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
Registrant)
Payment of Filing Fee (Check the appropriate box):
[X] No fee required.
[ ] Fee computed on table below per Exchange Act Rules 14a-
6(i)(4) and 0-11
1) Title of each class of securities to which
transaction applies:
2) Aggregate number of securities to which
transaction applies:
3) Per unit price or other underlying value of
transaction computed pursuant to
Exchange Act Rule 0-11 (set forth the amount on
which the filing fee is calculated and state how
it was determined):
4) Proposed maximum aggregate value of transaction:
5) Total fee paid:
[ ] Fee paid previously with preliminary materials.
[ ] Check box if any part of the fee is offset as provided
by Exchange Act Rule 0-11(a)(2) and identify the filing
for which the offsetting fee was paid previously.
Identify the previous filing by registration statement
number, or the Form or Schedule and the date of its
filing.
1) Amount Previously Paid:
2) Form, Schedule or Registration Statement No.:
3) Filing Party:
4) Date Filed:
<PAGE>
Pomeroy Computer Resources, Inc.
1020 Petersburg Road
Hebron, Kentucky 41048
Notice Of Annual Meeting Of Stockholders
Notice is hereby given that the Annual Meeting of
Stockholders of Pomeroy Computer Resources, Inc. will be
held at 1020 Petersburg Road, Hebron, KY 41048 on
Wednesday, June 25, 1997 at 10:00 A.M., E.D.T. for the
following purposes:
1. To elect six directors, and;
2. To amend Article Fourth of the
Certificate of Incorporation of the Company to
increase the number of authorized shares of
common stock, $0.01 par value, from 10,000,000 to
15,000,000 and;
3. To approve an increase in the number of
shares of Common Stock reserved for issuance under
the Company's 1992 Outside Directors' Stock
Option Plan from 123,750 shares to 175,000 shares,
and;
4. To transact such other business as may be
properly brought before the meeting and any and
all adjournments thereof.
Stockholders of record at the close of business on May
12, 1997 will be entitled to notice of and to vote at the
meeting.
Stockholders are cordially invited to attend the meeting.
Please complete, execute and return the enclosed proxy
card in the enclosed envelope whether or not you plan to
attend so that your shares may be represented at the
meeting. If you attend the meeting, you may revoke your
proxy and vote in person if you choose.
By Order of The Board of Directors
Edwin S. Weinstein, Secretary
Dated: May 27, 1997
<PAGE>
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
Stockholders, which will be held Wednesday, June 25, 1997
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 Stockholders. This Proxy Statement and
the enclosed proxy card are being sent to stockholders on
or about May 27, 1997. 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 and for the
proposals described herin. 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 in person by
ballot at the meeting.
Only stockholders of record at the close of business on
May 12, 1997 will be entitled to the notice of and to
vote at the meeting. On that date, there were 7,507,956
common shares outstanding and entitled to vote, and each
such share is entitled to one (1) vote on each matter to
be considered. Stockholders 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
stockholder 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 stockholders and the Company
will reimburse these institutions for their expense in so
doing.
<PAGE>
<TABLE>
COMMON STOCK OWNED BY CERTAIN BENEFICIAL OWNERS
AND BY DIRECTORS AND EXECUTIVE OFFICERS
The following table sets forth certain information, as of April
30, 1997, with respect to each person known to the Company to be
the beneficial owner of more than five percent of its
outstanding shares of common stock, $0.01 par value ("Common
Stock"), and information with respect to the beneficial ownership
of its common stock by each Director, each Named Executive
Officer (as defined on page 14), and by the Directors and
executive officers of the Company as a group.
<CAPTION>
Amount & Nature of
Name Beneficial Ownership (1) % of Class
<S> <C> <C>
David B. Pomeroy, II 1,670,877 (2) 21.96%
Stephen E. Pomeroy 33,332 (3) *
Richard C. Mills 94,648 (4) 1.25%
James C. Eck 11,500 (5) *
Edwin S. Weinstein 78,436 (6) 1.05%
James H. Smith, III 13,075 (7) *
David W. Rosenthal 10,493 (8) *
Michael E. Rohrkemper 19,276 (9) *
Kenneth R. Waters - -
Pomeroy Computer Resources, ESOP 57,129 (10) *
Directors and all Executive
Officers as a Group (10 individuals) 1,885,586 (11) 23.95%
* Less than one percent (1%)
<FN>
(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 based solely on information
provided to the Company.
