SCHEDULE 14A
(RULE 14a-101)
INFORMATION REQUIRED IN PROXY STATEMENT
SCHEDULE 14A INFORMATION
Proxy Statement Pursuant to Section 14(a) of the Securities
Exchange Act of 1934 (Amendment No. )
Filed by the Registrant X
Filed by a Party other than the Registrant |_|
Check the appropriate box:
|_| Preliminary Proxy Statement |_| Confidential, for Use of the Commission
Only (as permitted by Rule 14a-6(e)(2))
X Definitive Proxy Statement
|_| Soliciting Material Pursuant to Rule 14a-11(c) or Rule 14a-12
(Name of Registrant as Specified in Its Charter)
Grow Biz International, Inc.
(Name of Person(s) Filing Proxy Statement, if other than the 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:
[LOGO]
-----------------------------------------
NOTICE OF ANNUAL MEETING OF SHAREHOLDERS
APRIL 30, 1997
-----------------------------------------
TO THE SHAREHOLDERS OF GROW BIZ INTERNATIONAL, INC.
Notice is hereby given to the holders of the shares of Common Stock of
Grow Biz International, Inc. that the Annual Meeting of Shareholders of the
Company will be held at the Company's corporate offices, 4200 Dahlberg Drive,
Minneapolis, Minnesota, on Wednesday, April 30, 1997, at 4:00 p.m. Central
Daylight Time, to consider and act upon the following matters:
1. To set the number of members of the Board of Directors at six.
2. To elect six directors to serve for a term of one year.
3. To ratify the appointment of Arthur Andersen LLP as
independent auditors for the current fiscal year.
4. To transact such other business as may properly come before
the meeting or any adjournments thereof.
Shareholders of record at the close of business on March 5, 1997 will
be entitled to vote at the meeting and adjournments of the meeting.
YOU ARE CORDIALLY INVITED TO ATTEND THE MEETING. EVEN IF YOU PLAN TO
ATTEND THE MEETING, WE URGE YOU TO SIGN, DATE, AND RETURN THE PROXY AT ONCE IN
THE ENCLOSED ENVELOPE.
By the Order of the Board of Directors
Gaylen L. Knack
SECRETARY
Dated March 17, 1997
GROW BIZ INTERNATIONAL, INC.
4200 DAHLBERG DRIVE
MINNEAPOLIS, MINNESOTA 55422-4837
ANNUAL MEETING OF SHAREHOLDERS
APRIL 30, 1997
PROXY STATEMENT
GENERAL
The Annual Meeting of Shareholders of Grow Biz International, Inc.
("Company") will be held on Wednesday, April 30, 1997, at 4:00 p.m., Central
Daylight Time, at the Company's corporate offices, 4200 Dahlberg Drive,
Minneapolis, Minnesota, for the purposes set forth in the Notice of Annual
Meeting of Shareholders.
The enclosed proxy is solicited by the Board of Directors of the
Company. Such solicitation is being made by mail and may also be made by
directors, officers, and regular employees of the Company personally or by
telephone. Any proxy given pursuant to such solicitation may be revoked by the
shareholder at any time prior to the voting thereof by so notifying the Company
in writing at the above address, attention: Corporate Secretary, or by appearing
in person at the meeting. Shares represented by proxies will be voted as
specified in such proxies, and if no choice is specified, will be voted in favor
of (1) setting the number of members of the Board of Directors at six, (2) the
Board of Directors' nominees named in this proxy statement, and (3) the
appointment of Arthur Andersen LLP as independent auditors for the current
fiscal year.
Common stock, no par value per share ("Common Stock"), of which there
were 6,286,569 shares outstanding on the record date, constitutes the only class
of outstanding voting securities issued by the Company. Each shareholder will be
entitled to cast one vote in person or by proxy for each share of Common Stock
held by the shareholder. Only shareholders of record at the close of business on
March 5, 1997, will be entitled to vote at the meeting.
The affirmative vote of the majority of shares present in person, or
represented by proxy, at this Annual Meeting of Shareholders is required to set
the number of directors, elect each director and to approve Arthur Andersen LLP
as independent auditors for the current fiscal year. A quorum is achieved when
51% of the outstanding shares are present in person or by proxy. Shares voted as
abstentions on any matter (or a "withhold authority" vote as to directors) will
be counted as present and entitled to vote for purposes of determining a quorum
and for purposes of calculating the vote with respect to such matter, but will
not be deemed to have been voted in favor of such matter. If a broker submits a
"non-vote" proxy, indicating that the broker does not have discretionary
authority to vote certain shares on a particular matter, those shares will be
counted as present for purposes of determining a quorum, but will not be
considered present and entitled to vote for purposes of calculating the vote
with respect to such matter.
