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:
(X) Preliminary Proxy Statement ( ) Confidential, for Use of the
Commission Only (as permitted
by Rule 14a-6(e)(2))
( ) Definitive Proxy Statement
( ) Definitive Additional Materials
( ) Soliciting Material Pursuant to Section 240.14a-11(c) or Section 240.14a-12
CONCEPTS DIRECT
(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>
CONCEPTS DIRECT, INC.
2950 Colorful Avenue
Longmont, Colorado 80504
-------------------
Notice of Annual Meeting of Stockholders
To Be Held on April 30, 1999
-------------------
TO THE STOCKHOLDERS OF CONCEPTS DIRECT, INC.:
The Annual Meeting of Stockholders of Concepts Direct, Inc. (the
"Company") will be held at the Company offices at 2950 Colorful Avenue,
Longmont, Colorado 80504, on April 30, 1999, at 9:00 A.M., local time, for the
following purposes:
1. To elect seven directors for the ensuing year;
2. To consider and vote upon a proposal to amend the Certificate of
Incorporation and increase the authorized Common Stock from
6,000,000 shares to 7,500,000 shares;
3. To ratify the appointment of Ernst & Young LLP as the independent
public accountants for the Company for the fiscal year ending
December 31, 1999; and
4. To transact such other business as may properly come before the
meeting or any adjournments thereof.
The close of business on March 5, 1999, has been fixed as the record date
for the Annual Meeting. All stockholders of record as of that date are entitled
to notice of and to vote at the meeting and any adjournments thereof.
A copy of the Company's Annual Report to Stockholders for the fiscal year
ended December 31, 1998, is included with this Proxy Statement.
By Order of the Board of
Directors
H. Franklin Marcus, Jr.
Secretary
March [31], 1999
PLEASE SIGN, DATE AND RETURN THE ENCLOSED PROXY. YOU MAY WITHDRAW THIS PROXY
AT ANY TIME BEFORE YOUR SHARES ARE ACTUALLY VOTED AND MAY VOTE YOUR OWN
SHARES IF YOU ATTEND THE MEETING IN PERSON.
<PAGE>
CONCEPTS DIRECT, INC.
2950 Colorful Avenue
Longmont, Colorado 80504
PROXY STATEMENT
TO BE MAILED ON OR ABOUT MARCH [31], 1999
FOR
ANNUAL MEETING OF STOCKHOLDERS
TO BE HELD APRIL 30, 1999
The enclosed proxy is solicited by and on behalf of the Board of Directors
of Concepts Direct, Inc. (the "Company"), for use at the Annual Meeting of
Stockholders of the Company to be held April 30, 1999, or any adjournments
thereof, for the purposes set forth in this Proxy Statement and the attached
Notice of Annual Meeting of Stockholders. If sufficient proxies are not returned
in response to this solicitation, supplementary solicitations may be made by
mail or by telephone, telegraph, electronic means or personal interview by
directors, officers, and regular employees of the Company, none of whom will
receive additional compensation for these services. Costs of solicitation of
proxies will be borne by the Company, which will reimburse banks, brokerage
firms, and other custodians, nominees, and fiduciaries for reasonable
out-of-pocket expenses incurred by them in forwarding proxy materials to the
beneficial owners of stock held by them. The Company has also retained Corporate
Investor Communications, Inc., of Carlstadt, New Jersey, to assist in the
solicitation of proxies of stockholders whose shares are held in street name by
brokers, banks and other institutions at an approximate cost of $1,000 plus
out-of-pocket expenses. Such solicitation will be made by mail or by telephone,
telegraph, electronic means or personal interview. These costs will also be
borne by the Company.
The shares represented by all properly executed proxies received by the
Secretary of the Company and not revoked will be voted for the election of the
directors nominated, for the amendment of the Certificate of Incorporation and
for the ratification of Ernst & Young LLP as independent public accountants for
the Company for the fiscal year ending December 31, 1999, unless the stockholder
directs otherwise in the proxy, in which event such shares will be voted in
accordance with such directions. Any proxy may be revoked at any time before the
shares to which it relates are voted either by giving written notice delivered
to the Secretary of the Company (which may be in the form of a substitute proxy)
or by attending the meeting and voting in person.
