meeting. In the absence of precedent to the contrary, the Company intends
to treat abstentions and broker non-votes with respect to the election of
directors in this manner.
Unless otherwise instructed, the proxy holders will vote the proxies
received by them for the Company's three nominees named below, all of whom are
presently directors of the Company. If any nominee of the Company is unable or
declines to serve as a director at the time of the Meeting, the proxies will be
voted for any nominee who is designated by the present Board of Directors to
fill the vacancy. It is not expected that any nominee will be unable or will
decline to serve as a director. THE BOARD OF DIRECTOR RECOMMENDS THAT
STOCKHOLDERS VOTE "FOR" THE NOMINEES LISTED BELOW.
NOMINEES FOR ELECTION AT THE ANNUAL MEETING
The names of the nominees, and certain information about them, are set
forth below:
<TABLE>
<CAPTION>
DIRECTOR
SINCE
NAME OF NOMINEE AGE POSITION/PRINCIPAL OCCUPATION --------
- --------------- --- -----------------------------------
<S> <C> <C> <C>
Vinod Gupta................. 50 Chairman of the Board and Chief 1972
Executive Officer of the Company
Jon D. Hoffmaster (1)....... 48 Director; Consultant to the Company 1978
George F. Haddix, Ph.D (2).. 58 Director; President of CSG Holdings, 1995
Inc. and CSG Systems, International Inc.
</TABLE>
- ------------------
(1) Member of the Audit Committee
(2) Member of Compensation Committee
Vinod Gupta is the founder of the Company and has been Chairman of the
Board and Chief Executive Officer of the Company since its incorporation in
1972. Mr. Gupta received an M.B.A. degree from the University of Nebraska in
1971 and holds an M.S. degree in Engineering from the University of Nebraska and
a B.S. degree in Engineering from the Indian Institute of Technology, Kharagpur,
India. Mr. Gupta is unrelated to Gautam Gupta.
Jon D. Hoffmaster has served as a director of the Company since 1978, as
Vice Chairman of the Company from September 1993 to December 1995, as Chief
Financial Officer of the Company from July 1992 to July 1995, and as President
and Chief Operating Officer of the Company from September 1991 to September
1993. Mr. Hoffmaster has served as a consultant to the Company (see "Certain
Transactions") since January 1996.
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George F. Haddix, Ph.D. has served as a director of the Company since March
1995. Since November 1994, Mr. Haddix has served as President of CSG Holdings,
Inc. and CSG Systems, International Inc., companies engaged in providing
software and information services to the communications industry. Mr. Haddix is
a director of CSG Systems, International Inc. From 1989 until joining CSG in
1994, Mr. Haddix was an individual investor. Mr. Haddix holds a B.A. degree from
the University of Nebraska, an M.A. degree from Creighton University and a Ph.D.
degree from Iowa State University, all in Mathematics.
INCUMBENT DIRECTORS WHOSE TERMS OF OFFICE CONTINUE AFTER THE ANNUAL MEETING
The names and certain other information about the Directors whose terms of
office continue after the Annual Meeting are set forth below:
<TABLE>
<CAPTION>
Director
Name Age Position/Principal Occupation Since
---- --- ----------------------------- --------
<S> <C> <C> <C>
Harold W. Andersen (1)(2)... 73 Director; Retired Publisher of 1993
Omaha World Herald
Jon H. Wellman.............. 45 Director, President and Chief 1997
Operating Officer
Paul A. Goldner............. 63 Director, Consultant to the Company 1997
Elliot S. Kaplan (2)........ 60 Director; Senior Partner in Law 1988
Firm of Robins, Kaplan, Miller and
Ciresi
Gautam Gupta................ 51 Director; President and Chief 1988
Executive Officer of IDEAssociates
George J. Kubat (1)......... 51 Director; President and Chief 1995
Executive Officer of Phillips
Manufacturing Co.
- ----------
</TABLE>
(1) Member of Audit Committee
(2) Member of Compensation Committee
Harold W. Andersen has served as director of the Company since September
1993. He is a former Chief Executive Officer of the Omaha World Herald Company,
and was the President from 1966 to 1986 and Chairman and Publisher from 1986
until his retirement in 1989. Mr. Anderson is currently a director of the Omaha
World Herald Company and a Contributing Editor to the Omaha World Herald. Mr.
Andersen also serves on the board of Williams Companies. Mr. Andersen graduated
Phi Beta Kappa from the University of Nebraska.
Jon H. Wellman has served as a director of the Company since February
1997. He is the current President, Chief Operating Officer, Secretary and acting
Chief Financial Officer of the Company. Mr. Wellman joined the Company in 1995.
Mr. Wellman previously served as Vice President and Chief Financial Officer at
Signal Technology Corporation from 1994 to 1995, and was a Partner with Coopers
& Lybrand from 1989 to 1994.
Paul A. Goldner has served as a director of the Company since February
1997. He is the former Chairman and Chief Executive Officer of Database America
Companies, which Mr. Goldner founded in 1972, which was merged with the Company
in February 1997. Mr. Goldner has served as a consultant to the Company (see
"Certain Transactions") since February 1997.
Elliot S. Kaplan has served as director of the Company since May 1988. He
is a senior partner in the law firm of Robins, Kaplan, Miller and Ciresi and has
practiced law continuously with that firm since 1961. Mr. Kaplan is also a
director of Best Buy Co., Inc. Mr. Kaplan holds a B.A. and a J.D. from the
University of Minnesota.
