<PAGE>
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
SCHEDULE 14A INFORMATION
Proxy Statement Pursuant to Section 14(a)
of the Securities Exchange Act of 1934
------------------------
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 Section240.14a-11(c) or Section240.14a-12
------------------------
NFO WORLDWIDE, INC.
(Name of Registrant as Specified in its Charter)
NFO WORLDWIDE, INC.
(Name of Person(s) Filing Proxy Statement)
------------------------
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:(1)
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 No.:
3) Filing Party:
4) Date Filed:
- ------------------------
(1) Set forth the amount on which the filing fee is calculated and state how it
was determined.
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
<PAGE>
NFO WORLDWIDE, INC.
2 Pickwick Plaza
Greenwich, Connecticut 06830
----------------------------------------------------------------
NOTICE OF
ANNUAL MEETING
AND
PROXY STATEMENT
-----------------------------
ANNUAL MEETING OF STOCKHOLDERS
May 13, 1998
<PAGE>
NFO WORLDWIDE, INC.
2 Pickwick Plaza
Greenwich, Connecticut 06830
------------------------
Notice of 1998 Annual Meeting of Stockholders
------------------------
To the Stockholders of NFO Worldwide, Inc.:
NOTICE IS HEREBY GIVEN that the 1998 Annual Meeting of Stockholders of NFO
Worldwide, Inc. will be held at Hyatt Regency Greenwich, 1800 East Putnam
Avenue, Old Greenwich, Connecticut, on Wednesday, the 13th day of May, 1998 at
10:00 a.m. (Eastern Daylight Time), for the following purposes:
(1) To elect five directors to serve for a term of one year expiring at
the annual meeting to be held in 1999;
(2) To consider and act upon a proposal to amend the NFO Worldwide, Inc.
Stock Option Plan to increase the number of shares of Common Stock reserved
for issuance under the Stock Option Plan to 4,677,250 shares;
(3) To consider and act upon a proposal to ratify the appointment of
Arthur Andersen LLP as independent accountants of the Company for calendar
year 1998; and
(4) To consider and act upon any other matters which may properly come
before the meeting or any adjournment thereof.
Only stockholders of record at the close of business on March 20, 1998 will
be entitled to notice of, and to vote at, the meeting.
By order of the Board of Directors,
Patrick G. Healy
Secretary
Greenwich, Connecticut
April 13, 1998
A PROXY FOR THE MEETING AND A PROXY STATEMENT ARE ENCLOSED HEREWITH. YOU ARE
REQUESTED TO FILL IN AND SIGN THE ENCLOSED FORM OF PROXY, WHICH IS SOLICITED BY
THE COMPANY'S BOARD OF DIRECTORS, AND TO MAIL IT PROMPTLY. STOCKHOLDERS WHO
EXECUTE PROXIES RETAIN NOTICE OF 1998 ANNUAL MEETING OF STOCKHOLDERS THE RIGHT
TO REVOKE THEM AT ANY TIME BEFORE THEY ARE VOTED.
<PAGE>
NFO WORLDWIDE, INC.
PROXY STATEMENT
The 1998 Annual Meeting of Stockholders of NFO Worldwide, Inc. (formerly
known as NFO Research, Inc.) (the "Company") will be held on May 13, 1998 (the
"Annual Meeting"), for the purposes set forth in the accompanying Notice of 1998
Annual Meeting of Stockholders. This statement and the accompanying proxy, which
are first being sent to stockholders on or about April 13, 1998, are furnished
in connection with the solicitation by the Board of Directors of proxies to be
used at such meeting and at any adjournment thereof. If a proxy in the
accompanying form is duly executed and returned, the shares represented thereby
will be voted in accordance with the recommendations of the Board of Directors.
The proxy nevertheless may be revoked prior to its exercise by delivering
written notice of revocation to the Secretary of the Company, by executing a
later dated proxy or by attending the meeting and voting in person.
The Board of Directors of the Company has fixed the close of business on
March 20, 1998 as the record date for the determination of stockholders entitled
to notice of and to vote at the Annual Meeting (the "Record Date"). As of the
Record Date, the Company had outstanding 20,906,153 shares of Common Stock, par
value $.01 per share (the "Common Stock"), which constitutes the only class of
voting securities of the Company. Each share of Common Stock is entitled to one
vote at the Annual Meeting. All references in this Proxy Statement to amounts of
shares of Common Stock reflect the Company's three for two stock split effected
on October 15, 1997 (the "1997 Stock Split").
NOMINEES FOR ELECTION AS DIRECTORS
The Board of Directors currently consists of five members. It is intended
that the proxies in the accompanying form will be voted at the meeting for the
election to the Board of Directors of the named nominees, William E. Lipner,
Steven J. Gilbert, Walter A. Forbes, Edmund A. Hajim and John Sculley, all of
whom currently serve as directors.
The Board of Directors has no reason to believe that any of such nominees
will be unable or unwilling to serve as a director if elected, but if any
nominee should be unable or for good cause unwilling to serve, the shares
represented by proxies solicited by the Board of Directors will be voted for the
election of such other person for the office of director as the Board of
Directors may recommend in place of such nominee.
Set forth below are each nominee's name, age, principal occupation, position
with the Company, period of service as a director of the Company, membership on
committees of the Board of Directors, and other directorships held.
<TABLE>
<CAPTION>
DIRECTOR
NAME AGE POSITION SINCE
- ------------------------------------------------ --- ------------------------------------------------ -----------
<S> <C> <C> <C>
William E. Lipner(1)............................ 50 Chairman of the Board, President, Chief 1991
Executive Officer and Director
Steven J. Gilbert(1)(3)(4)...................... 51 Director 1991
Walter A. Forbes(1)(2)(3)(4).................... 55 Director 1991
Edmund A. Hajim(2)(3)(4)........................ 61 Director 1992
John Sculley(2)................................. 59 Director 1994
</TABLE>
- ------------------------
(1) Member of the Executive Committee
(2) Member of the Audit Committee
(3) Member of the Compensation Committee
(4) Member of the Nominating Committee
Mr. Lipner has been with the Company or its predecessor, National Family
Opinion, Inc. (the "Predecessor") for over 20 years, serving as its President
and Chief Executive Officer since July 1982 and
<PAGE>
as Chairman of the Board of Directors since February 1993. Mr. Lipner has been a
director of the Company since its organization in September 1991.
Mr. Gilbert has been a director of the Company since its organization in
September 1991 and served as the Chairman of the Board of Directors from
September 1991 to February 1993 and as Vice Chairman of the Board of Directors
from February 1993 to March 1998. Mr. Gilbert was the Managing General Partner
of Soros Capital L.P., an investment firm, from 1992 to 1997. He has also been
the Managing Director of Commonwealth Capital Partners, L.P., a private equity
investment fund, since 1988, and presently is Chairman of Gilbert Global Equity
Partners, L.P., an investment firm. Mr. Gilbert was the Managing General Partner
of Chemical Venture Partners, a venture capital firm, from 1984 to 1988. Mr.
Gilbert is also a director of Veritas-DGC, Inc., a marine seismic company,
UroMed Corporation, a medical device manufacturer, GTS-Duratek, Inc., a
hazardous waste conversion company, ESAT Telecom Holdings, an Irish
telecommunications company and Sydney Harbour Casino Holdings, Ltd., an
Australian casino operator.
Mr. Forbes has been a director of the Company since its organization in
September 1991. Mr. Forbes was the Chairman and Chief Executive Office of
Cendant Corporation (formerly CUC International Inc.), an interactive electronic
consumer services company, from 1988 through December 1997. Since December 1997,
Mr. Forbes has been the Chairman of Cendant Corporation.
Mr. Hajim has been a director of the Company since February 1992. For more
than five years, Mr. Hajim has been the Chairman and Chief Executive Officer of
Furman Selz LLC, an investment banking, brokerage and money management firm. Mr.
Hajim is also a director of Tosco Corporation, a refiner and marketer of
petroleum products and a manufacturer and distributor of fertilizer products.
Mr. Sculley joined the Board of Directors in October 1994. Mr. Sculley is a
partner in the investment firm of Sculley Brothers LLC. From 1983 to 1993, Mr.
Sculley was the Chairman and Chief Executive Officer of Apple Computer, Inc. For
five months (from October 1993 to February 1994), Mr. Sculley was the Chairman
and Chief Executive Officer of Spectrum Information Technologies, Inc.
("Spectrum"). On January 26, 1995, Spectrum together with three of its four
operating subsidiaries filed voluntary petitions for reorganization under
Chapter 11 of the United States Bankruptcy Code in the United States Bankruptcy
Court for the Eastern District of New York. Mr. Sculley is a co-founder of
Sirius Thinking Ltd., a children's educational entertainment company. He is also
Chairman of Live Picture Inc. ("LivePicture"), a digital photographic software
technology and applications company and a director of LiveWorld Productions,
Inc. ("LiveWorld"), an on-line community programming management and distribution
company.
BOARD OF DIRECTORS AND COMMITTEES
The business of the Company is managed under the direction of the Board of
Directors. The Board of Directors has established four principal committees,
whose primary functions are briefly described below. During 1997, the Board of
Directors met or acted by written consent eight times. Each director attended at
least 75% of the total number of meetings held during 1997 while he was a member
of the Board of Directors, including meetings of committees of which the
director is a member.
The Audit Committee is presently composed of Messrs. Forbes, Hajim and
Sculley. The Audit Committee's functions include recommending to the Board of
Directors the appointment of independent public accountants for the Company,
subject to the approval of the stockholders, discussing and reviewing the scope
and the fees of the prospective annual audit and reviewing the results thereof
with the independent accountants, reviewing compliance with existing major
accounting and financial policies of the Company, reviewing the adequacy of the
financial organization of the Company, and considering comments by the
independent accountants regarding internal controls and accounting procedures
and management's response to those comments. In 1997, the committee held one
meeting and acted by written consent once.
2
<PAGE>
The Executive Committee is composed of Messrs. Lipner, Gilbert and Forbes.
The principal functions of the Executive Committee include exercising the powers
of the Board of Directors during intervals between Board meetings and acting as
an advisory body to the Board of Directors by reviewing various matters prior to
their submission to the Board of Directors. The committee did not meet during
1997.
The Compensation Committee is composed of Messrs. Forbes, Gilbert and Hajim.