(2) Includes 15,091 shares owned by his spouse as to which Mr.
Pomeroy disclaims beneficial ownership. Also includes 103,750
shares issuable upon exercise of stock options and 57,129 shares
owned by the ESOP. See note (10) below. Of the 57,129 shares
owned by the ESOP, Mr. Pomeroy disclaims beneficial ownership
except as to the 23,989 shares allocated to his account which
shares he has the right to vote under the Plan with respect to
certain matters. Mr. Pomeroy's address is 1020 Petersburg Road,
Hebron, KY. 41048.
(3) Includes 27,750 shares of Common Stock issuable upon exercise
of stock options and 137 shares held by the ESOP allocated to
the account of Mr. Pomeroy which shares he has the right to vote
under the Plan with respect to certain matters.
(4)Includes 94,497 shares of Common Stock issuable upon exercise
of stock options and 151 shares held by the ESOP allocated to
the account of Mr. Mills, which shares he has the right to vote
under the Plan with respect to certain matters.
(5) Includes 10,000 shares of Common Stock issuable upon exercise
of stock options.
(6) Includes a total of 16,000 shares issuable upon exercise of
stock options, 57,129 shares owned by the ESOP and excludes
11,297 shares owned by his spouse as to which he disclaims
beneficial ownership. See note (10) below. Of the 57,129 shares
owned by the ESOP, Mr. Weinstein disclaims beneficial ownership
except as to the 3,179 shares allocated to his account which
shares he has the right to vote under the Plan with respect to
certain matters.
(7) Includes 12,250 shares issuable upon exercise of stock
options.
(8) Includes 1,800 shares of Common Stock owned by his spouse, 43
shares held by the ESOP allocated to the account of his spouse
(which shares she has the right to vote under the Plan with
respect to certain matters) and 500 shares issuable upon the
exercise of stock options, as to which Dr. Rosenthal disclaims
beneficial ownership. Includes 4,386 shares of Common Stock
issuable upon exercise of stock options.
(9) Includes 165 shares of Common Stock held by Rohrkemper &
Ossege Ltd., a partnership in which Mr. Rohrkemper has a 60%
interest. Also includes 17,500 shares of Common Stock issuable
upon exercise of stock options.
<PAGE>
(10)The trustees of the ESOP are David B. Pomeroy, II and Edwin S.
Weinstein, both officers of the Company who
have voting control over the 57,129 shares of Common Stock
held in the ESOP in certain situations. In December 1996 the
Board of Directors took action to initiate proceedings to
terminate the ESOP which is expected to become effective during
fiscal 1997.
(11) Includes all the shares owned by Pomeroy Computer Resources
ESOP.
</TABLE>
<PAGE>
ELECTION OF DIRECTORS
Six directors are to be elected at the Annual Meeting of
Stockholders, 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
six 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 Board of Directors
recommends that the stockholders vote for the six nominees for
director named below. The following contains information relating
to each nominee for election to the Board of Directors:
Year
First
Name, Age, Principal Occupation for Elected
Last Five Years; and Directorships A Director
Public Corporations
David B. Pomeroy II, 47, is 1992
Chairman of the Board, President and
Chief Executive Officer of the Company.
Mr. Pomeroy was a founder of the first
of the Company's predecessor businesses
("the Pomeroy Companies") in 1981.
Mr. Pomeroy controlled the Pomeroy
Companies until their reorganization
into Pomeroy Computer Resources in 1992
and has served as Chairman of the
Board, President and Chief Executive
Officer since 1992.
Edwin S. Weinstein, 50, is Vice 1992
President of Finance, Treasurer, and
Secretary of the Company. Mr. Weinstein
has been with the Pomeroy Companies in
substantially his present capacity
since 1983.
James H. Smith, III, 46, has been 1992
a Director of the 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 1992
Director of the 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 also served as a
consultant with Stratvertise, a
marketing, research and strategic
consulting firm since 1975.
Michael E. Rohrkemper, 50, has 1993
been a Director of the 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.