Gautam Gupta has served as a director of the Company since May 1988. Since
1984, Mr. Gupta has served as the President and Chief Executive Officer of
IDEAssociates, Inc., a manufacturer of data communication equipment for computer
systems. Mr. Gupta holds an M.B.A. from Harvard and an M.S. degree in
Engineering and a B.S. degree in Engineering from the Indian Institute of
Technology, Kharagpur, India. Mr. Gupta is unrelated to Vinod Gupta.
3
<PAGE>
George J. Kubat has served as a director of the Company since March 1995.
Since November 1992, Mr. Kubat has served as President and Chief Executive
Officer of Phillips Manufacturing Co., a dry wall contractors equipment and
supplies business. Prior to joining Phillips, Mr. Kubat was with the accounting
firm of Coopers & Lybrand for over 16 years. Mr. Kubat is also a director of
America First Companies L.L.C. Mr. Kubat holds a B.S. in Business Administration
from Creighton University and a Juris Doctorate degree from the Creighton
University School of Law. Mr. Kubat is licensed as a Certified Public Accountant
and is admitted to practice law in Nebraska.
SECURITY OWNERSHIP
The following table sets forth the beneficial ownership of the Company's
Common Stock as of the Record Date (i) by each of the executive officers named
in the table under "Executive Compensation -- Summary Compensation Table," (ii)
by each director, (iii) by all current directors and executive officers as a
group and (iv) by all persons known to the Company to be the beneficial owners
of more than 5% of the Company's Common Stock:
<TABLE>
<CAPTION>
APPROXIMATE
PERCENTAGE
NAME OF PERSON OR ENTITY NUMBER OF TOTAL
------------------------ OF SHARES VOTING POWER
--------- ------------
<S> <C> <C>
Vinod Gupta(1) (2)....................... 9,265,654 37.6%
5711 South 86th Circle
Omaha, Nebraska 68127
FRM Corp................................. 2,448,050 10.1%
82 Devonshire Street
Boston, MA 02109-3614
Paul A. Goldner(3)....................... 1,423,316 5.9%
Jon D. Hoffmaster(4)..................... 493,000 1.7%
Jon H. Wellman(5)........................ 25,000 *
Gautam Gupta(6).......................... 60,535 *
Elliot S. Kaplan(6)...................... 88,840 *
Harold W. Andersen....................... 14,300 *
George Kubat(7).......................... 24,300 *
George Haddix(7)......................... 19,500 *
Donald R. Dixon(8)....................... 0 *
Ed Malin(9).............................. 32,700 *
Bill Kerry(10)........................... 16,125 *
Jack Betts............................... 168,976 *
Monica Messer(11)........................ 165,934 *
All directors and executive officers as
a group (21 persons)(12)................. 14,490,355 57.8%
- ----------
</TABLE>
* Represents less than 1% of the outstanding shares of Common Stock
(1) Excludes 414,213 shares held in irrevocable trusts for the benefit of Mr.
Gupta's children for which Mr. Gupta is not trustee and in which he has
no beneficial interest.
(2) Includes 120,000 shares subject to options exercisable on or before May
31, 1997.
(3) Excludes 543,717 shares held in irrevocable trusts for the benefit of Mr.
Goldner's children for which Mr. Goldner is not a trustee and in which he
has no beneficial interest.
(4) Includes 75,000 shares subject to options exercisable on or before May
31, 1997, and 3,000 shares subject to immediately exercisable options.
4
<PAGE>
exercisable options.
(5) Includes 25,000 shares subject to options exercisable on or before May 31,
1997.
(6) Includes 3,000 shares subject to immediately exercisable options.
(7) Includes 18,000 shares subject to immediately exercisable options.
(8) Mr. Dixon resigned from the Board effective September 16, 1996.
(9) Includes 29,700 shares subject to options exercisable on or before May 31,
1997.
(10) Includes 16,125 shares subject to options exercisable on or before May 31,
1997.
(11) Includes 11,250 shares subject to options exercisable on or before May 31,
1997.
(12) Includes 439,475 shares subject to options exercisable on or before May 31,
1997.
Board Meetings and Committees
The Board of Directors of the Company held a total of 7 meetings during 1996.
The Board of Directors has an Audit Committee and a Compensation Committee. The
Board does not have a nominating or any committee performing similar functions.
The Audit Committee, which currently consists of directors Jon D. Hoffmaster,
Harold W. Andersen and George Kubat, met 2 times in 1996. This committee is
primarily responsible for approving the services performed by the Company's
independent auditors and for reviewing and evaluating the Company's accounting
principles and its system of internal accounting controls.
The Compensation Committee, which currently consists of directors Jon D.
Hoffmaster and Elliot S. Kaplan, met 2 times during 1996. This committee has
been delegated the duties of administering existing and future stock and option
plans of the Company, including the Company's 1992 Stock Option Plan, and
establishing the compensation of the Company's executive officers.
No director attended fewer than 75% of the aggregate of the total number of
meetings of the Board of Directors and the total number of meetings held by all
committees of the Board of Directors on which he served.