The functions of the Compensation Committee include reviewing and making
recommendations to the Board of Directors regarding salaries, compensation and
benefits of executive officers and key employees of the company. In 1997, the
committee held two meetings and acted by written consent once. A subcommittee of
the Compensation Committee, the Stock Option Committee, has been established by
the Board of Directors. The Stock Option Committee is presently composed of
Messrs. Forbes and Hajim and is responsible for administering the NFO Worldwide,
Inc. Stock Option Plan.
The Nominating Committee is composed of Messrs. Gilbert, Forbes and Hajim.
Its principal function is to consider and nominate persons for election to the
Board of Directors. The committee acted by written consent once in 1997. The
Nominating Committee may consider nominees recommended by stockholders. In order
for the Nominating Committee to do so, written notice must be given and received
by the Secretary of the Company at the principal executive office of the Company
no later than 60 days prior to the anniversary date of the immediately preceding
annual meeting. Such notice shall set forth (i) the name and address of the
nominee; (ii) any arrangements or understandings between the stockholder and the
nominee or any third party with respect to the nomination; (iii) any other
information required to be included in a proxy statement pursuant to the
Securities Exchange Act of 1934, as amended (the "Exchange Act"); and (iv) the
consent of the nominee to serve as a director if so selected.
EXECUTIVE OFFICERS
In addition to Mr. Lipner, the Company's executive officers are as follows:
<TABLE>
<CAPTION>
NAME AGE TITLE
- ----------------------------------------------------- --- -----------------------------------------------------
<S> <C> <C>
Allen R. DeCotiis.................................... 44 President -- Financial Services, Travel & Leisure and
International Operations
Charles B. Hamlin.................................... 51 President -- Interactive/High Technology and
Telecommunications
Patrick G. Healy..................................... 42 President -- Corporate Products/Systems Development
and Chief Financial Officer
Joseph M. Migliara................................... 53 President -- Healthcare and Consumer Packaged Goods
Richard A Spitzer.................................... 53 Executive Vice President -- Corporate
Products/Systems Development
</TABLE>
Mr. DeCotiis became the Company's President -- Financial Services, Travel &
Leisure and International Operations in September 1997. Mr. DeCotiis joined the
Company upon the acquisition of Payment Systems, Inc. ("PSI") in January 1994.
Mr. DeCotiis began his career at PSI in 1982 as Vice President, was promoted to
President in 1986 and remained in that position until his recent promotion to
the Office of the President of the Company.
Mr. Hamlin joined the Company as its Executive Vice President -- Interactive
Business Development in February 1996 and assumed his current position in
September 1997. From 1994 to 1996, he was Vice President of Marketing for Lotus
Development Corporation, a computer software company. From 1992 to 1994, Mr.
Hamlin was Corporate Vice President of the Harvard Business School Publishing
Company. Prior to that he served in various capacities with Mercer Management
Consulting (formerly Temple Barker and Sloane/Strategic Planning Associates)
from 1978 to 1992, most recently as Senior Partner.
3
<PAGE>
Mr. Healy joined the Company as its Executive Vice President --Finance and
Chief Financial Officer in November 1993. He was Executive Vice President and
Chief Financial Officer of The Interep Radio Store, a national radio advertising
sales firm, for the previous nine years. From 1983 to 1984, Mr. Healy was
Assistant Controller of Scali, McCabe, Sloves, Inc., and from 1977 to 1983, Mr.
Healy served in various capacities with Arthur Andersen LLP, an independent
public accounting firm, lastly as an Audit Manager. Mr. Healy is a certified
public accountant. Mr. Healy has served as the Company's President -- Corporate
Products/Systems Development and Chief Financial Officer since September 1997
and as the Company's Secretary since March 1998.
Mr. Migliara became the Company's President -- Healthcare and Consumer
Packaged Goods in September 1997. Mr. Migliara joined the Company upon the
acquisition of Migliara/Kaplan Associates, Inc. ("M/K") in January 1996. In
1980, Mr. Migliara co-founded M/K and was President and Chief Executive Officer
from 1980 through 1995. Prior to starting M/K he was employed at
Becton-Dickinson, most recently as Director of Marketing.
Mr. Spitzer has been with the Company or its Predecessor since June 1985 and
served as its Executive Vice President -- Operations from May 1987 to September
1997. Mr. Spitzer has served as the Company's Executive Vice President --
Corporate Products/Systems Development since September 1997.
NFO WORLDWIDE INC. STOCK OPTION PLAN
PROPOSED AMENDMENT TO STOCK OPTION PLAN
The NFO Worldwide, Inc. Stock Option Plan (the "Employees' Stock Option
Plan") was adopted by the Board of Directors of the Company on February 23, 1993
and approved by the stockholders of the Company on March 15, 1993. The
Employees' Stock Option Plan provides for the grant of "non-qualified" options
to purchase shares of Common Stock, that is, options that are not intended to
satisfy the requirements of Section 422 of the Internal Revenue Code of 1986, as
amended (the "Code").
The Board of Directors recommends that the stockholders approve the
amendment of the Employees' Stock Option Plan to increase the number of shares
of Common Stock reserved for issuance thereunder to 4,677,250. The number of
shares of Common Stock reserved for issuance under the Employees' Stock Option
Plan is currently 2,812,500 shares, and the Board of Directors has determined
that such number of shares may be insufficient to permit the Compensation
Committee to grant an appropriate number of options in future years. As of March
20, 1998, options with respect to an aggregate of 395,239 shares of Common Stock
are available for grants under the Employees' Stock Option Plan.
DESCRIPTION OF STOCK OPTION PLAN
The purpose of the Employee's Stock Option Plan is to secure for the Company
and its stockholders the benefits arising from capital ownership by the key
employees of the Company and its Subsidiaries (as defined in the Employee's
Stock Option Plan) who will be responsible for its future growth and continued
success. The Employees' Stock Option Plan provides that the Plan shall be
administered by a committee (the "Committee") consisting of two or more
directors who are appointed by, and may be removed by, the Board of Directors
and, that in the absence of any such appointment or removal, the Committee shall
consist of the Compensation Committee of the Board of Directors. The Employees'
Stock Option Plan is currently administered by the Stock Option Committee, a
subcommittee of the Compensation Committee of the Board of Directors. The Stock
Option Committee members are appointed by and serve at the pleasure of the Board
of Directors. The individuals eligible to participate in the Employees' Stock
Option Plan are the key employees of the Company or its Subsidiaries, as
determined and designated by the Compensation Committee from time to time.
Directors who are also employees of the Company or a subsidiary of the Company
are eligible to receive awards under the Employees' Stock Option Plan. The
Committee determines which individuals will be granted options, the number of
shares to be subject to
4
<PAGE>
options, and other terms and conditions applicable to the grants. As of March
20, 1998, 214 individuals held options granted under the Employees' Stock Option
Plan.
The exercise price of options granted under the Employees' Stock Option Plan
may not be less than the fair market value (as defined in the Employees' Stock
Option Plan) of the Common Stock on the date of grant. The closing price on
March 20, 1998 of the Common Stock as reported on the New York Stock Exchange
was $19.875. The Employees' Stock Option Plan provides that, at the time of a
grant of an option, the Committee may require a participant to enter into an
agreement with the Company in a form specified by the Committee agreeing to the
terms and conditions of the Employees' Stock Option Plan and to such additional
terms and conditions as the Committee may in its sole discretion prescribe,
provided that such terms and conditions are not inconsistent with the Employees'
Stock Option Plan. The Committee's determinations under the Employees' Stock
Option Plan are final and binding on all persons. Options granted under the
Employees' Stock Option Plan generally become exercisable with respect to
one-third of the shares subject thereto each year under a three-year vesting
schedule. The expiration date of such options is determined by the Compensation
Committee at the time of the grant, and shall be no later than the tenth
anniversary date of the date on which the options are granted. If an option
holder dies, his estate has three months to exercise his vested options. If he
ceases to be an employee for any other reason, his options terminate on the date
of such cessation unless the Compensation Committee permits exercise after such
date, but in no event may options be exercised later than the expiration date.
Under the Employees' Stock Option Plan, an option holder may exercise an
option by giving written notice thereof to the Company prior to the option's
expiration date. Upon delivery of such notice, the full exercise price, plus
applicable state or federal withholding taxes, shall be paid either in cash, by
tender of stock certificates held for at least six months, or by any combination
of the foregoing. Options under the Employees' Stock Option Plan are not
transferable except by will or by the laws of descent and distribution or, to
the extent not inconsistent with the applicable provisions of the Code, pursuant
to a qualified domestic relations order (as that term is defined in the Code).
Except as set forth below, options may be exercised during the lifetime of the
options holder only by the option holder, and after the death of the option
holder, only as provided in the previous paragraph. Notwithstanding the
foregoing, the Committee may in the applicable award agreement evidencing an
option granted under the Employee's Stock Option Plan or at any time thereafter
provide that options granted under the Employee's Stock Option Plan may be
transferred without consideration by the option holder, subject to such rules as
the Committee may adopt to preserve the purposes of the Employee's Stock Option
Plan, to one or more of: (i) the option holder's spouse, children or
grandchildren (including adopted and stepchildren and grandchildren)
(collectively, the "Immediate Family"); (ii) a trust solely for the benefit of
the option holder and/or his or her Immediate Family; or (iii) a partnership or
limited liability company the partners or shareholders of which are limited to
the option holder and his or her Immediate Family members; (each transferee
described in clauses (i), (ii) and (iii) above is hereinafter referred to as a
"Permitted Transferee"); provided that the option holder gives the Committee
advance written notice describing the terms and conditions of the proposed
transfer and the Committee notifies the option holder in writing that such a
transfer would comply with the requirements of the Employee's Stock Option Plan
and any applicable award agreement evidencing the option.
The terms of any option transferred in accordance with the immediately
preceding sentence shall apply to the Permitted Transferee, except that (a)
Permitted Transferees shall not be entitled to transfer any options, other than
by will or the laws of descent and distribution; and (b) Permitted Transferees
shall not be entitled to exercise any transferred options unless there shall be
in effect a registration statement on an appropriate form covering the shares to
be acquired pursuant to the exercise of such option if the Committee determines
that such a registration statement is necessary or appropriate.