<PAGE>
Kenneth E. Waters, 45, became a 1997
Director of the Company in April 1997
and provides consulting services to the
Company. Mr. Waters has worked in the
computer industry since 1977. Most
recently, he has been an industry
consultant, serving as such from
February 1995 until present as well as
from April 1993 to August 1993 and
January 1991 to August 1992. From
September 1993 to January 1995, Mr.
Waters was the President of MicroAge
Inc., a computer reseller. From
September 1992 to March 1993, Mr.
Waters was the President and CEO of
Power Up Software, a software
manufacturer. From July 1978 to
September 1988, Mr. Waters was employed
by Vanstar (then known as
ComputerLand), holding various
management positions, with his last
position being CEO. Mr. Waters was also
a Director of Vanstar from September
1987 to July 1989.
There is no family relationship among the foregoing persons.
There were three meetings of the Board of Directors in 1996. 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.
PROPOSAL TO AMEND ARTICLE FOURTH OF THE COMPANY'S CERTIFICATE OF
INCORPORATION TO INCREASE THE NUMBER OF AUTHORIZED SHARES OF COMMON
STOCK
Introduction
The Company's Certificate of Incorporation currently
authorizes the issuance of 10,000,000 shares of Common Stock, $.01
par value per share ("Common Stock"), and 2,000,000 shares of
Preferred Stock, $.01 par value per share ("Preferred Stock"). In
May 1997, the Board of Directors adopted a resolution proposing to
amend the Certificate of Incorporation to increase the number of
authorized shares of Common Stock from 10,000,000 to 15,000,000,
subject to stockholder approval of the amendment. As of May 12,
1997, the Company had 7,507,956 shares of Common Stock outstanding.
No shares of Preferred Stock are currently outstanding. Of the
2,492,044 shares of Common Stock which are currently authorized but
unissued, 1,023,750 shares are reserved for future issuance under
the Company's stock option plans, of which approximately 382,178
shares are covered by outstanding options and approximately 641,572
shares are available for granting options. Accordingly, the
Company currently has approximately 1,468,294 shares available for
other purposes. If the Proposal to increase the number of shares
reserved for the 1992 Outside Directors' Stock Option Plan from
123,750 shares to 175,000 shares is approved, but the proposed
amendment to the Certificate of Incorporation is not approved,
then, of the 2,492,044 shares of Common Stock which are currently
authorized but unissued, 1,075,000 shares would be reserved for
future issuance under the Company's stock option plans, of which
692,822 shares would be available for granting options, and
1,417,044 shares would be available for other purposes.
Proposed Amendment
The proposed amendment will be effected by deleting Section A
of Article Fourth of the Company's Certificate of Incorporation,
and substituting a new Section A of Article Fourth, as follows:
"FOURTH:
A. General Authorization. The aggregate number of shares of
capital stock which the Corporation is authorized to
issue is Seventeen Million (17,000,000) shares,
consisting of:
1. Fifteen Million (15,000,000) shares of
common stock having a par value of one cent ($.01)
per share; and
2. Two Million (2,000,000) shares of
preferred stock having a par value of one cent ($.01)
per share."
<PAGE>
Purpose and Effect of the Amendment
The Board believes that the increase in the number of
authorized shares of Common Stock is in the best interest of the
Company and its stockholders. The purpose of the Amendment is to
ensure the availability of shares of Common Stock without the delay
and expense of obtaining further stockholder approval, subject to
certain situations where stockholder approval may be required under
Delaware law or the rules of any exchange on which the Company's
securities are traded.
The availability of additional authorized but unissued shares
will provide the Company with the flexibility to issue Common Stock
for corporate purposes as the Board may determine in its discretion
including, without limitation, acquisitions, stock distributions,
stock dividends or splits, anti-takeover provisions,
and the raising of additional capital. The Board has no present
plans to issue any of the proposed additional authorized shares
except as provided under the Company's employee benefit plans
including to increase the number of shares of Common Stock reserved
under the 1992 Outside Directors' Stock Option plan as described in
the next proposal below (Item #3).
While the Company has no specific plans to issue shares in
connection with an acquisition, the Company continually seeks to
identify and evaluate potential acquisition candidates. Typically,
the consideration paid by the Company for an acquired company
includes a combination of cash, Common Stock, notes payable and
earn-out compensation. Thus, the Company anticipates that to
the extent that it completes acquisitions in the future, shares of
Common Stock will be issued in connection with such acquisitions.