Board Compensation
During 1996, non-employee directors were compensated at a rate of $2,500 per
Board meeting attended. Employee directors do not receive compensation for their
service on the Board. In addition, during 1996, directors Harold W. Andersen,
Elliott S. Kaplan, Gautam Gupta, George J. Kubat, George F. Haddix, and Jon D.
Hoffmaster were each granted an option to purchase 3,000 shares of Common Stock
at an exercise price of $15.50 per share (the fair market value on the date of
grant). See also the Executive Compensation table herein.
PROPOSAL TWO
APPROVAL OF A 1,000,000 SHARE INCREASE IN SHARES ISSUABLE
UNDER THE 1992 STOCK OPTION PLAN AND CERTAIN OTHER CHANGES
The Company is proposing the following amendments to its 1992 Stock Option
Plan (the "Option Plan"): (i) an increase on the number of shares reserved under
the Option Plan from 4,000,000 to 5,000,000 and (ii) certain technical changes,
discussed below.
As of April 4, 1997, options to purchase 3,565,750 shares of Common Stock (net
of lapsed and terminated options) had been granted under the Option Plan,
434,250 shares remained available for future option grants and 486,650 options
had been exercised. The aggregate market value of the unexercised and
outstanding options to purchase 3,079,100 shares of Common Stock under the
Option Plan at April 4, 1997, was $55,038,912 based on a closing price of
$17.875 on the Nasdaq National Market on April 10, 1997.
5
<PAGE>
Increase of 1,000,000 Shares
The Company's Option Plan was approved by the Board of Directors in 1992 and
by the stockholders in 1992. In 1994, the Board and stockholders of the Company
approved an increase in the number of shares of common stock reserved under the
Option Plan to 1,300,000. In August 1995, by virtue of a stock dividend and
Section 13(a) of the Option Plan, the number of shares reserved under the Option
Plan increased to 1,950,000. In 1996, the Board and stockholders of the Company
approved an increase in the number of shares of common stock reserved under the
Option Plan to 4,000,000. In January 1997, the Board of Directors approved a
further increase of 1,000,000 shares issuable under the Option Plan, which, if
approved by the stockholders, would increase the total shares reserved for
issuance under the Option Plan since its inception to 5,000,000 shares of common
stock.
The Board believes the recent increase is in the best interest of the Company
for two principal reasons. First, the Board believes that the increase will
provide an adequate reserve of shares for issuance under the Option Plan, which
is necessary to enable the Company to compete successfully with other companies
to attract and retain valuable employees. Second, the Board believes that it is
appropriate to have a substantial pool of options available for grant in
connection with acquisitions that the Company may make from time-to-time. The
ability to make such grants enhances the Company's ability to structure
attractive offers to potential acquisition targets. No such acquisitions are
presently being considered by the Company.
Additional Amendments
In January 1997, the Board of Directors of the Company also approved a number
of amendments to the Option Plan to conform the Option Plan to changes in
applicable law and to provide greater administrative flexibility. Pursuant to
recent changes in Federal securities laws, the Option Plan has been amended to
simplify administrative procedures, withholding of taxes, and amendment of the
Option Plan and to enable the Company, in its discretion, to allow for
transferability of options. In addition, the Option Plan was amended to specify
that the per share exercise price for incentive stock options and nonstatutory
stock options intended to qualify as "performance-based compensation" (within
the meaning of Section 162(m) of the Internal Revenue Code of 1986, as amended
(the "Code")) must be at least 100% of the fair market value of the Company's
Common Stock at the date of grant, but that options may be granted with a per
share exercise price of less than 100% of the fair market value on the date of
grant pursuant to a merger or other corporate transaction. Finally, the Option
Plan was amended to clarify the tax treatment of incentive stock options for
employees on leave of absence, the time periods for exercise of stock options
after termination, and the means of exercise of stock options.
Summary of 1992 Option Plan
The terms of the Option Plan, including the amendments thereto proposed above,
are summarized below. The following summary is qualified in its entirety by the
Option Plan.
Purpose. The purposes of the 1992 Stock Option Plan are to attract and retain
the best available personnel for positions of substantial responsibility, to
provide additional incentives to employees, consultants and directors of the
Company and its subsidiaries and to promote the success of the Company's
business.
General. Options granted under the 1992 Stock Option Plan may be either
"incentive stock options," as defined in Section 422 of the Code, or
"nonstatutory stock options." See "Tax Information" below for information
concerning the tax treatment of both incentive stock options and nonstatutory
stock options. Generally, options granted by the Company are nonstatutory stock
options.
The 1992 Stock Option Plan is not subject to the Employee Retirement Income
Security Act of 1974.
Administration. The 1992 Stock Option Plan is administered by the Board or by
a committee appointed by the Board constituted to comply with applicable law.
The interpretation and construction of the 1992 Stock Option Plan by the Board
or its committee is final and conclusive. The 1992 Stock Option Plan is
currently administered by the Compensation Committee of the Board of Directors
(the "Committee"). Members of the Committee receive no remuneration for their
services in connection with the administration of the 1992 Stock Option Plan.
