<PAGE>
SCHEDULE 14A INFORMATION
PROXY STATEMENT PURSUANT TO SECTION 14(A) OF THE SECURITIES EXCHANGE ACT OF 1934
(AMENDMENT NO. )
Filed by the Registrant [X]
Filed by a Party other than the Registrant [_]
Check the appropriate box:
[_] Preliminary Proxy Statement [_] Confidential, for Use of the
Commission Only (as permitted by
Rule 14a-6(e)(2))
[X] Definitive Proxy Statement
[_] Definitive Additional Materials
[_] Soliciting Material Pursuant to (S)240.14a-11(c) or (S)240.14a-12
Geerlings & Wade, Inc.
------------------------------------------------
(Name of Registrant as Specified In Its Charter)
The Board of Directors of the Registrant
------------------------------------------------
(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 (Set forth the amount on which the
filing fee is calculated and state how it was determined):
________________________________________________________________________
(4) Proposed maximum aggregate value of transaction:
________________________________________________________________________
(5) Total fee paid:
________________________________________________________________________
[_] Fee paid previously with preliminary materials.
[_] Check box if any part of the fee is offset as provided by Exchange Act Rule
0-11(a)(2) and identify the filing for which the offsetting fee was paid
previously. Identify the previous filing by registration statement number,
or the Form or Schedule and the date of its filing.
(1) Amount Previously Paid:
________________________________________________________________________
(2) Form, Schedule or Registration Statement No.:
________________________________________________________________________
(3) Filing Party:
________________________________________________________________________
(4) Date Filed:
________________________________________________________________________
<PAGE>
[GEERLINGS & WADE LETTERHEAD APPEARS HERE]
[GEERLINGS & WADE LOGO APPEARS HERE]
April 11, 1997
Dear Stockholder:
It is our pleasure to invite you to the Annual Meeting of Stockholders of
Geerlings & Wade, Inc. to be held on May 13, 1997 at 2:00 p.m. at the offices of
Ropes & Gray, One International Place, Boston, Massachusetts 02110.
Whether or not you plan to attend, and regardless of the number of shares you
own, it is important that your shares be represented at the meeting. You are
accordingly urged to sign, date and return your proxy promptly in the enclosed
envelope, which requires no postage if mailed in the United States. Your return
of a proxy in advance will not affect your right to vote in person at the
meeting.
We hope that you will be able to attend the meeting. The officers and
directors of Geerlings & Wade, Inc. look forward to seeing you at that time.
Sincerely
/s/ Huib E. Geerlings
Huib E. Geerlings
Chairman of the Board of Directors
/s/ Phillip D. Wade
Phillip D. Wade
Director
<PAGE>
GEERLINGS & WADE, INC.
960 TURNPIKE STREET
CANTON, MASSACHUSETTS 02021
________________
NOTICE OF ANNUAL MEETING OF STOCKHOLDERS
To be held May 13, 1997
____________________
The Annual Meeting of Stockholders of Geerlings & Wade, Inc. (the
"Company") will be held at the offices of Ropes & Gray, One International Place,
Boston, Massachusetts 02110, on Tuesday, May 13, 1997 at 2:00 p.m. for the
following purposes:
1. To elect one director for a three-year term ending in 2000.
2. To approve an increase of 150,000 shares in the aggregate number of
shares reserved for issuance under the Company's Stock Option Plan.
3. To ratify the appointment of Arthur Andersen LLP as independent
auditors of the Company.
4. To transact such other business as may properly come before the meeting
and any adjournment thereof.
The Board of Directors has fixed the close of business on March 21, 1997 as
the record date for determination of stockholders entitled to notice of and to
vote at the meeting and any adjournments thereof.
IF YOU ARE UNABLE TO BE PRESENT PERSONALLY, PLEASE SIGN AND DATE THE
ENCLOSED PROXY AND RETURN IT PROMPTLY IN THE ENCLOSED ENVELOPE.
By Order Of The Board Of Directors,
/s/ Jay L. Essa
Jay L. Essa
President and Chief Executive Officer
April 11, 1997
<PAGE>
GEERLINGS & WADE, INC.
960 TURNPIKE STREET
CANTON, MASSACHUSETTS 02021
___________________
PROXY STATEMENT
ANNUAL MEETING OF STOCKHOLDERS
___________________
The accompanying proxy is solicited by and on behalf of the Board of
Directors of Geerlings & Wade, Inc. (the "Company") for use at the Annual
Meeting of Stockholders to be held at the offices of Ropes & Gray, One
International Place, Boston, Massachusetts 02110 on Tuesday, May 13, 1997 at
2:00 p.m. and any adjournments thereof.