Page 1 of 16
<PAGE>
The Board of Directors has fixed the close of business on March 5, 1999, as
the record date for the Annual Meeting. In accordance with applicable law, all
the stockholders of record on the record date are entitled to receive notice of,
and to vote at, the Annual Meeting and any adjournments thereof. On the record
date there were issued and outstanding 4,975,286 shares of the Company's common
stock, $.10 par value (the "Common Stock"). All of such shares were of one
class, with equal voting rights, and each holder thereof is entitled to one vote
on all matters voted on at the Annual Meeting for each share registered in such
holder's name. Presence in person or by proxy of holders of 2,487,644 shares of
Common Stock will constitute a quorum at the Annual Meeting. Abstentions, votes
withheld in the election of directors and broker non-votes are counted as
present for purposes of determining a quorum. Assuming a quorum is present, the
directors shall be elected by a plurality of votes cast by the holders of shares
represented and entitled to vote at the Annual Meeting. With regard to the
election of directors, stockholders may vote in favor of all nominees, withhold
their votes as to all nominees or withhold their votes as to specific nominees.
Votes withheld and broker non-votes will have no effect on the outcome of the
election of directors. The affirmative vote of the holders of a majority of the
outstanding shares of Common Stock will be required to approve the proposal to
amend the Certificate of Incorporation to increase the number of shares of
Common Stock that the Company is authorized to issue. The affirmative vote by
the holders of a majority of the shares of Common Stock voting at the Annual
Meeting will be required to act on all other matters to come before the Annual
Meeting, including the ratification of the selection of Ernst & Young LLP as
independent auditors for the current fiscal year. With respect to all proposals
presented to stockholders other than the election of directors, abstentions are
counted as votes against in tabulations of the votes cast on proposals, whereas
broker non-votes are not counted for purposes of determining whether a proposal
has been approved.
VOTING SECURITIES AND PRINCIPAL STOCKHOLDERS
The table below sets forth information regarding beneficial ownership as of
March 5, 1999 of Common Stock by the Company's directors individually, the
executive officers named in the Summary Compensation Table individually, the
Company's directors and executive officers as a group, and persons known to the
Company to be beneficial owners of more than 5% of the Common Stock.
<TABLE>
<CAPTION>
Name and Address of Amount and Nature of Percent
Beneficial Owner Beneficial of Class
Ownership(1)
- ------------------------------------------------------------------------------------
<S> <C> <C>
Executive Officers and Directors
Phillip A. Wiland 1,317,500(2) 26.04
2950 Colorful Avenue
Longmont, CO 80504
Virginia B. Bayless 5,500 *
835 S. Garfield
Denver, CO 80209
Michael T. Buoncristiano 60,396 1.19
409 Washington Street, Suite 398
Hoboken, NJ 07030
Robert L. Burrus, Jr. 12,666 *
One James Center
Richmond, VA 23219
H. Franklin Marcus, Jr. 87,196 1.72
2950 Colorful Avenue
Longmont, CO 80504
Phillip D. White 90,166(3) 1.77
200 Camden Place
Boulder, CO 80302
J. Michael Wolfe 196,000 3.87
2950 Colorful Avenue
Longmont, CO 80504
Stephen R. Polk 112,666(4) 2.22
26955 Northwestern Highway
Southfield, MI 48034
All Directors and Executive Officers 1,882,090(5) 37.20
as a Group (8 Persons)
5% Owners
Laifer Capital Management, Inc. 1,026,800(6) 20.29
114 West 47th Street
New York, NY 10036
Page 2 of 16
<PAGE>
Safeco Asset Management Company 914,700(7) 18.08
601 Union Street
Seattle, WA 98101
- ----------------
* Does not exceed 1% of the outstanding shares of the Company
</TABLE>
(1) Except as described in footnotes (2) and (3) below, each individual has
sole voting power and sole investment power with respect to the Common Stock set
forth opposite his name. Includes, as to Mr. White, 2,666 shares, as to Messrs.
Buoncristiano and Burrus, 5,332 shares each, as to Mr. Marcus, 12,000 shares, as
to Mr. Wiland, 10,000 shares and as to Mr. Wolfe, 24,000 shares of Common Stock,
which could be acquired through exercise of stock options within 60 days.