All of the expenses involved in preparing, assembling, and mailing this
proxy statement and the material enclosed herewith will be paid by the Company.
The Company may reimburse banks, brokerage firms, and other custodians,
nominees, and fiduciaries for reasonable expenses incurred by them in sending
proxy material to beneficial owners of stock. This proxy statement and
accompanying form of proxy are first being mailed to shareholders on or about
March 17, 1997.
ELECTION OF DIRECTORS
(Proposals #1 and #2)
At the meeting the Board of Directors of the Company is to be elected
to hold office until the 1998 Annual Meeting or until successors are elected and
have qualified. The Bylaws of the Company provide that the number of directors
of the Company shall be fixed by the shareholders, subject to increase by the
Board of Directors. Currently the authorized size of the Board of Directors is
seven. The Board of Directors recommends that the shareholders reduce the number
of directors to six and elect the nominees indicated below. Each nominee is
currently a director of the Company whose current term expires at the 1997
Annual Meeting.
Shares represented by executed proxies will be voted, if authority to
do so is not withheld, for the election of the nominees named below, unless one
or more of such nominees should become unavailable for election, in which event
such shares shall be voted for the election of such substitute nominees as the
Board of Directors may propose. Each person nominated has agreed to serve if
elected, and the Company knows of no reason why any of the listed nominees would
be unavailable to serve. Following is a list of the seven current directors,
including the six persons nominated for election to the Board of Directors at
the 1997 Annual Meeting.
<TABLE>
<CAPTION>
PRINCIPAL OCCUPATION AND BUSINESS DIRECTOR
NAME AND AGE EXPERIENCE FOR PAST FIVE YEARS SINCE
------------ ------------------------------ -----
<S> <C> <C>
K. Jeffrey Dahlberg (1)(2) Mr. Dahlberg has served as Chairman of the Board of Directors of the 1990
Age: 43 Company since January 1990. Mr. Dahlberg served as President and Chief
Executive Officer of Dahlberg, Inc., a publicly-held manufacturer and
distributor of hearing aids and franchisor of hearing aid retail
stores, from June 1988 to December 1992 and as a director of Dahlberg,
Inc. until July 1993. He has served as Chairman of the Board of
Franchise Business Systems, Inc., a franchise consulting firm, since
July 1988.
Ronald G. Olson (1) Mr. Olson has served as President, Chief Executive Officer and a 1990
Age: 56 Director of the Company since January 1990. Mr. Olson has been
President and Chief Executive Officer of Franchise Business Systems,
Inc. since July 1988.
Randel S. Carlock (1)(3) Mr. Carlock has served as a Director of the Company since September 1993
Age: 48 1993. He currently serves as a professor at the University of St.
Thomas, a position held since 1990 and has served as Chairman of the
Board of Directors of Audio King, Inc., a Minneapolis consumer
electronics retail company.
Dennis J. Doyle (1)(2)(4) Mr. Doyle has served as a Director of the Company since June 1993. 1993
Age: 44 Since 1978, he has served as President and Chief Executive Officer of
Welsh Companies, Inc., a real estate development and management firm,
Chairman of the Board of Welsh Construction Corp. and a Director of PM
Services.
Bruce C. Sanborn(1)(2)(4) Mr. Sanborn has served as a Director of the Company since June 1993. 1993
Age: 44 Since 1990, he has served as Chairman of the Board of Directors and
Chief Executive Officer of the North Central Life Insurance Company
and Financial Life Companies, Inc.
Robert C. Pohlad (1)(3) Mr. Pohlad has served as a Director of the Company since September 1993
Age: 42 1993. Since 1987, he has served as President and a Director of Pohlad
Companies, a Minneapolis based holding company active in investments
and soft drink manufacturing and distribution. Mr. Pohlad is a
director of Mesaba Holdings, Inc.
Robert E. Thiner Mr. Thiner has served as a Director of the Company since September 1993
Age: 52 1993. Since October 1996, he has served as Senior Vice President of
Finance and Treasurer of Audio King Corporation, a Minneapolis
consumer electronics company. Mr. Thiner served as Executive Vice
President of Finance and Chief Financial Officer of the Company from
February 1992 to August 1996 and Secretary from July 1993 to August
1996.
