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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
Pomeroy Computer Resources, 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/ $125 per Exchange Act Rules 0-11(c)(1)(ii), 14a-6(i)(1), 14a-6(i)(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:
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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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[Logo]
Dear Shareholder,
You are cordially invited to attend the Annual Meeting of Stockholders of
Pomeroy Computer Resources, Inc. on Wednesday, June 26, 1996 at 10 a.m. at our
Corporate Headquarters, 1020 Petersburg Road, Hebron, KY 41048.
We hope that you will be able to attend the Meeting. If you cannot, please
carefully read the attached Proxy Statement for information on the matters to be
considered and acted upon at the Meeting and vote on those matters by marking,
signing and returning the enclosed Proxy Form. Your shares cannot be voted
unless you sign and return a proxy or vote by ballot at the Meeting.
If you plan to attend the Meeting and will need special assistance because of a
disability, please contact Addie Rosenthal, Director of Investor Relations,
1020 Petersburg Road, Hebron, KY 41048, (606) 282-7111.
Very truly yours,
David B. Pomeroy, II
Chairman of the Board
YOUR VOTE IS IMPORTANT
Please Sign, Date and Return Your Proxy
<PAGE>
Pomeroy Computer Resources, Inc.
1020 Petersburg Road
Hebron, Kentucky 41048
May 30, 1996
NOTICE OF ANNUAL MEETING OF SHAREHOLDERS
Notice is hereby given that the Annual Meeting of Shareholders of Pomeroy
Computer Resources, Inc. will be held at 1020 Petersburg Road, Hebron, KY 41048
on Wednesday, June 26, 1996 at 10:00 A.M., E.D.T. for the following purposes:
1. To elect five (5) directors, and;
2. To transact such other business as may be properly brought before
the meeting and any and all adjournments thereof.
Shareholders of record at the close of business on May 16, 1996 will be entitled
to notice of and to vote at the meeting.
By Order of The Board of Directors
Edwin S. Weinstein, Secretary
Dated: May 30, 1996
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PROXY STATEMENT
SOLICITATION AND VOTING OF PROXIES
This Proxy Statement is furnished in connection with the solicitation of
proxies by the Board of Directors of Pomeroy Computer Resources, Inc., a
Delaware corporation (the "Company") for use at the Annual Meeting of
Shareholders, which will be held Wednesday, June 26, 1996 at 10:00 A.M., E.D.T.,
at 1020 Petersburg Road, Hebron, KY 41048 and at any and all adjournments of
that meeting for the purposes set forth in the accompanying Notice of Annual
Meeting of Shareholders. This Proxy Statement and the enclosed proxy card are
being sent to shareholders on or about May 30, 1996. The Company's principal
executive offices are located at 1020 Petersburg Road, Hebron, KY 41048.
Shares represented by properly executed proxy cards received by the Company
at or prior to the meeting will be voted according to the instructions indicated
on the proxy card. Unless contrary instructions are given, the persons named on
the proxy card intend to vote the shares so represented for the election of the
nominees for director named in this Proxy statement. As to any other business
which may properly come before the meeting, the persons named on the proxy card
will vote according to their best judgment.
A proxy card may be revoked at any time before it is voted at the meeting
by filing with the corporate secretary an instrument revoking it, by a duly
executed proxy bearing a later date, or by voting by ballot at the meeting.
Only shareholders of record at the close of business on May 16, 1996 will
be entitled to the notice of and to vote at the meeting. On that date, there
were 2,752,643 common shares outstanding and entitled to vote, and each such
share is entitled to one (1) vote on each matter to be considered. Shareholders
do not have cumulative voting rights in the election of directors.
A majority of the votes entitled to be cast on matters to be considered at
the meeting constitutes a quorum. If a share is represented for any purpose at
the meeting, it is deemed to be present for quorum purposes and for all other
matters. Abstentions and shares held of record by a broker or its nominee
("Broker Shares") that are voted on any matter are included in determining the
number of votes present or represented at the meeting. The specific vote
requirements for the proposals being submitted to shareholder vote at the Annual
Meeting are set forth under the description of each proposal in this Proxy
Statement.
The expense of this solicitation will be borne by the Company. In addition,
arrangements may be made with brokerage firms and other custodians, nominees and
fiduciaries to forward solicitation material for the Annual Meeting to
beneficial shareholders and the Company will reimburse these institutions for
their expense in so doing.
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COMMON SHARES OWNED BY CERTAIN BENEFICIAL OWNERS
AND BY DIRECTORS AND EXECUTIVE OFFICERS
The following table sets forth certain information, as of May 20, 1996, with
respect to each person known to the Company to be beneficial owner of more
than five percent (5%) of its outstanding common shares, and information with
respect to the beneficial ownership of its common shares by each Director and
by the Directors and executive officers of the Company as a group.