(2) Includes 1,300,000 shares owned in joint tenancy by Mr. Wiland and his
wife, who share voting and investment power as to the shares, 12,900 shares held
by Mr. Wiland as custodian for his minor children under the Uniform Gifts to
Minors Act and for which Mr. Wiland has sole voting and investment power and
4,600 shares owned by Mr. Wiland's daughter and for which Mr. Wiland shares
voting and investment power.
Page 3 of 16
<PAGE>
(3) Includes 78,166 shares owned directly by Mr. White and 12,000 shares
held in a Family Limited Partnership for which Mr. White has shared voting and
investment power.
(4) Stephen R. Polk, a Director of the Company, is Chairman of the Board
and Chief Executive Officer of R.L. Polk & Co., and may by virtue of these
positions be deemed to share voting and investment power over 100,000 shares
owned by R.L. Polk & Co. Mr. Polk disclaims beneficial ownership and any such
shared control of shares owned by R.L. Polk & Co.
(5) Includes 59,330 shares of Common Stock which could be acquired through
exercise of stock options within 60 days. Beneficial ownership of 100,000 shares
is disclaimed.
(6) Ownership information is based on the Schedule 13D filed on January 8,
1999. According to this Schedule 13D, Laifer Capital Management, Inc. holds
600,500 shares with sole voting and dispositive power and 426,300 shares with
shared dispositive power.
(7) Ownership information is based on the Schedule 13G filed on February
11, 1999. According to the Schedule 13G, Safeco Asset Management Company is an
investment advisor and the reported shares are owned beneficially by registered
investment companies for which Safeco Asset Management serves as investment
advisor, as follows: Safeco Common Stock Trust, 479,500 shares and Safeco
Resources Series Trust, 435,200 shares. Safeco Asset Management Company shares
voting and dispositive power.
Page 4 of 16
<PAGE>
PROPOSAL NO. 1
ELECTION OF DIRECTORS
Action will be taken at the Annual Meeting to elect a Board of Directors of
seven members. Unless otherwise instructed on the proxy, the shares represented
by proxies will be voted for the election as directors of all of the nominees
named below. Each of the nominees has consented to being named as a nominee and
has agreed that, if elected, he or she will serve on the Board of Directors for
a term which will run until the next annual meeting of stockholders and until
his or her successor has been elected. If any nominee becomes unavailable for
any reason the shares represented by proxies may be voted for a substitute
nominee designated by the Board of Directors.
The following table sets forth certain information as to the nominees and
certain executive officers.
<TABLE>
<CAPTION>
Name, Age, Principal Occupation Director
and other information Since
<S> <C>
PHILLIP A. WILAND (52) 1992
Chairman and Chief Executive Officer of the
Company since 1992. President and Chief
Executive Officer of Wiland Services, Inc.
from 1971 to 1992.
VIRGINIA B. BAYLESS (43) N/A
President of Bayless & Associates, Inc., a
strategic financial planning
services company, since 1993. Vice
President and stockholder, The Wallach
Company, an investment banking
company specializing in mergers and
acquisitions, from 1986 to 1992.
MICHAEL T. BUONCRISTIANO (57) 1992
President, AVANTI! Marketing Solutions, Inc.
since 1990. Executive Vice President of Wiland
Services, Inc. from 1986 to 1989.
ROBERT L. BURRUS, JR. (64) 1992
Chairman, Law Firm of McGuire, Woods, Battle &
Boothe LLP, Richmond, Virginia, since 1990.
Director, CSX Corporation, Heilig-Meyers
Company, O'Sullivan Corporation, S&K Famous
Brands, Inc. and Smithfield Foods, Inc.
Page 5 of 16
<PAGE>
Name, Age, Principal Occupation Director
and other information Since
--------------------- -----
STEPHEN R. POLK (43) 1992
Chairman of the Board and Chief Executive Officer, R.L.
Polk & Co., a direct marketing company, since 1994.
Previous employment with R.L. Polk & Co. includes
position as President, 1990 to 1994.
PHILLIP D. WHITE (52) 1992
Associate Professor and past Chairman of
Marketing, College of Business and Administration,
University of Colorado at Boulder since 1976 (on
leave). Lecturer and writer on marketing. Ph.D.
in Marketing, University of Texas, 1976. President,
Phillip D. White & Associates, Inc. since 1996.
J. MICHAEL WOLFE (40) 1998
President and Chief Operating Officer of the
Company since 1992. Vice President of Wiland
Services from 1987 to 1992.