In the event of any change in the shares of outstanding Common Stock of the
Company by reason of any stock dividend, stock split, recapitalization, merger,
consolidation, combination, exchange of shares or other similar corporate
change, an appropriate and proportionate adjustment shall be made in the number
5
<PAGE>
of shares of Common Stock subject to options outstanding or to be granted under
the Employees' Stock Option Plan. Any such adjustment in any outstanding option
shall be made by the Committee without change in the aggregate purchase price
applicable to the unexercised portion of such option but with a corresponding
adjustment in the price for each share of Common Stock covered by such option as
well as the adjustment in the number. The determination as to what adjustments
shall be made and the extent thereof, shall be final, binding and conclusive. In
accordance with such provisions, the number of shares of Common Stock subject to
outstanding options, and the number of shares reserved for issuance pursuant to
the Employees' Stock Option Plan, have been adjusted to reflect the 1997 Stock
Split, and the share amounts set forth in this section and in the section
entitled "Proposed Amendment to Stock Option Plan" reflect such adjustments.
Subject to any approval of the stockholders of the Company which may be
required by law (including under Rule 16b--3 of the Exchange Act), the Board of
Directors may at any time amend, suspend or terminate the Employees' Stock
Option Plan. No amendment, suspension or termination of the Employees' Stock
Option Plan shall alter or impair any rights under any option previously granted
without the consent of the holder thereof.
6
<PAGE>
STOCK OPTION PLAN BENEFITS
Since the adoption of the Employees' Stock Option Plan, options have been
granted with respect to the following shares of Common Stock:
<TABLE>
<CAPTION>
NUMBER OF
SECURITIES
UNDERLYING
OPTIONS YEAR EXERCISE
NAME AND POSITION GRANTED GRANTED PRICE
- --------------------------------------------------------------------------------- ---------- ----------- -----------
<S> <C> <C> <C>
William E. Lipner................................................................ 47,250 1993 $ 4.44
Chairman of the Board, President and Chief Executive Officer 84,375 1993 5.59
135,000 1995 10.56
135,000 1996 14.50
125,000 1997 17.12
----------
526,625
----------
Allen R. DeCotiis................................................................ 3,000 1996 $ 15.17
President -- Financial Services, Travel & Leisure and International Operations 15,000 1996 14.50
25,000 1997 17.12
----------
43,000
----------
Charles B. Hamlin................................................................ 75,000 1996 $ 12.17
President -- Interactive/High Technology and Telecommunications 52,500 1996 14.50
20,000 1997 17.12
----------
147,500
----------
Patrick G. Healy................................................................. 67,500 1993 $ 5.48
President -- Corporate Products/Systems Development and Chief Financial Officer 33,750 1994 6.44
67,500 1995 9.78
60,000 1996 14.50
40,000 1997 17.12
----------
268,750
----------
Joseph A. Migliara............................................................... 6,177 1996 $ 12.28
President -- Healthcare and Consumer Packaged Goods 15,000 1996 14.50
25,000 1997 17.12
----------
46,177
----------
Richard A. Spitzer............................................................... 43,875 1993 $ 4.44
Executive Vice President -- Corporate Products/Systems Development 23,625 1993 5.59
56,250 1995 9.78
45,000 1996 14.50
20,000 1997 17.12
----------
188,750
----------
All current executive officers as a group........................................ 1,220,802 -- --
----------
----------
All other employees as a group................................................... 1,348,334 -- --
----------
----------
</TABLE>
FEDERAL INCOME TAX CONSEQUENCES OF PARTICIPATION IN THE EMPLOYEE'S STOCK
OPTION PLAN
The following summary generally describes the principal federal (but not
state or local) income tax consequences of options granted under the Employees'
Stock Option Plan. It is general in nature and is
7
<PAGE>
not intended to cover all tax consequences that may apply to a particular
optionee or the Company. The provisions of the Code and the regulations
thereunder relating to these matters are complicated and their impact in any one
case may depend upon the particular circumstances. This discussion is based on
the Code as currently in effect.
The Employees' Stock Option Plan is not intended to be qualified under
Section 401(a) of the Code. Generally no income will be recognized at the time
the option is granted. However, on exercise of a non-- qualified stock option,
the amount by which the fair market value of the shares of the Common Stock on
the date of exercise exceeds the purchase price of such shares will be taxable
to the participant as ordinary income, and will be deductible for tax purposes
by the Company or its affiliates in the year in which the participant recognizes
income, subject to the possible limitations on deductibility under Section 280G
and 162(m) of the Code. Special rules may apply in the case of option holders
who are reporting persons under Section 16(b) of the Exchange Act.
The disposition of shares acquired upon exercise of a non-qualified stock
option generally will result in long-term or short-term capital gain or loss
(depending on the applicable holding period) in an amount equal to the
difference between the amount realized on such disposition and the sum of the
purchase price and the amount of ordinary income recognized in connection with
the exercise of the non-qualified stock option. The payment by an optionee of
the exercise price, in full or in part, with previously acquired Common Stock
will not affect the tax treatment of the exercise described above. No gain or
loss generally will be recognized by the participant upon the surrender of the
previously acquired Common Stock, and shares received by the participant, equal
in number to the previously surrendered shares of Common Stock, will have the
same tax basis as the shares surrendered to the Company and will have a holding
period that includes the holding period of the shares surrendered. The value of
shares received by the optionee in excess of the number of shares of Common
Stock surrendered to the Company will be taxable to the participant. Such
additional shares will have a tax basis equal to the fair market value of such
additional shares as of the date ordinary income is recognized, and will have a
holding period that begins on the date ordinary income is recognized.
If, in any year after 1993, an affected participant's total compensation
from the Company (including compensation related to options granted under the
Employees' Stock Option Plan) exceeds $1 million, such compensation in excess of
$1 million may not be tax deductible by the Company under Code Section 162(m).
Affected participants are generally the Company's chief executive officer and
the four most highly compensated employees of the Company (other than the chief
executive officer) during the Company's taxable year. Excluded from the
calculation of total compensation for this purpose is compensation that is
"performance-based" within the meaning of Code Section 162(m). It is expected
that compensation realized upon the exercise of an option will be regarded as
"performance-based" and, therefore, that such compensation will be deductible
without regard to the limits of Code Section 162(m).
REQUIRED VOTE
The proposal to approve the foregoing amendment to the Employees' Stock
Option Plan requires the approval by a majority of the votes cast by
stockholders present in person or represented by proxy and entitled to vote at
the meeting. Proxies will be voted for or against such approval in accordance
with the specifications marked thereon and, if no specification is made, will be
voted "FOR" such approval. THE BOARD OF DIRECTORS RECOMMENDS A VOTE FOR THE
APPROVAL OF THE AMENDMENT TO THE EMPLOYEES' STOCK OPTION PLAN.
EXECUTIVE COMPENSATION
Shown below is information concerning the annual compensation for services
in all capacities to the Company for the years ended December 31, 1997, December
31, 1996 and December 31, 1995, of those persons who were, during the calendar
year of 1997 (i) the chief executive officer, (ii) the other five
8
<PAGE>
executive officers of the Company, and (iii) the individual who was an executive
officer of the Company for part of the calendar year of 1997 and who would have
been among the most highly-compensated executive officers of the Company had he
been an executive officer at the end of the calendar year 1997 (collectively,
the "Named Executive Officers"):
SUMMARY COMPENSATION TABLE
<TABLE>
<CAPTION>
LONG TERM
COMPENSATION
-------------
AWARDS
-------------
ANNUAL COMPENSATION NUMBER OF
----------------------------------------------- SECURITIES
NAME AND OTHER ANNUAL UNDERLYING ALL OTHER
PRINCIPAL POSITION YEAR SALARY BONUS COMPENSATION(7) OPTIONS COMPENSATION(8)
- ------------------------------------- --------- ---------- ------------ --------------------- ------------- ----------------
<S> <C> <C> <C> <C> <C> <C>
William E. Lipner.................... 1997 $ 360,000 $ 362,008(5) -- 125,000 $ 15,716
Chairman of the Board, 1996 350,000 330,399(5) -- 135,000 13,950
President and Chief 1995 349,933 314,230(5) -- 135,000 16,717
Executive Officer
Allen R. DeCotiis(1)................. 1997 237,250 30,000 -- 25,000 5,975
President--Financial 1996 210,000 0 -- 18,000 5,975
Services, Travel & 1995 200,000 52,383 -- -- 5,975
Leisure and Inter-
national Operations
Charles B. Hamlin(2)................. 1997 249,000 80,000 -- 20,000 2,375
President--Interactive 1996 186,058 101,250 -- 127,500 70,169
/High Technology and 1995 -- -- -- -- --
Telecommunications
Patrick G. Healy..................... 1997 249,000 220,000(6) -- 40,000 10,313
President -- Corporate 1996 227,077 112,500 -- 60,000 10,175
Products/Systems 1995 214,717 111,500 -- 67,500 17,817
Development and Chief
Financial Officer
Joseph M. Migliara(3)................ 1997 221,696 100,000 -- 25,000 240
President-- Healthcare 1996 198,354 56,558 -- -- 240
and Consumer Packaged
Goods
Lawrence D. White(4)................. 1997 240,000 110,000 -- -- 8,739
Executive Vice President 1996 227,000 102,150 -- 45,000 11,861
-- Corporate Development 1995 212,750 111,500 -- 67,500 11,030
</TABLE>
- ------------------------
(1) Allen R. DeCotiis became President -- Financial Services, Travel & Leisure
and International Operations in September 1997. Mr. DeCotiis joined the
Company upon the acquisition of Payment Systems, Inc. ("PSI") in January
1994. Mr. DeCotiis began his career at PSI in 1982 as Vice President, was
promoted to President in 1986 and remained in that position until his recent
promotion to the Office of the President of the Company.
(2) Charles B. Hamlin joined the Company as Executive Vice President --
Interactive Business Development on February 26, 1996.
(3) Joseph M. Migliara became President -- Healthcare and Consumer Packaged
Goods in September, 1997. Mr. Migliara joined the Company upon the
acquisition of Migliara/Kaplan Associates, Inc. ("M/ K") in January 1996. In
1980, Mr. Migliara co-founded M/K and was President and Chief Executive
Officer from 1980 through 1997.