<TABLE>
<CAPTION>
BENEFICIAL OWNERSHIP (1)
-----------------------------
NAME NUMBER PERCENT
- --------------------------------------------- ---------------- -----------
<S> <C> <C>
David B. Pomeroy, II......................... 1,309,266(2) 46.7%
Edwin S. Weinstein........................... 58,368(3) 2.1
Frank D. Friedersdorf........................ 27,140(4) 1.0
Richard C. Mills............................. 49,903(5) 1.8
Carol Teufel Weinstein....................... 4,691(6) *
James C. Eck................................. 1,000 *
James H. Smith............................... 11,050(7) *
Dr. David W. Rosenthal....................... 5,864(8) *
Michael E. Rohrkemper........................ 9,389(9) *
Pomeroy Computer Resources, ESOP............. 41,487(10) 1.5
All directors and executive officers as a
group ( 9 persons).......................... 1,434,730(11) 49.7%
</TABLE>
- ------------------------
* Less than one percent
(1) The "Beneficial Owner" of a security includes any person who shares voting
power or investment power with respect to such security or has the right
to acquire beneficial ownership of such security within 60 days.
(2) Includes 10,061 shares of Common Stock owned by his spouse and 1,650 shares
of Common Stock owned by his adult daughter and 3,630 shares of Common Stock
owned by his adult son, as to which Mr. Pomeroy disclaims beneficial
ownership. Also includes 52,500 shares of Common Stock issuable upon
exercise of stock options and 41,487 shares owned by the ESOP. See
Note (10) below. Of the 41,487 shares owned by the ESOP, 16,561 shares are
allocated to the account of Mr. Pomeroy which shares he has the right to
vote under the Plan. Beneficial ownership after the Offering excludes the
150,000 shares of Common Stock to be sold in this Offering. Mr. Pomeroy's
address is 1020 Petersburg Road, Hebron, KY 41048.
(3) Includes 7,575 shares of Common Stock issuable upon exercise of stock
options and 41,487 shares owned by the ESOP. See Note (10) below. Of the
41,487 shares owned by the ESOP, 2,174 shares are allocated to Mr. Weinstein
which shares he has the right to vote under the Plan. Excludes shares owned
by his spouse.
(4) Includes 84 shares held by the ESOP allocated to the account of Mr.
Friedersdorf which shares he has the right to vote under the Plan.
(5) Includes 49,832 shares of Common Stock issuable upon exercise of stock
options prior to the Offering and 71 shares held by the ESOP allocated to
the account of Mr. Mills, which shares he has the right to vote under the
Plan. Beneficial ownership after the Offering also includes 20,000 shares of
Common Stock issuable upon exercise of stock options awardable upon
completion of the Offering.
(6) Excludes shares owned by her spouse. Includes 2,000 shares of Common Stock
issuable upon exercise of stock options and 281 shares held by the ESOP
allocated to the account of Mrs. Weinstein which shares she has the right to
vote under the Plan.
(7) Includes 10,500 shares of Common Stock issuable upon exercise of stock
options.
(8) Includes 103 shares of Common Stock owned by his spouse, and 18 shares held
by the ESOP allocated to the account of his spouse (which shares she has the
right to vote under the Plan), as to which Dr. Rosenthal disclaims
beneficial ownership. Includes 3,900 shares of Common Stock issuable upon
exercise of stock options.
(9) Includes 66 of the 110 shares of Common Stock held by Rohrkemper & Ossege
Ltd., a partnership in which Mr. Rohrkemper has a 60% interest. Also
includes 8,250 shares of Common Stock issuable upon exercise of stock
options.
(10)David B. Pomeroy, II and Edwin S. Weinstein, both officers of the Company,
are trustees of the ESOP and may have voting control over the 41,487 shares
of Common Stock held in the ESOP in certain situations.
(11)Includes all of the shares owned by Pomeroy Computer Resources ESOP.
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ELECTION OF DIRECTORS
Five (5) directors are to be elected at the Annual Meeting of Shareholders,
each to serve until the next annual meeting and until his successor shall have
been elected and qualified. Each of the following nominees is presently a member
of the Board of Directors. The election of each nominee for director requires
the affirmative vote of the holders of a plurality of the shares of common stock
cast in the election of directors. The proxy solicited hereunder will be voted,
unless otherwise instructed, for the election of the five nominees named below.
If, for any unforeseen reason, any nominee should become unavailable, the
proxies will exercise their discretion in voting for a substitute. The following
contains information relating to each nominee for election to the Board of
Directors:
YEAR FIRST
NAME, AGE, PRINCIPAL OCCUPATION FOR LAST FIVE ELECTED A
YEARS; AND DIRECTORSHIPS IN PUBLIC CORPORATIONS DIRECTOR
- ----------------------------------------------- --------
David B. Pomeroy II, 46, is Chairman of the Board, 1992
President and Chief Executive Officer of the Company.
Mr. Pomeroy controlled the Pomeroy Companies until
their reorganization into Pomeroy Computer Resources in
1992 and has served in this capacity since February, 1992.
