<PAGE>
NORAND CORPORATION
550 Second Street, S.E.
Cedar Rapids, Iowa 52401
------------------------
INFORMATION STATEMENT PURSUANT
TO SECTION 14(F) OF THE SECURITIES
EXCHANGE ACT OF 1934 AND RULE 14F-1 THEREUNDER
------------------------
NO VOTE OR OTHER ACTION OF THE COMPANY'S STOCKHOLDERS
IS REQUIRED IN CONNECTION WITH THIS INFORMATION STATEMENT.
NO PROXIES ARE BEING SOLICITED AND
YOU ARE REQUESTED NOT TO SEND THE COMPANY A PROXY.
------------------------
This Information Statement, which is being mailed on or about January 24,
1997 to the holders of shares of the common stock, par value $0.01 per share
(the "Common Stock") of Norand Corporation, a Delaware corporation (the
"Company"), is being furnished in connection with the designation by Western
Atlas Inc., a Delaware corporation ("Parent"), of persons (the "Parent
Designees") to the Board of Directors of the Company (the "Board"). Such
designation is to be made pursuant to an Agreement and Plan of Merger dated as
of January 21, 1997 (the "Merger Agreement") among the Company, Parent and WAI
Acquisition Corp., a Delaware corporation and a wholly owned subsidiary of
Parent ("Purchaser").
Pursuant to the Merger Agreement, among other things, the Purchaser
commenced a tender offer on January 24, 1997 to purchase all of the issued and
outstanding shares (the "Shares") of the Common Stock at a price of $33.50 per
Share, net to the seller in cash, as described in the Purchaser's Offer to
Purchase dated January 24, 1997 and the related Letter of Transmittal (which
Offer to Purchase and related Letter of Transmittal together constitute the
"Offer"). The Offer is scheduled to expire at 12:00 midnight, New York City
time, on Friday February 21, 1997, unless extended. The Offer is subject to,
among other things, the condition that a number of Shares representing not less
than a majority of the Company's outstanding Shares on a fully diluted basis
being validly tendered prior to the expiration of the Offer and not withdrawn
(the "Minimum Condition"). The Merger Agreement also provides for the merger
(the "Merger") of Purchaser with and into the Company as soon as practicable
after the consummation of the Offer. Following the consummation of the Merger
(the "Effective Time"), the Company will be the surviving corporation and a
wholly owned subsidiary of Parent. In the Merger, each Share issued and
outstanding immediately prior to the Effective Time (other than Shares held by
Parent, Purchaser, in the treasury of the Company or by any subsidiary of
Parent, Purchaser or the Company, all of which will be cancelled, and other than
Shares, if any, held by stockholders who have perfected rights as dissenting
stockholders under Delaware law) will be converted into the right to receive
cash in the amount of $33.50.
Following the election or appointment of the Parent Designees and prior to
the Effective Time, any amendment or termination of this Agreement by the
Company, any extension by the Company of the time for the performance of any of
the obligations or other acts of Parent or the Purchaser, waiver of any of the
Company's rights under the Merger Agreement or any other action by the Company
concerning this Agreement or any of the transactions contemplated by the Merger
Agreement, will require the concurrence of a majority of the directors of the
Company then in office who were not designated by Parent.
The terms of the Merger Agreement, a summary of the events leading up to the
Offer and the execution of the Merger Agreement and other information concerning
the Offer and the Merger are contained in the Offer to Purchase and in the
Solicitation/Recommendation Statement on Schedule 14D-9
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of the Company (the "Schedule 14D-9") with respect to the Offer, copies of which
are being delivered to stockholders of the Company contemporaneously herewith.
Certain other documents (including the Merger Agreement) were filed with the
Securities and Exchange Commission (the "SEC") as exhibits to the Tender Offer
Statement on Schedule 14D-1 of Purchaser and Parent (the "Schedule 14D-1"). The
exhibits to the Schedule 14D-9 and the Schedule 14D-1 may be examined at, and
copies thereof may be obtained from, the regional offices of and public
reference facilities maintained by the SEC (except that the exhibits thereto
cannot be obtained from the regional offices of the SEC) in the manner set forth
in Sections 8 and 9 of the Offer to Purchase.
No action is required by the stockholders of the Company in connection with
the election or appointment of the Parent Designees to the Board. However,
Section 14(f) of the Securities Exchange Act of 1934, as amended (the "Exchange
Act"), requires the mailing to the Company's stockholders of the information set
forth in this Information Statement prior to a change in a majority of the
Company's directors otherwise than at a meeting of the Company's stockholders.
The information contained in this Information Statement concerning the
Parent, the Purchaser and the Parent Designees has been furnished to the Company
by such persons, and the Company assumes no responsibility for the accuracy or
completeness of such information. The Schedule 14D-1 indicates that the
principal executive offices of the Purchaser and the Parent are located at 360
North Crescent Drive, Beverly Hills, California 90210-9867.
GENERAL
The Shares of Common Stock are the only class of voting securities of the
Company outstanding. Each Share is entitled to one vote. As of January 17, 1997,
there were 7,842,905 Shares outstanding. The Board currently consists of five
(5) members. Each director holds office until his successor is elected and
qualified or until his earlier death, resignation or removal.