MEETINGS AND COMMITTEES OF THE BOARD
The Board of Directors held seven meetings during 1998. Each incumbent
director attended 75% or more of the aggregate of (1) such meetings of the Board
of Directors and (2) the total number of meetings held by all committees of the
Board of Directors on which he or she served.
Committees of the Board
The standing committees of the Board of Directors include an Audit
Committee and a Compensation and Nominations Committee.
Messrs. Polk, White and Buoncristiano and Ms. Bayless are the members of
the Audit Committee, which met four times in 1998. The principal function of the
Audit Committee is to oversee the performance of the Company's independent
accountants. In this capacity, the Audit Committee recommends the firm to be
engaged by the Company for independent auditing and reviews the overall scope
and results of the annual audit. It also reviews, among other things, the
functions and performance of the Company's internal accounting controls, the
performance of nonaudit services, and changes in accounting policies.
Page 6 of 16
<PAGE>
Messrs. Burrus, Polk, White and Buoncristiano are the members of the
Compensation and Nominations Committee, which met two times in 1998. The
principal functions of the Compensation and Nominations Committee are to review
and set the direct and indirect compensation of the directors and officers of
the Company, to administer the Company's incentive compensation and stock option
plans and to nominate candidates to the Board of Directors. The Committee also
considers nominations for director made by stockholders of the Company. The
Committee reviews the salaries and bonuses for all officers and certain other
executives, recommends special benefits and perquisites for management, consults
with management regarding employee benefits and general personnel policies and
recommends persons to be considered for election to the Board of Directors,
membership on committees of the Board of Directors, and positions as executive
officers of the Company. Recommendations by stockholders of persons to serve on
the Board of Directors should be submitted to the Compensation and Nominations
Committee in care of the Secretary of the Company. The Stockholder recommending
a person to serve on the Board of Directors should submit the following
information by February 1, 2000 in writing to the Office of Secretary, Concepts
Direct, Inc., 2950 Colorful Avenue, Longmont, Colorado 80504: (i) the name and
address of the stockholder who is recommending the proposed nominee; (ii) the
name, address, and principal occupation of each proposed nominee; (iii) a
representation that the stockholder is entitled to vote at such meeting and
intends to appear in person or by proxy at the meeting; and (iv) the written
consent of each proposed nominee to serve as a director of the Company if so
elected.
Compensation of Directors
The Company pays to each director who is not a Company employee an annual
retainer of $4,000 and $500 for each meeting of the Board of Directors or any
committee meeting of the Board of Directors attended. All directors are
reimbursed for travel expenses incurred as a result of service on the Board of
Directors.
Directors who are not employees of the Company also receive awards under
the 1998 Non-Employee Directors Stock Option Plan (the "1998 Plan") which was
approved at the April 24, 1998 Annual Stockholders Meeting. They previously
received awards under the 1992 Non-Employee Directors Stock Option Plan (the
"1992 Plan") which expired on May 1, 1998. Stock option grants under the 1992
Plan were automatic. Each eligible director of the Company on the effective date
of the 1992 Plan, December 18, 1992, automatically received an option to
purchase 6,000 shares of Common Stock. Each eligible director newly elected by
the Company's stockholders on and after the effective date of the 1992 Plan
automatically received options for 6,000 shares on the date the director was
elected by the stockholders. In addition, on the second anniversary of the date
on which an eligible director received his or her initial grant of an option,
and biannually thereafter, each then eligible director automatically received an
option to acquire an additional 4,000 shares of Common Stock. Option grants
under the 1992 Plan are exercisable in annual increments of 33.3% commencing one
year following the date of grant. Under the 1998 Plan, the Board may make grants
of options to directors at the times and in the amounts that it deems
appropriate. The maximum number of shares of Common Stock reserved for the 1998
Plan and the 1992 Plan are 52,000 and 80,000 respectively. The exercise price of
the options granted under both Plans is the fair market value of the Common
Stock on the date of the option grant.
During 1998, Ms. Bayless was issued 6,000 shares under the 1992 Plan and
Messrs. Burrus, White, Buoncristiano and Polk were issued 4,000 shares under the
1998 Plan.
Page 7 of 16
<PAGE>
EXECUTIVE COMPENSATION
Summary Compensation Table
The following table sets forth, for the years ended December 31, 1996,
December 31, 1997, and December 31, 1998, certain compensation awarded to,
earned by, or paid to the Company's Chief Executive Officer and to the Company's
other executive officers whose annual compensation exceeded $100,000 for the
year ended December 31, 1998.