Edwin S. Weinstein, 49, is Chief Financial Officer, 1992
Treasurer and Secretary of the Company. Mr. Weinstein
has been with the Pomeroy Companies in substantially his
present capacity since 1983. He became a Director and
Chief Financial Officer of the Company when it was
organized in February 1992.
James H. Smith, III, 46, has been a Director of the 1992
Company since April 1992. He is a Shareholder in the law
firm of Lindhorst & Dreidame Co., L.P.A., Cincinnati,
Ohio, where he has practiced law since 1979. Lindhorst &
Dreidame acts as outside general counsel to the Company.
David W. Rosenthal, 44, has been a Director of the 1992
Company since April 1992. He is a Professor of
Marketing at Miami University, Oxford, Ohio, a position
he has held for sixteen years. Dr. Rosenthal has also
served as a consultant with Stratvertise, a marketing,
research and strategic consulting firm since 1975.
Michael E. Rohrkemper, 49, has been a Director of the 1993
Company since July 1993. He is a certified public
accountant and has been a partner in the accounting firm of
Rohrkemper and Ossege Ltd. since January 1991.
There is no family relationship among the foregoing persons.
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There were three (3) meetings of the Board of Directors in 1995. Each
member of the Board of Directors attended at least seventy-five percent (75%) of
the aggregate of the total number of meetings of the Board and committees on
which he served.
COMMITTEES OF THE BOARD OF DIRECTORS;
DIRECTOR'S FEES
The Company has a standing audit committee composed of two nonemployee
directors, Messrs. Smith and Rohrkemper, and Mr. Pomeroy, Chairman of the Board,
President and Chief Executive Officer. The audit committee consults with the
independent auditors regarding their examination of the financial statements of
the Company and regarding the adequacy of internal controls. It reports to the
Board of Directors on these matters and recommends the independent auditors to
be designated for the ensuing year.
The Company has a standing compensation committee composed of two
nonemployee directors, Messrs. Smith and Rohrkemper, and Mr. Pomeroy. This
committee reviews the compensation paid by the Company and makes recommendations
on these matters to the Board of Directors.
The Company has a standing stock option committee consisting of Messrs.
Rosenthal, Rohrkemper and Smith. This committee administers the 1992 Non-
Qualified and Incentive Stock Option Plan.
Each director who is not an employee of the Company, except for Mr.
Smith, receives a quarterly retainer of $2,000 plus $500 for each Board of
Directors meeting attended (including as part of each such meeting any
committee meetings held on the same date), and $500 for any committee
meetings attended which were not held on the same date as a Board of
Directors meeting. Beginning with the fourth quarter of fiscal 1993, the
amount earned by such directors is automatically deposited by the
Company, on a quarterly basis, into an account at Paine Webber established
for such Director unless the Director requests receipt of the cash instead.
A broker at Paine Webber is directed to utilize the funds deposited for each
Director to purchase shares of Common Stock of the Company on the open
market. Mr. Smith's law firm, Lindhorst & Dreidame Co., L.P.A., is
compensated for his time in attendance at Board of Directors' Meetings based
on his hourly rate.
EXECUTIVE COMPENSATION
REPORT OF THE COMPENSATION COMMITTEE
The Compensation Committee of the Board of Directors is composed of two (2)
nonemployee directors, Messrs. Rohrkemper and Smith, and Mr. Pomeroy, Chairman
of the Board, President and Chief Executive Officer. The Committee is
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responsible for the establishment and oversight of the Company's Executive
Compensation Program. This program is designed to meet the objectives of
attracting, retaining and motivating executive employees and providing a balance
of short term and long term incentives that can recognize individual
contributions from an executive and the overall operating and financial results
of the Company. The Committee intends to review Executive Compensation on a
regular basis and to compare the competitiveness of the Company's executive
compensation and corporate performance with other corporations comparable to the
Company. The committee believes that the significant equity interest in the
Company held by the Company's management aligns the interests of the
shareholders and management. Through the programs adopted by the Company a
significant portion of Executive Compensation is linked to individual and
corporate performance and stock price appreciation.
The basic elements of the Company's Executive Compensation Program consist
primarily of base salary, potential for annual cash opportunities and stock
options. The Committee believes that incentives play an important role in
motivating executive performance and attempts to reward achievement of both
short and long term goals. However, the emphasis on using stock options as a
long term incentive is intended to insure a proper balance in the achievement of
long term business objectives which ties a significant portion of the
executive's compensation to factors which impact on the performance of the
Company's stock.
Compensation opportunities must be adequate to enable the Company to
compete effectively in the labor market for qualified executives. The elements
of the Executive Compensation Program are designed to meet these demands, and at
the same time encourage increases in shareholder value.