RIGHT TO DESIGNATE DIRECTORS; THE PARENT DESIGNEES
The Merger Agreement provides that, promptly upon the purchase by Purchaser
of Shares representing at least a majority of the Shares then actually
outstanding, the Company shall, upon the request of Parent, take all actions
necessary to cause a majority of the directors of the Company to consist of the
Parent Designees, including by accepting the resignations of those incumbent
directors designated by the Company or increasing the size of the Board and
causing the Parent Designees to be elected.
Parent has informed the Company that each of the Parent Designees listed
below has consented to act as a director of the Company.
It is expected that the Parent Designees may assume office at any time
following the purchase by Purchaser of such number of Shares that satisfies the
Minimum Condition, which purchase cannot be earlier than February 21, 1997, and
that, upon assuming office, the Parent Designees will thereafter constitute at
least a majority of the Board.
Biographical information concerning each of the Parent Designees and the
Company's directors and executive officers is presented below.
PARENT DESIGNEES
ALTON J. BRANN. Mr. Brann has been a director, Chairman of the Board and
Chief Executive Officer of Parent since 1994. Mr. Brann was the Chairman of the
Board of Litton Industries, Inc. from 1994 to 1995, the Chief Executive Officer
of Litton from 1992 to 1994, and President of Litton from 1990 to 1994.
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MICHAEL E. KEANE. Mr. Keane has been Senior Vice President and Chief
Financial Officer of Parent since 1996. Prior to assuming his present position,
Mr. Keane served as Vice President and Treasurer from 1994 to 1996, and as
Director of Pensions and Insurance of Litton Industries, Inc. from 1991 to 1994.
NORMAN L. ROBERTS. Mr. Roberts has been Senior Vice President and General
Counsel of Parent since 1994. Prior to assuming his present position, Mr.
Roberts served as Senior Vice President and General Counsel of Litton
Industries, Inc. from 1990 to 1994.
CURRENT DIRECTORS AND EXECUTIVE OFFICERS OF THE COMPANY
<TABLE>
<CAPTION>
BUSINESS EXPERIENCE DURING THE PAST FIVE YEARS
NAME AGE AND OTHER INFORMATION
- ----------------------------------------------- --- -----------------------------------------------------------
<S> <C> <C>
N. Robert Hammer............................... 54 Mr. Hammer has been Chairman, President and Chief Executive
Officer of the Company since 1988. Mr. Hammer received a
Bachelor of Science degree from Columbia University in
1965, and a Master of Business Administration degree from
Columbia University in 1967.
Keith B. Geeslin............................... 43 Mr. Geeslin has been a director of the Company since 1988.
Mr. Geeslin is a General Partner of the Sprout Group, a
division of DLJ Capital Corporation, where he has been
employed since 1984. In addition, he is a General Partner
of the general partner of a series of investment funds
managed by the Sprout Group. In addition to the Company,
Mr. Geeslin is a director of Actel Corporation, SDL, Inc.,
and several privately-held companies. Mr. Geeslin received
a Bachelor of Science, Electrical Engineering degree from
Stanford University in 1975, a Master of Arts, Philosophy,
Politics and Economics degree from Oxford University in
1977, and a Master of Science, Engineering-Economic Systems
degree from Stanford University in 1978.
</TABLE>
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<TABLE>
<CAPTION>
BUSINESS EXPERIENCE DURING THE PAST FIVE YEARS
NAME AGE AND OTHER INFORMATION
- ----------------------------------------------- --- -----------------------------------------------------------
<S> <C> <C>
Charles G. Moore III........................... 53 Mr. Moore has been a director of the Company since 1988 and
Senior Director since January 1996. Since March 1994, Mr.
Moore has been president of Little Diamond Island
Enterprises, a venture capital investment firm. Mr. Moore
was Chairman and Chief Executive Officer of Digital
Communications Associates, Inc., a manufacturer of hardware
and software products for the personal computer networking
environment, from November 1993 to March 1994. From January
1982 to June 1993 Mr. Moore was a General Partner of Welsh,
Carson, Anderson & Stowe, a venture capital investment
firm. Mr. Moore serves on the board of directors of one
privately-held company. Mr. Moore received a Bachelor of
Arts, Mathematics degree from Dartmouth College in 1965 and
Master of Science and Ph.D., Computer and Communications
degrees from the University of Michigan in 1967 and 1971,
respectively. From 1972 to 1975, Mr. Moore served on the
faculty of Cornell University in the Department of Computer
Science.
Fred W. Wenninger.............................. 57 Mr. Wenninger has been a director of the Company since
1989. Since August 1995, Mr. Wenninger has served as
President and Chief Executive Officer of Keytronic Corp., a
manufacturer of computer keyboards. From May 1989 to
December 1993, Mr. Wenninger was President and from May
1989 to October 1993 he was also Chief Executive Officer of
Iomega Corporation, a computer disk drive manufacturer. Mr.
Wenninger is also a director of Keytronic Corp. and Hach
Company. Mr. Wenninger received a Bachelor of Science,
Physics degree and Master of Science and Ph.D., Engineering
degrees from Oklahoma State University in 1959, 1962 and
1964, respectively.