Long Term
Compen-
Annual Compensation sation
Awards
- ---------------------------------------------------------------------
Securities
Other Underlying All Other
Annual Options Compen-
Name and Principal Salary Bonus Compen- /SARs sation
Position Year ($) ($) sation (#) ($)(1)
- ----------------------- ------- -------- ------- --------- ----------- ---------
Phillip A. Wiland, 1998 248,603 -0- (2) 0 4,130
Chairman and Chief 1997 198,723 60,840 0 5,011
Executive Officer 1996 167,390 57,025 0 3,939
J. Michael Wolfe, 1998 209,809 -0- (2) 0 4,494
President and Chief 1997 178,084 54,383 0 2,661
Operating Officer 1996 150,690 51,054 0 2,709
H. Franklin Marcus, 1998 102,832 -0- (2) 0 2,343
Jr. 1997 95,345 30,034 0 3,033
Chief Financial 1996 86,010 29,316 0 2,173
Officer and
Secretary, Treasurer
(1) These amounts were paid by the Company as matching contributions under
the Company's Retirement Savings Plan.
(2) None of the named executive officers received perquisites in excess of
the lesser of $50,000 or 10% of combined salary and bonus for fiscal 1996, 1997
or 1998.
Page 8 of 16
<PAGE>
Options/SAR Exercises and Year-End Value Table
The following table sets forth information concerning each exercise of
stock options and SARs during the fiscal year ended December 31, 1998 for each
of the executive officers named in the Summary Compensation Table and the fiscal
year-end value of unexercised options and SARs.
</TABLE>
<TABLE>
<CAPTION>
Aggregated Option/SAR Exercises in Last Fiscal Year, and FY-End Option/SAR Values
- ---------------------------------------------------------------------------------------------
Number of Securities Value of
Underlying Unexercised Unexercised In-the-Money
Options/SARs at Options/SARs at
12/31/98(#) 12/31/98(2) ($)
- ---------------------------------------------------------------------------------------------
Shares Value
Acquired on Realized(1)
Name Exercise(#) ($) Exercisable Unexercisable Exercisable Unexercisable
- ---------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C>
Phillip A. Wiland 0 0 10,000 40,000 73,400 125,820
J. Michael Wolfe 0 0 24,000 46,000 183,565 173,055
H. Franklin Marcus, Jr. 0 0 12,000 12,000 91,783 86,528
- ---------------------------------------------------------------------------------------------
</TABLE>
(1) The value realized calculation is based on the fair market value of the
underlying stock on the date of exercise, minus the exercise price.
(2) The value calculation is based on the fair market value of the
underlying stock at year end, minus the exercise price.
Compensation Committee Interlocks and Insider Participation
Mr. Burrus, a member of the Compensation and Nominations Committee, is
Chairman and partner of the law firm of McGuire, Woods, Battle & Boothe LLP,
which was retained as general counsel by the Company during the fiscal year
ended December 31, 1998, and has been so retained during the current fiscal
year.
SECTION 16(a) COMPLIANCE
Section 16(a) of the Securities Exchange Act requires the Company's
officers and directors, and persons who own more than 10 percent of a registered
class of the Company's equity securities, to file reports of ownership and
changes in ownership on Forms 3, 4 and 5 with the Securities and Exchange
Commission. Officers, directors and greater than 10 percent stockholders are
required by regulation to furnish the Company with copies of all Forms 3, 4 and
5 which they file.
Page 9 of 16
<PAGE>
Based solely on the Company's review of the copies of such forms it has
received and written representations from certain reporting persons that they
were not required to file Form 5 for specified fiscal years, the Company
believes that all of its officers, directors and greater than 10 percent
beneficial owners complied with all filing requirements applicable to them with
respect to transactions during fiscal 1998, except that Mr. White filed late
reports with respect to purchase and sale transactions which occurred in
connection with the Company's Common Stock offering during such fiscal year.