Stockholders of record at the close of business on March 21, 1997 will be
entitled to vote at the Annual Meeting of Stockholders. On that date, there were
3,779,380 shares of Common Stock, par value $.01 per share (the "Common Stock"),
of the Company outstanding, the holders of which are entitled to one vote per
share on each matter to come before the meeting. Proxies properly executed and
returned will be voted at the meeting in accordance with any directions noted
thereon or, if no direction is indicated, proxies will be voted FOR the election
of the nominee for director set forth herein, FOR an increase of 150,000 shares
in the aggregate number of shares reserved for issuance under the Company's
Stock Option Plan and FOR the ratification of the appointment of Arthur Andersen
LLP as independent auditors of the Company. Proxies will be voted in the
discretion of the holders of the proxy with respect to any other business that
may properly come before the meeting and all matters incidental to the conduct
of the meeting. Any stockholder signing and delivering a proxy may revoke it at
any time before it is voted by delivering to the Clerk of the Company a written
revocation or a duly executed proxy bearing a later date than the date of the
proxy being revoked. Any record stockholder attending the meeting in person may
revoke his or her proxy and vote his or her shares at the meeting.
This Proxy Statement was mailed to stockholders on or about April 11, 1997.
-1-
<PAGE>
PROPOSAL NUMBER ONE
ELECTION OF DIRECTOR
One director is to be elected at the 1997 Annual Meeting for a three-year
term that expires in 2000. In March 1997, Mr. William J. Shea, a director of the
Company since its initial public offering in June 1994, announced that he would
not stand for re-election as a director in view of business and personal
reasons. In accordance with the by-laws of the Company, the Board of Directors
has reduced the size of the Board of Directors to four directors. Three other
directors have been elected to terms that end in either 1998 or 1999, as
indicated below. Unless instructions are given to the contrary, it is the
intention of the persons named as proxies to vote the shares to which each proxy
relates FOR the election of the nominee listed below for a term of three years
expiring at the 2000 Annual Meeting of Stockholders and until his successor is
elected and qualified or until his earlier death, removal or resignation. The
nominee named below is presently serving as a director of the Company and is
anticipated to be available for election and able to serve. However, if the
nominee should become unavailable, such proxy will be voted for substitute
nominees designated by the Board of Directors. The Company does not anticipate
that the nominee will become unavailable. The nominee for election as a director
at the Annual Meeting who receives the greatest number of votes properly cast
for the election of director shall be elected.
Set forth below is certain information concerning the nominee and the other
incumbent directors:
NOMINEE FOR ELECTION AT THE 1997 ANNUAL MEETING
HUIB E. GEERLINGS - Mr. Geerlings is Chairman of the Board of Directors and
until February 1995 held the position of Chief Executive Officer. Mr. Geerlings
was a consultant to the Company from its inception until June 1988 when he
became Chairman of the Board of Directors. Mr. Geerlings was employed at
Coopers & Lybrand in Rotterdam, The Netherlands from 1981 to 1984 when he
transferred to Coopers & Lybrand in Boston, Massachusetts. Mr. Geerlings worked
as an Audit Manager for Coopers & Lybrand in Boston, Massachusetts until June
1988. Mr. Geerlings received his undergraduate degree and his Masters in
Business Administration from Erasmus University in Rotterdam. Mr. Geerlings is
42 years old.
DIRECTOR WHOSE TERM EXPIRES IN 1998
ROBERT L. WEBB - Mr. Webb has been a director of the Company since its
initial public offering in June 1994. Mr. Webb was the co-founder, and served
as President and Chief Executive Officer of Webb & Co., a direct-marketing
consulting agency from 1973 until 1997. Mr. Webb was also the co- founder and
now serves as the Vice President of Catalog Ventures, Inc., established in 1989,
which publishes five national direct-mail consumer gift catalogs. Mr. Webb
received his undergraduate degree from the United States Air Force Academy and
holds a Master's Degree from the Fletcher School of International Law and
Diplomacy of Tufts University. Mr. Webb is 49 years old.
DIRECTORS WHOSE TERMS EXPIRE IN 1999
PHILLIP D. WADE - Mr. Wade has been a director of the Company since its
inception in August 1986 and served as President of the Company from August 1986
through August 1996. From February
-2-
<PAGE>
1995 until August 1996, Mr. Wade also served as Chief Executive Officer and
Treasurer of the Company. From July 1981 through October 1986, Mr. Wade was
engaged in a number of capacities at Coopers & Lybrand in Boston, Massachusetts,
most recently as Audit Manager. He is a graduate of Northeastern University. Mr.
Wade is 39 years old.
JAMES C. CURVEY - Mr. Curvey has been a director of the Company since its
initial public offering in June 1994. Mr. Curvey is President of Fidelity
Capital, Inc. and a director of FMR Corp. ("Fidelity Investments"). Mr. Curvey
joined Fidelity Investments in June 1982 as Vice President, Human Resources and
became Senior Vice President for Administration in January 1983. Mr. Curvey has
served in his current position since December 1986. Prior to joining Fidelity
Investments, Mr. Curvey was Vice President, Human Resources for the Chase
Manhattan Bank in New York. Mr. Curvey received his B.S. degree from Villanova
University in 1957 and M.A. from George Washington University in 1962. Mr.