</TABLE>
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(1) Nominees for election to the Board of Directors at the 1997 Annual Meeting
(2) Member of Executive Committee
(3) Member of Audit Committee
(4) Member of Compensation Committee
MEETINGS OF THE BOARD OF DIRECTORS AND CERTAIN COMMITTEES
The Board of Directors of the Company has standing Executive, Audit,
and Compensation Committees which have a current membership as indicated in the
foregoing section. The Board of Directors has no standing Nominating Committee.
The Executive Committee may exercise all of the powers and authority of
the Board of Directors, except as otherwise provided under the Minnesota
Business Corporation Act. The Executive Committee was formed in December 1993
and held no meetings during fiscal 1996.
The Audit Committee makes recommendations as to the selection of
auditors and their compensation, and reviews with the auditors the scope of the
annual audit, matters of internal control and procedure, the audit results and
reports and other general matters relating to the Company's accounts, records,
controls and financial reporting. The Audit Committee was formed in July 1993
and held one meeting during fiscal 1996.
The Compensation Committee reviews and recommends to the Board of
Directors the compensation guidelines for executive officers, other key
employees and nonemployee directors and the composition and levels of
participation in incentive compensation plans. The Compensation Committee
administers the Company's 1992 Stock Option Plan including determining the
participants, the number of shares subject to option and the terms and
conditions of exercise. During fiscal 1996, the Compensation Committee held two
meetings.
During fiscal 1996, the Board of Directors of the Company met four
times. All directors attended at least 75% of the meetings of the Board of
Directors and committees of the Board of Directors on which they served.
DIRECTOR COMPENSATION
Each nonemployee director of the Company receives $500 for each Board
and committee meeting attended. Effective August 23, 1993, Dennis J. Doyle and
Bruce C. Sanborn, the only nonemployee directors at the time, were each granted
an option to purchase 25,000 common shares at an exercise price of $10.00 per
share. Effective September 24, 1993, the Board of Directors adopted the Stock
Option Plan for Nonemployee Directors ("Directors Plan") which provides for an
automatic grant of an option to purchase 25,000 common shares upon the initial
election as a director. Pursuant to this Plan, Randel S. Carlock and Robert C.
Pohlad were each granted an option to purchase 25,000 common shares at an
exercise price of $15.00 per share. Effective November 21, 1995, the options
granted to Messrs. Carlock and Pohlad were cancelled and replacement options to
purchase 25,000 common shares each at $10.00 per share, which was above the
market price on the effective date, were granted separate from the Directors
Plan. All options granted to nonemployee directors become exercisable in
increments through 1998, provided that the nonemployee director is still serving
as a director, and expire in 1999.
EXECUTIVE COMPENSATION
The following table sets forth certain information regarding
compensation earned or awarded during each of the last three fiscal years to the
Company's Chief Executive Officer and the other four most highly compensated
executive officers serving as executive officers at the end of Fiscal 1996 (the
"Named Executive Officers").
<TABLE>
<CAPTION>
SUMMARY COMPENSATION TABLE
ANNUAL COMPENSATION ($)
--------------------------------------- LONG-TERM
OTHER COMPENSATION
FISCAL ANNUAL OPTION ALL OTHER
NAME AND PRINCIPAL POSITION YEAR SALARY BONUS COMPENSATION AWARDS(#) COMPENSATION ($)
- --------------------------- ---- ------ ----- ------------ --------- ----------------
<S> <C> <C> <C> <C> <C> <C>
K. Jeffrey Dahlberg 1996 220,000 - - - 44,392(1)
Chairman of the Board 1995 220,000 - - - 43,053
1994 220,000 - - - 41,205
Ronald G. Olson 1996 220,000 - - - 43,505(1)
Chief Executive Officer 1995 220,000 - - - 42,721
and President 1994 220,000 - - 15,000 40,747
Charles V. Kanan 1996 129,000 - - 20,000 4,904(2)
President 1995 115,000 - - 5,000 3,000
Play It Again Sports Division 1994 100,000 - - 30,000 -
Ted R. Manley(3) 1996 115,000 - - 20,000 4,509(2)
President 1995 110,000 - - 10,000 931
Once Upon A Child Division 1994 43,000 - - 20,000 -
Michael E. Flynn(4) 1996 115,000 - - 20,000 1,681(2)
President 1995 80,000 - - 20,000 -
Computer Renaissance Division
</TABLE>
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(1) Includes premiums paid in 1996 by the Company for term life insurance
coverage and the present value of the benefit to the executive of the
remainder of the premiums for split dollar life insurance coverage paid
by the Company on behalf of the named executive as follows: Mr. Dahlberg
- $36,892 and Mr. Olson - $36,005. Also includes 401(k) Company matching
contributions and profit sharing as follows:
Mr. Dahlberg - $7,500 and Mr. Olson - $7,500.