BASE SALARIES
Base salaries for executives are initially determined by evaluating the
duties and responsibilities of the position to be held by the individual,
experience and the competitive marketplace for executive talent. The Company has
entered into Employment Agreements that establish salaries for certain executive
officers. Salaries for executives and other employees are reviewed periodically
and may be set at higher levels if the Company concludes that is appropriate in
light of that particular individual's responsibilities, experience and
performance.
ANNUAL CASH BONUSES
The Company's executives and other employees are eligible to receive annual
cash awards or bonuses at the discretion of the Committee with the approval of
the Board of Directors. In determining whether such discretionary awards should
be made, the Committee considers corporate performance measured by financial and
operating results including income, return on assets and management of expenses
and costs.
LONG TERM COMPENSATION
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A. 1992 NON-QUALIFIED AND INCENTIVE STOCK OPTION PLAN
The Company's 1992 Non-Qualified and Incentive Stock Option Plan (the
"Option Plan") has presently reserved for issuance an aggregate of 600,000
common shares. The Option Plan was adopted to encourage ownership of common
shares by officers and key employees of the Company to encourage their continued
employment with the Company and to provide them with incentives to promote the
success of the Company. The Stock Option Committee of the Board of Directors
grants options under and otherwise administers the Option Plan. The exercise
price for options under the Option Plan must be at least one hundred percent
(100%) of the fair market value of the common shares on the date of grant;
provided, however, in the event that an incentive stock option is granted to an
employee who owns more than ten percent (10%) of the total combined voting power
of all classes of stock of the Company or, if applicable, a subsidiary or parent
corporation of the Company, the exercise price per share for such incentive
stock options cannot be less than one hundred ten percent (110%) of the fair
market value of the common shares on the date of grant. The exercise price of
options granted under the Option Plan is payable in cash or, at the discretion
of the Stock Option Committee in whole or in part, in common shares, valued at
their fair market value at the date of exercise. Each option granted under the
Option Plan expires on the date or dates set forth in the specific option award
as determined by the Stock Option Committee in its sole discretion, but not
later than ten (10) years from the date of grant. The Option Plan will terminate
on February 13, 2002, but such termination will not affect any outstanding
options previously granted.
The tax consequences of the granting and exercise of an option under the
Option Plan to the recipient of the option depend upon the type of option
granted. Taxable gain on a non-qualified stock option is determined on the date
of exercise of the option and is measured by the difference between the fair
market value of the common shares on the date of exercise and the exercise
price. Gain from the granting and exercise of incentive stock options is
deferred until the option holder sells the common shares received upon exercise
of the option. Generally, the amount of gain is measured by the difference
between the sales price of the common shares and the exercise price of the
option. In the case of a non-qualified stock option granted and exercised under
the Option Plan, the Company is entitled to a tax deduction equal to the amount
of income recognized by the option holder, subject to certain withholding and
reporting requirements. With respect to incentive stock options, the Company is
not entitled to a deduction in connection with the granting or exercise of such
an option or the sale of the common shares issued upon the exercise of the
option.
The Option Plan may be amended any time by the Board of Directors, but no
amendment can be made without the approval of the Company's shareholders if
shareholder approval is required under Section 422A of the Internal Revenue Code
of 1986 or Rule 16b-3 under the Securities Exchange Act of 1934. No amendment
may, however, impair the rights or obligations of the holder of any option
granted under the Option Plan without his or her consent.
B. 1992 OUTSIDE DIRECTORS' STOCK OPTION PLAN
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The Company's 1992 Outside Directors' Stock Option Plan (the "Directors'
Plan") has reserved for issuance an aggregate of 75,000 common shares to outside
directors. The purpose of the plan is to encourage outside directors of the
Company to acquire or increase their ownership of common shares on reasonable
terms, to foster a strong incentive for outside directors to put forth maximum
effort for the continued success and growth of the Company, to aid in retaining
such individuals who put forth such efforts and to assist in attracting the best
available individuals to serve as directors of the Company in the future. The
Directors' Plan became effective February 13, 1992 and will terminate ten (10)
years from that date. Pursuant to the Directors' Plan, an option to purchase
10,000 common shares is automatically granted on the first day of the initial
term of an outside director. Thereafter, an option to purchase an additional
2,500 common shares will automatically be granted upon the first day of each
consecutive year of service on the Board of Directors. The exercise price of the
options will be the fair market value of the shares on the date the option is
granted. The options may be exercised after one (1) year from the date of grant
for not more than one-third (1/3) of the shares subject to the option and an
additional one-third (1/3) of the shares subject to the option may be exercised
for each of the next two (2) years thereafter. To the extent not exercised,
options granted under the Directors' Plan will expire five (5) years after the
date of grant except upon termination of the director's service on the Board, in
which case the option may be exercised within three (3) months of the date of
such termination (but not beyond the term of the option) and, except upon death
of the director in which case the option may be exercised by the deceased
director's legatee, personal representative or distributee within one (1) year
of the date of death (but not beyond the term of the option).