</TABLE>
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<TABLE>
<CAPTION>
BUSINESS EXPERIENCE DURING THE PAST FIVE YEARS
NAME AGE AND OTHER INFORMATION
- ----------------------------------------------- --- -----------------------------------------------------------
<S> <C> <C>
Hatim A. Tyabji................................ 51 Mr. Tyabji has been a director of the Company since March
1995. Mr. Tyabji is Chairman, President and Chief Executive
Officer of VeriFone, Inc., a global provider of transaction
automation solution for the delivery of electronic payment
services; he has been President and CEO since 1986 and
Chairman since 1992. Mr. Tyabji earned a Bachelor of
Science, Electrical Engineering degree from the College of
Engineering in Porrna, India, in 1967, a Master of Science,
Electrical Engineering degree from the State University of
New York at Buffalo in 1969, and a Master of Business
Administration from Syracuse University in 1975. Mr. Tyabji
is also a graduate of the Stanford Executive Program.
</TABLE>
MEETINGS AND COMMITTEES OF THE BOARD
The Board of Directors has two standing committees: the Audit Committee and
the Compensation Committee. The Board of Directors does not have a Nominating
Committee. During the fiscal year ended August 31, 1996, the Board of Directors
met eight times, the Audit Committee met three times, and the Compensation
Committee met four times. During 1996, all directors attended at least 75% of
the meetings of the Board of Directors and the committees thereof on which they
served.
The duties of the Audit Committee are to review the scope of the annual
audit and interim procedures with the independent auditors; consult with the
auditors during any annual audit or interim procedures on any situation that the
auditors deem advisable for resolution prior to the completion of the audit or
procedures; meet with the auditors to appraise the effectiveness of the audit
effort; determine that no restrictions were placed by management on the scope of
the examination or its implementation; inquire into the effectiveness of the
Company's accounting and internal control functions; review with the auditors
and management any registration statement in connection with the public offering
of securities and such other financial reports as the committee or the Board of
Directors deems advisable; report to the Board of Directors on the results of
the committee's activities; and recommend to the Board of Directors any changes
in the appointment of independent auditors that the committee deems to be in the
best interest of the Company and its stockholders. The members of the Audit
Committee are Messrs. Geeslin and Moore.
The duties of the Compensation Committee are to make recommendations to the
Board of Directors concerning the salaries of the Company's officers; to
exercise the authority of the Board of Directors concerning the Company's
benefit plans, including those plans limited in application to the Company's
officers and senior management; to serve as the administration committee of the
Company's compensation plans; and to advise the Board of Directors on other
compensation and benefit matters. The members of the Compensation Committee are
Messrs. Geeslin, Moore, and Tyabji.
OWNERSHIP OF THE CAPITAL STOCK OF THE COMPANY
The following table sets forth information with respect to the number of
shares of Common Stock beneficially owned by (i) each director of the Company,
(ii) the five executive officers of the Company named in the table under
"Compensation of Directors and Executive Officers--Summary Compensation Table,"
(iii) all directors and executive officers of the Company as a group, and (iv)
based on information available to the Company and a review of statements filed
with the Commission pursuant to Section 13(d) and 13(g) of the Securities
Exchange Act of 1934, as amended (the "Exchange Act"), each person that owns
beneficially (directly or together with affiliates) more than 5% of the Common
Stock, in each case as
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of November 8, 1996 (unless otherwise noted). The Company believes that each
individual or entity named has sole investment and voting power with respect to
shares of Common Stock indicated as beneficially owned by them, except as
otherwise noted.
<TABLE>
<CAPTION>
COMMON STOCK
BENEFICIALLY PERCENTAGE
NAME OWNED(1) OWNERSHIP(1)
- ----------------------------------------------------------------------------------- -------------- ---------------
<S> <C> <C>
N. Robert Hammer (2)............................................................... 386,509 4.98%
Keith B. Geeslin (3)............................................................... 9,600 *
Charles G. Moore III (4)........................................................... 20,382 *
Fred W. Wenninger (5).............................................................. 7,665 *
Hatim A. Tyabji (6)................................................................ 1,700 *
Scott D. Mercer (7)................................................................ 5,139 *
Alan G. Bunte (8).................................................................. 25,842 *
John A. Niemzyk (9)................................................................ 8,048 *
Thomas O. Miller (10).............................................................. 36,880 *
All directors and executive officers as a group (11 persons) (11).................. 407,671 6.56%
Kopp Investment Advisors, Inc. (12)................................................ 2,265,014 29.55%
</TABLE>
- ------------------------
* Represents less than 1% of the outstanding shares of Common Stock.
(1) Calculated pursuant to Rule 13d-3(d) under the Exchange Act. Under Rule
13d-3(d), shares not outstanding which are subject to options, warrants,
rights, or conversion privileges exercisable within 60 days are deemed
outstanding for the purpose of calculating the number and percentage owned
by such person, but not deemed outstanding for the purpose of calculating
the percentage owned by each other person listed.