Eligibility. The 1992 Stock Option Plan provides that options may be granted
to employees (including officers and directors) of the Company, non-employee
directors and consultants. Incentive stock options may only be granted to
employees. The Committee selects the optionee and determines the number of
shares to be subject to each option. In making this determination, the Committee
takes into account the duties and responsibilities of the optionee, the value of
the optionee's services, the optionee's present and
6
<PAGE>
potential contributions to the success of the Company, the anticipated years of
future service of the employee and other relevant factors. However, the
Committee may not, in any fiscal year of the Company, grant options to purchase
more than 900,000 shares to any single employee.
Terms of Options. The term of options granted under the 1992 Stock Option Plan
are determined by the Committee. Each option is evidenced by a stock option
agreement between the Company and the optionee and is subject to the following
additional terms:
Exercise. The Committee has the discretion to determine when options can be
exercised. Options may be exercised as to vested shares at any time before
expiration. Generally, options vest over a four-year period at the rate of 1/4
of the shares subject to the option per year. An option is exercised by giving
written notice to the Company, specifying the number of full shares to be
purchased, and by tendering payment of the purchase price. Payment for shares
issued upon exercise of an option may consist of cash, check, other shares of
Common Stock, promissory notes or such other consideration as determined by the
Committee.
Exercise Price. The exercise price of options is determined by the Committee
but may in no event be less than the fair market value of the Company's Common
Stock on the date the option is granted in the case of incentive stock options.
Incentive stock options granted to 10% stockholders are subject to the
additional restriction that the exercise price be at least 110% of fair market
value on the date of grant.
Termination of Employment. If the optionee's employment by the Company is
terminated for any reason other than death, the option may be exercised within
three months after termination (or such other period as is determined by the
Committee, which determination, in the case of an incentive stock option, is
made at the time of grant and will not exceed three months) and may be exercised
to the extent the option could have been exercised on the date of termination.
Death. If an optionee dies while employed by the Company, his options may be
exercised at any time within three months after death, but only to the extent
the options could have been exercised at the time of death. If any optionee dies
within three months after termination of employment, his options may be
exercised within three months after death to the extent the options could have
been exercised on the date of termination.
Term. All options have a maximum term of ten years from the date of grant,
unless a lesser period is provided for in the option agreement. No option may be
exercised by any person after its expiration.
Transferability. Unless otherwise determined by the Committee, an option
cannot be transferred by the optionee, other than by will or the laws of descent
and distribution, and can be exercised only by him during his lifetime or, if he
dies, by a person who acquires the right to exercise the option by bequest or
inheritance or otherwise by reason of the optionee's death.
Other Provisions. The option agreement may contain such other terms,
provisions and conditions not inconsistent with the 1992 Stock Option Plan as
may be determined by the Committee.
Adjustments upon Changes in Capitalization
Changes in Capitalization. If a change is made in the Company's
capitalization, such as a stock split, which results in an exchange of the
Company's Common Stock for a greater or lesser number of shares, appropriate
adjustment will be made in the option price and in the number of shares subject
to the option. If there is a stock dividend, each optionee will be entitled to
receive, upon exercise of his option, the equivalent of any stock dividend which
he would have received had he been the holder of record of the shares being
purchased.
Dissolution of Liquidation. In the event of a dissolution or liquidation of
the Company all outstanding options automatically terminate unless otherwise
provided by the Committee. In this event, the Committee may, in its discretion,
make provision for accelerating the ability to exercise shares subject to
option.
Merger or Asset Sale. In the event of a merger of the Company with or into
another corporation, or the sale of substantially all of the assets of the
Company, each outstanding option may be assumed or an equivalent option or right
may be substituted by the successor corporation or a parent or subsidiary of the
successor corporation. In the event that the successor corporation does not
agree to assume the option or to substitute an equivalent option, the optionee
shall have the right to exercise the option as to all or a portion of the stock
covered by such option, including shares as to which it would not otherwise be
exercisable.
7
<PAGE>
Amendment and Termination of the Plan. The Board may, from time to time, amend
the 1992 Stock Option Plan or terminate it without approval of the stockholders;
provided, however, that the approval of the holders of a majority of the
outstanding shares of the Company entitled to vote will be obtained for any
amendment for which stockholder approval is required to comply with Section 422
of the Code, or any successor provision. However, no action by the Board or the
stockholders may unilaterally alter or impair options previously granted without
the consent of the optionee. In all events, the 1992 Stock Option Plan will
terminate on December 31, 2001.
Tax Information. Options granted under the 1992 Stock Option Plan may be
either "incentive stock options, " as defined in Section 422 of the Code, or
"nonstatutory stock options."
If an option granted under the 1992 Stock Option Plan is an incentive stock
option, the optionee will recognize no income upon grant of the option and incur
no tax liability due to its exercise unless the optionee is subject to the
alternative minimum tax. The Company will not be allowed a deduction for federal
income tax purposes as a result of the exercise of an incentive stock option
regardless of the applicability of the alternative minimum tax. A gain on a sale
or exchange of shares will be treated as a long-term capital gain if it is
realized at least two years after the option is granted and one year after the
option is exercised. If these holding periods are not satisfied at the time of
sale, the optionee will recognize ordinary income equal to the difference
between the exercise price and the lower of the fair market value of the stock
on the date of exercise or the sale price of the stock. A different rule for
measuring ordinary income upon a premature disposition may apply if the optionee
is also an officer, director or 10% stockholder of the Company. The Company will
be entitled to a deduction in the same amount as the ordinary income recognized
by the optionee. Any gain recognized on a premature disposition of the shares in
excess of the amount treated as ordinary income will be characterized as long-
term capital gain.