C. EMPLOYEE BENEFIT PLANS
As of July 1, 1992, the Company converted its Profit Sharing Plan, which
covers substantially all employees, to an Employee Stock Ownership Plan (ESOP).
Participation requirements under the ESOP are essentially those as existed under
the Profit Sharing Plan. No less than the majority and no more than seventy-five
percent (75%) of the assets of the ESOP are invested in common shares of the
Company purchased on the open market. As of May 20, 1996, the ESOP owned
41,487 common shares of the Company.
In addition the Company maintains a 401(k) savings plan which generally
covers all employees of the Company. Plan participants may contribute up to
fifteen percent (15%) of their annual base salary on a pre-tax basis, although
contributions of certain highly compensated employees may be limited under
federal tax laws. The Company does not contribute to the plan.
D. STOCK AWARDS
Through Employment Agreements with two of the Company's executive officers,
Messrs. Weinstein and Friedersdorf, the Company has agreed to make awards of its
common shares over a five (5) year period. Each of these individuals is issued,
on an annual basis, common shares having a fair market value as of such date
equal to Twenty Thousand Dollars ($20,000), commencing on January 15, 1993 and
terminating after the distribution on January 15, 1997. Generally, these
payments of common shares are due whether the individual remains employed by
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the Company, dies or becomes disabled, unless his termination of employment is
by him without cause or by the Company with cause. Mr. Friedersdorf's employee
with the company was terminated on January 6, 1996, however Mr. Friedersdorf has
retained the right of distribution through January 15, 1997.
9
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EXECUTIVE OFFICER COMPENSATION
Mr. Pomeroy has an employment agreement with the Company for a term of three
years, which is extended on a daily basis resulting in a perpetual three year
term.
The Board of Directors amended Mr. Pomeroy's employment agreement,
effective January 6, 1996, to provide an annual base salary of $395,000 during
1996 and for each subsequent year unless modified by the Compensation Committee.
The amended employment agreement provides for annual bonuses, based on the
applicable percentage of the Company's income from operations in the following
categories:
Income from Bonus Percentage Maximum
Operations ---------------- -------
- ----------
$2 million to $4 10% $200,000
million
$4 million to $8 5% $200,000
million
Mr. Pomeroy may also be paid a discretionary bonus under any compensation,
benefit or management incentive plan. Fifty percent of any discretionary bonus
will be paid in cash and fifty percent will be treated as incentive deferred
compensation. The amended employment agreement also provides for a supplemental
compensation agreement to provide supplemental income up to $50,000 per year,
subject to a seven year vesting schedule, for a period of ten years commencing
on the earliest to occur of the following events: (i) death, (ii) disability,
(iii) retirement, or (iv) the expiration of seven years from the effective date
of the agreement
Pursuant to his employment agreement, Mr. Pomeroy was granted an option to
purchase 25,000 shares of Common Stock, effective January 6, 1996, at the fair
market value of the Common Stock on January 5, 1996. Upon the occurrence of a
change in control, Mr. Pomeroy is entitled to receive (a) through the date of
termination of his employment and thereafter for the balance of the three
year term of the agreement, his full base salary, bonus and all other amounts
under any compensation plan or program of the Company (other than the amounts
referred to in (b) below) at the time such payments are due and to continue
participation in all medical, life and other employee welfare benefit plans in
which Mr. Pomeroy was entitled to participate immediately prior to the date of
termination (or substantially similar benefits if a continued participation is
not possible under such plans and programs) and (b) a lump sum payment equal to
the present value of his benefits under the supplemental compensation agreement
based upon a 100% vesting percentage. For purposes of Mr. Pomeroy's employment
agreement, a change of control occurs: (i) upon the sale or disposition to a
person, entity or a group (as such term is used in Rule 13d-5 promulgated under
the Securities and Exchange Act of 1934, as amended) of 50% or more of the
consolidated assets of the Company taken as a whole; or (ii) in the event shares
representing a majority
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of the voting power of the Company are acquired by a person or group (as such
term is used in Rule 13d-5) of persons other than holders of common shares on
March 1, 1992.
Mr. Weinstein has an employment agreement with the Company effective February
13, 1992. The initial term of Mr. Weinstein's agreement continued until December
31, 1994, but the agreement is extended annually for additional one-year periods
unless either party gives 60 days written notice of termination. The agreement
provides for a stated base salary and a discretionary bonus to be determined by
the Board of Directors. In addition, the Company agreed to issue, on an annual
basis, shares of Common Stock having a fair market value as of such date equal
to $20,000, commencing on January 15, 1993 and terminating after the
distribution on January 15, 1997. Generally, these payments of shares of Common
Stock are due to Mr. Weinstein whether he remains employed by the Company, dies
or becomes disabled, unless his termination of employment is by him without
cause or by the Company with cause.