(2) Includes 225,010 shares of Common Stock issuable upon exercise of options,
Also includes 1,566 shares of Common Stock owned by members of Mr. Hammer's
immediate family that may be deemed to be beneficially owned by Mr. Hammer.
(3) Includes 3,800 shares of Common Stock issuable upon exercise of options.
(4) Includes 10,800 shares of Common Stock issuable upon exercise of options.
(5) Includes 6,065 shares of Common Stock issuable upon exercise of options.
Also includes 100 shares of Common Stock held by Mr. Wenninger's wife that
may be deemed to be beneficially owned by Mr. Wenninger.
(6) Includes 1,700 shares of Common Stock issuable upon exercise of options.
(7) Includes 5,139 shares of Common Stock issuable upon exercise of options.
(8) Includes 21,700 shares of Common Stock issuable upon exercise of options.
(9) Includes 7,470 shares of Common Stock issuable upon exercise of options.
(10) Includes 26,748 shares of Common Stock issuable upon exercise of options.
(11) Includes 218,136 shares of Common Stock issuable upon exercise of options.
(12) Kopp Investment Advisor, Inc. ("Kopp") filed a Schedule 13G with the
Commission indicating beneficial ownership of shares of Common Stock.
According to the Schedule 13G and to information supplied to the Company by
Kopp, (i) Kopp has shared dispositive power with respect to 2,215,014
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shares of Common Stock it beneficially owns and sole dispositive power with
respect to 50,000 shares of Common Stock it beneficially owns and (ii) Kopp
has sole voting power with respect to 181,000 shares of Common Stock
beneficially owned. The number of shares beneficially owned by Kopp is
indicated as of October 24, 1996. The address of Kopp is 6600 France Ave.
S., #672, Edina, MN 55435.
Section 16(a) of the Exchange Act requires the Company's directors and
executive officers, and persons who own more than the percent of a registered
class of the Company's equity securities, to file with the Commission initial
reports of ownership and reports of changes in ownership of Common Stock and
other equity securities of the Company. Officers, directors, and greater than
ten-percent stockholders are required by Commission regulation to furnish the
Company with copies of all Section 16(a) forms they file.
To the Company's knowledge, based solely on a review of the copies of such
reports furnished to the Company and written representations that no other
reports were required, during the Company's 1996 fiscal year all Section 16(a)
filing requirements applicable to its officers, directors, and greater than ten-
percent beneficial owners were complied with except that Mr. John A. Niemzyk and
Mr. Scott D. Mercer each filed one report late.
COMPENSATION OF DIRECTORS AND EXECUTIVE OFFICERS
SUMMARY COMPENSATION TABLE
The following table sets forth a summary of the annual, long-term, and other
compensation for services rendered to the Company for the fiscal year ended
August 31, 1996, and the prior two fiscal years paid or awarded to those persons
who were, at August 31, 1996: (i) the Company's chief executive officer, and
(ii) the Company's four most highly compensated executive officers other than
the chief executive officer (collectively, including the Company's chief
executive officer, the "Named Executive Officers").
<TABLE>
<CAPTION>
LONG-TERM COMPENSATION
----------------------
ANNUAL COMPENSATION AWARDS PAYOUTS
------------------------------ ---------------------- ------------
OTHER ANNUAL RESTRICTED OPTIONS/ ALL OTHER
NAME AND SALARY BONUS COMPENSATION STOCK AWARDS SARS LTIP PAYOUTS COMPENSATION
PRINCIPAL POSITION YEAR ($) ($) ($)(1) ($) (#) ($) ($)
- -------------------------------------- ---- ------- ------- ------------ ------------ -------- ------------ -------------
<S> <C> <C> <C> <C> <C> <C> <C> <C>
N. Robert Hammer 1996 340,000 -- -- 0 35,100 0 8,269(3)
Chief Executive Officer 1995 313,333 -- -- 0 20,000(2) 0 7,540(3)
1994 300,000 143,000 -- 0 12,000 0 6,924(3)
Thomas O. Miller 1996 200,000 -- -- 0 22,975 0 5,592(5)
Senior Vice President 1995 160,113 17,341 -- 0 8,500(4) 0 5,588(5)
1994 141,251 80,000 -- 0 8,800 0 5,546(5)
Scott D. Mercer 1996 152,838 50,760 -- 0 16,760 0 0
Vice President, Norand International 1995 93,684 61,260 -- 0 4,700(6) 0 0
Corporation 1994 74,448 18,485 -- 0 500 0 0
Alan G. Bunte 1996 139,833 -- -- 0 14,285 0 4,635(8)
Vice President, Strategic Planning 1995 129,833 20,000 -- 0 7,000(7) 0 5,465(8)
1994 121,500 41,000 -- 0 -- 0 3,657(8)
John A. Niemzyk 1996 133,752 -- -- 0 25,415 0 5,491(10)
Vice President, Operations and 1995 117,153 28,000 -- 0 4,400(9) 0 4,883(10)
Information Technology and Chief 1994 98,208 26,000 -- 0 1,300 0 4,820(10)
Information Officer
</TABLE>
(1) During the fiscal years covered, no Named Executive officer received any
other annual compensation in an aggregate amount exceeding the lesser of
either $50,000 or 10% of his total annual salary and bonus reported in the
preceding two columns.
