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SCHEDULE 14C
(Rule 14c-101)
Information Statement Pursuant to Section 14(c)
of the Securities Exchange Act of 1934
Check the appropriate box:
|_| Preliminary Information Statement |_| Confidential, for Use of the
Commission Only (as permitted
by Rule 14c-5(d)(2))
|X| Definitive Information Statement
Market America, Inc.
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(Name of Registrant as Specified in Charter)
Payment of Filing Fee (Check the appropriate box):
|X| No fee required.
|_| Fee computed on table below per Exchange Act Rules 14c-5(g) 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: August 13, 1999
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<PAGE>
NOTICE OF ANNUAL MEETING OF SHAREHOLDERS OF
- MARKET AMERICA, INC. -
To the Shareholders of Market America, Inc.:
Notice is hereby given that the annual meeting of the shareholders of
Market America, Inc. will be held at the Embassy Suites Hotel, 204 Centreport
Drive, Greensboro, North Carolina, on August 26, 1999, at 10:00 a.m. for the
following purposes:
(1)To re-elect existing directors; and
(2)To transact such other business as may properly come
before the meeting.
The determination of shareholders entitled to notice of and to vote at
the meeting was made as of the close of business on July 31, 1999, which is the
record date fixed by the Board of Directors for such purpose.
By order of the Board of Directors,
/s/ Loren Ashley Ridinger
-------------------------
Loren Ashley Ridinger
Secretary
Dated: August 13, 1999
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<PAGE>
MARKET AMERICA, INC.
7605 Business Park Drive
Greensboro, NC 27409
August 13, 1999
INFORMATION STATEMENT
FOR ANNUAL MEETING OF SHAREHOLDERS
TO BE HELD ON AUGUST 26, 1999
WE ARE NOT ASKING YOU FOR A PROXY
AND YOU ARE REQUESTED NOT TO SEND US A PROXY
This Information Statement is being furnished by the management of
Market America, Inc. (the "Company") in connection with the annual meeting of
shareholders of the Company to be held on August 26, 1999, at 10:00 a.m., at the
Embassy Suites Hotel, 204 Centreport Drive, Greensboro, North Carolina. The
meeting is being held for the purposes of electing directors and transacting
such other business as may lawfully come before the meeting.
As of July 31, 1999, the record date for determining the shareholders
entitled to notice of and to vote at the meeting, there were 19,950,000 shares
of the Company's Common Stock outstanding and entitled to be voted. A majority
of such shares will constitute a quorum for the transaction of business at the
meeting. Abstentions by shareholders represented at the meeting will be counted
as present for determining the presence of a quorum.
Each share will have one vote at the annual meeting. Those persons who
receive the highest number of votes will be elected as directors. Except as
otherwise required by law, all other matters will be approved if the votes cast
favoring the action exceed the votes cast opposing the action. Abstentions will
be excluded entirely from the vote, and will have no effect on the outcome.
Since the Company's management is not soliciting proxies for the meeting, there
will be no returns of proxies from brokers holding shares in street name without
instructions for voting. Therefore, such "broker non-votes" will have no effect
on any shareholder vote.
Annual Report and Form 10-K
A copy of the Annual Report to Shareholders of the Company for the
fiscal year ended April 30, 1999 is being sent with this Information Statement
to all shareholders of record on the record date for the annual meeting.
Additional copies are available from the Company on request. A copy of the most
recent annual report of the Company filed with the U.S. Securities and Exchange
Commission on Form 10-K may be obtained from the Company by any shareholder on
written request. Direct your request to: Corporate Secretary, Market America,
Inc., 7605 Business Park Drive, Greensboro, NC 27409.
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Election of Directors
The members of the Company's Board of Directors elected at the annual
meeting will serve until the next annual meeting or until their successors are
elected and qualified. Listed below are the persons nominated for election to
the Board of Directors by management.
Nominees for Membership on Board of Directors
James H. Ridinger, 49, is Chairman of the Board of Directors and CEO of the
Company. He founded the Company in 1992 and has been a Director and Chief
Executive Officer of the Company since that time.
On May 4, 1999, Mr. Ridinger entered into a settlement with the Securities and
Exchange Commission in which he consented to the entry of an order enjoining him
from violating certain antifraud and other provisions of the federal securities
laws. In connection with the settlement, Mr. Ridinger agreed to pay a fine of
$100,000 and disgorgement and prejudgment interest of $304,695. Mr. Ridinger
neither admitted nor denied the allegations made in the proceeding. The
proceeding involved the way in which Market America was taken public in 1992 and
1993, the failure to disclose the use of proceeds of the initial public
offering, and Mr. Ridinger's sharing in those proceeds.
Loren A. Ridinger, 30, is a Director and Senior Vice President and Secretary of
the Company. She has been a Director of the Company since 1993 and held a number
of executive positions with the Company since its founding in 1992. Mrs.
Ridinger is the wife of James H. Ridinger, the Chairman of the Board of
Directors and CEO of the Company.
Dennis J. Franks, 45, has been a Director of the Company since 1994 and has
served as Executive Vice President of the Company since 1993. He is a former
professional football player and marketing professional for a number of
companies.