The proposed amendment to increase the number of authorized
shares of Common Stock could, under certain circumstances, have an
anti-takeover effect. In the event of a hostile attempt to take
over control of the Company, the availability of authorized and
unissued shares of Common Stock may enable the Board of Directors
to issue shares of Common Stock to one or more other persons, or to
stockholders of the Company pursuant to a ``Rights Plan", as
described herein. Such issuance of shares could dilute the voting
power of other outstanding shares and/or increase the potential
cost to acquire control of the Company.
While the Board has not decided to utilize any shares for
anti-takeover purposes, the Board does intend to review its current
situation to determine whether it has adequate means of defending
potentially coercive or inadequately priced takeover attempts in
order to improve the Board's bargaining position and to afford the
Board sufficient time to develop better alternatives for the
stockholders. One of a number of proposals that the Board of
Directors will likely consider is a Rights Plan. While the
specific terms of a Rights Plan vary, typically, a Rights Plan
involves: (i) an initial distribution of a rights dividend on the
outstanding Common Stock of the Company; (ii) the rights are not
exercisable and not separately tradable unless triggered by
takeover activity; (iii) the rights are usually redeemable for
nominal consideration although the right to redeem the rights often
expires upon the occurrence of certain takeover-related events; and
(iv) the rights which are held by the acquiring party become void.
The proposed amendment, therefore, may have the effect of
discouraging unsolicited takeover attempts. By potentially
discouraging initiation of any such unsolicited takeover attempt,
the proposed amendment may limit the opportunity for the Company's
stockholders to dispose of their shares at the higher price
generally available in takeover attempts or that may be available
under a merger proposal. Further, if used for such anti-takeover
purposes, the proposed amendment may have the effect of permitting
the Company's current management, including the current Board of
Directors, to retain its position, and place it in a better
position to resist changes that stockholders may wish to make if
they are dissatisfied with the conduct of the Company's business.
However, the Board of Directors is not aware of any attempt to take
control of the Company. Further, the primary purpose of the
proposed amendment is to increase the number of authorized shares
so that there is a sufficient number of shares for acquisitions and
to continue to issue stock and stock options under the Company's
existing employee benefit plans.
Under the Company's Certificate of Incorporation, the
Company's stockholders do not have preemptive rights with respect
to Common Stock. Thus, should the Board of Directors elect to
issue additional shares of Common Stock, existing stockholders
would not have any preferential rights to purchase shares. In
addition, depending on the nature and terms of future transactions
in which any additional shares are issued, the issuance could have
a dilutive effect on the earnings per share, voting power, and/or
share holdings of current stockholders.
The Board of Directors recommends that the stockholders vote
for approval of the proposed amendment of the Company's Certificate
of Incorporation as described above.
<PAGE>
Approval of such amendment will require the affirmative vote of a
majority of the outstanding Common Stock. Holders of shares of
Common Stock have no rights of appraisal or similar rights of
dissenting stockholders with respect to the proposed increase in
the number of authorized shares of common stock. The persons named
in the enclosed form of Proxy have advised that it is their
intention to vote each Proxy for such proposal unless a contrary
decision is indicated on the Proxy.
PROPOSAL TO INCREASE THE NUMBER OF SHARES RESERVED
FOR ISSUANCE UNDER THE 1992 OUTSIDE DIRECTORS' STOCK OPTION PLAN
On February 13, 1992 the Board of Directors and the stockholders
of the Company adopted the 1992 Outside Directors' Stock Option
Plan ( the "Directors' Plan"). 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 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 year from the date
of grant for not more than one-third of the shares subject to the
option and an additional one-third of the shares subject to the
option may be exercised for each of the next two years thereafter.
To the extent not exercised, options granted under the Directors'
Plan will expire five 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 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 year of the date of death
(but not beyond the term of the option).