(2) Consists of 401(k) Company matching contributions and profit sharing.
(3) Mr. Manley joined the Company in 1994.
(4) Mr. Flynn joined the Company in 1995.
OPTIONS GRANTED DURING FISCAL 1996
The following table provides information relating to options granted to
the Named Executive Officers during the Company's 1996 fiscal year:
<TABLE>
<CAPTION>
INDIVIDUAL GRANTS
-------------------------------------------------------------------------------------
POTENTIAL REALIZABLE
VALUE AT ASSUMED
ANNUAL RATES OF STOCK
% OF TOTAL PRICE APPRECIATION
OPTIONS GRANTED EXERCISE FOR OPTION TERM
OPTIONS TO EMPLOYEES IN PRICE EXPIRATION ------------------------
NAME GRANTED (1) FISCAL YEAR (#/SH) ($)(2) DATE 5%($)(3) 10%($)(3)
- ---- ----------- ------------------ ------ ---- -------- ---------
<S> <C> <C> <C> <C> <C> <C>
K. Jeffrey Dahlberg 0 - - - - -
Ronald G. Olson 0 - - - - -
Charles V. Kanan 10,000 3% 8.00 4/11/01 22,100 48,800
Charles V. Kanan 10,000 3% 9.00 1/1/02 24,900 54,900
Michael E. Flynn 10,000 3% 8.00 4/11/01 22,100 48,800
Michael E. Flynn 10,000 3% 9.00 1/1/02 24,900 54,900
Ted R. Manley 10,000 3% 8.00 4/11/01 22,100 48,800
Ted R. Manley 10,000 3% 9.00 1/1/02 24,900 54,900
</TABLE>
(1) The number indicated is the number of common shares that can be acquired
upon exercise of the option. The Company has not granted any stock
appreciation rights. Each option is non-transferable, becomes
exercisable in four annual installments of 25% per year commencing on
the first anniversary of the date of grant, and provides for forfeiture
of any unvested portion upon termination of employment.
(2) Exercise prices are equal to the fair market value at the date of grant.
(3) The assumed 5% and 10% annual rates of appreciation are hypothetical
rates selected by the Securities and Exchange Commission and are not
intended to, and do not, forecast or assume actual future stock prices.
AGGREGATED OPTION EXERCISES DURING FISCAL 1996 AND FISCAL YEAR-END OPTION VALUES
The following table provides information relating to options exercised
by the Named Executive Officers during fiscal 1996 and the number and value of
options held at fiscal year end. The Company does not have any outstanding stock
appreciation rights.
<TABLE>
<CAPTION>
NUMBER OF UNEXERCISED VALUE OF UNEXERCISED
SHARES OPTIONS AT FISCAL IN-THE-MONEY OPTIONS AT
ACQUIRED ON VALUE YEAR-END (#) FISCAL YEAR-END ($)(1)
NAME EXERCISE (#) REALIZED($) EXERCISABLE/UNEXERCISABLE EXERCISABLE/UNEXERCISABLE
- ---- ------------- ------------ ------------------------- -------------------------
<S> <C> <C> <C> <C>
K. Jeffrey Dahlberg 0 0 0 0
Ronald G. Olson 0 0 45,000/20,000 0
Charles V. Kanan 0 0 16,250/38,750 0/$7,500
Michael E. Flynn 0 0 5,000/35,000 0/$7,500
Ted R. Manley 0 0 12,500/37,500 0/$7,500
</TABLE>
(1) Options are "in-the-money" if the fair market value of the underlying
shares at fiscal year end is greater than the exercise price. The
amounts set forth represent the difference between the fair market value
of the common shares on December 28, 1996 and the option exercise price
multiplied by the number of shares subject to the option.
SEPARATION AGREEMENTS
Under the terms of separation agreement with the Company, Robert E.
Thiner resigned his employment with the Company effective August 12, 1996. Mr.
Thiner agreed to consult with the Company through May 1997 in consideration for
payments totaling $97,500. The Company also agreed to extend the expiration of a
stock option terminating in November, 1996, until July 1, 1997, and agreed to
reprice stock options for a total of 70,000 shares at the then market value as
of the date of his resignation. The separation agreement also includes certain
noncompete, release and confidentiality agreements by Mr. Thiner. Mr. Thiner
will continue as a director until the 1997 Annual Meeting.