9
<PAGE>
(4) Lawrence D. White is the Executive Vice President --Corporate Development.
Prior to September 1997, Mr. White served as Executive Vice President --
Marketing of the Company.
(5) Portions of Mr. Lipner's annual bonus amounts included in the table were
deferred pursuant to a Deferred Compensation Agreement between Mr. Lipner
and the Company in the following amounts: $62,008 in 1997, $60,399 in 1996
and $51,730 in 1995.
(6) Bonus of $220,000, of which $100,000 was an extraordinary bonus.
(7) Personal benefits for each executive officer named in the table did not
exceed $50,000 or 10% of such executive officer's total annual salary and
bonus in 1997, 1996 or 1995.
(8) Includes contributions made by the Company pursuant to the NFO Research,
Inc. Profit Sharing Plan on behalf of Messrs. Lipner, Healy, Spitzer and
White in 1997 in the amounts of $8,739 each and on behalf of Mr. DeCotiis
and Mr. Hamlin in the amount of $2,375, on behalf of Messrs. Lipner, Healy,
Spitzer and White in 1996 in the amounts of $8,669 each, and in 1995 in the
amounts of $8,864, $8,864, $8,840, and $8,864 respectively. Also includes
life insurance premiums paid on behalf of Messrs. Lipner, Healy, White,
Migliara, Hamlin and DeCotiis in 1997 in the amounts of $6,977,
$1,574,$2,471, $240, $2,415 and $3,600 respectively. Also includes life
insurance premiums on behalf of Messrs. Lipner, Healy, White, Migliara,
Hamlin and DeCotiis in 1996 in the amounts of $5,281, $1,506, $3,192, $240,
$1,124 and $3,600, respectively, and in 1995 in the amounts of $7,853, $767,
$2,166, $240, $0 and $3,600, respectively. The amount set forth for Mr.
Healy in 1995 includes disbursements made by the Company in the amount of
$8,186 for relocation expenses. The amount set forth for Mr. Hamlin in 1996
includes disbursements made by the Company in the amounts of $29,045 for
relocation expenses and a sign-on payment of $40,000.
10
<PAGE>
OPTION GRANTS
The Company's executive officers and certain other employees participate in
the Employees' Stock Option Plan. The table below sets forth the stock options
granted to the Named Executive Officers during 1997. The Company did not grant
SARs to any employees during 1997.
OPTION GRANTS IN LAST FISCAL YEAR
<TABLE>
<CAPTION>
INDIVIDUAL GRANTS
----------------------------------------------------
% OF POTENTIAL REALIZABLE VALUE
TOTAL AT
OPTIONS ASSUMED ANNUAL RATES OF
NUMBER OF GRANTED STOCK PRICE APPRECIATION
SECURITIES TO FOR
UNDERLYING EMPLOYEES EXERCISE OPTION TERM
OPTIONS DURING OR BASE EXPIRATION --------------------------
GRANTED 1997 PRICE $/SH DATE 5%($) 10%($)
----------- ----------- ----------- ------------- ------------ ------------
<S> <C> <C> <C> <C> <C> <C>
William E. Lipner............................ 125,000(1) 22.95% $ 17.12 2007 $ 1,321,401 $ 3,371,703
Allen R. DeCotiis............................ 25,000(1) 4.59% 17.12 2007 264,280 674,341
Charles B. Hamlin............................ 20,000(1) 3.67% 17.12 2007 211,424 539,472
Patrick G. Healy............................. 40,000(1) 7.34% 17.12 2007 422,848 1,078,945
Joseph M. Migliara........................... 25,000(1) 4.59% 17.12 2007 264,280 674,341
Richard A. Spitzer........................... 20,000(1) 3.67% 17.12 2007 211,424 539,472
</TABLE>
- ------------------------
(1) These options were granted on December 1, 1997. Options with respect to
one-third of the shares subject thereto will become exercisable on January
1, 1998, options with respect to the second one-third of the shares will
become exercisable on January 1, 1999 and options with respect to the last
one-third of the shares will become exercisable on January 1, 2000.
FISCAL YEAR END OPTION VALUES
The table below presents information with respect to both exercisable and
unexercisable options to purchase the Company's Common Stock held by the Named
Executive Officers at December 31, 1997 and the value of such options at
December 31, 1997. The Named Executive Officers did not exercise any options
during 1997, except Lawrence D. White who exercised options for 50,625 shares in
1997.
AGGREGATED OPTION EXERCISES IN LAST FISCAL YEAR AND FISCAL YEAR END OPTION
VALUES
<TABLE>
<CAPTION>
NUMBER OF SECURITIES
UNDERLYING VALUE OF UNEXERCISED
UNEXERCISED OPTIONS AT IN-THE-MONEY OPTIONS
SHARES DECEMBER 31, 1997 AT DECEMBER 31, 1997(1)
ACQUIRED VALUE -------------------------- ---------------------------
NAME ON EXERCISE REALIZED EXERCISABLE UNEXERCISABLE EXERCISABLE UNEXERCISABLE
- ----------------------------------------- ----------- ---------- ----------- ------------- ------------ -------------
<S> <C> <C> <C> <C> <C> <C>
William E. Lipner........................ -- -- 398,290 128,335 $ 4,213,892 $ 607,821
Allen R. DeCotiis........................ -- -- 20,332 22,668 107,721 101,591
Charles B. Hamlin........................ -- -- 91,664 55,836 689,287 382,842
Patrick G. Healy......................... -- -- 222,082 46,666 2,594,091 230,558
Joseph M. Migliara....................... -- -- 24,509 21,668 149,657 95,820
Richard A. Spitzer....................... -- -- 160,415 28,335 1,932,417 147,471
Lawrence D. White........................ 50,625 $ 648,278 109,300 16,260 1,105,192 104,609
</TABLE>
- ------------------------
(1) Based on the closing price on the New York Stock Exchange of the Company's
Common Stock on Wednesday, December 31, 1997 ($20.94).
11
<PAGE>
EMPLOYMENT CONTRACTS
On March 15, 1995, the Company and Mr. Lipner entered into an employment
agreement. The agreement provides for Mr. Lipner's employment as the Chairman,
President and Chief Executive Officer of the Company through March 15, 1997,
with an unlimited number of two-year extensions unless either party provides 13
months' advance notice not to extend the period of employment. The agreement
provides for a minimum annual base salary of $350,000 (currently $370,000),
subject to annual discretionary increases by the Board of Directors. Mr. Lipner
is also entitled to certain fringe benefits and incentive compensation as
determined by the Board of Directors.
Under his employment agreement, Mr. Lipner's employment may be terminated by
the Company for cause (as defined in the agreement) or without cause. If the
Company terminates Mr. Lipner's employment without cause, or if Mr. Lipner
resigns for good reason (as defined in the agreement) after the occurrence of a
change in control (as defined in the agreement), Mr. Lipner is entitled to
receive his base salary and annual bonus payments through the second anniversary
of the termination. If the Company elects not to extend the term of Mr. Lipner's
employment, Mr. Lipner is entitled to receive his base salary and bonus payments
for one year following the end of the term. Mr. Lipner's agreement also provides
that Mr. Lipner's stock options granted under the Employees' Stock Option Plan
shall become immediately exercisable in the event of a change in control of the
Company or in the event Mr. Lipner's employment is terminated without cause. Mr.
Lipner's stock options will remain exercisable for a period of two years after
termination of his employment in the event of termination by the Company without
cause or resignation by Mr. Lipner for good reason following a change of
control. Under the agreement, Mr. Lipner has agreed not to own, or engage in any
manner in, a business competing with the Company for a period of two years
following his termination for cause or resignation (other than resignation for
good reason following a change in control).
On September 12, 1995, the Company entered into an employment agreement with
Mr. Spitzer; on December 12, 1996, the Company entered into an employment
agreement with Mr. Hamlin; on December 1, 1997, the Company entered into
employment agreements with each of Messrs. DeCotiis, Migliara and Healy. The
employment agreement for Mr. Spitzer provides for employment until September 12,
1998, in the case of Mr. Hamlin, until December 12, 1999, in the case of Messrs.
DeCotiis, Migliara and Healy, until December 1, 2000. The agreements provide for
a minimum base salary of $195,000 for Mr. Spitzer (currently $235,000), $240,000
for Mr. Hamlin (currently $280,000) and $280,000 for each of Messrs. DeCotiis,
Migliara and Healy, in each case subject to annual discretionary increases by
the Board of Directors. The agreements also provide for certain specified fringe
benefits, incentive compensation as determined by the Board of Directors, and
certain stock option grants under the Employees' Stock Option Plan. Under each
of the employment agreements, the executive's employment may be terminated by
the Company for cause (as defined in each agreement) or without cause. If the
Company terminates the executive's employment without cause, the executive is
entitled to receive his base salary and benefits, in the case of Mr. Spitzer,
through September 12, 1998, in the case of Mr. Hamlin, through December 12,
1999, in the case of Messrs. DeCotiis, Migliara and Healy, through December 1,
2000. If the executive resigns for good reason (as defined in each agreement)
after the occurrence of a change in control (as defined in each agreement), he
is entitled to receive: (i) his base salary and benefits until the later of (a)
in the case of Mr. Spitzer, September 12, 1998, in the case of Mr. Hamlin,
December 12, 1999, in the cases of Messrs. DeCotiis, Migliara and Healy,
December 1, 2000 or (b) in the cases of Messrs. Spitzer, Hamlin, DeCotiis and
Migliara, the first anniversary of the resignation, and in the case of Mr.
Healy, the second anniversary of the resignation, and (ii) in the cases of
Messrs. Spitzer, Hamlin, DeCotiis and Migliara, a pro-rated portion of his bonus
for the year in which the termination occurs, and in the case of Mr. Healy, an
amount equal to the most recent annual bonus he received. The employment
agreements also provide that the executive's stock options granted under the
Employees' Stock Option Plan shall become immediately exercisable in the event
that the executive's employment is terminated without cause or in the event of a
change in control of the Company. The stock options will remain exercisable for
a period of 12 months
12
<PAGE>
after termination of employment in the event of termination by the Company
without cause or resignation by the executive for good reason following a change
in control. Each of Messrs. Spitzer, Hamlin, Healy, DeCotiis and Migliara has
entered into customary non-compete and non-solicitation agreements with the
Company.