In 1995 the Board of Directors and stockholders of the Company
increased the shares of Common Stock reserved for issuance under
the Directors' Plan from 50,000 shares of Common Stock to 75,000
shares of Common Stock. During 1995 and 1996, the number of
reserved shares was increased as a result of a stock dividend in
1995 and a stock split in 1996 to 123,750 shares of Common Stock
reserved for issuance. At April 30, 1997, options to purchase
44,136 shares of Common Stock were outstanding. Because of the
addition of a fourth outside director to the Board of Directors
and the obligation to issue additional options each year as outside
directors continue to serve, the Board of Directors believes that
additional shares should be reserved for issuance under the
Directors' Plan. Outside directors will receive no new plan
benefits as a result of the amendment.
The proposal is to increase the number of shares of Common Stock
reserved for issuance under the Directors' Plan from 123,750 shares
to 175,000 shares. The Board of Directors recommends that the
stockholders vote in favor os this proposal.
Assuming the presence of a quorum at the Annual Meeting, approval
of this proposal will require the affirmative
vote of the holders of a majority of the shares of Common Stock
present in person or represented by proxy and entitled to vote at
the Annual Meeting. The persons named in the enclosed form of Proxy
have advised that it is their intention to vote each Proxy for
such proposal unless a contrary decision is indicated on the Proxy.
COMMITTEES OF THE BOARD OF DIRECTORS;
DIRECTOR'S FEES
The Company has a standing audit committee which held two meetings
during 1996. The audit committee is composed of two non-employee
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.
<PAGE>
The Company has a standing compensation committee which held one
meeting during 1996. The compensation committee is composed of two
non-employee 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 which held one
meeting during 1996. The stock option committee consists of Messrs.
Rosenthal, Rohrkemper and Smith. This committee administers the
1992 Non-Qualified and Incentive Stock Option Plan.
The Company does not have a standing nominating committee
or committee performing a similar function.
Each director who is not an employee of the Company, except for
Messrs. Smith and Waters, receives a quarterly retainer of Two
Thousand Dollars ($2,000) plus Five Hundred Dollars ($500) for each
Board of Directors meeting attended (including as part of each such
meeting any committee meetings held on the same date), and Five
Hundred Dollars ($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 a broker account established for each such
Director unless the Director requests receipt of the cash instead.
The broker 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 Directors'
Meetings based on his hourly rate. Mr. Waters is paid a monthly
consulting fee of $1,500 in lieu of the quarterly retainer and the
fee for meetings attended and for providing consulting.
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 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 recognize individual
contributions from an executive and the overall operating and
financial results of the Company. The Committee reviews Executive
Compensation on a regular basis and compares 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
stockholders 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 Committee believes that the Company's current executive
compensation program has been designed and is administered in a
manner consistent with these objectives. The Committee also
intends that compensation under the various programs will generally
meet the requirements to be deductible under the Internal Revenue
Code's $1 million compensation limit.
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 stockholder 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 executive officers 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.
<PAGE>
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.
Chief Executive Officer Compensation
Mr. Pomeroy served as Chairman of the Board and Chief Executive
Officer throughout fiscal 1996. Mr. Pomeroy's compensation, which
includes an annual salary, bonuses and stock options, was
determined in accordance with the terms of the Fifth Amendment to
his Employment Agreement. The Fifth Amendment, which established
the performance criteria for fiscal 1996, was adopted by the
Compensation Committee in December 1995.
Submitted by the Compensation Committee:
James H. Smith, III
Michael E. Rohrkemper
David B. Pomeroy, II
Compensation Committee Interlocks and Insider Participation
In fiscal 1996, the Compensation Committee consisted of David B.
Pomeroy, II, James H. Smith, III and Michael E. Rohrkemper. Mr.
Pomeroy is the Chief Executive Officer of the Company.
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 at any time 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.
The Company intends to expand its existing distribution center to
include a new depot repair facility that will replace the Company's
existing depot repair facility. Pomeroy Investments exercised its
option to purchase 4.32 acres of the land described above and to
finance, purchase and own the land and improvements necessary to
accommodate the new depot repair facility. The estimated cost of
the additional land and improvements is expected to be $1.8
million. The Company will lease the additional space from Pomeroy
Investments at an annual base rent no less favorable to the Company
than can be obtained from unaffiliated third parties. The expansion
of the existing distribution center to accommodate the new depot
repair facility is expected to be completed in the fourth quarter
of 1997.
The Company from time to time has made advances to Pomeroy
Investments to satisfy Pomeroy Investments' working capital needs.