Martin L. Weissman, 55, has been a Director of the Company since 1993 and has
served as Executive Vice President of the Company since 1994. Mr. Weissman was a
founder, owner and Executive Vice President of Howard Carpet Mills of
Chatsworth, Georgia.
Executive Officers
In addition to the executive officers who are nominated for election as
directors, the following individuals are also executive officers of the Company:
Marc Ashley, 29, is currently the Vice President of Administrative for the
Company. Mr. Ashley has been an employee of the Company since 1992. Mr. Ashley
is a brother of Loren A. Ridinger, Senior Vice President and Secretary of the
Company.
Joseph V. Bolyard, 29, is currently the Vice President of Operations for the
Company. Mr. Bolyard has been an employee of the Company since 1992.
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During the fiscal year ended April 30, 1999, the Board of Directors
held four meetings. No director attended fewer than 75% of the meetings. The
Board has no standing audit, nominating or compensation committees or committees
performing similar functions. Board members receive no additional compensation
for their service on the Board.
Executive Compensation
The following table summarizes the compensation awarded to, earned by
or paid to the CEO and the four other most highly compensated executive officers
of the Company for services to the Company in the fiscal year ended April 30,
1999:
Annual Compensation
-----------------------------------
<TABLE>
<CAPTION>
Other
Name and Fiscal Annual
Principal Position Year Ended Salary($) Bonus($) Compensation(1)
- -------------------------------- ---------- --------- -------- ---------------
<S> <C> <C> <C> <C>
James H. Ridinger, Chairman 4-30-99 365,000 636,392 0
of the Board and Chief 4-30-98 365,000 418,312 0
Executive Officer 4-30-97 365,000 276,610 0
Loren A. Ridinger, Senior 4-30-99 184,894 87,560 0
Executive Vice President 4-30-98 184,894 10,000 0
And Secretary 4-30-97 184,894 10,000 0
Dennis J. Franks, Executive 4-30-99 120,000 60,000 0
Vice President 4-30-98 120,000 0 0
4-30-97 120,000 30,000 0
Martin L. Weissman, Executive 4-30-99 132,142 0 0
Vice President 4-30-98 146,345 0 0
4-30-97 0 0 0
Marc Ashley, Vice President 4-30-99 95,975 66,551 0
of Administration 4-30-98 74,510 37,778 0
4-30-97 56,124 0 0
</TABLE>
(1) Does not include the value of any perquisites or other personal benefits not
reflected in the above table because the aggregate amount of any such
compensation does not exceed the lesser of $50,000 or 10% of the total annual
salary and bonus shown. Also does not include commissions on "business volume"
(a measure of sales) of the Company, which each of the named executive officers
receives as an independent distributor of the Company. See "Certain
transactions."
None of the executive officers currently has a written employment
agreement. Mr. Ridinger negotiates the base salaries and other compensation of
all of the executive officers named in the table above other than himself.
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Board Compensation Report
The Company's compensation policy is set by the Board of Directors.
In setting Mr. Ridinger's compensation, the Board of Directors
considered numerous factors, including Mr. Ridinger's unique role as the
pre-eminent personality in the selling of the Company's products, the motivation
of the Company's sales organization and the formulation of sales promotional
programs. The Board fixed Mr. Ridinger's base compensation several years ago and
it has not changed since that time. The Board considers Mr. Ridinger's bonus on
an annual basis. His bonus is based upon the Company's overall performance and
his individual contribution to the success of the Company.
Salaries of the Executive Officers are set by the Board of Directors
based on Mr. Ridinger's recommendations. Mr. Ridinger takes into consideration
industry comparables as well as individual job performance and the overall
performance of the Company. Bonuses for executive officers, other than Mr.
Ridinger, are based on a combination of performance criteria and Mr. Ridinger's
discretion.
Shareholder Return Performance Graph
Set forth below is a graph comparing the yearly percentage change in
total shareholder return on the Company's common stock with the Total Return
Index for The Nasdaq Stock Market (US Companies) and the total shareholder
return on a designated Peer Group of stocks. The total shareholder return
calculation is for the period commencing August 3, 1994 (the first day of public
trading of shares of the Company's common stock) and includes the reinvestment
of dividends (on securities on which dividends were paid).
Comparison of Shareholder Returns Among the Company,
Nasdaq Total Returns Index and Peer Group Companies*
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8/3/94 4/28/95 4/30/96 4/30/97 4/30/98 4/30/99
------- ------- ------- ------- ------- --------
Market America, Inc. $100.0 $400.0 $2250.0 $1037.5 $1112.5 $812.5
Nasdaq Stock Market $100.0 $117.6 $ 167.6 $ 177.4 $ 265.3 $360.5
(U.S. Companies)
Peer Group $100.0 $108.4 $ 137.2 $ 167.3 $ 184.8 $210.7
* Assumes $100.00 invested at the closing price on August 3, 1994 in the stock
of Market America, Inc., the Nasdaq Total Returns Index (U.S. Companies) and
Peer Group companies (weighted by market capitalization). Graph prepared for
Market America, Inc. by The University of Chicago Graduate School of Business,
Center for Research in Security Prices.