Under the terms of separation agreement with the Company, Steven A.
Gemlo resigned his employment with the Company effective August 12, 1996. Mr.
Gemlo agreed to consult with the Company through May 1997 in consideration for
payments totalling $112,500. The Company also agreed to extend the expiration of
a stock option terminating in November, 1996, until July 1, 1997, and agreed to
reprice stock options for a total of 47,500 shares at the then market value as
of the date of his resignation. The separation agreement also includes certain
noncompete, release and confidentiality agreements by Mr. Gemlo. Mr. Gemlo and
K. Jeffrey Dahlberg are brother-in-laws.
The following table provides information relating to the repricing and
replacement of options held by Robert E. Thiner and Steven A. Gemlo, the only
options that have been repriced since the formation of the Company.
<TABLE>
<CAPTION>
LENGTH OF
NUMBER OF ORIGINAL
SECURITIES MARKET PRICE EXERCISE OPTION TERM
UNDERLYING OF STOCK AT PRICE AT REMAINING AT
OPTIONS TIME OF TIME OF NEW EXERCISE DATE OF
NAME DATE REPRICED (#) REPRICING ($) REPRICING ($) PRICE ($) REPRICING (1)
---- ---- ------------ ------------- ------------- --------- -------------
<S> <C> <C> <C> <C> <C> <C>
Robert E. Thiner 8/12/96 50,000 7.25 10.00 7.25 25 months
8/12/96 10,000 7.25 10.50 7.25 36 months
8/12/96 10,000 7.25 8.00 7.25 56 months
Steven A. Gemlo 8/12/96 30,000 7.25 10.00 7.25 25 months
8/12/96 7,500 7.25 10.50 7.25 36 months
8/12/96 10,000 7.25 8.00 7.25 56 months
</TABLE>
(1) The options listed in this table were replaced with options which
expire in April 1999 for Mr. Thiner and in January 1999 for Mr. Gemlo.
COMPLIANCE WITH SECTION 16(a)
Section 16(a) of the 1934 Act requires the Company's directors,
executive officers, and persons who own more than ten percent of the Common
Stock of the Company to file with the Securities and Exchange Commission
("Commission") initial reports of beneficial ownership and reports of changes in
beneficial ownership of common shares of the Company. Directors, officers, and
greater than ten percent shareholders are required by the regulations of the
Commission to furnish the Company with copies of all Section 16(a) reports they
file. To the Company's knowledge, based solely on review of the copies of such
reports furnished to the Company and written representations that no other
reports were required, during the fiscal year ended December 28, 1996, all Form
3 and Form 5 filing requirements were met. The statement of changes in
beneficial ownership on Form 4 were filed late for Ronald G. Olson for the
months of May, July and August and for K. Jeffrey Dahlberg for the month of
August.
COMPENSATION COMMITTEE REPORT
COMPENSATION COMMITTEE CHARTER. The purpose of the Compensation
Committee of the Board of Directors is to oversee compensation of officers, key
employees and nonemployee directors of the Company. The Committee's policy is to
insure that compensation programs contribute directly to the success of the
Company including enhanced share value. The Compensation Committee is comprised
of two members of the Board of Directors, neither of whom is an employee of the
Company.
EXECUTIVE COMPENSATION POLICIES AND PROGRAMS. The Company's executive
compensation programs are designed to attract and retain qualified executives
and to motivate them to maximize shareholder investment by achieving strategic
Company goals. There are three basic components to the Company's executive
compensation program: base pay, annual incentive bonus, and long-term,
equity-based incentive compensation in the form of stock options. Each component
is established in light of individual and Company performance, comparable
compensation programs in the Minneapolis/St. Paul metropolitan area, equity
among employees and cost effectiveness. The initial recommendation with respect
to compensation of all executive officers was made by the Chief Executive
Officer and the Chairman of the Board.
Base Pay. Base pay is designed to be competitive, although
conservative as compared to salary levels for equivalent positions at
comparable companies in the Minneapolis/St. Paul metropolitan area. The
executive's actual salary within this competitive framework depends on
the individual's performance, responsibilities, experience, leadership
and potential future contribution.
Annual Incentive Bonus. In addition to base pay, each
executive is eligible to receive an annual cash bonus. For fiscal 1996,
the bonus for certain executives was tied directly to the earnings per
share of the Company. The bonus for the other executives was tied to
specific performance criteria which were weighted based on the
importance of such criteria to the specific job. The Committee believes
that it is not in the best interests of the Company to identify the
specific earnings measures. Executives were eligible for a bonus of up
to 100% of their base pay.