In July 1996, the Company made two advances to Pomeroy Investments
in the amounts of $100,000 and $150,000, respectively. In September
and October 1996, the Company made two additional advances in the
amounts of $20,000 and $25,000, respectively. The largest amount of
advances outstanding at any time during fiscal 1996 was $295,000.
No interest was charged on the advanced funds, which were repaid in
full on December 20, 1996.
<PAGE>
On April 29, 1996, the Company entered into a settlement
agreement with Vanstar (the "Settlement Agreement"). Pursuant to
the Settlement Agreement, the Company 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 "Vanstar Note"). The Vanstar
Note was due on August 27, 1996 and bore interest at 8.0% per
annum.
The Vanstar Note was secured by a pledge of 100,000 shares of
Common Stock owned by Mr. Pomeroy (the "Pledge"). In consideration
of the Pledge, the Company agreed to indemnify Mr. Pomeroy against
any loss, including attorneys' fees suffered by Mr. Pomeroy in
connection with the Pledge. Also in connection with the Settlement
Agreement the Company incurred approximately $0.4 million of legal
fees, which included the defense of the Company and
Mr. and Mrs. Pomeroy.
All agreements between the Company and Vanstar were terminated as
of the effective date of the Settlement Agreement. In partial
consideration of the Settlement Agreement, Vanstar agreed to
release Mr. and Mrs. Pomeroy from their personal guarantees of
certain obligations of the Company to Vanstar. The Company paid the
Vanstar Note in full on August 27, 1996 and the Pledge was
terminated.
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 less than
5% of the firm's business in 1996.
SUMMARY OF CASH AND CERTAIN OTHER COMPENSATION
<TABLE>
The following table is a summary for the fiscal years 1994, 1995
and 1996 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 1996 an executive officer of the
Company and whose aggregate salary and bonus exceeded $100,000
(collectively, the Named Executive Officers).
Summary Compensation Table
<CAPTION> Long Term
Annual Compensation Compensation Awards
Restricted Stock
Name and Principal Other Annual Stock Awards Options
Position Year Salary (1) Bonus Compensation $ (2) # (3)
<S> <C> <C> <C> <C> <C> <C>
David B. Pomeroy 1996 $395,000 $499,845 - - 37,500
CEO 1995 $350,000 $329,812 - - 41,250
1994 $300,000 $274,000 $55,540 (4) - -
Stephen E. Pomeroy 1996 $100,000 $100,000 $21,762 (5) - 19,500
CFO
Richard C. Mills 1996 $156,967 $10,000 $56,220 (6) - 36,000
COO 1995 $137,875 $62,205 - - -
1994 $129,000 - - - -
James C. Eck 1996 $150,000 $75,000 $17,400 (7) - -
Vice President of
Sales and Services
Edwin S. Weinstein 1996 $110,000 $25,000 $14,500 (5) $20,000 6,000
Vice President of 1995 $109,500 $25,000 $21,500 (8) $20,000 -
Finance, Treasurer, 1994 $98,000 $4,000 - $20,000 -
and Secretary
<FN>
(1) Includes amounts deferred at the direction of the executive officer
pursuant to the Company's 401(k) Retirement Plan.
(2) At January 5, 1997 a total of 5,851 restricted shares were held with
an aggregate value of approximately $205,000. Dividends, if any, are
payable on all issued and outstanding shares of Common Stock
including shares of restricted stock.
(3) Adjusted for three-for-two stock split effected as a stock dividend
on October 4, 1996.
(4) 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.
(5) Represents amounts accrued pursuant to deferred compensation
agreements.
(6) Includes $48,220 for commissions related to monthly sales goals and
$8,000 accrued pursuant to deferred compensation agreements.
(7) Represents commissions related to monthly sales goals.
(8) Represents reimbursement for taxes related to stock awards incurred
because the stock awards resulted in immediate taxation.
<PAGE>
</TABLE>
<TABLE>
Option Grants in Last Fiscal Year
The following table sets forth certain information concerning the
grant of options to purchase Common Stock to any of the Named
Executive Officers during fiscal year 1996.