On September 12, 1995, the Company entered into an employment agreement with
Mr. White, which provided for employment until September 12, 1998 and for a base
salary of $213,000, subject to annual discretionary increase by the Board of
Directors. On September 4, 1997, the employment agreement with Mr. White was
amended to extend the term of his employment to October 12, 1999.
PENSION PLAN AND EXECUTIVE DEFERRED BENEFIT PLAN
NFO RESEARCH, INC. PENSION PLAN
The Company maintains the NFO Research, Inc. Pension Plan (the "Pension
Plan"), which it assumed in connection with the acquisition of substantially all
the assets of its Predecessor in 1991 (the "Acquisition"). The Pension Plan is a
noncontributory trusteed plan that provides for fixed benefits to employees and
their survivors in the event of normal (age 65) or early (age 55 and 10 years of
credited service) retirement. Participants become 20% vested in their benefits
after two years of service and vest thereafter at a rate of 20% per year of
service, becoming fully vested after six years of service. Early retirement
benefits are subject to reduction to reflect early commencement.
<TABLE>
<CAPTION>
YEARS OF CREDITED SERVICE
-----------------------------------------------------
<S> <C> <C> <C> <C> <C>
COMPENSATION 15 20 25 30 35
- -------------------- --------- --------- --------- --------- ---------
$160,000............ $ 26,157 $ 31,405 $ 35,517 $ 38,739 $ 41,263
200,000............. 32,696 39,256 44,396 48,423 51,579
</TABLE>
The Pension Table set forth above illustrates the estimated annual pension
payable as a single life annuity upon retirement pursuant to the current Pension
Plan formula for various levels of compensation and years of service, assuming
retirement after attainment of age 65. The benefits set forth above are not
subject to any reduction for Social Security or other offsets.
Compensation taken into account for the purposes of calculating benefits
under the Pension Plan for 1997 is limited to $160,000, which limit is subject
to adjustment in accordance with the Code. Compensation for purposes of the
Pension Plan includes salary and bonus as set forth in the Summary Compensation
Table.
The 1997 compensation taken into account for Pension Plan purposes was
$160,000 for each of Messrs. Lipner, Healy, Spitzer and White, who had 24, 3, 13
and 13 years, respectively, of credited service under the Pension Plan as of
December 31, 1997.
NFO WORLDWIDE, INC. EXECUTIVE DEFERRED BENEFIT PLAN
The Company also maintains the Executive Deferred Benefit Plan (the
"Supplemental Plan"), which it assumed in connection with the Acquisition. The
Compensation Committee of the Company's Board of Directors determines which
executives are eligible to participate. Currently, five of the Named Executive
Officers, Messrs. Lipner, Hamlin, Healy, Spitzer and White, participate in the
Supplemental Plan. The Supplemental Plan entitles an eligible executive to a
benefit that, when added to his benefit under the Pension Plan, the Profit
Sharing Plan (to the extent attributable to Company contributions) and Social
Security, equals 40% of his highest five-year average annual compensation
(prorated if the executive has fewer than 15 years of service). Vesting under
the Supplemental Plan is the same as under the Pension Plan but is accelerated
if a participant is terminated within two years after a change of control of the
Company. Benefits payable under the Supplemental Plan are reduced if payment
commences before age 60.
13
<PAGE>
Compensation taken into account under the Supplemental Plan includes base
salary and bonus as described in the Summary Compensation Table. The 1997
compensation taken into account for purposes of the Supplemental Plan was
$680,399 for Mr. Lipner, $287,308 for Mr. Hamlin, $339,577 for Mr. Healy,
$287,500 for Mr. Spitzer and $329,150 for Mr. White.
The Supplemental Plan only recognizes service after December 31, 1991 for
benefit accrual purposes. Messrs. Lipner, Spitzer and White each had 6 years,
Mr. Healy had 3 years and Mr. Hamlin had [1] year of service under the
Supplemental Plan as of December 31, 1997 for benefit accrual purposes.
LIFE INSURANCE ARRANGEMENTS
The Company provides life insurance coverage to each of its executive
officers. In 1997, Mr. Lipner was provided with $1,206,175 of term life
insurance coverage. Messrs. Healy, Spitzer and White were each provided with
$400,000 of term life insurance coverage.
REPORT OF COMPENSATION COMMITTEE ON EXECUTIVE COMPENSATION
The three-member Compensation Committee of the Board of Directors makes
compensation decisions regarding compensation of the Company's executives. Each
member of the Compensation Committee is a non-employee Director. The Board of
Directors reviews all decisions by the Compensation Committee relating to such
compensation except for decisions about awards under the Employees' Stock Option
Plan, which have been made solely by the Compensation Committee. This is a
report of the Compensation Committee addressing the Company's policies governing
the compensation of the executive officers of the Company for the Company's
fiscal year ending December 31, 1997 ("Fiscal Year 1997").
COMPENSATION POLICIES AND COMPONENTS OF COMPENSATION
Generally, the Compensation Committee's executive compensation policies are
designed to base pay on the Company's annual and long-term performance goals by
rewarding above-average corporate performance and recognizing individual
initiative and achievements; furthermore, these policies assist the Company in
attracting and retaining qualified executives. The Compensation Committee
believes that stock ownership by management is beneficial in aligning
management's and shareholders' interests in increasing the value of the Common
Stock; therefore, the Compensation Committee includes a stock-based element in
the Company's compensation packages for its executive officers, although the
Compensation Committee does not have target ownership levels for equity holdings
by executives.
The three primary components of executive compensation are base salary,
annual bonus and stock options. The Compensation Committee believes that the
cumulative effect of these three elements is to provide the Company's executive
officers with levels of total compensation consistent with the Compensation
Committee's executive compensation policies set forth above.
The Compensation Committee attempts to keep the Company's executive base
salary increases as low as possible, thus limiting the Company's exposure if
performance targets are not met. Executive salary levels are subjectively
determined by the Compensation Committee based on the experience of each of its
members and are intended to be consistent with competitive practices and levels
of responsibility (with salary increases reflecting competitive and economic
trends, the overall financial performance of the Company and the performance of
the individual executive).
The Compensation Committee subjectively determines annual bonus amounts paid
to each of the Company's executives in respect of each fiscal year. Generally,
bonuses are set within a specified percentage range of base salary, and do not
exceed 100% of the base salary. For the executive officers named in the Summary
Compensation Table, bonuses averaged approximately 54% of Fiscal Year 1997 total
salary. Factors taken into account in awarding annual bonuses are described
below under "Relationship of Corporate Performance to Executive Compensation."
14
<PAGE>
Before March 1996, stock options were periodically granted to the Company's
executives under the Employees' Stock Option Plan based upon the subjective
determination of the Compensation Committee. Effective March 1996, all authority
to administer the Employees' Stock Option Plan has been vested in the Stock
Option Committee, a subcommittee of the Compensation Committee. No specific
formulas or executive stock ownership targets are employed in determining stock
option grants. The number of options previously awarded to and held by executive
officers is considered in determining the size of each option grant. Factors
taken into account in awarding stock options are described below under
"Relationship of Corporate Performance to Executive Compensation."
An additional factor the Compensation Committee focuses on in its
consideration of compensation matters is the tax implications of various
payments and benefits to the Company and to the individual executive officers.
Certain types of compensation payments and their deductibility depend upon the
timing of vesting or exercise of awards granted. In addition, interpretations of
and changes in the tax laws and other factors beyond the Compensation
Committee's control also affect the deductibility of compensation. The
Compensation Committee will not in all circumstances limit executive
compensation to that deductible under section 162(m) of the Internal Revenue
Code. The Compensation Committee will consider the various alternatives to
preserving the deductibility of compensation payments and benefits to the extent
consistent with its other compensation objectives and to the extent reasonably
practicable.
RELATIONSHIP OF CORPORATE PERFORMANCE TO EXECUTIVE COMPENSATION
The factors that the Compensation Committee considered in awarding annual
bonuses and options under the Employees' Stock Option Plan were based on the
performance of both the Company and the individual executive. With respect to
the Company, the Compensation Committee considered targeted versus actual annual
operating performance, after-tax earnings-per-share growth over the last fiscal
year and increase in operating income over the last fiscal year. With respect to
the individual executive, the Compensation Committee considered the individual's
ability to undertake special projects, to facilitate strategic acquisitions and
alliances, to execute the Company's strategic business plan and to develop new
custom research methods and concepts. While the Compensation Committee
considered all of the foregoing factors, the Compensation Committee subjectively
made its determinations and recommendations based on the experience of each of
its members.
Targeted versus actual operating performance was a major factor considered
in determining the extent to which annual bonuses were paid and awards made
under the Employees' Stock Option Plan to the Company's executive officers. The
performance of individual executives was reviewed either as to the Company as a
whole, or, for those executive officers in charge of an operating unit, as to
such officer's particular operating unit. Performance targets were based on
business plans developed by the Company's management and approved by the Board
of Directors at the start of Fiscal Year 1997. In developing the business plans,
consideration was given to integrating the business of any recently acquired
subsidiaries, divisions or businesses and expanding the Company's mix of
services and clients.
The Compensation Committee also took into account the executives'
performance in special projects undertaken during the past fiscal year,
contribution to strategic acquisitions and alliances (e.g., joint ventures) and
development of new custom research methods and concepts. In addition, the
Compensation Committee considered the growth in after-tax earnings per share of
Common Stock over the last fiscal year in determining executive compensation.
Another consideration in determining executive compensation was the improvement
in the Company's operating income over the last fiscal year. Also, the
executives' satisfaction of certain subjective performance criteria (including
initiative, contribution to overall corporate performance and managerial
ability) was evaluated after informal discussions with other members of the
Board of Directors and, for all of the executives other than Mr. Lipner, after
discussions with Mr. Lipner.
15
<PAGE>
COMPENSATION OF CHIEF EXECUTIVE OFFICER FOR FISCAL YEAR 1997
In addition to the factors mentioned above, the Compensation Committee's
general approach in setting Mr. Lipner's annual compensation took into
consideration the Company's earnings and sought to reward Mr. Lipner's strategic
management abilities in the Company's expansion efforts. The Compensation
Committee also considered Mr. Lipner's role in the development and
implementation of strategic business plans for building the Company, identifying
niche markets, and developing new proprietary custom research methods and
concepts.