Mr. Mills has an employment agreement with the Company effective January 1,
1993. The term of Mr. Mills' agreement is three years and is extended annually
for additional one-year periods unless either party gives 60 days written notice
of termination. The agreement provides for a stated base salary and a
discretionary bonus to be determined by the Board of Directors. The agreement
also provides that Mr. Mills is to receive an option to purchase 20,000 shares
on the closing date of a second public stock offering.
Mr. James C. Eck joined the Company in September 1995 as Vice President of
Sales & Services effective February 9,1996. Mr. Eck has an employment agreement
with the Company extending from September 18, 1995 to January 5, 1999, which is
extended annually for successive one-year periods unless either party gives 30
days written notice of termination. Mr. Eck's compensation under the agreement
consists of a base salary of $150,000 for fiscal 1996, annual and quarterly
bonuses, monthly commissions based on gross sales, and stock options. The amount
of any annual bonuses are determined on the basis of attainment of certain
economic goals, and are to be paid 50% in cash and 50% as incentive deferred
compensation.
COMPENSATION COMMITTEE INTERLOCKS AND INSIDER PARTICIPATION
On September 15, 1992, the Company loaned $100,000 to David B. Pomeroy, II,
the Company's Chairman of the Board, President and Chief Executive Officer, to
pay income taxes on distributions he received in connection with the
reorganization of the previous Pomeroy companies. In connection with the loan,
Mr. Pomeroy executed a promissory note which provided for interest at a rate of
1.0% above prime rate. In addition, the Company from time to time has advanced
Mr. Pomeroy additional sums, with $106,000 being the largest amount due the
Company at any time during fiscal 1995. Pomeroy Investments, LLC (an entity
controlled by David B. Pomeroy, II as described below) has agreed to purchase
this note from the Company at its face value.
Mr. Pomeroy and his spouse personally guaranteed the Company's obligations
under the Datago Agreement. The Company entered into an agreement, dated October
14, 1993, with Mr. Pomeroy to compensate him and his spouse for the
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economic risk of such guarantee. The sum of $75,000 was paid on the effective
date of the agreement. On the first day of each year thereafter that their
guarantee remained in effect, the Company paid the sum of $25,000. The Company
and Mr. and Mrs. Pomeroy have terminated the annual payments. In December 1994,
Vanstar filed suit against the Company alleging that the Company had failed to
comply with the terms of the Datago Agreement and on September 30, 1995, Vanstar
amended its complaint to add co-defendants David B. Pomeroy, II and his spouse
with respect to their personal guarantees of the Company's performance under the
Datago Agreement. On April 29, 1996, the Company and Mr. and Mrs. Pomeroy
entered into a Settlement Agreement with Vanstar Corporation et al. The Company
has agreed to pay to Vanstar $3.3 million consisting of $1.65 million in cash
and a promissory note in the amount of $1.65 million. The note is due 120 days
from the effective date of the Agreement and bears interest at 0.25% below the
prime rate of the Company's bank as of April 29, 1996. The note is secured by
100,000 shares of common stock of the Company owned by Mr. Pomeroy. All
agreements between the Company and Vanstar were terminated as of the effective
date of the Agreement.
In September 1995, Pomeroy Investments, LLC ("Pomeroy Investments"), a
Kentucky limited liability company controlled by David B. Pomeroy, II, acquired
from Paul Hemmer & Associates, III (the "Seller") approximately 11.5 acres of
property at AirPark International in Boone County, Kentucky, and contracted with
Paul Hemmer Construction Company, an affiliate of the Seller, for the
construction of a new headquarters and distribution facility on the site. In
addition, under the purchase agreement with the Seller, Pomeroy Investments was
granted an option to purchase the contiguous 15.56 acres of land during the
three (3) years following completion of the construction project, subject to
certain extensions and related rights. Pomeroy Investments has entered into a
ten year triple-net lease with the Company (subject to an option to extend the
term for two consecutive five year periods) for the new headquarters for an
initial annual base rent of $7.50 per square foot for approximately 36,000
square feet of office use, $3.50 per square foot for approximately 88,084 square
feet of service, sales and distribution use, and $1.50 per square foot for
approximately 3,333 square feet of storage (calculated on a weighted average
basis). The total base rent to be paid by the Company under the lease for all
types of uses is $583,294 per year (plus pass-through costs such as taxes and
insurance). These terms were determined on the basis of a fair market rental
opinion given to the Company by West Shell Commercial, dated April 24, 1995.
In addition, in connection with the construction of the new facilities, Pomeroy
Investments advanced approximately $0.4 million to the Company for leasehold
improvements which are to be paid by the Company under the terms of the lease.
No interest has been charged on the advanced funds, which will be paid by the
Company on or before June 30, 1996.
Stephen E. Pomeroy, the son of David B. Pomeroy, II, is employed by the
Company as Director of New Market Development. His annual compensation for
fiscal year 1995 was $117,442.