REPORT OF THE COMPENSATION AND NOMINATIONS COMMITTEE
General. During the calendar year ended December 31, 1998, the
Compensation and Nominations Committee of the Board of Directors (the
"Committee ") was comprised of four non-employee directors, Messrs. Michael
T. Buoncristiano, Robert L. Burrus, Jr., Stephen R. Polk, and Phillip D.
White. The Committee is responsible for setting compensation levels for the
Company's executive officers and for overseeing the administration of the
Concepts Direct, Inc. 1998 Incentive Compensation Plan (the "Incentive
Compensation Plan ") and the Concepts Direct, Inc. 1992 Employee Stock Option
Plan (the "Stock Option Plan ").
All decisions by the Committee are reviewed by the entire Board of
Directors. It has been the practice of the Committee to meet with the Company's
Chief Executive Officer ("CEO") in reviewing the compensation of senior
officers.
The compensation of the Company's senior executives is generally made up of
three components. These components are base salary, performance bonuses under
the Incentive Compensation Plan, and stock options granted under the Stock
Option Plan. At the Committee's discretion, an executive's compensation may also
include an award of stock appreciation rights under the Stock Option Plan. No
stock appreciation rights were awarded by the Committee during 1998.
An executive officer's base salary is a function of the executive officer?s
responsibilities. The Committee believes that the compensation of executive
officers should be closely aligned with the performance of the Company on both a
short-term and long-term basis.
Prior to the beginning of 1998, the Committee established the formula to be
used to determine performance bonuses during 1998. The Committee determined the
amount of the performance bonus awarded to each executive officer who is
eligible for such an award as a percentage of such executive officer's base
salary. Quarterly and annual bonuses are paid under the Incentive Compensation
Plan based on the performance of the Company using a variety of measures
including net profit, earnings per share, revenues, and market capitalization.
The Committee's decisions were incorporated into the Incentive Compensation Plan
which was approved by the Board. Each calendar quarter, executive officers are
eligible to receive performance bonuses under the Incentive Compensation Plan.
The Committee believes that an executive officer should have an opportunity to
receive a performance bonus based on his or her performance during the
applicable quarter.
Page 10 of 16
<PAGE>
The long-term performance based compensation of executive officers takes
the form of stock option awards under the Stock Option Plan. The Committee
believes that compensation in the form of equity in the Company ensures that the
executive officers will have a continuing stake in the long-term success of the
Company and help further the alignment of their interests with those of the
stockholders. All options granted under the Stock Option Plan have an exercise
price equal to the market price of the Company's Common Stock on the date of the
grant. Thus, the stock options granted to an executive officer will have value
only if the Company's stock price increases.
In granting options under the Stock Option Plan, the Committee takes into
account each executive officer's responsibilities, relative position in the
Company and past grants. The Committee does not follow an established formula in
awarding stock options. Factors considered in making option awards to the
Company's officers include past grants, the importance of retaining the officer,
and the potential of the officer to contribute to the future success of the
Company.
The compensation currently paid by the Company is not subject to Internal
Revenue Code Section 162(m) which limits the income tax deductibility of certain
forms of compensation paid to its named executive officers in excess of $1
million per year. Section 162(m) allows full deductibility of certain types of
performance-based compensation. If these limitations should become applicable to
the Company in the future, the Committee will consider modifications to the
Company's compensation practices, to the extent practicable, to provide the
maximum deductibility for compensation payments.
Compensation for Mr. Phillip A. Wiland, Chairman and Chief Executive
Officer. The base salary for Mr. Wiland during the 1998 calendar year was
$250,000. Mr. Wiland's salary was recommended to the Board of Directors by
the Committee following consultation with Mr. Wiland. The Committee reviewed
CEO performance in relation to the Company's goals in formulating its salary
recommendation for Mr. Wiland. Mr. Wiland's salary for 1998 was recommended
and approved by the Board of Directors. Mr. Wiland does not have an
Employment Agreement with the Company.
It is the Committee's view that Mr. Wiland's base salary of $250,000 and
bonus opportunity are in line with the compensation paid to the CEOs of other
corporations, including direct marketing businesses of similar size. No 1998
bonuses were paid to Mr. Wiland under the Incentive Compensation Plan. During
1998, options were granted for 22,000 shares of Common Stock for Mr.
Wiland.
Compensation and Nominations Committee
Phillip D. White, Chairman
Michael T. Buoncristiano
Robert L. Burrus, Jr.