(2) Represents 20,000 options originally authorized pursuant to the Company's
Long-Term Performance Program on March 31, 1995, at an exercise price of
$35.00, and subsequently cancelled and reissued on May 3, 1995, at a
repriced exercise price of $30.25.
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<PAGE>
(3) Represents the Company's matching contribution to the Company's Section
401(k) deferred compensation plan of $4,750 in 1996, $4,620 in 1995, and
$4,620 in 1994, and represents the value of term life insurance provided in
excess of $50,000 of $3,519 in 1996, $2,920 in 1995, and $2,304 in 1994.
(4) Represents 8,500 options originally authorized pursuant to the Company's
Long-Term Performance Program on March 31, 1995, at an exercise price of
$35.00, and subsequently cancelled and reissued on May 3, 1995, at a
repriced exercise price of $30.25.
(5) Represents the Company's matching contribution to the Company's Section
401(k) deferred compensation plan of $4,724 in 1996, $5,058 in 1995, and
$5,171 in 1994, and represents the value of term life insurance provided in
excess of $50,000 of $867 in 1996, $530 in 1995, and $375 in 1994.
(6) Represents 700 options originally authorized pursuant to the Company's
Long-Term Performance Program on March 31, 1995, at an exercise price of
$35.00, and subsequently cancelled and reissued on May 3, 1995, at a
repriced exercise price of $30.25 plus an additional 4,000 options issued on
May 17, 1995, at an exercise price of $33.00.
(7) Represents 7,000 options originally authorized pursuant to the Company's
Long-Term Performance Program on March 31, 1995, at an exercise price of
$35,00, and subsequently cancelled and reissued on May 3, 1995, at a
repriced exercise price of $30.25.
(8) Represents the Company's matching contribution to the Company's 401(k)
deferred compensation plan of $4,219 in 1996, $5,142 in 1995, and $3,453 in
1994, and represents the value of term life insurance provided in excess of
$50,000 of $416 in 1996, $322 in 1995, and $204 in 1994.
(9) Represents 1,400 options originally authorized pursuant to the Company's
Long-Term Performance Program on March 31, 1995, at an exercise price of
$35.00, and subsequently cancelled and reissued on May 3, 1995, at a
repriced exercise price of $30.25 plus an additional 3,000 options issued on
June 12, 1995, at an exercise price of $36.13.
(10)Represents the Company's matching contribution to the Company's 401(k)
deferred compensation plan of $5,198 in 1996, $4,620 in 1995, and $4,620 in
1994, and represents the value of term life insurance provided in excess of
$50,000 of $293 in 1996, $263 in 1995, and $200 in 1994.
OPTION/SAR GRANTS IN LAST FISCAL YEAR
The following table summarizes the grants of stock options awarded to the
Named Executive Officers during the fiscal year ended August 31, 1996, under the
Company's 1989 Stock Option Plan and the Company's Long-Term Performance
Program.
<TABLE>
<CAPTION>
POTENTIAL REALIZABLE
VALUE AT ASSUMED
ANNUAL RATES OF
INDIVIDUAL GRANTS STOCK PRICE
------------------------------------------------------------ APPRECIATION FOR
% OF TOTAL OPTION TERM(2)
OPTIONS/SARS OPTIONS/ SARS EXERCISE PRICE EXPIRATION --------------------
NAME GRANTED(#) GRANTED ($/SH)(1) DATE 5%($) 10%($)
- ---------------------------------- ------------- --------------- --------------- ----------- --------- ---------
<S> <C> <C> <C> <C> <C> <C>
N. Robert Hammer.................. 35,100 6.31% 16.50 03/28/06 364,224 923,016
Thomas O. Miller.................. 7,500 1.35% 18.00 02/05/06 84,901 215,155
Thomas O. Miller.................. 15,475 2.78% 16.50 03/28/06 160,580 406,943
Alan G. Bunte..................... 5,000 0.90% 18.00 02/05/06 56,600 143,437
Alan G. Bunte..................... 9,285 1.67% 16.50 03/28/06 96,348 244,165
Scott D. Mercer................... 10,000 1.80% 18.00 02/05/06 113,201 286,874
Scott D. Mercer................... 6,760 1.22% 16.50 03/28/06 70,147 177,766
John A. Niemzyk................... 20,000 3.60% 13.25 01/24/06 166,657 422,342
John A. Niemzyk................... 5,415 0.97% 16.50 03/28/06 56,190 142,397
</TABLE>
(1) The exercise price equals the last reported sale price of the Common Stock
on the Nasdaq National Market System on the date of grant of the options.
(2) The potential realizable dollar value of a grant is the product of: (a) the
difference between (i) the product of the per share market price at the time
of the grant and the sum of 1 plus the stock appreciation rate compounded
annually over the term of the option (here, 5% and 10%), and (ii) the
per-share exercise price of the option, and (b) the number of securities
underlying the grant at fiscal year-end.