Curvey is 61 years old.
INFORMATION CONCERNING THE BOARD AND ITS COMMITTEES
In fiscal 1996, the Board of Directors held nine meetings. The Board has
two standing committees: the Audit Committee and the Compensation Committee.
The Audit Committee was established in June 1994 and held one meeting
during fiscal 1996. The duties of the Audit Committee are (i) to review with
management and the independent auditors the scope and results of the annual
audit, the nature of any other services provided by the independent auditors,
changes in the accounting principles applied to the presentation of the
Company's financial statements, and any comments by the independent auditors on
the Company's policies and procedures with respect to internal accounting,
auditing and financial controls, and (ii) to make recommendations to the Board
of Directors on the engagement of the independent auditors.
The Compensation Committee was established in June 1994 and held eight
meetings during fiscal 1996. The duties of the Compensation Committee are to
recommend compensation arrangements for the President and Chief Executive
Officer and review annual compensation arrangements for all other officers and
significant employees. The Compensation Committee also has the responsibility
to administer the Company's Stock Option Plan. Accordingly, the Compensation
Committee has the discretionary authority to (i) grant option awards to eligible
persons, (ii) determine the time or times when awards shall be granted and the
number of shares of Common Stock subject to each award, (iii) designate options
as incentive options, (iv) determine the terms and conditions of each award, (v)
prescribe the form or forms of any instruments evidencing awards and any other
instruments required under the Plan and to change such forms from time to time,
(vi) adopt, amend, and rescind rules and regulations for the administration of
the Stock Option Plan, and (vii) interpret the Stock Option Plan and decide any
questions and settle all controversies and disputes that may arise in connection
with the Stock Option Plan. Messrs. Curvey, Shea and Webb are the members of the
Compensation Committee and are "disinterested persons" as that term is used in
Rule 16b-3 under the Securities Exchange Act of 1934, as amended.
In fiscal 1996, directors of the Company who were not employees of the
Company were paid $750 per meeting of the Board of Directors and $250 for each
meeting of a committee thereof (other than a meeting held coincident with a
Board meeting) that they attended. Directors who are employees of the Company
are not paid any fees or additional compensation for service as members of the
Board of
-3-
<PAGE>
Directors or any of its committees. All directors are reimbursed for reasonable
travel and other expenses of attending meetings to the Board of Directors and
committees of the Board of Directors.
In addition, pursuant to the Non-Employee Director's Stock Option Plan (the
"Director's Stock Option Plan"), each of Messrs. Curvey, Shea and Webb received
options to purchase 2,500 shares of the Company's Common Stock at an exercise
price of $4.50 per share upon the anniversary of their election to the Board of
Directors on June 24, 1996. The options granted under the Director's Stock
Option Plan become exercisable in three equal annual installments commencing on
the first anniversary of the date of the grants.
THE BOARD OF DIRECTORS RECOMMENDS ELECTION
OF THE NOMINEE DESCRIBED ABOVE
-4-
<PAGE>
EXECUTIVE OFFICERS OF THE COMPANY
The following table sets forth certain information with respect to the
executive officers of the Company and other significant employees as of April
11, 1997. All of the Company's officers are elected annually and serve at the
discretion of the Board of Directors.
<TABLE>
<CAPTION>
NAME AGE POSITION
- ---- --- --------
<S> <C> <C>
Jay L. Essa 53 President and Chief Executive Officer
David R. Pearce 38 Vice President, Chief Financial Officer
and Treasurer
</TABLE>
JAY L. ESSA - Mr. Essa has been President and Chief Executive Officer of
the Company since September 1996. Prior to joining the company, Mr. Essa was
Managing Director for Europe since 1993 for E&J Gallo Winery ("Gallo"), one of
the world's largest wineries with revenues of approximately $1 billion. Mr. Essa
joined Gallo in 1970 in sales and was promoted to the following positions:
General Sales Manager for Valley Vintners, General Sales Manager for Mountain
Wine, Regional Manager for Vintage Wine Division, General Manager for Gallo
Sales Company, Managing Director for U.K. and Eire. Mr. Essa is 53 years old.
DAVID R. PEARCE - Mr. Pearce has been Vice President and Chief Financial
Officer of the Company since November 1996. Prior to joining the Company, Mr.
Pearce was Chief Financial Officer of State Line Tack, Inc. Mr. Pearce joined
State Line Tack, Inc. in 1995 and was a director from 1993 to 1996. From 1991 to
1995, Mr. Pearce was Vice President of Environmental Power Corporation and was
previously Managing Director of BancIreland/First Financial, Inc. Mr. Pearce
received his undergraduate degree from Brown University and his Masters of
Business Administration from University of California, Berkeley. Mr. Pearce is
38 years old.