The annual bonus paid to Mr. Lipner for Fiscal Year 1997 was based on the
Compensation Committee's subjective evaluation of Mr. Lipner's performance in
that year. Specifically, the Compensation Committee considered Mr. Lipner's
roles in pursuing and completing selected acquisitions and joint ventures,
further developing and improving the Company's management team, developing
relationships with stockholders and analysts, developing and executing the
Company's strategic business plan, encouraging the development of new research
technologies, increasing operating income and increasing after-tax earnings per
share. In assessing the Company's overall performance, to determine Mr. Lipner's
annual salary and bonus, the Compensation Committee considered all of the
factors above but did not use any formula with respect to the factors.
The grant of options to Mr. Lipner in Fiscal Year 1997 under the Employees'
Stock Option Plan was based upon the Compensation Committee's compensation
policy of promoting management retention while further aligning management's and
stockholders' interests in increasing the value of the Company's Common Stock.
Walter A. Forbes
Steven J. Gilbert
Edmund A. Hajim
16
<PAGE>
PERFORMANCE GRAPH
The following graph sets forth the Company's total stockholder return as
compared to the CRSP Index for Nasdaq Stock Market (U.S. Companies) of the
Center for Research in Security Prices, and as compared to a peer group selected
in good faith by the Company, for the period from April 7, 1993, when the
Company's Common Stock was first registered under the Exchange Act, through
December 31, 1997, the last day of the Company's last completed fiscal year. The
Company's Common Stock has traded on the New York Stock Exchange since December
29, 1997. Prior to that, the Company's Common Stock was traded on the Nasdaq
National Market tier of the Nasdaq Stock Exchange since its initial public
offering was completed in April 1993. The peer group consists of the Company and
seven other companies in the market research industry: Audits & Surveys
Worldwide, Inc., Intelliquest, Inc., Market Facts, Inc.,
M/A/R/C Inc., Opinion Research Corporation, National Research Corp., and Total
Research Corporation. The returns of each component company in the peer group
have been weighted based on such company's relative market capitalization.
EDGAR REPRESENTATION OF DATA POINTS USED IN PRINTED GRAPHIC
<TABLE>
<CAPTION>
COMPARISON OF CUMULATIVE TOTAL RETURN1 FOR THE PERIOD FROM 04/07/93 THROUGH
12/31/97
<S> <C> <C> <C>
Among NFO Worldwide, Inc., the CRSP Index for Nasdaq Stock Market (U.S.
Companies)
and the Peer Group
NFO Worlwide, Inc. Peer Index
4/7/93 100.000 100.000
4/30/93 96.825 99.871
5/28/93 96.825 101.56
6/30/93 100.000 100.675
7/30/93 105.556 108.751
8/31/93 128.571 122.542
9/30/93 123.809 120.620
10/29/93 126.984 125.898
11/30/93 123.809 126.657
12/31/93 119.841 121.925
1/31/94 146.032 143.427
2/28/94 144.444 134.992
3/31/94 152.381 137.779
4/29/94 133.333 133.236
5/31/94 128.571 131.818
6/30/94 142.857 138.739
7/29/94 141.667 139.239
8/31/94 148.809 144.946
9/30/94 164.286 155.326
10/31/94 164.286 152.891
11/30/94 150.000 145.390
12/30/94 138.095 138.285
1/31/95 145.238 143.182
2/28/95 164.286 154.776
3/31/95 185.714 174.067
4/28/95 182.143 171.142
5/31/95 171.428 163.707
6/30/95 192.857 174.276
7/31/95 190.476 181.893
8/31/95 188.095 178.613
9/29/95 223.809 190.689
10/31/95 216.667 184.744
11/30/95 233.333 190.293
12/29/95 252.381 193.031
1/31/96 264.286 199.336
2/29/96 282.143 208.688
3/29/96 360.714 240.135
4/30/96 333.928 259.850
5/31/96 328.571 249.831
6/28/96 337.500 258.059
7/31/96 325.000 225.441
8/30/96 317.857 231.053
9/30/96 307.143 221.852
10/31/96 332.143 228.388
11/29/96 314.285 229.250
12/31/96 314.285 231.576
1/31/97 332.143 237.274
2/28/97 317.857 213.718
3/31/97 248.214 193.215
4/30/97 260.714 205.369
5/30/97 288.393 233.175
6/30/97 353.571 260.706
7/31/97 342.857 260.928
8/29/97 364.285 282.201
9/30/97 392.857 309.325
10/31/97 385.714 277.221
11/28/97 380.357 263.271
12/31/97 448.660 244.166
<CAPTION>
COMPARISON OF CUMULATIVE TOTAL RETURN1 FOR THE PERIOD FROM 04/07/93 THROUGH
12/31/97
<S> <C>
Among NFO Worldwide, Inc., the CRSP Index for Nasdaq Stock Market (U.S.
Companies)
and the Peer Group
CRSP Index for Nasdaq Stock Market (U.S.
Companies)
4/7/93 100.000
4/30/93 99.265
5/28/93 105.195
6/30/93 105.681
7/30/93 105.806
8/31/93 111.275
9/30/93 114.588
10/29/93 117.164
11/30/93 113.672
12/31/93 116.841
1/31/94 120.387
2/28/94 119.263
3/31/94 111.929
4/29/94 110.477
5/31/94 110.747
6/30/94 106.697
7/29/94 108.885
8/31/94 115.827
9/30/94 115.531
10/31/94 117.801
11/30/94 113.893
12/30/94 114.213
1/31/95 114.853
2/28/95 120.927
3/31/95 124.513
4/28/95 128.433
5/31/95 131.747
6/30/95 142.424
7/31/95 152.893
8/31/95 155.992
9/29/95 159.579
10/31/95 158.665
11/30/95 162.390
12/29/95 161.526
1/31/96 162.322
2/29/96 168.500
3/29/96 169.059
4/30/96 183.085
5/31/96 191.492
6/28/96 182.860
7/31/96 166.577
8/30/96 175.910
9/30/96 189.366
10/31/96 187.274
11/29/96 198.851
12/31/96 198.672
1/31/97 212.792
2/28/97 201.028
3/31/97 187.905
4/30/97 193.780
5/30/97 215.748
6/30/97 222.346
7/31/97 245.819
8/29/97 245.444
9/30/97 259.962
10/31/97 246.454
11/28/97 247.671
12/31/97 243.793
</TABLE>
The graph above assumes $100 invested at the beginning of the period in the
Company's Common Stock,(2) the CRSP Index for Nasdaq Stock Market (U.S.
Companies) and the Peer Group, and was plotted using the following data:
<TABLE>
<CAPTION>
04/07/93 06/30/93 09/30/93 12/31/93 03/31/94 06/30/94 09/30/94 12/30/94
----------- ----------- ----------- ----------- ----------- ----------- ----------- -----------
<S> <C> <C> <C> <C> <C> <C> <C> <C>
NFO Worldwide,
Inc............... $ 100.00 $ 100.00 $ 123.81 $ 119.84 $ 152.38 $ 142.86 $ 164.29 $ 138.10
CRSP Index for
Nasdaq Stock
Market (U.S.
Companies)........ 100.00 105.68 114.59 116.84 111.93 106.70 115.53 114.21
Peer Group.......... 100.00 100.68 120.62 121.93 137.78 138.74 155.33 138.29
<CAPTION>
03/31/95 06/30/95
----------- -----------
<S> <C> <C>
NFO Worldwide,
Inc............... $ 185.71 $ 192.86
CRSP Index for
Nasdaq Stock
Market (U.S.
Companies)........ 124.51 142.42
Peer Group.......... 174.07 174.28
</TABLE>
<TABLE>
<CAPTION>
09/29/95 12/29/95 03/29/96 06/28/96 09/30/96 12/31/96 03/31/97 06/30/97
----------- ----------- ----------- ----------- ----------- ----------- ----------- -----------
<S> <C> <C> <C> <C> <C> <C> <C> <C>
NFO Worldwide,
Inc............... $ 223.81 $ 252.38 $ 360.71 $ 337.50 $ 307.14 $ 314.29 $ 248.21 $ 353.57
CRSP Index for
Nasdaq Stock
Market (U.S.
Companies)........ 159.58 161.53 169.06 182.86 189.37 198.67 187.91 222.35
Peer Group.......... 190.69 193.03 240.14 258.06 221.85 231.58 193.22 260.71
<CAPTION>
09/30/97 12/31/97
----------- -----------
<S> <C> <C>
NFO Worldwide,
Inc............... $ 392.86 $ 448.66
CRSP Index for
Nasdaq Stock
Market (U.S.
Companies)........ 259.96 243.79
Peer Group.......... 309.33 244.17
</TABLE>
- ------------------------
(1) Total Return Assumes Reinvestment of Dividends
(2) Based on the initial public offering price
17
<PAGE>
COMPENSATION COMMITTEE INTERLOCKS AND INSIDER PARTICIPATION
The Compensation Committee of the Company is composed of Walter A. Forbes,
Steven J. Gilbert and Edmund A. Hajim. Mr. Gilbert served as the Company's
Chairman of the Board in 1992 and has served as Secretary since 1993. Mr.
Gilbert has never been an employee of the Company, and Messrs. Forbes and Hajim
have never been officers or employees of the Company. Commonwealth Capital
Partners, L.P. ("Commonwealth"), of which Mr. Gilbert is a Managing Director,
and Mr. Forbes each purchased equity securities from the Company in September
1991 in connection with the Acquisition. The Company, Commonwealth and Messrs.
Forbes and Hajim are parties to the Stockholders Agreement, dated as of
September 27, 1991, as amended (the "Stockholders Agreement"), among the
Company, Commonwealth and certain other stockholders of the Company prior to the
Company's initial public offering of its Common Stock (the "Offering"). Pursuant
to the Stockholders Agreement, the Company paid Commonwealth $10,000 per month
as a non-allocable expense reimbursement through March 31, 1997, when
Commonwealth ceased to hold at least 5% of the outstanding Common Stock.
CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS
On October 25, 1994, John Sculley joined the Company's Board of Directors
and entered into a consulting agreement with the Company. The agreement provides
that Mr. Sculley will serve as a consultant, particularly in the areas of
technology, idea development for new services and ventures, and international
expansion. Under the agreement, as consideration for his services to the Company
as consultant and as director, Mr. Sculley will receive an annual fee of $50,000
so long as he is a director of the Company, plus out-of-pocket expenses. In
addition, pursuant to the agreement, the Company granted Mr. Sculley an option
to purchase 56,250 shares of the Company's Common Stock, with an exercise price
of $7.45 per share, the exercise price being equal to the market price on the
date of grant. The option is exercisable in whole or in part at any time before
October 25, 1999. Pursuant to the agreement, the Company filed a registration
statement with the Securities and Exchange Commission to register the issuance
by the Company of the shares subject to the option. Moreover, as a director of
the Company, Mr. Sculley received options to purchase 56,250 shares of the
Company's Common Stock pursuant to the NFO Worldwide, Inc. Directors' Stock
Option Plan, which is described below.
Messrs. Lipner and Sculley are each minority shareholders of LiveWorld and,
in addition, Mr. Sculley is a director of LiveWorld and Chairman of LivePicture.
On February 10, 1997, the Company and LiveWorld announced an agreement to
jointly provide online market research services that combine LiveWorld's Talk
City community/chat services with the Company's panel-based market research
services. Also on February 10, 1997, the Company and LivePicture announced a
strategic alliance to combine LivePicture's RealSpace and FlashPix technologies,
which provide three-dimensional, photographic quality images with the Company's
Internet-based market research offerings.
The Company paid Commonwealth $10,000 per month in non-allocable expense
reimbursement payments through March 31, 1997, when Commonwealth ceased to hold
5% of the outstanding Common Stock. See "Compensation Committee Interlocks and
Insider Participation."
Mr. Migliara is a partial owner of one of the buildings in which a
subsidiary of the Company leases office space.
COMPENSATION OF DIRECTORS
The Company does not pay any additional remuneration to officers of the
Company for serving as directors. Directors who are not employees of the Company
are paid an annual fee of $24,000, and a fee of $1,000 for each committee
meeting of the Board of Directors they attend. Additionally, non-employee
directors are reimbursed for out-of-pocket expenses associated with attending
meetings of the Board of Directors and committees. Mr. Gilbert did not receive
annual or meeting fees for his services as director or as a member of committees
during the period that Commonwealth received its non-allocable expense
18
<PAGE>
reimbursement payments described above. Mr. Sculley's annual director fee is
included in his fee under his consulting agreement with the Company described
above. See "Certain Relationships and Related Transactions."
Non-employee directors also receive annual stock options under the NFO
Worldwide, Inc. Directors' Stock Option Plan (the "Directors' Stock Option
Plan"). Under the Directors' Stock Option Plan, each new non-employee director
receives an option for 22,500 shares upon his initial election to the Board of
Directors, and each non-employee director receives an option for an additional
15,000 (increased from 11,250 shares by the Board of Directors on December 2,
1997) shares upon each re-election to the Board of Directors. The exercise price
of each option granted under the Directors' Stock Option Plan is equal to the
market price of the Common Stock on the date of grant. Each option is
exercisable, either in whole or in part, at any time after the six-month
anniversary of the date the option was granted and each option will expire on
the fifth anniversary date of the date on which the option is granted. The
Directors' Stock Option Plan is designed to be self-governing in order to comply
with certain requirements of Rule 16b-3 of the Exchange Act.
SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT
The following table sets forth the beneficial ownership, both direct and
indirect, reported to the Company as of March 20, 1998, of Common Stock of the
Company including shares as to which a right to acquire ownership exists (for
example, through the exercise of certain stock options). The information is
presented for beneficial owners of more than five percent (5%) of the Company's
Common Stock, for each director and nominee, for each Named Executive Officer
and for the group comprised of all directors, nominees and Named Executive
Officers. Management knows of no persons other than those identified herein who
owned beneficially more than five percent (5%) of the outstanding shares of
Common Stock as of March 20, 1998.
SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT
<TABLE>
<CAPTION>
NUMBER OF SHARES
OF COMMON STOCK
NAME AND ADDRESS BENEFICIALLY PERCENTAGE OF
OF BENEFICIAL OWNER (1) OWNED COMMON STOCK
- ------------------------------------------------------------------------------ ----------------- ---------------
<S> <C> <C>
William Blair & Company, L.L.C.(2)............................................ 3,315,208 15.86%
222 W. Adams Street
Chicago, IL 60606
John R. Goodyear and Mary J. Goodyear(3)...................................... 2,046,363 9.79
4-5 Bonhill Street
London EC2A 4BX
Walter P. Smith(4)............................................................ 1,730,391 8.28
9 Valley Oak
Portola Valley, CA 94028
T. Rowe Price Associates, Inc.(5)............................................. 1,701,750 8.14
100 E. Pratt Street
Baltimore, MD 21202
Allen R. DeCotiis(6).......................................................... 57,633 *
2 Pickwick Plaza
Greenwich, CT 06830
Walter A. Forbes(7)........................................................... 105,012 *
707 Summer Street
Stamford, CT 06901
</TABLE>
19
<PAGE>
<TABLE>
<CAPTION>
NUMBER OF SHARES
OF COMMON STOCK
NAME AND ADDRESS BENEFICIALLY PERCENTAGE OF
OF BENEFICIAL OWNER (1) OWNED COMMON STOCK
- ------------------------------------------------------------------------------ ----------------- ---------------
<S> <C> <C>
Steven J. Gilbert(8).......................................................... 75,666 *
590 Madison Avenue, 40th Floor
New York, NY 10022
Edmund A. Hajim(9)............................................................ 63,750 *
230 Park Avenue
New York, NY 10167
Charles B. Hamlin(10)......................................................... 91,664 *
2 Pickwick Plaza
Greenwich, CT 06830
Patrick G. Healy(11).......................................................... 222,757 1.01
2 Pickwick Plaza
Greenwich, CT 06830
William E. Lipner(12)......................................................... 900,415 4.31
2 Pickwick Plaza
Greenwich, CT 06830
Joseph M. Migliara(13)........................................................ 434,661 2.08
4 Park Center Court
Owings Mills, MD 21117
John Sculley(14).............................................................. 112,500 *
90 Park Avenue, 32nd Floor
New York, NY 10017
Richard A. Spitzer(15)........................................................ 205,142 *
2700 Oregon Road
Northwood, Ohio 43619
Lawrence D. White(16)......................................................... 95,504 *
2 Pickwick Plaza
Greenwich, CT 06830
All executive officers and directors as a group (10 persons)(17).............. 2,364,200 11.31
</TABLE>
- ------------------------
* Represents less than 1% of the outstanding shares of the Common Stock.
(1) Except as indicated in the notes to this table, the persons named in this
table have sole voting and investment power with respect to all shares of
Common Stock shown as beneficially owned by them.
(2) According to a statement on Schedule 13G dated February 17, 1998 filed with
the Securities and Exchange Commission by William Blair & Co. William Blair
& Co. is an Investment Advisor that owns 3,315,208 shares of Common Stock of
the Company on behalf of its clients.
(3) According to a statement on Schedule 13D dated July 24, 1997 filed with the
Securities and Exchange Commission by John R. Goodyear and Mary J. Goodyear.
Mr. and Mrs. Goodyear are both officers of the MBL Group plc, a recently
acquired wholly-owned subsidiary of the Company.
(4) According to a statement on Schedule 13D dated December 30, 1997 filed with
the Securities and Exchange Commission by Walter P. Smith. Mr. Smith is
trustee of the trust formed pursuant to the Walter P. Smith Trust Agreement
dated February 20, 1986, which owns the shares.
(5) According to a statement on Schedule 13G dated February 12, 1998 and filed
with the Securities and Exchange Commission by T. Rowe Price Associates,
Inc. and T. Rowe Price New Horizons Fund, Inc. T. Rowe Price Associates,
Inc. and T. Rowe New Horizons Fund, Inc. are Investment Advisors that
together own 1,701,750 shares of Common Stock of the Company on behalf of
its clients. These securities are owned by various individual and
institutional investors including T. Rowe Price New
20
<PAGE>
Horizons Fund, Inc. (which owns 1,326,000 shares, representing 6.3% of the
shares outstanding), which T. Rowe Price Associates, Inc. (Price Associates)
serves as investment adviser with power to direct investments and/or sole
power to vote the securities. For purposes of the reporting requirements of
the Securities Exchange Act of 1934, Price Associates is deemed to be a
beneficial owner of such securities; however, Price Associates expressly
disclaims that it is, in fact, the beneficial owner of such securities.
(6) Includes 20,332 shares issuable upon the exercise of options granted to Mr.
DeCotiis pursuant to the Employees' Stock Option Plan which have already
vested.
(7) Includes 6,750 shares held by his spouse in custodial accounts for his
children, for which Mr. Forbes may be deemed to share voting and investment
power and thus may be deemed to own beneficially. Also includes 60,750
shares issuable upon the exercise of options granted to Mr. Forbes pursuant
to the Directors' Stock Option Plan.
(8) Includes 60,750 shares issuable upon exercise of options granted to Mr.
Gilbert pursuant to the Directors' Stock Option Plan.
(9) Includes 60,750 shares issuable upon exercise of options granted to Mr.
Hajim pursuant to the Directors' Stock Option Plan.
(10) Includes 91,664 shares issuable upon exercise of options granted to Mr.
Hamlin pursuant to the Employees' Stock Option Plan which have already
vested.
(11) Includes 222,082 shares issuable upon exercise of options granted to Mr.
Healy pursuant to the Employees' Stock Option Plan which have already
vested.
(12) Includes 398,290 shares issuable upon exercise of options granted to Mr.
Lipner pursuant to the Employees' Stock Option Plan which have already
vested. Also includes 236,550 shares indirectly owned by him, 151,500 of
which are owned directly by his wife, Deborah Lipner; and 85,050 of which
are held in custodial accounts and trusts for their sons Justin Drew Lipner
and Wesley Edwin Lipner. A trust holds 5,063 shares of Common Stock of the
Company for the benefit of Deborah Lipner; however, since the trustee of the
trust has sole voting and investment power with respect to the shares, Mr.
Lipner does not beneficially own such shares.
(13) Includes 24,509 shares issuable upon the exercise of options granted to Mr.
Migliara pursuant to the Employees' Stock Option Plan which have already
vested.