All options which do not qualify as incentive stock options are referred to as
nonstatutory options. An optionee will not recognize taxable income at the time
he is granted a nonstatutory option. However, upon exercise, the optionee will
recognize ordinary income for tax purposes measured by the excess, if any, of
the then fair market value of the shares over the exercise price. A different
rule for measuring ordinary income upon option exercise may apply if the
optionee is also an officer, director or 10% stockholder of the Company. The
income recognized by an optionee who is also an employee of the Company will be
subject to tax withholding by the Company, either in cash, out of the current
earnings paid to the optionee or by withholding from the shares to be issued
pursuant to the exercise. Upon resale of the shares by the optionee, any
difference between the sales price and the exercise price, to the extent not
recognized as ordinary income, will be treated as a capital gain or loss.
This is only a summary of the effect of the United States federal income
taxation. It does not purport to be complete and does not discuss the income tax
laws of any municipality, state or other country or the tax consequences of an
optionee's death. Optionees are advised to consult with their own tax advisors
regarding the tax consequences arising from the receipt and exercise of Options
and the disposition of Common Stock issued upon exercise of Options.
Restrictions on Resale. Common Stock acquired under this 1992 Stock Option
Plan is freely tradeable, except when acquired by "affiliates" of the Company.
Certain directors and officers may be deemed to be "affiliates" as that term is
defined under the Securities Act of 1933, as amended (the "Act"). Common Stock
acquired under the 1992 Stock Option Plan by an affiliate may only be re-offered
or resold under an effective registration statement, under Rule 144 or under
another exemption from the registration requirements of the Act.
VOTE REQUIRED
The affirmative vote of a majority of the votes cast will be required to
approve the amendments to the 1992 Stock Option Plan. Abstentions and broker
non-votes will be counted as present for the purpose of establishing a quorum.
Abstentions will have the same effect as a vote against the proposal, and broker
non-votes will have no effect on the outcome of the proposal. THE BOARD OF
DIRECTORS RECOMMENDS THAT THE STOCKHOLDERS VOTE "FOR" THE INCREASE IN THE SHARES
ISSUABLE UNDER THE 1992 STOCK OPTION PLAN.
8
<PAGE>
PROPOSAL FOUR:
RATIFICATION OF APPOINTMENT OF INDEPENDENT PUBLIC ACCOUNTANTS
Management has selected Coopers & Lybrand L.L.P., independent accounts, to
audit the books, records and accounts of the Company for the current fiscal year
ending December 31, 1997. Coopers & Lybrand L.L.P. has audited the Company's
financial statements since the fiscal year ended December 31, 1991.
The affirmative vote of the holders of a majority of the votes cast at the
meeting will be required to approve and ratify the Board's selection of Coopers
& Lybrand L.L.P. Abstentions and broker non-votes will be counted as present for
the purpose of establishing a quorum. Abstentions will have the same effect as a
vote against the proposal, and broker non-votes will have no effect on the
outcome of the proposal. THE BOARD OF DIRECTORS RECOMMENDS VOTING "FOR" APPROVAL
AND RATIFICATION OF SUCH SELECTION. In the event of a negative vote on such
ratification, the Board of Directors will reconsider its selection.
A representative of Coopers & Lybrand L.L.P. is expected to be available at
the Annual Meeting to make a statement if such representative desires to do so
and to respond to appropriate questions.
OTHER INFORMATION REGARDING THE COMPANY
PERFORMANCE GRAPH
The following Performance Graph compares the cumulative total return to
stockholders of the Company's Common Stock from February 19, 1992 (the date of
the Company's initial public offering) to December 31, 1996 to the cumulative
total return over such period of (i) The Nasdaq Stock Market (U.S. Companies)
Index and (ii) the Dow Jones Industrial & Commercial Services Index. The
information contained in the Performance Graph shall not be deemed to be
"soliciting material" or to be "filed" with the Securities and Exchange
Commission (the "SEC"), nor shall such information be incorporated by reference
into any future filing under the Securities Act of 1933, as amended (the
"Securities Act"), or the Securities and Exchange Act of 1934, as amended (the
"Exchange Act"), except to the extent that the Company specifically incorporates
it by reference into any such filing.