OTHER KEY PERSONNEL
The Company's other key personnel are:
<TABLE>
<CAPTION>
NAME AGE POSITION
- ---- --- --------
<S> <C> <C>
Gregg A. Kober 34 Director of Operations
Michael J. LaFrance 30 Director of Sales and Customer Service
Michael McCann 37 Wine Director
Lee Tuttle 40 Director of Information Services
</TABLE>
GREGG A. KOBER - Mr. Kober joined the Company in September 1996. Mr.
Kober was previously employed since 1989 by Bose Corporation, most recently as
Manager of Business Operations. Mr. Kober is a graduate of Northeastern
University.
MICHAEL LAFRANCE - Mr. LaFrance joined the Company in December 1996. Prior
to joining the Company, Mr. LaFrance was
-5-
<PAGE>
a consultant to Bose Corporation. During 1995, Mr. LaFrance was employed by
Walt Disney World as Marketing Operations Manger. From 1989 through 1994, Mr.
LaFrance held various positions with Bose Corporation's Direct Marketing Group.
MICHAEL MCCANN - Mr. McCann joined the Company in January 1997. Mr. McCann
was previously employed since 1991 by United Liquors Limited, the largest wine
wholesaler in New England, as Sales Manager of its Fine Wine Division. Mr.
McCann has 18 years of experience in the wine industry. Mr. McCann attended St.
Joseph's University.
LEE TUTTLE - Mr. Tuttle has served as the Company's Director of Information
Systems since September 1995. Mr. Tuttle was previously employed since 1985 by
Lotus Development Corporation in Cambridge, Massachusetts, most recently as
Programming Manager. Mr. Tuttle is a graduate of Northeastern University.
SUMMARY COMPENSATION TABLE
The following Summary Compensation Table sets forth compensation earned for
all services rendered to the Company during each of the last three fiscal years,
as applicable, by persons serving as the Company's Chief Executive Officer and
President (collectively, the "Named Executive Officers") and each other officer
or employee of the Company who earned compensation in excess of $100,000 for the
year ended December 31, 1996.
<TABLE>
<CAPTION>
ANNUAL COMPENSATION
--------------------------------------
NAME AND PRINCIPAL POSITION AT
DECEMBER 31, 1996 FISCAL YEAR SALARY ($) BONUS ($)
----------- ---------- ---------
<S> <C> <C> <C>
Phillip D. Wade (1) 1996 121,500 --
President, Treasurer and Chief 1995 150,000 --
Executive Officer 1994 120,000 --
Jay L. Essa (2) 1996 53,846 --
President, Treasurer and Chief
Executive Officer
Peter F. McAree (3) 1996 132,238 --
Vice President and Chief 1995 68,452 --
Financial Officer
</TABLE>
- ---------------------------------
(1) Mr. Wade served as President, Treasurer and Chief Executive Officer through
September 9, 1996. Part of Mr. Wade's compensation in 1997 was in the form
of consulting fees after September 9, 1996.
(2) Mr. Essa was elected President, Treasurer and Chief Executive Officer
effective September 9, 1996.
(3) Mr. McAree served as Vice President and Chief Financial Officer through
November 11, 1996. Part of Mr. McAree's compensation in 1997 was in the form
of severance.
-6-
<PAGE>
OPTION GRANTS IN LAST FISCAL YEAR
INDIVIDUAL GRANTS
<TABLE>
<CAPTION>
POTENTIAL REALIZABLE
VALUE AT ASSUMED
% OF TOTAL ANNUAL RATES OF STOCK
OPTIONS PRICE APPRECIATION FOR
GRANTED TO OPTION TERM($) (2)
OPTIONS EMPLOYEES IN EXERCISE EXPIRATION ------------------
NAME GRANTED FISCAL YEAR (1) PRICE($/SH) DATE 5% 10%
- ---- ------- ---------------- ----------- ---- -- ---
<S> <C> <C> <C> <C> <C> <C>
Jay L. Essa 100,000 39.1% $3.78125 9/9/2006 $237,801 $602,634
Peter F. McAree 25,000 9.8% $8.00 5/5/2005 $125,779 $318,749
</TABLE>
(1) During fiscal 1996, the Company granted to its employees options covering
255,953 shares of Common Stock. Except as noted, all options become
exercisable in three equal annual increments commencing on the first
anniversary of the date of grant, which is ten years prior to the
expiration. Options granted to Mr. McAree became exercisable in two equal
annual increments commencing on the first anniversary of the date of the
grant.
(2) These potential realizable values are based on assumed rates of appreciation
required by applicable regulations of the Securities and Exchange
Commission. The potential realizable values stated are not discounted to
their present value.