<CAPTION>
Number of Percent of Potential Realizable Value at
Shares of Total Assumed Annual Rates of Stock
Common Options Exercise Price Appreciation for Option Term
Stock Granted to or Base
Underlying Employees Price Expiration
Options in Fiscal ($/Sh) Date 5% 10%
Granted (1) Year
<S> <C> <C> <C> <C> <C> <C>
David B. Pomeroy, II 37,500 16.7% $8.33 1/6/01 $86,000 $191,000
Stephen E. Pomeroy 4,500 2.0% $8.33 1/6/98 $4,000 $8,000
15,000 6.7% $8.50 8/15/98 $13,000 $27,000
Richard C. Mills 6,000 2.7% $8.33 1/6/98 $5,000 $11,000
30,000 13.4% $9.50 6/26/98 $29,000 $60,000
Edwin S. Weinstein 6,000 2.7% $8.33 1/6/98 $5,000 $11,000
<FN>
(1) The number of shares underlying the options was adjusted
for the three-for-two stock split effected as a stock
dividend on October 4, 1996.
</TABLE>
<TABLE>
Aggregate Stock Option Exercises In Last Fiscal Year
and Year-End Stock Option Values
The following table sets forth information concerning aggregated
option exercises in fiscal year 1996 and the number and value of
unexercised options held by each of the Named Executive Officers at
January 5, 1997.
<CAPTION>
Number of
Securities Value of
Underlying Unexercised
Unexercised In-the-Money
Options at Options at
January 5, 1997 January 5, 1997
Shares (#) ($)
Acquired Value Exercisable/ Exercisable/
Name on Exercise(#) Realized($) Unexercisable Unexercisable
<S> <C> <C> <C> <C>
David B. Pomeroy, II - - 78,750/0 $2,196,787/$0
Stephen E. Pomeroy - - 27,750/0 $756,847/$0
Richard C. Mills 12,000 $177,750 89,497/0 $2,557,591/$0
Edwin S. Weinstein 3,575 $56,235 6,000/0 $160,020/$0
</TABLE>
<PAGE>
Employment Agreements
David B. Pomeroy, II, the Chairman of the Board and Chief
Executive Officer of the Company, 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.
Effective January 6, 1997, Mr. Pomeroy entered into a Sixth
Amendment to the Employment Agreement with the Company (the "Sixth
Amendment"). Mr. Pomeroy's compensation under the Sixth Amendment
will consist of a base salary of $395,000 for fiscal 1997 and each
subsequent fiscal year unless modified by the Compensation
Committee. Under the Sixth Amendment Mr. Pomeroy is also entitled
to a bonus of up to a maximum of $720,000 in fiscal 1997 and each
subsequent fiscal year based upon the Company's operating income.
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.
Under the Sixth Amendment the Company has agreed to pay all
premiums for a term life insurance policy with a death benefit
equal to $3,000,000 insuring the life of Mr. Pomeroy. The owner and
beneficiary of this term life insurance policy is a trust
established by Mr. Pomeroy. The Company and the trust entered into
a split dollar arrangement whereunder the Company will pay all
premiums on a whole life insurance policy with a death benefit
equal to $1,000,000 insuring the life of Mr. Pomeroy, less the
reportable economic benefit to the trust.
Under the Sixth Amendment Mr. Pomeroy was also granted an option
to acquire 25,000 shares of Common Stock at a per share price equal
to the fair market value of a share of Common Stock on January 3,
1997. In connection with the Sixth Amendment, Mr. Pomeroy and the
Company also entered into a registration rights agreement which
entitles Mr. Pomeroy to demand and piggy back registration rights
in the event of a change in control of the Company. Also, upon the
occurrence of a change in control (as defined in the Sixth
Amendment to the Employment Agreement), Mr. Pomeroy is entitled to
receive (a) through the date of termination of his employment and
thereafter for the balance of the three (3) 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.
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.
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.
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, which may be adjusted
annually based on the achievement of certain economic goals, 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.
Mr. Stephen E. Pomeroy has an employment agreement with the
Company which extends to December 31,1999, and thereafter may be
extended on a daily basis unless either party gives 60 days written
notice of termination (or three days written notice if the Company
terminates Mr. Pomeroy's employment for cause). Mr. Pomeroy's
compensation under the agreement consists of a base salary at a
rate of $100,000 for fiscal 1996 and an annual bonus, to be
negotiated annually. Mr. Pomeroy's base salary will increase to
$115,000 for fiscal 1997 and is subject to increases in subsequent
fiscal years at the discretion of the Board of Directors. The
amount of any annual bonus will be paid 50% in cash and 50% as
incentive deferred compensation.