COMPARISON OF FIVE-YEAR CUMULATIVE TOTAL RETURN*
AMONG AMERICAN BUSINESS INFORMATION, INC., NASDAQ
STOCK MARKET AND DOW JONES INDUSTRIAL & COMMERICIAL SERVICES
<TABLE>
<CAPTION>
AMERICAN NASDAQ
BUSINESS STOCK MARKET DOW JONES INDUSTRIAL
INFORMATION, INC. (U.S. COMPANIES) & COMMERICAL SERVICES
<S> <C> <C> <C>
Measurement point -
February 19, 1992 100 100 100
FYE December 31, 1992 149 110 101
FYE December 31, 1993 118 126 90
FYE December 31, 1994 151 123 86
FYE December 31, 1995 238 174 103
FYE December 31, 1996 273 214 110
</TABLE>
* Assumes $100 invested on February 19, 1992 in American Business
Information, Inc. Common Stock, Nasdaq Stock Market (U.S. Companies) Index and
Dow Jones Industrial & Commercial Services Index
9
<PAGE>
EXECUTIVE COMPENSATION
Summary Compensation Table. The following table sets forth the compensation
paid by the Company for each of the three previous years for the period ending
December 31 to the Chief Executive Officer and each of the other four most
highly compensated executive officers of the Company (the "Named Executive
Officers"):
<TABLE>
<CAPTION>
LONG-TERM
COMPENSATION
AWARD
------------
SECURITIES
UNDERLYING
NAME AND PRINCIPAL POSITION YEAR SALARY($) BONUS($) OPTIONS(#)
--------------------------- ---- --------- -------- ------------
<S> <C> <C> <C> <C>
Vinod Gupta.................. 1996 $ 48,000(1) $ -- 900,000
Chairman and Chief 1995 $100,000(1) $ -- --
Executive Officer 1994 $120,000(1) $ -- --
Jack Betts................... 1996 $200,000 $ -- --
Senior Vice President 1995 $174,915 $ -- --
1994 $118,972 $ -- --
Bill Kerrey.................. 1996 $157,500 $ 79,048 --
Senior Vice President 1995 $118,500 $172,888 18,000
1994 $107,000 $ 20,000 7,500
Edward Mallin............... 1996 $208,000 $ 11,325 --
Senior Vice President 1995 $194,625 $ 31,270 9,000
1994 $185,000 $ 37,600 15,000
Monica Messer................ 1996 $208,000 $ -- --
Senior Vice President 1995 $182,875 $ -- --
1994 $173,221 $ 25,000 15,000
- ----------
</TABLE>
(1) Excludes certain amounts paid to Annapurna Corporation for consulting
services and related expenses reimbursed in connection with acquisition
activity conducted by the Company during 1996, 1995 and 1994, respectively
(see also "Certain Transactions" herein). Annapurna Corporation is 100%
owned by Vinod Gupta. Vinod Gupta has agreed not to be eligible for cash
bonuses.
Option Grants in the Last Fiscal Year.
Option Grants in Last Fiscal Year. The following table sets forth each
grant of stock options made during the year ended December 31, 1996 to each of
the Named Executive Officers.
<TABLE>
<CAPTION>
INDIVIDUAL GRANTS POTENTIAL REALIZABLE
------------------------------------------------------ VALUE AT ASSUMED
NUMBER OF % OF TOTAL ANNUAL RATES OF STOC
SECURITIES OPTIONS EXERCISE PRICE APPRECIATIONK
UNDERLYING GRANTED TO PRICE FOR OPTION TERM(2)
OPTIONS EMPLOYEES IN ($/SAFE EXPIRATION -----------------------
GRANTED(1) FISCAL YEAR HARBOR) DATE 5% 10%
----------- ------------ --------- ---------- -----------------------
<S> <C> <C> <C> <C> <C> <C>
Vinod Gupta (3)........... 900,000 46.5% $17.05 3/8/02 $3,349,000 $9,368,000
Jack Betts................ -- -- -- -- -- --
Bill Kerrey............... -- -- -- -- -- --
Edward Mallin............. -- -- -- -- -- --
Monica Messer............. -- -- -- -- -- --
- ----------
</TABLE>
(1) Options indicated vest and become exercisable in four equal annual
installments on the first four anniversaries of the date of grant based
upon the optionee continuing to be employed by the Company.
10
<PAGE>
(2) Potential realizable value is based on an assumption that the stock price
appreciates at the annual rate shown (compounded annually) from the date of
grant until the end of the option term. These numbers are calculated based
on the requirements promulgated by the Securities and Exchange Commission
and do not reflect the Company's estimate of future stock price growth.
(3) Refer to the following Report of the Compensation Committee to the Board of
Directors for information related to two options granted to Mr. Gupta in
March 1996.
Aggregate Option Exercises in Last Fiscal Year and Fiscal Year-End Values.
The following table sets forth, for each of the Named Executive Officers, the
value realized on exercised options and the year-end value of unexercised
options:
<TABLE>
<CAPTION>
NUMBER OF SECURITIES VALUE(1) OF UNEXERCISED
SHARES UNDERLYING UNEXERCISED IN-THE-MONEY
ACQUIRED VALUE OPTIONS AT YEAR-END(#): OPTIONS AT YEAR-END($):
NAME ON EXERCISE REALIZED EXERCISABLE/UNEXERCISABLE EXERCISABLE/UNEXERCISABLE
---- ----------- -------- ------------------------- -------------------------
<S> <C> <C> <C> <C>
Vinod Gupta -- -- 0 / 900,000 $ 0 / $4,680,000
Jack Betts -- -- 0 / 0 $ 0 / $ 0
Bill Kerrey -- -- 18,750 / 18,750 $222,690 / $ 136,680
Edward Mallin 4,800 $51,600 22,200 / 18,000 $291,863 / $ 187,988
Monica Messer -- -- 7,500 / 7,500 $101,850 / $ 101,850
- ----------
</TABLE>
(1) Market value of underlying securities at year-end minus the exercise price.
REPORT OF THE COMPENSATION COMMITTEE
The following is a report of the Compensation Committee of the Company
describing the compensation policies and rationale applicable to the Company's
executive officers with respect to the compensation paid to such executive
officers for the year ended December 31, 1996. The information contained in this
report shall not be deemed to be "soliciting material" or to be "filed" with the
Securities and Exchange Commission nor shall such information be incorporated by
reference into any future filing under the Securities Act or the Exchange Act,
except to the extent that the Company specifically incorporates it by reference
into any such filing.