Long-Term, Equity-Based Incentive Compensation. The long-term,
equity-based compensation program is tied directly to shareholder
return. Under the current program, long-term incentive compensation
consists of stock options that generally do not fully vest until after
four years. Stock options are awarded with an exercise price equal to
the fair market value of the Company's common shares on the date of
grant. Accordingly, the executive is rewarded only if the shareholders
receive the benefit of appreciation in the price of the Common Stock.
Because long-term options vest over time, the Company
periodically (generally once each year) grants new options to provide
continuing incentives for future performance. The size of previous
grants and the number of options held are considered by the Stock
Option Committee, but are not entirely determinative of future grants.
Each executive's actual grants are based upon the individual's
performance, responsibilities, experience, leadership and potential
future contribution and any other factors deemed relevant by the
Committee.
Stock options are designed to align the interests of the
Company's executives with those of shareholders by encouraging
executives to enhance the value of the Company and, hence, the price of
the Common Stock and the shareholders' investment. In addition, through
deferred vesting, this component of the compensation system is designed
to create an incentive for the executive to remain with the Company.
ANNUAL REVIEWS. Each year the Committee reviews its executive
compensation policies and programs and determines what changes, if any, are
appropriate for the following year. In addition, the Compensation Committee
reviews the individual performance of the Chief Executive Officer and the
Chairman of the Board.
CHIEF EXECUTIVE OFFICER. The Chief Executive Officer's compensation is
established by the Compensation Committee based on a subjective consideration of
his performance and the extent to which the Company achieves its strategic and
economic goals established at the beginning of the year and his current level of
compensation in comparison with the level of compensation paid the chief
executive officers of comparable companies in the Minneapolis/St. Paul
metropolitan area. The Chief Executive Officer is eligible for an annual
incentive bonus tied directly to the earnings of the Company. No bonus was paid
for fiscal 1996. The Compensation Committee also considers the Chief Executive
Officer's level of compensation as it relates to other executive officers of the
Company and to the Company's employees in general.
LIMITS ON DEDUCTIBLE COMPENSATION PAYABLE TO EXECUTIVE OFFICERS. The
Omnibus Reconciliation Act of 1993 added Section 162(m) to the Internal Revenue
Code of 1986, as amended (the "Code") limiting corporate deductions to
$1,000,000 for certain compensation paid to the chief executive officer and each
of the four other most highly compensated executives of publicly held companies.
The Company does not believe it will pay "compensation" within the meaning of
Section 162(m) to such executive officers in excess of $1,000,000 in the
foreseeable future. Therefore, the Company does not have a policy at this time
regarding qualifying compensation paid to its executive officers for
deductibility under Section 162(m), but will formulate a policy if compensation
levels ever approach $1,000,000.
The foregoing report is submitted by Dennis J. Doyle and Bruce C.
Sanborn, the members of the Compensation Committee.
COMPENSATION COMMITTEE INTERLOCKS. The Compensation Committee of the
Board of Directors consists of two nonemployee directors, Dennis J. Doyle and
Bruce C. Sanborn. Mr. Sanborn is the Chief Executive Officer of North Central
Life Insurance Company and K. Jeffrey Dahlberg, the Company's Chairman serves on
the Board of North Central Life Insurance Comany.
STOCK PERFORMANCE GRAPH
Shown below is a line graph comparing the yearly dollar change in the
cumulative total shareholder return on the Company's Common Stock as against the
cumulative total return of the NASDAQ Total Return Index and the NASDAQ Retail
Stock Index. The graph and table assume the investment of $100 on August 25,
1993 in the Company's Common Stock and on July 31, 1993 in the NASDAQ Total
Return Index and the NASDAQ Retail Stock Index.
COMPARISON OF CUMULATIVE TOTAL RETURN SINCE
INITIAL PUBLIC OFFERING
[TABLE]
7/93 12/93 12/94 12/95 12/96
---- ----- ----- ----- -----
Grow Biz $100 $118.3333 $ 70.8333 $ 64.1667 $ 58.3333
NASDAQ (US) 100 110.4256 107.9393 152.6464 187.7676
NASDAQ Retail 100 111.6533 101.7220 112.0606 133.6474
APPOINTMENT OF INDEPENDENT AUDITORS
(Proposal #3)
Based on the recommendation of the Audit Committee, the Board of
Directors has voted to retain Arthur Andersen LLP to serve as independent
auditors for the Company for fiscal year 1997 and is submitting its appointment
of such firm to the shareholders for ratification. Arthur Andersen LLP has
served as the Company's independent auditors since 1992. If the appointment is
not ratified, the Board of Directors will reconsider its selection.