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AGGREGATED OPTIONS/SAR EXERCISES IN LAST FISCAL YEAR AND FISCAL YEAR-END
OPTION/SAR VALUES
The following table provides information concerning options exercised by the
Named Executive Officers during the fiscal year ended August 31, 1996, and the
value at August 31, 1996, of unexercised options.
<TABLE>
<CAPTION>
VALUE ($) OF
NUMBER OF UNEXERCISED
UNEXERCISED IN-THE-MONEY
OPTIONS AT OPTIONS AT
AUGUST 31, 1996 AUGUST 31, 1996
---------------- ---------------
SHARES ACQUIRED VALUE EXERCISABLE/ EXERCISABLE/
NAME ON EXERCISE (#) REALIZED($) UNEXERCISABLE UNEXERCISABLE
- --------------------------------------------------- ----------------- --------------- ---------------- ---------------
<S> <C> <C> <C> <C>
N. Robert Hammer................................... 0 0 112,629/69,971 658/12,504
Thomas O. Miller................................... 0 0 23,422/39,153 290/5,513
Alan G. Bunte...................................... 0 0 19,193/20,014 10,033/3,308
Scott D. Mercer.................................... 0 0 3,996/19,484 127/2,408
John A. Niemzyk.................................... 0 0 5,914/27,245 39,595/67,179
</TABLE>
COMPENSATION OF DIRECTORS
Non-employee members of the Board of Directors, except Mr. Moore, receive an
annual fee of $12,000 (payable $3,000 per quarter) as compensation for their
services as directors, a fee of $1,000 for each board meeting attended in person
and $750 for each committee meeting attended in person. Mr. Moore serves as Lead
Director of the Board of Directors. Mr. Moore receives an annual fee of $24,000
(payable $6,000 per quarter) as compensation for his services as Lead Director,
a fee of $2,000 for each board meeting attended in person and $750 for each
committee meeting attended in person. Directors are also reimbursed for
reasonable costs associated with attendance at board and committee meetings.
Non-employee members of the Board of Directors also participate in the
Company's Stock Option Plan for Non-Employee Directors (the "Plan"), which was
adopted by the Board of Directors effective March 16, 1994 (the "Effective
Date"), and approved by the stockholders as of December 16, 1994. Pursuant to
the Plan, each individual who was a non-employee director as of the Effective
Date (Messrs. Geeslin, Moore, and Wenninger) was granted an option to purchase
6,000 shares of Common Stock as of the Effective Date, and each individual who
became a non-employee director after the Effective Date was granted an option to
purchase 5,000 shares of Common Stock as of the date of his initial appointment
as a non-employee director (in each case, the "Initial Grant"). Each
non-employee director who continues as a director is automatically granted an
option to purchase 2,000 shares of Common Stock on each anniversary of his
Initial Grant. In addition, Mr. Moore is automatically granted an additional
option to purchase 2,000 shares of Common Stock on each anniversary of his
Initial Grant. Options awarded under the Plan become exercisable with respect to
one-twentieth of the total shares as of the last day of each quarter anniversary
of the date of the award, with the exception of the options awarded in the
Initial Grant to non-employee directors who became directors after the Effective
Date, which become exercisable with respect to one-fifth of the shares on the
first anniversary date of the award and thereafter as to one-twentieth of the
total shares as of the last day of each quarter anniversary. Each such option
awarded under the Plan bears an exercise price per share of Common Stock equal
to the greater of par value or the fair market value of Common Stock on the date
the option is granted.
EMPLOYMENT CONTRACTS, TERMINATION OF EMPLOYMENT AND CHANGE-IN CONTROL
ARRANGEMENTS
The Company's employment policy provides that upon termination, with certain
exceptions, each of the Company's vice presidents is entitled to severance pay
in the amount of six months pay plus one additional month's pay for each year of
service to the Company, not to exceed a combined total of 18
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months. In the event of a change in control, enhanced severance may be payable
in the event of termination following a change in control on account of certain
events, such as elimination of a position, adverse change in duties or
compensation, or change in job location. The enhanced severance for vice-
presidents is generally equal to two times the employee's annual salary plus
bonus, continuation of employee benefits and outplacement services. The Company
has entered into an employment agreement with each Named Executive Officer. Each
of the agreements contain provisions for payment of a base salary plus bonus, an
automobile allowance and reimbursement of certain expenses relating to
relocating to Cedar Rapids, Iowa. In addition, pursuant to his employment
agreement, Mr. Hammer was granted options for 129,156 shares of Common Stock
vesting over a 55-month period beginning April 18, 1989. Mr. Hammer is also
entitled pursuant to his employment agreement to termination payments of six
months' salary, subject to certain exceptions.
The Company and Mr. Hammer are also parties to a Change in Control Benefit
Agreement pursuant to which Mr. Hammer is entitled to certain benefits in the
event of a change in control. Mr. Hammer may be entitled to accelerate up to
100,000 options upon the occurrence of a change in control, if such acceleration
does not have an adverse effect on the pooling-of-interest method of accounting.