(14) Includes 56,250 shares issuable upon the exercise of options granted to Mr.
Sculley which are exercisable in whole or in part at any time before October
25, 1999. Also includes 56,250 shares issuable upon the exercise of options
granted to Mr. Sculley pursuant to the Directors' Stock Option Plan.
(15) Includes 160,415 shares issuable upon exercise of the options granted to
Mr. Spitzer pursuant to the Employees' Stock Option Plan which have already
vested.
(16) Includes 90,000 shares issuable upon exercise of the options granted to Mr.
White pursuant to the Employees' Stock Option Plan which have already
vested. Also includes 504 shares owned directly by his children.
(17) Includes 245,250 shares issuable upon exercise of options granted pursuant
to the Directors' Stock Option Plan, 56,250 shares issuable upon exercise of
options granted to Mr. Sculley and 1,051,042 shares issuable upon exercise
of options granted pursuant to the Employees' Stock Option Plan which have
already vested.
21
<PAGE>
SELECTION OF INDEPENDENT ACCOUNTANTS
The directors of the Company have selected the firm of Arthur Andersen LLP
as the auditors of the Company subject to the approval of the stockholders.
Arthur Andersen LLP has acted for the Company as auditors since March 1995.
Before the Audit Committee recommended the appointment of Arthur Andersen
LLP, it carefully considered the qualifications of that firm, including their
performance during the year and their reputation for integrity and for
competence in the fields of accounting and auditing.
Representatives of Arthur Andersen LLP are expected to be present at the
meeting to respond to appropriate questions and to make a statement if they
desire to do so.
COMPLIANCE WITH SECTION 16(A) OF THE EXCHANGE ACT
Section 16(a) of the Exchange Act requires the Company's officers and
directors, and persons who may be deemed to own beneficially more than ten
percent of the Common Stock of the Company, to file reports of ownership and
changes in ownership on Forms 3, 4 and 5 with the Securities and Exchange
Commission ("SEC") and the New York Stock Exchange. Officers, directors and
greater than ten percent beneficial owners are required by SEC regulation to
furnish the Company with copies of all Forms 3, 4 and 5 they file.
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 Forms 5 for 1996, the Company believes that all its
officers, directors, and greater than ten percent beneficial owners complied
with all filing requirements applicable to them with respect to transactions
during 1997.
PROXIES
STOCKHOLDERS HAVE THREE CHOICES ON THE PROXY/VOTING INSTRUCTION CARD (THE
"PROXY CARD") WITH RESPECT TO THE ELECTION OF DIRECTORS. BY CHECKING THE BOX ON
THE PROXY CARD A STOCKHOLDER MAY: (I) VOTE FOR ALL OF THE DIRECTOR NOMINEES AS A
GROUP; (II) WITHHOLD AUTHORITY TO VOTE FOR ALL DIRECTOR NOMINEES AS A GROUP; OR
(III) VOTE FOR ALL DIRECTOR NOMINEES AS A GROUP EXCEPT THOSE NOMINEES IDENTIFIED
IN THE APPROPRIATE SPACE. CONCERNING THE PROPOSALS TO AMEND THE EMPLOYEES' STOCK
OPTION PLAN AND TO RATIFY THE APPOINTMENT OF INDEPENDENT ACCOUNTANTS, BY
CHECKING THE APPROPRIATE BOX ON THE PROXY CARD A STOCKHOLDER MAY: (I) VOTE "FOR"
THE ITEM; (II) VOTE "AGAINST" THE ITEM; OR (III) "ABSTAIN" FROM VOTING ON THE
ITEM.
The cost of soliciting proxies will be borne by the Company. The Company
expects to solicit proxies solely by mail.
UPON THE WRITTEN REQUEST OF ANY STOCKHOLDER OF RECORD ON MARCH 20, 1998, A
COPY OF THE COMPANY'S ANNUAL REPORT ON FORM 10-K FOR THE FISCAL YEAR ENDED
DECEMBER 31, 1997 (EXCLUDING EXHIBITS), AS FILED WITH THE SECURITIES AND
EXCHANGE COMMISSION, WILL BE SUPPLIED WITHOUT CHARGE. REQUESTS SHOULD BE
DIRECTED TO MR. PATRICK G. HEALY, NFO WORLDWIDE, INC., 2 PICKWICK PLAZA,
GREENWICH, CONNECTICUT 06830.
VOTE REQUIRED
To be elected as a director, each nominee must receive the affirmative vote
of a plurality of the votes cast by stockholders present in person or
represented by proxy and entitled to be voted at the Annual Meeting. An
affirmative vote of a majority of the votes cast by stockholders present in
person or represented by proxy and entitled to vote at the meeting is required
for all other matters including the amendment of the Employee's Stock Option
Plan and the ratification of the appointment of Arthur Andersen LLP as
independent accountants of the Company for calendar year 1998.
The vote occurring at the meeting will be overseen by an inspector. The
inspector's duties include ascertaining the number of votes outstanding and the
voting power of each, determining the number of
22
<PAGE>
shares represented at the meeting, counting all votes and ballots, determining
and retaining for a reasonable period a record of the disposition of any
challenges made to any determination by the inspections, and certifying the
determination of the number of shares represented and the outcome of the
balloting. The aggregate number of votes cast by all stockholders present in
person or represented by proxy and entitled to vote at the meeting will be
counted for purposes of determining the minimum number of affirmative votes
required for the election of directors, for the amendment of the Employees'
Stock Option Plan and for the ratification of appointment of independent
accountants. Abstentions and "non-votes" will be counted as present in
determining the existence of a quorum. However, an abstention from voting (or
withholding authority to vote for directors) will have the same effect as a vote
against. "Non-votes" will be considered unvoted and will not have the effect of
a vote against. A "non-vote" occurs when a nominee holding shares for a
beneficial owner votes on one proposal, but does not vote on another proposal
because the nominee does not have discretionary voting power and has not
received instructions from the beneficial owner.
1999 STOCKHOLDER PROPOSALS
To be eligible for inclusion in the Company's proxy statement, stockholder
proposals for the 1999 Annual Meeting of Stockholders must be received at the
Company's corporate office, NFO Worldwide, Inc. 2 Pickwick Plaza, Greenwich,
Connecticut 06830, Attention: Secretary, on or before December 1, 1998.
OTHER BUSINESS
As of the date of this Proxy Statement, the Board of Directors of the
Company is not aware of any matters that will be presented for action at the
Annual Meeting other than those described above. Should other business properly
be brought before the Annual Meeting, it is intended that the accompanying proxy
will be voted thereon in the discretion of the persons named as proxies.
23
<PAGE>
DETACH HERE
PROXY
NFO WORLDWIDE, INC.
2 PICKWICK PLAZA, SUITE 400, GREENWICH, CT 06830
PROXY FOR ANNUAL MEETING OF STOCKHOLDERS - MAY 13, 1998
THIS PROXY IS SOLICITED ON BEHALF OF THE BOARD OF DIRECTORS
The undersigned stockholder of NFO Worldwide, Inc. (the "Company") hereby
appoints William E. Lipner and Patrick G. Healy, and each of them, with full
power of substitution in each, as proxies to cast all votes, as designated
on the reverse side, which the undersigned stockholder is entitled to cast at
the 1998 Annual Meeting of Stockholders of the Company to be held on
Wednesday, May 13, 1998, at 10:00 a.m., at Hyatt Regency Greenwich located at
1800 East Putnam Avenue, Old Greenwich, Connecticut, and at any adjournments
thereof, upon the following matters set forth on the reverse side.
SEE REVERSE SEE REVERSE
SIDE CONTINUED AND TO BE SIGNED ON REVERSE SIDE SIDE
<PAGE>
DETACH HERE
/X/ PLEASE MARK
VOTES AS IN
THIS EXAMPLE.
This proxy, when properly executed, will be voted in the manner directed
herein by the undersigned stockholder(s). IF NO DIRECTION IS MADE, THIS PROXY
WILL BE VOTED "FOR" THE ELECTION OF THE NOMINEES UNDER PROPOSAL 1. "FOR" THE
PROPOSAL TO AMEND NFO WORLDWIDE, INC. STOCK OPTION PLAN UNDER PROPOSAL 2.
"FOR" THE PROPOSAL TO RATIFY THE APPOINTMENT OF ARTHUR ANDERSEN LLP AS
INDEPENDENT ACCOUNTS OF THE COMPANY UNDER PROPOSAL 3. AND WILL BE VOTED IN
THE DISCRETION OF THE PROXIES WITH RESPECT TO ANY OTHER MATTER THAT IS
PROPERLY PRESENTED AT THE MEETING.
1. Proposal to elect as directors of the Company the following persons, to
hold office for a term of one year expiring at the annual meeting to be held
in 1999.
NOMINEES: William E. Lipner, Steven J. Gilbert, Walter A. Forbes,
Edmund A. Hajim and John Sculley.
/ / FOR / / WITHHELD
ALL FROM ALL
NOMINEES NOMINEES
/ /
- --------------------------------------------------------------
INSTRUCTIONS: To withhold authority to vote for any individual
nominee, please write that nominee(s) name in the space
provided above.
<TABLE>
<CAPTION>
<S> <C> <C> <C>
FOR AGAINST ABSTAIN
2. Proposal to amend the NFO Worldwide, Inc. Stock Option Plan to increase / / / / / /
the number of shares of Common Stock reserved for issuance under the Stock
Option Plan from 2,812,500 shares to 4,677,250 shares.
FOR AGAINST ABSTAIN
/ / / / / /
3. Proposal to ratify the appointment of Arthur Andersen LLP as independent
accountants of the company for calendar year 1998.
</TABLE>
4. In their discretion, the proxies are authorized to vote upon such other
business as may properly come before the meeting.
MARK HERE FOR ADDRESS CHANGE AND NOTE AT LEFT / /
PLEASE MARK, SIGN, DATE AND RETURN THIS PROXY PROMPTLY USING THE ENCLOSED
ENVELOPE.
Please execute this proxy as your name appears hereon. When shares are held
by joint tenants, both should sign. When signing as attorney, executor,
administrator, trustee or guardian, please give full title as such. If a
corporation, please sign in full corporate name by the president or other
authorized officer. If a partnership, please sign in partnership name by
authorized person.
Signature: ______________ Date: ______ Signature:_______________ Date:______