The Peer Group of stocks represented in the above graph is made up of
stocks of publicly-traded companies possessing the following characteristics
similar to those of the Company:
o Size, as measured by net sales;
o Similarity in selling methodology;
o Comparative products, including companies engaged in the distribution
of health and nutritional supplements, and skin, hair, or other
personal products;
o Relatively high insider ownership; and /or
o Particular emphasis on the talents and visibility of the chief
executive officer.
Companies included in the Peer Group are: Aloette Cosmetics, Inc.,
Amway Asia Pacific Ltd., Amway Japan Ltd., Avon Products, Inc., Beauticontrol
Cosmetics, Inc., Enesco Group, Inc. (formerly Stanhome, Inc.), Herbalife, Inc.,
Nature's Sunshine Products, Inc., Tupperware Corp. and Usana, Inc. The Company
added Usana, Inc. to the Peer Group in 1998 because Usana, Inc. is a
publicly-traded company with characteristics very similar to those of the
Company. Without Usana, Inc., the Peer Group performance would have been:
08/03/94--$100.00, 04/28/95--$108.38, 04/30/96--$137.28, 04/30/97--$168.25,
04/30/98--$184.89, and 4/30/99--$212.0.
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Beneficial Ownership of Shares
The following table sets forth certain information on the beneficial
ownership of shares of the Company's common stock by its directors and executive
officers, by its directors and executive officers as a group, and by any other
person known by the Company to be the beneficial owner of more than five percent
of the outstanding shares of the stock as of July 31, 1999, the record date for
the annual meeting of shareholders. Unless otherwise indicated in the footnotes,
all shares are owned directly, and the person or entity identified as the
beneficial owner has sole voting and investment power.
No. of Shares Percentage of
Beneficially Outstanding
Name of Beneficial Owner Owned Shares/1
- ------------------------ ------------- -------------
James H. Ridinger 15,130,100/2 75.84%
Loren A. Ridinger 101,450/3 0.51%
Dennis J. Franks 184,000 0.92%
Martin L. Weissman 532,000/4 2.67%
Marc Ashley 50,000 0.25%
All Directors and Executive
Officers as a Group
(six persons) 16,017,550 80.28%
- --------------
1 Based on 19,950,000 shares issued and outstanding on July 31, 1999, the record
date for the Company's annual meeting of shareholders.
2 Does not include shares owned directly by Loren A. Ridinger, Mr. Ridinger's
wife, which are reported on separately in this table. Includes shares reported
by Mr. Ridinger as being subject to the AAA Plus Trust, of which Mr. Ridinger
and his family are beneficiaries.
3 Includes only shares owned directly by Mrs. Ridinger, and does not include
shares reported in this table as beneficially owned by James H. Ridinger, her
husband.
4 Does not include 50,000 shares held in the name of Mr. Weissman's
unemancipated son, of which Mr. Weissman disclaims beneficial ownership.
Section 16 (a) Beneficial Ownership Reporting Compliance
To the Company's knowledge, based solely on its review of reports
submitted to it, all SEC Section 16(a) filing requirements, which prescribe that
the Company's executive officers, directors, and 10% shareholders must file
initial reports of ownership and reports of changes in ownership of the
Company's Common Stock with the SEC, were complied with in fiscal year 1999.
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<PAGE>
Certain Transactions
All five executive officers, named in the compensation table above, of
the Company own and operate Business Development Centers as independent
contractors and distributors within the field sales organization of the Company.
In this capacity, they perform the typical and usual functions of field sales
and in return for which their Business Development Centers earn management
commissions under the Company's management performance compensation plan. For
the year ended April 30,1999 these individuals earned management commissions as
follows: James H. Ridinger $675,909.66; Loren A. Ridinger $13,660.50; Dennis J.
Franks $279,013.72; Martin L. Weissman $135,805.92; and Marc Ashley $4,060.00.
Effective as of the first day of the year ended April 30, 1999, the
Company entered into agreements with two companies owned by Mr. and Mrs.
Ridinger, officers and stockholders of the Company, to lease real estate in
Miami, Florida for use by Company management when conducting business in Florida
and for the lease of a yacht on a per event basis. The yacht is used as an
integral part of the direct sales training, education, and recruitment
activities of the Company. Both lease agreements have 5-year terms with options
to renew. Management believes the lease rates are based on the fair market value
of similar property in the Miami, Florida area. The amount of rent expense
incurred for the year ended April 30, 1999 was $240,000 for the yacht and
$183,600 for the real estate.
At April 30, 1999, these companies owed the Company $187,646. The amounts due
are a result of the Company paying operating expenses on behalf of the two
related companies. The indebted companies repay the amounts on a nonscheduled
periodic basis. The Company does not charged interest on these advances.
On November 1, 1998, the Company entered into an agreement with a company owned
by Mr. and Mrs. James H. Ridinger, officers and stockholders of the Company, for
a 33-year net ground lease for the site on which the Company is constructing its
new headquarters and warehouse facility in Greensboro, North Carolina. The
amount of rent expense incurred for the year ended April 30, 1999 under this
agreement was $64,000.
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