Vinod Gupta, the Company's Chairman of the Board and Chief Executive
Officers, served on the Compensation Committee until March 1, 1996. Donald R.
Dixon served on the Compensation Committee until September 16, 1996, the date
which he effectively resigned from the Board of Directors of the Company. Jon D.
Hoffmaster served on the Compensation Committee from September 17, 1996 through
December 31, 1996. Effective January 1, 1997, the Compensation Committee was
reconstituted to include as members Directors Elliot S. Kaplan, George F.
Haddix, and Harold W. Andersen.
TO THE BOARD OF DIRECTORS:
The Compensation Committee of the Board of Directors reviews and approves
salaries and bonuses payable to the Company's executive officers. The
Compensation Committee in effect during 1996 was composed of Donald R. Dixon,
for the period from January 1, 1996 to September 16, 1996, Jon D. Hoffmaster,
for the period from September 17, 1996 to December 31, 1996, and Elliot S.
Kaplan, two non-employee members.
The philosophy used by the Compensation Committee in establishing
compensation for executive officers, including the Chief Executive Officer, is
to attract and retain key personnel through the payment of competitive base
salaries, and reward performances through annual bonuses. The Internal Revenue
Code was amended during 1994 to limit companies' ability to deduct for income
tax purposes compensation paid to any individual employee in excess of $1
million. The Company intends to take the necessary steps to conform its
compensation arrangements to comply with the new deductibility ceiling.
The compensation of Vinod Gupta, the Company's Chief Executive Officer,
consists of Mr. Gupta's base salary, which was set at
11
<PAGE>
an annual rate of $48,000 for 1996. Mr. Gupta declined to participate in any of
the Company's bonus programs for 1996. Also during 1996, the Company paid
$48,000 to Annapurna Corporation for consulting services and related expenses
reimbursed in connection with the Company's acquisition related activities. In
March 1996, in recognition of Mr. Gupta's increased role in the Company due to
the resignation of the Company's chief operating officer and of Mr. Gupta's low
base salary and non-participation in the executive officers bonus plan, the
Board directed the Compensation Committee to review the compensation plan for
Mr. Gupta. The Committee engaged an independent executive compensation analyst
to advise it on compensation plans being used by similar companies, varying
approaches to structuring cash and equity executive compensation, and the size
and form of compensation that would be competitive within the industry and in
the Company's best interest. After considering and discussing the analyst's
findings, the Compensation Committee approved the grant to Vinod Gupta of two
options to purchase the Company's Common Stock at the per share purchase price
of $17.05, equal to 110% of the closing price of the Company's Common Stock on
March 8, 1996, on the following terms: (i) a five-year option to purchase
600,000 shares, which vest at the rate of 20% per year, with 100% of the shares
vesting after five (5) years; and (ii) a six-year option to purchase 300,000
shares which become fully vested after six (6) years subject to the accelerated
vesting of 20% in each of the first five (5) years of the option if the Company
meets certain performance objectives. Both options stop vesting if Mr. Gupta
ceases to be an employee of the Company.
The Compensation Committee has developed compensation packages for all
other executive officers, which provide for both base salaries and bonuses. The
base salaries are based on each officer's historical salary and past performance
as well as on publicly available information concerning executive compensation
levels paid to other companies in the Omaha, Nebraska area. During 1996, there
were two bonus plans in effect. The first applies to general managers of product
sales groups, and is based upon each general manager achieving at least 85% of
the internal Company revenue and profit goals for his or her product sales
group. The second bonus plan, which applies to all executive officers and key
employees other than Mr. Gupta, is based on achievement of specified pre-tax,
Company-wide profit levels. Neither bonus plan is guaranteed and bonuses under
either plan may be withheld by management or the Board of Directors, or adjusted
in the event of an acquisition during the year.
Compensation Committee
_________________
Elliot S. Kaplan, George F. Haddix and Harold W. Andersen
COMPLIANCE WITH SECTION 16(A) OF THE EXCHANGE ACT
Section 16(a) of the Exchange Act, requires the Company's officers and
directors, and persons who own more than ten percent of a registered class of
the Company's equity securities, to file reports of ownership on Form 3 and
changes in ownership on Form 4 or Form 5 with the SEC. Such officers, directors
and 10% stockholders are also required by SEC rules to furnish the Company with
copies of all Section 16(a) forms they file.
Based solely on its review of the copies of such forms received by it, or
written representations from certain reporting persons, the Company believes
that, during the fiscal year ended December 31, 1996, all Section 16(a) filing
requirements applicable to its officers, directors and 10% stockholders were
complied with, except that an Initial Statement of Beneficial Ownership of Form
3 was filed late by Claude Schoch and D.J. Thayer, and a Statement of Beneficial
Ownership on Form 4 was filed late by Vinod Gupta and Ed Mallin.
CERTAIN TRANSACTIONS
During 1994, 1995 and 1996, the Company paid $280,000, $148,000 and
$48,000, respectively, to Annapurna Corporation for consulting services and
related expenses reimbursed in connection with the Company's acquisition related
activities.