AGGREGATED OPTION EXERCISES IN LAST FISCAL YEAR
AND FISCAL YEAR-END OPTION VALUES
<TABLE>
<CAPTION>
SHARES
ACQUIRED
ON VALUE
EXERCISE REALIZED NUMBERS OF VALUE OF UNEXERCISED
-------- -------- OPTIONS IN-THE-MONEY OPTIONS
NAME (#) ($) AT FY-END (#) AT FY-END ($)(1)
- ---- -------- -------- ------------ ----------------
EXERCISABLE UNEXERCISABLE EXERCISABLE UNEXERCISABLE
----------- ------------- ----------- -------------
<S> <C> <C> <C> <C> <C> <C>
Jay L. Essa -- -- 20,000 80,000 $11,875 $47,500
Peter F. McAree -- -- 12,500 -- -- --
</TABLE>
(1) The closing bid price for the Company's Common Stock on the NASDAQ National
Market System on December 31, 1996, the last trading day of the fiscal year,
was $4.375 per share.
-7-
<PAGE>
COMPENSATION COMMITTEE REPORT
NOTWITHSTANDING ANYTHING TO THE CONTRARY SET FORTH IN ANY OF THE COMPANY'S
PREVIOUS FILINGS UNDER THE SECURITIES ACT OF 1933, AS AMENDED, OR THE SECURITIES
EXCHANGE ACT OF 1934, AS AMENDED, THAT MIGHT INCORPORATE FUTURE FILINGS,
INCLUDING THIS PROXY STATEMENT, IN WHOLE OR IN PART, THE FOLLOWING REPORT AND
THE PERFORMANCE GRAPH ON PAGE 10 SHALL NOT BE INCORPORATED BY REFERENCE INTO ANY
SUCH FILINGS.
REPORT OF THE COMPENSATION COMMITTEE
The Compensation Committee of the Board of Directors of the Company is
currently composed of three outside directors, Messrs. Curvey, Shea and Webb.
The Committee's responsibilities include recommending the annual compensation
arrangements for the President and Chief Executive Officer of the Company,
reviewing the annual compensation arrangements for all other officers and
significant employees of the Company and administering the Company's Stock
Option Plan. No member of this Committee was an officer or employee of the
Company during 1996.
The Company believes that all of its employees are vital to its continued
success. It is crucial that employees understand the Company's objectives and
the role they play in the achievement of these objectives. With this in mind,
the Company seeks to create a positive work environment for its employees,
including an appropriate level of training and ample opportunities for
advancement for all its employees.
Under the supervision of the Compensation Committee, the Company has developed
and implemented compensation policies and plans that seek to tie the financial
interests of the Company's senior management with the interests of its
stockholders. As a result, the Company seeks to reward performance in those
quantitative areas believed to be important to the long-term interests of
stockholders, namely enhanced sales growth and profitability and the successful
implementation of the Company's business plan. The Company believes that success
in these quantitative areas will also be evidence of success in the qualitative
areas discussed above relating to the work environment for the Company's
employees, employee training and the employees' opportunity for advancement. In
addition, the Company seeks to provide total compensation packages that will
attract the best talent to the Company, motivate individuals to perform at their
highest levels, reward outstanding performance and retain executives whose
skills are critical for building long-term stockholder value. To implement these
policies, the Company's compensation structure has three components: base
salary, cash bonuses and stock options.
With respect to the Company's other officers and employees, compensation is
determined based upon the recommendations to the Compensation Committee of the
President Chief Executive Officer and the Chief Financial Officer upon
consideration of such individuals' performance and any changes in their
functional responsibilities.
Officer and employee compensation is generally comprised of a combination of
cash compensation and grants of options under the Company's Stock Option Plan.
Stock options are awarded during the year on a discretionary basis. Stock
options are intended to offer an equity incentive for superior performance and
to foster the retention of key personnel through awards structured to vest and
become exercisable over time provided that the individual remains employed by
the Company. There is no set formula for the award of options. Factors
considered in making option awards to officers and employees of the Company
-8-
<PAGE>
included prior grants to such officers or employees, the importance of retaining
such officer's or employee's services, such officer's or employee's potential to
contribute to the success of the Company and such officer's or employee's past
contributions to the Company.
Compensation Committee
Of The Board of Directors
James C. Curvey
William J. Shea
Robert Webb
EMPLOYMENT ARRANGEMENTS
Mr. Wade entered into an employment agreement (the "Wade Agreement"),
effective June 24, 1994, with the Company for an initial term of three years,
which can be extended automatically for additional terms of two years each. The
Wade Agreement provided for a base salary of $250,000 for Mr. Wade in 1996;
however, Mr. Wade has waived the compensation provisions of the Wade Agreement
with respect to compensation in excess of $150,000. Pursuant to his resignation
as President and Chief Executive Officer on September 9, 1996, Mr. Wade has
waived the compensation and bonus provisions of the Wade Agreement with the
Company. Through September 9, 1996, Mr. Wade was compensated at an annual rate
of pay of $150,000. In addition, subsequent to his resignation as President and
Chief Executive Officer, Mr. Wade was paid fees in respect of certain consulting
services.