The agreement generally provides that if it is determined that the accelerated
vesting upon a change in control of a stock option awarded to Mr. Hammer on
September 24, 1996 would be subject to the excise tax imposed by section 4999 of
the Internal Revenue Code of 1986, as amended (the "Code") (relating to excess
parachute payments), Mr. Hammer will be entitled to a tax-gross up payment in an
amount equal to the amount of the excise tax attributable to the accelerated
vesting of the option, taxes incurred by Mr. Hammer on the excise tax and any
interest or penalties incurred by Mr. Hammer with respect to such excise tax.
Pursuant to the Company's Long-Term Performance Program, Mr. Hammer was awarded
100,000 options at an exercise price of $16.00 on September 24, 1996.
On January 21, 1997, the Company and Mr. Hammer entered into a Consulting
and Separation Agreement (the "Separation Agreement"). Pursuant to the
Separation Agreement, Mr. Hammer's employment with the Company will terminate at
the Effective Time. The Separation Agreement includes an agreement by Mr. Hammer
to maintain the confidentiality of certain information and an agreement by Mr.
Hammer not to compete with the Company for a period of three years following the
Effective Time. Under the Separation Agreement, at the Effective Time Mr. Hammer
will receive a payment of $1,000,000 and all unvested Company stock options
granted to Mr. Hammer under the Company's Long-Term Incentive Program and the
Company's 1989 Stock Option Plan will beome fully vested. The Separation
Agreement also provides for the continuation of medical, life and accidental
death and dismemberment insurance coverage for Mr. Hammer and his dependents for
a period of three years following the Effective Time (which period may be
extended by mutual agreement of the parties). The Separation Agreement also
provides that for a period of one year commencing at the Effective Time, the
Company will retain Mr. Hammer as a consultant for a fee of $800,000 payable at
the Effective Time. The Separation Agreement also provides for payment to Mr.
Hammer of a tax gross-up payment equal to the amount of excise tax that may be
payable by Mr. Hammer under Section 4999 of the Code due to payments under the
Separation Agreement and other payments and benefits that may be subject to such
taxes. The gross-up payment would also include an amount for interest and
penalties relating to payment of the excise tax and such other payments.
BOARD OF DIRECTORS COMPENSATION COMMITTEE REPORT ON EXECUTIVE COMPENSATION
The Compensation Committee approves all of the policies under which
compensation is paid or awarded to the Company's executive officers.
Under the direction of the Compensation Committee, the Company has
implemented compensation practices that seek to enhance the performance of the
Company and increase its value to all stockholders. In order to provide
information on the compensation practices of the Company, the Compensation
Committee has furnished the following report on executive compensation:
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COMPENSATION PHILOSOPHY The Compensation Committee has devoted considerable
attention to developing the Company's compensation philosophy which embodies
four primary objectives:
1. to provide incentives based on value delivered to the Company's
stockholders and customers;
2. to connect individual executive pay action with performance;
3. to maintain a system of rewards that is competitive with industry
standards; and
4. to attract, motivate, and retain executives of the highest quality.
The Company's compensation programs reflect the Compensation Committee's
commitment to the mission, values, and performance of the Company. Continual
review and refinement of the Company's compensation practices in response to the
changing business environment will serve to reinforce this commitment.
The most important performance yardstick in the Company's compensation
program is the Company's ability to deliver value to stockholders through
appreciation in share price. On an ongoing basis, the Compensation Committee
will test and refine the compensation program to ensure a high correlation
between level of compensation and return to stockholders. The Compensation
Committee measures the correlation between executive compensation and return to
stockholders as a function of Company operating income levels, the performance
of operating divisions, and individual performance. Certain goals are set,
reviewed, and approved by the Chairman and CEO, and weighted. Achievement of
goals triggers executive compensation. Goals include Company operating income
threshold levels, sales levels, business and product strategy development, cycle
time, total project cost, development and implementation of global support
strategies, net contributions margin, expense reduction, and days' sales
outstanding objectives. Achieving desirable stockholder returns over a sustained
period of time requires management's attention to a number of financial and
non-financial strategic elements which enables the Company to focus on the
current and long-term requirements of the customer. The Company's compensation
program, therefore, focuses executives on actions that directly impact
stockholder return in the short-term and long-term and serve the needs of the
Company's customers. The impact of executives' actions is measured in terms of
profit growth, earnings per share, asset management, and strategic product
development and positioning.
The Compensation Committee uses multiple sources of information to evaluate
and establish appropriate compensation practices. While using multiple sources,
the Compensation Committee relies on data from benchmark companies within the
computer/peripherals industry to assess the Company's relative performance and
compensation levels. Benchmark companies were selected by matching multiple
criteria including product lines, markets served, revenue size, revenue source,
and comparable operations. Consistent with the Compensation Committee's
objectives, the Compensation Committee will position its executive compensation
targets competitively with the benchmark companies. Annual executive
compensation will be below, at or above the competitive target depending on
individual and Company performance. Company and individual performance is
measured primarily as a function of Company operating income, with thresholds
set at the beginning of each fiscal year by the Board of Directors, through the
planning and budgeting process.
The Company's executive compensation program has three components--base
salary, annual incentives, and long-term incentives. Base salary and annual
incentives are primarily designed to reward current and past performance.