James H. Smith, a director of the Company, is a stockholder in the law firm
of Lindhorst & Dreidame Co., L.P.A. Lindhorst & Dreidame Co. serves as general
counsel to the Company. The legal services provided by Lindhorst & Dreidame Co.
constituted significantly less than 5% of the firm's business in 1995. The legal
services provided to the Company by the firm constitute less than 20% of Mr.
Smith's personal practice in 1995.
12
<PAGE>
Submitted by the Compensation Committee:
James H. Smith, III
Michael E. Rohrkemper
David B. Pomeroy, II
13
<PAGE>
SUMMARY OF CASH AND CERTAIN OTHER COMPENSATION
The following table is a summary for the fiscal years 1993, 1994 and 1995 of
certain information concerning the compensation paid or accrued by the Company
to the Chief Executive Officer and to each person who was at any time during
1995 an executive officer of the Company and whose aggregate total salary and
bonus exceeded $100,000 (collectively, the "Named Executive Officers").
Summary Compensation Table
<TABLE>
<CAPTION>
Long Term
Compensation Awards
-------------------
Restricted Stock
Name and Principal Other Annual Stock Awards Options
Position Year Salary (1) Bonus Compensation $(2) #
- ---------------------------- ---- ---------- ----- -------------------------------------------------
<S> <C> <C> <C> <C> <C> <C>
David B. Pomeroy 1995 $350,000 $329,812 - - 27,500
Chairman of the Board, 1994 $300,000 $274,000 $55,540 (3) - -
President and 1993 $225,000 $79,002 $154,113 (4) - -
Chief Executive Officer
Edwin S. Weinstein 1995 $109,500 $25,000 $21,500 (5) $20,000 -
Chief Financial Officer, 1994 $98,000 $4,000 - $20,000 -
Treasurer and Secretary 1993 $91,300 - - $20,000 -
Frank D. Friedersdorf 1995 $144,500 $81,496 - $20,000 -
Vice President of 1994 $157,450 - - $20,000 -
Sales (6) 1993 $132,000 $5,000 - $20,000 -
Richard C. Mills 1995 $137,875 $62,205 - - -
Vice President of 1994 $129,000 - - - -
Operations 1993 $106,303 $10,000 - - 47,665 (7)
- ----------------------------------
</TABLE>
(1) Includes amounts deferred at the direction of the executive officer
pursuant to the Company's 401(k) Retirement Plan.
(2) At January 5, 1996 a total of 15,534 restricted shares were held with an
aggregate value of approximately $186,000. Dividends, if any, are payable
on all issued and outstanding shares of Common Stock including shares of
restricted stock.
(3) Includes $25,000 for personal guarantee of the Datago Agreement with
Vanstar and $14,787 for reimbursement of automobile expenses. Other amounts
individually were less than 25% of the total perquisites and other benefits
reported for Mr. Pomeroy.
(4) Includes $50,000 for signing new employment agreement and $75,000 for
personal guarantee of the Datago Agreement with Vanstar. Other amounts
individually were less than 25% of the total perquisites and other benefits
reported for Mr. Pomeroy.
(5) Represents reimbursement for taxes related to stock awards incurred because
the stock awards resulted in immediate taxation.
(6) Mr. Friedersdorf's employment with the Company was terminated on
January 6, 1996.
(7) Adjusted for the 10% stock dividend effective May 22, 1995. Of this total,
options for 45,832 shares are presently vested.
14
<PAGE>
OPTION GRANTS IN LAST FISCAL YEAR
The following table sets forth certain information concerning the grant of
options to purchase Common Stock to David B. Pomeroy, II. No grant of options to
purchase Common Stock was made to any other of the Named Executive Officers
during fiscal year 1995.
<TABLE>
<CAPTION>
Number of Percent of
Shares of Total Potential Realizable Value at
Common Options Assumed Annual Rates of Stock
Stock Granted to Exercise Price Appreciation for Option
Underlying Employees or Base Term
Options in Fiscal Price Expiration -----------------------------
Name Granted (1) Year ($/Sh) Date 5% 10%
- ---- ---------- ---- ------ ---- ------------ ---------
<S> <C> <C> <C> <C> <C> <C>
David B. Pomeroy, II 27,500 52.6% $8.98 1/6/2000 $ 72,124 $155,682
Chairman of the Board,
President and Chief
Executive Officer
</TABLE>
(1) The number of shares underlying the options was adjusted for the 10% stock
dividend effective May 22, 1995.
FISCAL YEAR-END VALUE OF STOCK OPTIONS
The following table sets forth information concerning aggregated option
exercises in fiscal year 1995 and the number and value of unexercised options
held by each of the Named Executive Officers at January 5, 1996.