<PAGE>
PERFORMANCE GRAPH
The following Performance Graph compares the percentage of the
cumulative total stockholder 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.
EDGAR PRESENTATION OF DATA POINTS USED IN PRINTED GRAPHIC
Date Pomeroy S&P500 NASDAQ
Industrial
4/92 100 100 100
7/92 86.7 101.1 89
10/92 68.3 103.5 91.8
1/93 86.7 107.9 107.2
4/93 90 111.9 105.5
7/93 90.6 111.6 107.9
10/93 113.4 113.7 115.4
1/94 143.3 115.5 119.2
4/94 150 110.4 115.2
7/94 123.3 110.1 105.7
10/94 130 114.6 115
1/95 126.7 113.8 111.5
4/95 176.7 124 118.6
7/95 267.7 134.9 130.9
10/95 260.4 144.8 145.2
1/96 176 152.6 142.7
4/96 209 159.9 151.6
7/96 233.1 166.1 164.3
10/96 491.4 170.3 163.8
1/97 770.1 183.5 164.1
CERTAIN RELATIONSHIPS AND RELATED 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. Rosenthal, a member of the
Board of Directors, serves as Director of Investor Relations for
the Company.
Kenneth R. Waters, a director of the Company since April 1997,
served as a consultant to the Company from June 1996 through
November 1996. Mr. Waters was paid $1,500 per month for his
services for a total of $9,000 during the term of the consulting
arrangement. In January 1997, the Company retained Mr. Waters to
provide additional consulting services to the Company on an on-
going basis. Mr. Waters is paid $1,500 per month which also
includes his compensation as a member of the Board of Directors.
<PAGE>
SECTION 16(a) BENEFICIAL OWNERSHIP REPORTING COMPLIANCE
During fiscal 1996, Mr. James C. Eck, Vice President of Sales and
Services for the Company, failed to file one Form 4 with respect to
the acquisition of 1,000 shares of Common Stock in May 1996, which
transaction was subsequently reported on a Form 4 for February
1997.
Proposals for 1998 Meeting
In order to be eligible for inclusion in the Company's proxy
statement for the 1998 annual meeting of stockholders, stockholder
proposals must be received by the Company at its principal office,
1020 Petersburg Road, Kentucky 41048, by January 17, 1998.
By Order of the Board of Directors
/s/ Edwin S. Weinstein
_____________________________
Edwin S. Weinstein, Secretary
Dated: May 27, 1997
<PAGE>
POMEROY COMPUTER RESOURCES, INC.
This Proxy is Solicited On Behalf of The Board of Directors
The undersigned appoints EDWIN S, WEINSTEIN and CAROL TEUFEL
WEINSTEIN as proxies, or either of them, each with power to appoint
his or her 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 12, 1997 at the
Annual Meeting of Stockholders to be held on June 25, 1997 and at
any adjournments thereof.
1. Election Of Directors
/ /FOR all nominees listed below (except as marked to the
contrary below)
/ /WITHHOLD AUTHORITY 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; Kenneth R. Waters.
2. Approval of the amendment to the Article Fourth of the
Certificate of Incorporation of the Company to increase the number
of authorized shares of common stock, $0.01 par value, from
10,000,000 to 15,000,000.
/ / FOR/ /AGAINST / /ABSTAIN
3. Approval to increase the number of shares of common stock
reserved for issuance under the Company's 1992 Outside Directors'
Stock Option Plan from 123,750 shares to 175,000 shares.
/ / FOR / /AGAINST / /ABSTAIN
4. 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'' proposals 1, 2, and 3.
Discretion will be used with respect to such other matters as may
properly come before the meeting or any adjournment or adjournments
thereof.
The undersigned hereby acknowledges receipt of the notice of
meeting and proxy statement.
(Signature of Stockholder)
NUMBER OF SHARES
Dated: , 1997
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 the partnership name by authorized person.
PLEASE MARK, SIGN, DATE AND RETURN THE PROXY CARD PROMPTLY, USING
THE ENCLOSED ENVELOPE.