Effective September 9, 1996, Mr. Essa and the Company entered into a letter
agreement (the "Essa Agreement") pursuant to which Mr. Essa has agreed to serve
as the Company's President, Chief Executive Officer and Treasurer. The Essa
Agreement provides for a base salary of $200,000 and for a grant of 100,000
stock options under the Stock Option Plan. Mr. Essa is also entitled to
reimbursement of certain relocation expenses. The Essa Agreement is terminable
at will at the option of the Company or Mr. Essa.
Effective November 8, 1996, Mr. Pearce and the Company entered into a letter
agreement (the "Pearce Agreement") pursuant to which Mr. Pearce has agreed to
serve as the Company's Vice President, Chief Financial Officer and Treasurer.
The Pearce Agreement provides for a base salary of $130,000 and for a grant of
35,000 stock options under the Stock Option Plan. The Pearce Agreement is
terminable at will at the option of the Company or Mr. Pearce.
-9-
<PAGE>
PERFORMANCE GRAPH
The following graph compares the yearly percentage change in the Company's
cumulative total shareholder return on its Common Stock with the cumulative
total return on the Nasdaq Market Index (Broad Market index) and a self-
constructed peer group index from June 17, 1994, the date of the Company's
initial public offering, through December 30, 1996, the last trading day of
fiscal 1996. The cumulative total shareholder return is based on $100 invested
in Common Stock of the Company and in the respective indices on June 17, 1994
(including reinvestment of dividends). The stock prices on the Performance
Graph are not necessarily indicative of future price performance.
[GRAPH APPEARS HERE]
<TABLE>
<CAPTION>
Geerlings
& Broad
Wade, Inc. Peer Group Market
--------- ---------- --------
<S> <C> <C> <C>
06/17/94 $ 100.00 $ 100.00 $ 100.00
12/31/94 $ 163.89 $ 53.46 $ 103.21
12/31/95 $ 65.28 $ 39.68 $ 133.87
12/31/96 $ 48.61 $ 49.90 $ 166.36
</TABLE>
______________________________
* The Peer Group index is comprised of the following direct-mail retail
marketing companies: DM Management Corporation (DMMC), Green Mountain Coffee
(GMC), Hanover Direct (HW), Land's End (LE), Lilian Vernon (LVC), Right
Start (RTST), Spiegel (SPGLA) and Vermont Teddy Bear (BEAR). Each of these
companies is publicly traded. The returns of each company have been weighted
according to their respective stock market capitalization for purposes of
arriving at a peer group average.
-10-
<PAGE>
OWNERSHIP OF COMMON STOCK
The following table sets forth information regarding the beneficial
ownership of the Company's Common Stock as of April 10, 1996, by each person
known to the Company to be the beneficial owner of more than five percent of the
Common Stock, each director of the Company, each executive officer of the
Company and all directors and executive officers of the Company as a group.
Except as otherwise indicated, the beneficial owners of the Common Stock listed
below, based on information furnished by such owners, have sole investment and
voting power with respect to such shares. The business address for each
director and executive officer of the Company is in care of the Company.
<TABLE>
<CAPTION>
SHARES
NAME AND ADDRESS BENEFICIALLY OWNED PERCENT
- ---------------- ------------------ -------
<S> <C> <C>
Huib Geerlings................................... 920,000 24.34%
Phillip D. Wade.................................. 707,242 18.71%
Jay L. Essa (1).................................. 20,000 *
James C. Curvey (2).............................. 103,498 2.74%
William J. Shea (2).............................. 2,499 *
Robert L. Webb (2)............................... 2,499 *
All Directors and executive officers as a group
(7 persons)...................................... 1,763,938 46.67%
</TABLE>
- --------------------------------------------------
* Less than 1%
(1) Represents options to purchase shares of the Company's common stock
exercisable within 60 days of April 11, 1996.
(2) Includes options to purchase 2,499 shares of the Company's common stock
issued under the Non-Employee Director Stock Option Plan which are
currently exercisable.
CERTAIN TRANSACTIONS
Mr. Shea is Vice Chairman, Chief Financial Officer and Treasurer of Bank of
Boston Corporation. The First National Bank of Boston, a subsidiary of Bank of
Boston Corporation, is the Company's senior lender under a revolving
discretionary demand line of credit. Boston EquiServe, L.P., a Bank of
Boston/State Street Service Company, also serves as the Company's Transfer Agent
and Registrar.
-11-
<PAGE>
PROPOSAL NUMBER TWO
APPROVAL OF INCREASE IN SHARES RESERVED FOR ISSUANCE
UNDER THE COMPANY'S STOCK OPTION PLAN
THE COMPANY'S STOCK OPTION PLAN
The Company's Stock Option Plan (the "Stock Option Plan") was adopted to
advance the Company's interests by enhancing its ability to attract and retain
able employees and others in a position to make significant contributions to the
success of the Company through ownership of shares of Common Stock. A total of
300,000 shares of Common Stock is currently reserved for issuance under the
Stock Option Plan, subject to adjustment for stock dividends and similar events.