Representatives of Arthur Andersen LLP will be present at the meeting, will have
the opportunity to make a statement if they desire and will be available to
respond to appropriate questions.
THE BOARD OF DIRECTORS RECOMMENDS THAT SHAREHOLDERS VOTE "FOR"
RATIFICATION OF THIS APPOINTMENT.
SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS,
DIRECTORS AND EXECUTIVE OFFICERS
The following table sets forth the number of shares of Common Stock
beneficially owned by (i) each person known by the Company to own 5% or more of
the outstanding shares of Common Stock, (ii) each Named Executive Officer, (iii)
each director of the Company and (iv) all directors and executive officers as a
group. All persons named in the table have sole voting and investment power with
respect to all shares of Common Stock owned, unless otherwise noted. The number
of shares listed is as of January 31, 1997 unless otherwise noted.
NUMBER OF SHARES PERCENT OF
BENEFICIALLY OWNED OUTSTANDING SHARES
------------------ ------------------
K. Jeffrey Dahlberg
4200 Dahlberg Drive
Golden Valley, MN 55422 2,570,925(1) 41.1%
Ronald G. Olson
4200 Dahlberg Drive
Golden Valley, MN 55422 1,403,355(2) (3) 22.3%
Sheldon T. Fleck 582,000(4) 9.3%
1400 International Centre
900 Second Avenue South
Minneapolis, MN 55402
Charles V. Kanan 23,539(3) .4%
Ted Manley 15,212(3) .2%
Mike Flynn 10,530(3) .2%
Dennis J. Doyle 30,000(3) .5%
Bruce C. Sanborn 25,100(3)(5) .4%
Randel S. Carlock 15,000(3) .2%
Robert C. Pohlad 15,000(3) .2%
Robert E. Thiner 116,277(3)(6) 1.9%
All directors
and executive officers
as a group (14 persons) 4,265,476(3) 68.0%
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(1) Includes 274,250 shares held in trust for minor children.
(2) Includes 14,100 shares held by Mr. Olson's adult children and 111,600
shares held in trust for these children and 1,500 shares held by Mr.
Olson's wife. Mr. Olson disclaims beneficial ownership of these shares.
(3) Includes the following shares which may be acquired within 60 days
through the exercise of stock options: Mr. Olson - 45,000; Mr. Kanan -
22,500; Mr. Manley - 15,000; Mr. Flynn - 10,000; Mr. Doyle - 15,000;
Mr. Sanborn - 10,000; Mr. Carlock - 15,000; Mr. Pohlad - 15,000, Mr.
Thiner - 85,000; and all directors and executive officers as a group -
246,250.
(4) Includes 80,000 shares held by Mr. Fleck's wife. Mr. Fleck disclaims
beneficial ownership of these shares.
(5) Includes 100 shares held by Mr. Sanborn's son. Mr. Sanborn disclaims
beneficial ownership of these shares.
(6) Includes 2,150 shares held by Mr. Thiner's adult child and 5,000 shares
held by Mr. Thiner's wife. Mr. Thiner disclaims beneficial ownership of
these shares.
CERTAIN TRANSACTIONS
During 1996, two Play It Again Sports franchises, two Once Upon A Child
franchises and a Computer Renaissance franchise, owned by relatives of K.
Jeffrey Dahlberg, paid $46,938 in royalties to the Company and purchased
$272,291 of merchandise through the Company's buying group. In addition, a Play
It Again Sports and a Computer Renaissance franchise, owned by a corporation in
which Steven Gemlo and his relatives are shareholders, paid $20,134 in royalties
to the Company and purchased $98,412 of merchandise through the Company's buying
group.
In June 1996, the Company purchased the assets of a Once Upon a Child
franchise for $175,000 in cash from a relative of K. Jeffrey Dahlberg.
In December 1996, the Company sold a company-owned Computer Renaissance
store to a relative of K. Jeffrey Dahlberg for $254,277 payable over seven
years, with interest at the base rate plus 1.25%, in monthly installments
beginning in January 1997.
The price of the assets of the Once Upon a Child franchise purchased by
the Company and the Computer Renaissance stores sold by the Company were based
upon fair market value as negotiated between the Company and such third party.