AGGREGATE STOCK OPTION EXERCISES IN YEAR ENDED JANUARY 5, 1996
AND YEAR-END STOCK OPTION VALUES
<TABLE>
<CAPTION>
Number of
Securities Value of
Underlying Unexercised
Unexercised In-the-Money
Options at Options at
January 5, 1996 January 5, 1996
(#) ($)
Shares ---------------- ----------------
Acquired Value Exercisable/ Exercisable/
Name on Exercise (#) Realized ($) Unexercisable Unexercisable
- ----------------------- ------------------ ------------------ ------------------ ------------------
<S> <C> <C> <C> <C>
David B. Pomeroy, II - - 27,500/0 $ 83,050/0
Edwin S. Weinstein 10,175 $175,450 3,575/0 $ 16,910/0
Frank D. Friedersdorf - - 13,750/0 $ 65,037/0
Richard C. Mills - - 45,832/1,833 $230,093/4,088
</TABLE>
15
<PAGE>
PERFORMANCE GRAPH
The following Performance Graph compares the percentage of the cumulative
total shareholder return on the Company's common shares with the cumulative
total return assuming reinvestment of dividends of (i) the S&P 500 Stock Index
and (ii) the NASDAQ Industrial Index.
[Graph]
Based on initial public offering dated April 10, 1992 and fiscal quarters for
1992 through 1995 subsequent to that date.
CERTAIN TRANSACTIONS
James H. Smith, III, a director of the Company, is a shareholder in the law
firm of Lindhorst & Dreidame Co. L.P.A., which serves as general counsel to the
Company. See "Compensation Committee Interlocks and Insider Participation".
Mr. David B. Pomeroy, II the Chairman of the Board, President and Chief
Executive Officer of the Company, engaged in certain transactions with the
Company in the last fiscal year. See "Compensation Committee Interlocks and
Insider Participation".
Addie W. Rosenthal, the spouse of Dr. David W. Rosenthal, a member of and
nominee for election to the Board of Directors, has been employed as Director
of Marketing and Investor Relations for the Company since May 1993. From
January 1992 until May 1993, she was retained by the Company to provide
consulting services. Ms. Rosenthal's annual compensation for the fiscal year
1995 was $97,241.
16
<PAGE>
Edwin S. Weinstein and Carol Teufel Weinstein are husband and wife. There
are no other family relationships among the Company's directors and executive
officers.
Since the initial public offering of the Company, the policy of the Company
has been that proposed transactions with affiliates of the Company must have
the prior approval of a majority of the disinterested members of the Board of
Directors and, as in transactions prior thereto, such transactions will be made
on terms no less favorable to the Company than can be obtained from
unaffiliated third parties.
PROPOSALS FOR 1997 MEETING
In order to be eligible for inclusion in the Company's proxy statement for the
1996 annual meeting of shareholders, shareholder proposals must be received by
the Company at its principal office, 1020 Petersburg Road, Kentucky 41048, by
January 17, 1997.
By Order of the Board of Directors
----------------------------------
Edwin S. Weinstein, Secretary
Dated: May 30, 1996
17
<PAGE>
PROXY PROXY
POMEROY COMPUTER RESOURCES, INC.
THIS PROXY IS SOLICITED ON BEHALF OF THE BOARD OF DIRECTORS
The undersigned appoints EDWIN S. WEINSTEIN and CAROL J. WEINSTEIN as
proxies, or either of them, each with power to appoint his substitute, to
represent and to vote, as designated below, all shares of common stock of
POMEROY COMPUTER RESOURCES, INC. held of record by the undersigned on May 16,
1996 at the Annual Meeting of Shareholders to be held on June 26, 1996 and at
any adjournments thereof.
1. ELECTION OF DIRECTORS
/ / FOR all nominees listed below / / WITHHOLD AUTHORITY
(except as marked to the contrary below) to vote for all nominees
below
(Instruction: To withhold authority to vote for any individual nominee strike a
line through the nominee's name in the list below.)
David B. Pomeroy, II; Edwin S. Weinstein; Michael E. Rohrkemper; David W.
Rosenthal; James H. Smith, III.
2. In their discretion, the proxies are authorized to vote upon such other
business as may come before the meeting.
Unless otherwise specified on this proxy, the shares represented by this proxy
will be voted "FOR" the election of management's nominees for directors.
Discretion will be used with respect to such other matters as may properly come
before the meeting or any adjournment or adjournments thereof.
<PAGE>
The undersigned hereby acknowledges receipt of the notice of meeting and proxy
statement.
- ------------------------------------
(Signature of Stockholder)
- ------------------------------------
(Signature of Stockholder)
NUMBER OF SHARES
Dated: , 1996
------------------------
(Title or Capacity)
Please sign exactly as name(s) appears on this proxy card. When shares are held
by joint tenants, both should sign. When signing as attorney, executor,
administrator, trustee or guardian, please give full title. If a corporation,
please sign in the full corporate name by president or other authorized officer.
If a partnership, please sign in partnership name by authorized person.
PLEASE MARK, SIGN, DATE AND RETURN THE PROXY CARD PROMPTLY, USING THE ENCLOSED
ENVELOPE.