Stephen R. Polk
Page 11 of 16
<PAGE>
PERFORMANCE GRAPH
The following graph represents the cumulative total return on the Company's
Common Stock, with the cumulative total return of the companies included in the
Standard & Poor's Specialty Retail Index and the Standard & Poor's 500 Index for
the last five fiscal years. Cumulative total stockholder return is defined as
share price appreciation assuming reinvestment of dividends. The dollar amounts
shown on the following graph assume that $100 was invested on December 31, 1993
in Company Common Stock, stocks constituting the Standard & Poor's Specialty
Retail Index and stocks constituting the Standard and Poor's 500 Index with all
dividends being reinvested.
Comparison of Five-Year Total Return
Among Concepts Direct, Inc., S&P Specialty Retail Index and
S&P 500 Index
[Insert Graph]
Value of $100 invested on December 31, 1993
Fiscal Year 12/31/93 12/31/94 12/31/95 12/31/96 12/31/97 12/31/98
Concepts Direct, Inc. $100 $615 $1,631 $2,523 $5,169 $2,062
S&P Specialty 100 76 58 81 81 63
Retail-500
S&P 500 Index 100 101 139 171 229 294
PROPOSAL NO. 2
AMENDMENT TO CERTIFICATE OF INCORPORATION RELATING
TO INCREASED AUTHORIZATION OF COMMON STOCK
The Board of Directors has unanimously approved, and recommends to the
stockholders for adoption, an amendment to the Company's Certificate of
Incorporation, as set forth in Exhibit A hereto, that would increase the number
of shares of Common Stock authorized for issuance from 6,000,000 to 7,500,000
shares.
The Board of Directors believes that an increase in the number of shares of
authorized Common Stock as contemplated by this Proposal would benefit the
Company and its stockholders by giving the Company the needed flexibility in its
corporate planning and in responding to developments in the Company's business,
including possible financing and acquisition transactions, stock splits or
dividends and other general corporate purposes.
Page 12 of 16
<PAGE>
The increase in the number of shares authorized for issuance will not have
any immediate effect on the rights of existing stockholders. However, the Board
of Directors will have the authority to issue the authorized shares without
requiring future stockholders' approval of such issuances, except as may be
required by applicable law or stock exchange regulations. To the extent that
additional authorized shares are issued in the future, they will decrease the
existing stockholders' percentage equity ownership and, depending upon the price
at which they are issued, could be dilutive to the existing stockholders. The
holders of Common Stock have no preemptive rights.
The Board of Directors could use the additional shares of Common Stock to
discourage an attempt to change control of the Company. However, the Board of
Directors has no present intention of issuing any shares of Common Stock for
such purposes and this Proposal is not being recommended in response to any
specific effort of which the Company is aware to obtain control of the Company.
Approval of Proposal No. 2 requires the affirmative vote of the holders
of a majority of the outstanding shares of Common Stock.
THE BOARD OF DIRECTORS BELIEVES THAT THE ADOPTION OF THE AMENDMENT TO THE
CERTIFICATE OF INCORPORATION TO INCREASE THE SHARES OF COMMON STOCK AUTHORIZED
FOR ISSUANCE TO 7,500,000 IS IN THE BEST INTEREST OF ALL STOCKHOLDERS AND,
ACCORDINGLY, RECOMMENDS A VOTE "FOR" PROPOSAL NO 2.
PROPOSAL NO. 3
SELECTION OF PRINCIPAL ACCOUNTANT
Ernst & Young LLP served during the Company's year ended December 31, 1998,
as its independent certified public accountants and has been selected by the
Board of Directors to serve as the Company's independent certified public
accountants for the current fiscal year, subject to ratification by the
stockholders of the Company. The Board of Directors expects that representatives
of Ernst & Young LLP will be present at the Annual Meeting of Stockholders, with
the opportunity to make a statement if they so desire, and will be available to
respond to appropriate questions.
THE BOARD OF DIRECTORS RECOMMENDS A VOTE "FOR" PROPOSAL NO. 3.
OTHER MATTERS
The Board of Directors knows of no other matters to be brought before the
meeting. If any other matters are properly presented, however, or if any
question arises as to whether any matter has been properly presented and is a
proper subject for stockholder action, the persons named as proxies in the
accompanying proxy intend to vote the shares represented by such proxy in
accordance with their best judgment.