Stockholders are being requested to approve at the Annual Meeting an
increase of 150,000 shares in the total number of shares reserved for issuance
under the Stock Option Plan. Unless instructions are given to the contrary, it
is the intention of the persons named as proxies to vote the shares to which the
proxy is related FOR the increase in the number of shares reserved for issuance
under the Stock Option Plan by 150,000 shares. If this proposal is approved,
there will be 450,000 of Common Stock reserved for issuance under the Stock
Option Plan.
The Stock Option Plan was adopted by the Board of Directors of the Company
on June 24, 1993, and subsequently amended on February 28, 1994 and April 8,
1994. The stockholders of the Company adopted the Stock Option Plan, as
amended, on April 8, 1994. On November 1, 1994, the Board of Directors voted to
amend the Stock Option Plan by increasing the number of shares reserved for
issuance under the Stock Option Plan to 300,000 shares of Common Stock, and the
stockholders of the Company approved such increases on May 18, 1995. The Stock
Option Plan currently provides for the grant of awards covering a maximum of
300,000 shares of Common Stock to employees, consultants and advisers to the
Company ("participants"). On February 1, 1995, the Board of Directors voted to
further amend the Stock Option Plan by increasing the number of options which
may be granted to an individual employee to a total of 100,000, and the
stockholders of the Company approved such amendment on May 18, 1995.
On February 27, 1996, the Board of Directors voted to effectuate a change
in the exercise price of options issued and outstanding under the Stock Option
Plan as of February 27, 1996. Under this change, active employees who are
holders of options with an exercise price greater than $8.00 per share were
permitted to effectively exchange such options for options with an exercise
price of $8.00 per share. This was accomplished by the Board of Directors
terminating such existing options and reissuing to the employee an option for an
equal number of shares and containing identical provisions with respect to
vesting and exercise other than with respect to the exercise price which will be
$8.00. The Board of Directors determined that such options should be reissued
at $8.00 per share, which is currently higher than the fair market value of a
share of the Company's Common Stock, and in view of the fact that the Company's
Common Stock was priced at $8.00 in connection with the Company's initial public
offering in June 1994. The stockholders of the Company approved these changes
on May 14, 1996.
Options granted under the Stock Option Plan may be in the form of incentive
stock options (within the meaning of Section 422 of the Internal Revenue Code of
1986, as amended (the "Code")), or options that are not incentive options, or
both. Incentive options may only be granted to "employees" as defined in the
Code or regulations thereunder applicable to incentive stock options.
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<PAGE>
The Stock Option Plan is administered by the Compensation Committee of the
Board of Directors of the Company which has discretionary authority to (i) grant
option awards to eligible persons, (ii) determine the time or times when awards
shall be granted and the number of shares of Common Stock subject to each award,
(iii) designate options as incentive options, (iv) determine the terms and
conditions of each award, (v) prescribe the form or forms of any instruments
evidencing awards and any other instruments required under the Stock Option Plan
and to change such forms from time to time, (vi) adopt, amend, and rescind rules
and regulations for the administration of the Stock Option Plan, and (vii)
interpret the Stock Option Plan and to decide any questions and settle all
controversies and disputes that may arise in connection with the Stock Option
Plan. Under the Stock Option Plan, options granted to directors or executive
officers may only be granted by a committee of the Board of Directors comprised
of "disinterested persons" within the meaning of Rule 16b-3 under the Securities
Exchange Act of 1934, as amended.
The exercise price of each option is determined by the Compensation
Committee, but in the case of an incentive option the price shall not be less
than 100% (110%, in the case of an incentive option granted to a ten-percent
stockholder) of the fair market value of the Common Stock at the time the
option is granted, nor shall the exercise price be less, in the case of an
original issue of authorized stock, than par value. The latest date on which an
option may be exercised shall be the date which is ten years (five years, in the
case of an incentive option granted to a ten-percent stockholder) from the date
the option was granted, or such earlier dates as may be specified by the
Compensation Committee.
An option may be exercised by payment of the option price (i) in cash, (ii)
if permitted by the Compensation Committee, (A) through the delivery of shares
of Common Stock having a fair market value equal to the purchase price, (B) by
delivery of a promissory note payable on such terms as are specified by the
Compensation Committee, (C) by delivery of an unconditional and irrevocable
undertaking by a broker to promptly deliver to the Company sufficient funds to
pay the exercise price, or (D) by any combination of any permissible forms of
payment. No awards may be transferred other than by will or by the laws of
descent and distribution, and during the participant's lifetime an award may be
exercised only by him or her. In the event of any merger, consolidation,
dissolution or liquidation of the Company, the Compensation Committee may
substitute or adjust the aggregate number of shares reserved for issuance under
the Stock Option Plan and in the number and purchase price (if any) of shares
subject to such awards, or accelerate, amend or terminate awards. Upon
termination of employment or other service relationship with the Company, (i)
options not exercisable immediately prior to the termination shall terminate,
and (ii) to the extent exercisable immediately prior to termination, the option
shall continue to be exercisable during the period prior to the expiration date
and within 60 days following termination (180 days if termination by reason of
death), unless termination is "for cause," as defined in the Stock Option Plan,
in which case all awards terminate immediately.