Long-term incentives are primarily designed to provide strong incentives for
long-term future performance.
The Compensation Committee strongly believes that incentive compensation
should only be awarded with commensurate performance. The Compensation Committee
has approved compensation plans which include high minimum levels of performance
to ensure that incentives are paid only when truly earned.
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DESCRIPTION OF COMPENSATION PROGRAMS The following briefly describes the
role of each element of compensation:
BASE SALARY Base salary will be at levels sufficient to attract and retain
qualified executives. To accomplish these goals, the Compensation Committee has
generally targeted base salaries within a competitive range of average base
salaries for similar positions in benchmark companies within the
computer/peripheral industry. Aggregate base salary increases are intended to
parallel increases in the pay levels of the computer/peripheral industry as a
whole. Individual executive salary increases will strongly reflect the
individual's level of performance as measured against the individual and Company
goals discussed above and, to a lesser extent, trends within the industry which
reflect salary and total compensation trends in a growth industry.
ANNUAL INCENTIVE The Company's executive annual incentive plan serves to
recognize and reward executives for taking actions that build the value of the
Company, generate competitive total returns to stockholders, and provide
value-added solutions to the Company's customers. The formula for annual
incentive awards recognizes operational and financial goals of significance to
the Company. Payments are made based on a combination of corporate and
individual performance. Achieving a minimal Company operating income goal is a
pre-condition for the awarding of any incentive awards. Individual annual
incentive awards are conditioned on achieving certain pre-set objectives.
LONG-TERM INCENTIVES The Company's Long-Term Performance Program serves to
reward executive performance in successfully executing the long-term business
strategy and building stockholder value. The program allows for the awarding of
incentive stock options, non-qualified stock options, and performance restricted
stock. During fiscal year 1996, only stock options were granted to the Company's
executive officers. Participation and target awards are determined by the
Compensation Committee by benchmarking the Company's performance against other
companies within the computer/peripheral industry and against companies
providing similar products and services. Awards are based on performance and
individual responsibility. Criteria include: performance expectations versus
results, significant and strategic contributions towards performance of the
Company, and unique core competencies essential to the achievement of the
Company's business mission. Awards may exceed targets if all criteria are met.
COMPENSATION ADMINISTRATION The Compensation Committee follows an annual
cycle to administer each of the three components of executive compensation. The
integrity of the Company's compensation program relies on an annual performance
evaluation process.
DISCUSSION OF CEO COMPENSATION Consistent with the Company's compensation
philosophy, the Compensation Committee managed Mr. Hammer's total compensation
during fiscal year 1996 based on overall performance of the Company and on
relative levels of compensation for CEOs within the benchmark companies in the
computer/peripheral industry. In particular, Mr. Hammer's compensation is based
on achievement of goals relating to earnings per share, profit and revenue
growth, strategic product development and positioning, and asset management.
Mr. Hammer is eligible for an annual incentive award of 50% of his base
salary, provided that the Company achieves certain revenue and operating income
growth thresholds. In fiscal year 1996, Mr. Hammer received no annual incentive
award.
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The Compensation Committee took the following fiscal year 1996 compensation
actions for Mr. Hammer:
1. effective September 1, 1995, the Compensation Committee approved a
base salary of $340,000 per year.
2. granted on May 29, 1996, an incentive stock option to purchase
35,100 shares of Common Stock at $16.50 per share. The option will vest
1/20th each quarter through May 29, 2001.
The primary purpose of this grant was to motivate Mr. Hammer to successfully
execute the Company's long-term business strategy and to build stockholder
value.
COMPENSATION COMMITTEE,
Keith B. Geeslin
Charles G. Moore III
Hatim A. Tyabji
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PERFORMANCE GRAPH
The following line graph compares the Company's cumulative total stockholder
return on its Common Stock since February 2, 1993, the date that the Common
Stock began trading, with the cumulative total return of Standard & Poor's 500
Composite Stock Price Index and the Standard & Poor's Technology Sector Index.
These comparisons assume the investment of $100 on January 31, 1993, in each
index and on February 1, 1993, in the Company's Common Stock and reinvestment of
dividends.
COMPARISON OF CUMULATIVE TOTAL RETURN
COMPARISON OF 43 MONTH CUMULATIVE TOTAL RETURN*
"AMONG NORAND CORPORATION," THE S & P 500 INDEX
AND THE S & P TECHNOLOGY SECTOR INDEX
NORAND CORPORATION S & P 500 S & P TECHNOLOGY SECTOR
02/01/1993 100 100 100
Feb-93 116 101 103
May-93 126 104 108
Aug-93 152 108 109
Nov-93 160 106 114
Feb-94 202 110 126
May-94 237 108 122
Aug-94 215 113 131
Nov-94 216 108 133
Feb-95 253 118 146
May-95 213 130 175
Aug-95 248 138 199
Nov-95 95 149 203
Feb-96 116 159 214
May-96 132 167 232
Aug-96 106 164 222
* $100 INVESTED ON 3/01/96 IN STOCK OR ON
1/01/83 IN INDEX - INCLUDING INVESTMENT OF
DIVIDEND. FISCAL YEAR ENDING AUGUST 31.
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