Page 13 of 16
<PAGE>
STOCKHOLDER PROPOSALS
The stockholders may present proposals for consideration at the 2000 Annual
Meeting of Stockholders to the Company for inclusion in its proxy materials for
such meeting. Any such proposal should be submitted in writing in accordance
with Securities and Exchange Commission rules to Concepts Direct, Inc., 2950
Colorful Avenue, Longmont, Colorado 80504, Attention: Corporate Secretary.
Stockholder proposals must be received by December [2], 1999, to be included in
the proxy materials for the 2000 Annual Meeting.
For proposals stockholders properly bring before the 2000 Annual Meeting of
Stockholders, the Company will have unrestricted use of discretionary voting
authority if it does not receive prior written notice of an intent to submit any
such proposal at the meeting. For the Company's 2000 Annual Meeting of
Stockholders, this notice must be received by February [15], 2000.
FURTHER INFORMATION
The Company will provide without charge to each person from whom a proxy is
solicited by the Board of Directors, upon the written request of any such
person, a copy of the Company's annual report on Form 10-K, including the
financial statements and schedules thereto, required to be filed with the
Securities and Exchange Commission pursuant to the Securities Exchange Act of
1934 for the Company's fiscal year ended December 31, 1998. Such written request
should be sent to Concepts Direct, Inc., 2950 Colorful Avenue, Longmont,
Colorado 80504, Attention: Corporate Secretary.
By Order of the Board of Directors
H. FRANKLIN MARCUS, JR.
Secretary
March [31], 1999
Page 14 of 16
<PAGE>
Exhibit A
PROPOSAL NO. 2
The Fourth Section of the Certificate of Incorporation is proposed to be
restated in its entirety as follows:
"Fourth: That the total number of shares which the corporation shall
have authority to issue is 7,500,000 shares of Common Stock, and the par
value of each share is $.10 per share."
Page 15 of 16
<PAGE>
CONCEPTS DIRECT, INC.
PROXY SOLICITED ON BEHALF OF THE BOARD OF DIRECTORS
FOR ANNUAL MEETING OF STOCKHOLDERS TO BE HELD APRIL 30, 1999
The undersigned having received the Annual Report to the Shareholders and
the accompanying Notice of Annual Meeting of Shareholders and Proxy Statement
dated March [31], 1999, hereby appoints H. Franklin Marcus, Jr., and Robert L.
Burrus, Jr. (each with power to act alone and with power of substitution) as
proxies and hereby authorizes them to represent and vote, as directed below, all
the shares of common stock of Concepts Direct, Inc. (the "Company"), held of
record by the undersigned on March 5, 1999, at the annual meeting of
shareholders to be held on April 30, 1999, and any adjournments thereof.
1. Election of Directors
[ ] FOR all nominees listed below [ ] WITHHOLD AUTHORITY
to vote for all nominees
listed below
Virginia B. Bayless, Robert L. Burrus, Jr., Michael T. Buoncristiano,
Stephen R. Polk, Phillip D. White, Phillip A. Wiland, J. Michael Wolfe
(INSTRUCTION: To withhold authority to vote for any individual nominee,
write the nominee's name on the line provided below.)
- ------------------------------------------------------------------------------
2. Adoption of the amendment to the Certificate of Incorporation to increase
the shares of Common Stock authorized for issuance from 6,000,000 to
7,500,000.
[ ] FOR [ ] AGAINST [ ] ABSTAIN
3. Ratification of the selection of Ernst & Young LLP as independent
accountants for the year 1999.
[ ] FOR [ ] AGAINST [ ] ABSTAIN
4. IN THEIR DISCRETION the proxies are authorized to vote such other business
as may properly come before the meeting and any adjournments thereof.
This proxy, when properly executed, will be voted as directed. Where no
direction is given, this proxy will be voted FOR all nominees as director listed
above and FOR Proposals 2 and 3.
Any proxy or proxies previously given for the meeting are revoked.
Please sign your names(s) exactly as
shown below. If signer is a
corporation, please sign the full
corporate name by duly authorized
officer. If an attorney, guardian,
administrator, executor, or trustee,
please give full title as such. If a
partnership, please sign in
partnership name by authorized person.
Dated:_________________________, 1999
------------------------------------
------------------------------------
Please complete, date, sign, and
return this proxy promptly in the
enclosed envelope.