The Company leases from PIAS Holdings, a general partnership owned by
K. Jeffrey Dahlberg and Ronald G. Olson, certain real property which houses a
corporate owned retail store located at 3505 Hennepin Avenue, Minneapolis,
Minnesota. Pursuant to this lease, the Company is obligated to make lease
payments of $5,500 per month through September 2000. During fiscal 1996, the
Company made payments of $66,000 under this lease.
SHAREHOLDER PROPOSALS
The Company will consider any shareholder proposals for inclusion in
the proxy materials for the 1998 Annual Meeting of Shareholders if such
proposals are received by the Company no later than November 17, 1997.
Proposals must also comply with all applicable statutes and regulations.
ANNUAL REPORTS
The Company's 1996 Annual Shareholder Report, including financial
statements, is being mailed with this proxy statement to shareholders entitled
to notice of the Annual Meeting. THE COMPANY WILL FURNISH WITHOUT CHARGE TO
SHAREHOLDERS A COPY OF THE COMPANY'S ANNUAL REPORT ON FORM 10-K FOR FISCAL YEAR
1996, AS FILED WITH THE SECURITIES AND EXCHANGE COMMISSION UPON RECEIPT OF
WRITTEN REQUEST ADDRESSED TO: CORPORATE SECRETARY, GROW BIZ INTERNATIONAL, INC.,
4200 DAHLBERG DRIVE, MINNEAPOLIS, MINNESOTA 55422-4837.
OTHER MATTERS
The Board of Directors knows of no other matters to be presented at the
meeting. In the event any other business is presented at the meeting, the
persons named in the enclosed proxy will have authority to vote on that business
in accordance with their judgment.
By Order of the Board of Directors
Gaylen L. Knack
SECRETARY
PROXY
GROW BIZ INTERNATIONAL, INC.
PROXY SOLICITED BY THE BOARD OF DIRECTORS FOR ANNUAL MEETING OF SHAREHOLDERS
-- APRIL 30, 1997
The undersigned shareholder(s) of Grow Biz International, Inc. (the
"Company") hereby appoints K. Jeffrey Dahlberg, Ronald G. Olson and Gaylen L.
Knack and each of them, as attorneys, agents and proxies of the undersigned with
full power of substitution in each of them, to vote, as designated below, in the
name and on behalf of the undersigned at the Annual Meeting of Shareholders of
the Company to be held on April 30, 1997, at 4:00 p.m., Central Daylight Time,
at the Company's corporate offices, 4200 Dahlberg Drive, Minneapolis, Minnesota,
and at all adjournments thereof, all of the common shares of the Company which
the undersigned would be entitled to vote if personally present, with the powers
the undersigned would possess if personally present:
I. Approving setting the number of members of the Board of Directors at
six;
[ ] GRANT [ ] WITHHOLD
II. Authority to vote for the election of K. Jeffrey Dahlberg, Ronald G.
Olson, Randel S. Carlock, Dennis J. Doyle, Robert C. Pohlad and Bruce C.
Sanborn. You may withhold authority to vote for a nominee by lining through
his name;
[ ] GRANT [ ] WITHHOLD
III. Ratifying the appointment of Arthur Andersen LLP as independent
auditors for the current fiscal year;
[ ] FOR [ ] AGAINST [ ] ABSTAIN
IV. In their discretion, upon such other business as may properly come before
the meeting, all as set out in the Notice of Annual Meeting of Shareholders and
Proxy Statement dated March 17, 1997, receipt of which is hereby acknowledged.
(Continued, and to be SIGNED, on other side)
(continued from other side)
ALL SHARES WILL BE VOTED AS SPECIFIED. IF NO CHOICES ARE SPECIFIED, THE
SHARES WILL BE VOTED FOR THE DIRECTORS AS SET FORTH IN THE PROXY STATEMENT
AND FOR ALL OTHER IDENTIFIED MATTERS.
A majority of said attorneys or their substitutes who shall be present and
act, or if only one shall attend, then that one, shall have and may exercise
all the powers of said attorneys hereunder.
Dated: ___________________, 1997
(Please insert date)
________________________________
(Signature)
________________________________
(Joint Owner's Signature)
[Signature(s) should agree with stenciled name(s).] When signing as attorney,
guardian, executor, administrator or trustee, please give title. If the
signer is a corporation, please give the full corporate name and sign by a
duly authorized officer, showing the officer's title. EACH joint owner is
requested to sign.
PLEASE EXECUTE AND RETURN THIS PROXY PROMPTLY.
YOUR COOPERATION WILL BE APPRECIATED.