The Company has an investment of $500,000 in CSG Acquisition Fund, L.P., a
limited partnership organized by Trident Capital, L.P. to acquire CSG Holdings,
Inc. George Haddix, a director of the Company, is the President and a director
of CSG Holdings, Inc. The Company owns approximately 5.3% of the partnership
interests of CSG Acquisition Fund, L.P. and, through its ownership interest in
CSG Acquisition Fund, L.P., indirectly owns less than one percent of the
outstanding capital stock of CSG Holdings, Inc.
In January 1996, the Company entered into an agreement with director Jon
Hoffmaster for one year, under which Mr. Hoffmaster
12
<PAGE>
provided certain consulting services to the Company in exchange for fees
totalling $96,000. The Company paid Mr. Hoffmaster an additional $60,000 in 1996
for services provided related to certain acquisitions performed by the Company
in 1996. In January 1997, the Company entered into a new agreement with Mr.
Hoffmaster for a one year period, for which fees will be paid as services are
requested by the Company. In February 1997, The Company paid Mr. Hoffmaster
$100,000 for services provided related to the acquisition of Database America
Companies, Inc. in February 1997.
In February 1997, as part of the acquisition of Database America Companies,
Inc., the Company entered into an employee and consulting agreement with Paul A.
Goldner for a term of five years, under which Mr. Goldner will receive
compensation at a rate of $120,000 per annum.
In January 1996, the Company entered into a two year agreement with former
director and Chief Operating Officer Albert Winemiller, under which Mr.
Winemiller is to provide certain consulting services to the Company in exchange
for fees totaling $180,000 and $90,000 in 1996 and 1997, respectively.
OTHER MATTERS
The Company knows of no other matters to be submitted to the meeting. If
any other matters properly come before the meeting, it is the intention of the
persons named in the enclosed proxy card to vote the shares they represent as
the Board of Directors may recommend.
BY ORDER OF THE BOARD OF DIRECTORS
Omaha, Nebraska
April 22, 1997
13
<PAGE>
THIS PROXY IS SOLICITED ON BEHALF OF THE BOARD OF DIRECTORS OF
AMERICAN BUSINESS INFORMATION, INC.
--------------
1997 ANNUAL MEETING OF STOCKHOLDERS--MAY 23, 1997
The undersigned stockholder of American Business Information, Inc., a
Delaware corporation (the "Company"), hereby appoints JON WELLMAN with full
power of substitution, as the proxy of the undersigned to vote and otherwise
represent all of the shares registered in the name of the undersigned at the
Annual Meeting of Stockholders of the company to be held on May 23, 1997 at
10:00 a.m. local time at the Marriott Hotel, 10220 Regency Circle, Omaha,
Nebraska, and at any adjournments thereof, and to vote all shares of Common
stock which the undersigned would be entitled to vote if then and there
personally present on the matters, on the following matters and in the
following manner:
- --------------------------------------------------------------------------------
1. ELECTION OF THREE DIRECTORS [_] FOR all nominees
Nominees: Vinod Gupta, Jon D. [_] WITHHELD from nominees
Hoffmaster, George F. Haddix [_] FOR all nominees except ____________
- --------------------------------------------------------------------------------
2. PROPOSAL TO INCREASE THE NUMBER [_] FOR [_] AGAINST [_] ABSTAIN
OF SHARES RESERVED FOR ISSUANCE
UNDER THE COMPANY'S 1992 STOCK
OPTION PLAN FROM 4,000,000 TO
5,000,000 AND MAKE CERTAIN OTHER
CHANGES TO THE 1992 STOCK OPTION
PLAN.
- --------------------------------------------------------------------------------
3. PROPOSAL TO RATIFY THE [_] FOR [_] AGAINST [_] ABSTAIN
APPOINTMENT OF COOPERS & LYBRAND
L.L.P. AS INDEPENDENT PUBLIC
ACCOUNTANTS FOR THE COMPANY FOR
THE FISCAL YEAR ENDING DECEMBER
31, 1997.
- --------------------------------------------------------------------------------
and, in their discretion to vote or otherwise represent the shares on any other
business which may properly come before the meeting or any adjournments
thereof.
(Continued, and to be signed on reverse side)
- --------------------------------------------------------------------------------
(Continued from other side)
THE SHARES REPRESENTED BY THIS PROXY WILL BE VOTED IN ACCORDANCE WITH THE
SPECIFICATION MADE. IF NO SPECIFICATION IS MADE, THE SHARES REPRESENTED BY THIS
PROXY WILL BE VOTED FOR EACH OF THE ABOVE PERSONS AND PROPOSALS, AND FOR SUCH
OTHER MATTERS AS MAY PROPERLY COME BEFORE THE MEETING AS THE PROXY HOLDERS DEEM
ADVISABLE.
--------------------------------------
Signature Date
--------------------------------------
Signature Date
Sign exactly as your name(s) appears
on your stock certificate. A
corporation is requested to sign its
name by its President or other
authorized officer, with the office
held designated. Executors,
administrators, trustees, etc., are
requested to so indicate when
signing. If stock is registered in
two names, both should sign.
TO ASSURE YOUR REPRESENTATION AT THE
ANNUAL MEETING, PLEASE MARK, SIGN AND
DATE THIS PROXY AND RETURN IT
PROMPTLY IN THE ENCLOSED ENVELOPE.