Activity under the Stock Option Plan through March 21, 1997 was as follows:
<TABLE>
<S> <C>
Shares Authorized for Issuance.................................... 300,000
Options Granted.................................................... 260,953
Shares Available for Issuance...................................... 48,138
</TABLE>
-13-
<PAGE>
<TABLE>
<CAPTION>
NUMBER OF EXERCISE PRICE
SHARES PER SHARE
------ ---------
<S> <C> <C>
Granted.................................... 260,953 $3.63 - $ 8.00
Terminated................................. 162,589 $3.63 - $16.00
Exercised.................................. 0
Outstanding................................ 201,619 $3.78 - $8.00
Exercisable at March 21, 1997.............. 54,105 $3.78 - $8.00
</TABLE>
OPTION GRANTS UNDER THE STOCK OPTION PLAN
The future benefits or amounts that would be received under the Stock
Option Plan by the executive officers and the groups named in the table below
are not determinable at this time. The following table shows the number of
shares subject to options granted in fiscal 1996 to the groups indicated below.
<TABLE>
<CAPTION>
SHARES SUBJECT TO OPTIONS
GROUP GRANTED IN FISCAL 1996
<S> <C>
All Executive Officers as a Group......................... 175,000 (1)
All Non-Executive Officer Directors as a Group............ 7,500 (2)
All Non-Excutive Officer Employees as a Group............. 80,953 (1)
</TABLE>
(1) Shares subject to options issued under the Company's Stock Option.
(2) Shares subject to options issued under the Non-Employee Directors' Stock
Option Plan.
FEDERAL TAX EFFECTS
In general, neither the grant nor the exercise of an incentive stock option
will result in taxable income to the option holder or a deduction to the
Company. However, option holders exercising incentive stock options may become
subject to the alternative minimum tax by reason of that exercise.
If the stock received upon the exercise of an incentive stock option is
held for at least two years from the date of grant and at least one year from
the date of exercise, any gain or loss recognized from the disposition of the
stock will be considered long-term capital gain or loss and will be taxable
accordingly. If shares received upon exercise of an incentive stock option are
disposed of before the holding period requirements described above have been
satisfied (a "disqualifying disposition"), the option holder will realize
ordinary income, and in general the Company will be entitled to a deduction,
equal in general to the difference between the option price and the value of the
stock at the later of (i) the date of exercise, or
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<PAGE>
(ii) in the case of an officer or director subject to the short-swing profit
limitations of Section 16(b) of the Exchange Act exercising an option within six
months of grant, the end of such six-month period unless immediate recognition
of income is elected under Section 83(b) of the Internal Revenue Code. The same
tax consequences may result if the aggregate value of stock (determined as of
time of grant) for which incentive stock options become exercisable in any one
year by an optionee exceeds $100,000. The amount of ordinary income so realized
may be limited when the stock is sold for less than its value on the applicable
date described in (i) and (ii) above.
In the case of nonstatutory options, no income results upon the grant of
the option. When an option holder exercises a nonqualified option, he or she
will realize ordinary income, subject to withholding, equal in general to the
excess of the then-fair market value of the stock over the option price.
However, if the optionee is an officer or director subject to the limitations of
Section 16(b) of the Exchange Act and exercises an option within six months of
grant, income will be realized at the end of such six-month period unless
immediate recognition of income is elected under Section 83(b) of the Internal
Revenue Code. The Company will in general be entitled to a deduction equal to
the amount of ordinary income realized by the optionee, provided the Company
satisfies certain withholding and reporting requirements.
Section 162(m) of the Internal Revenue Code limits to $1 million the
deduction a public corporation may claim with respect to the remuneration paid
in any year to any of the corporations top five officers. The deduction
limitation is subject to a number of important exceptions, including an
exception for so- called "performance based" compensation. It is anticipated
that options granted under the Stock Option Plan will be eligible for an
exception from the $1 million deduction limitation.
The foregoing summary does not purport to be a complete description of
Federal tax consequences in respect of the Stock Option Plan.
THE BOARD OF DIRECTORS RECOMMENDS APPROVAL OF THE INCREASE
IN SHARES RESERVED FOR ISSUANCE UNDER THE COMPANY'S STOCK OPTION PLAN
-15-
<PAGE>
PROPOSAL NUMBER THREE
RATIFICATION OF THE SELECTION
OF INDEPENDENT ACCOUNTANTS
The Board of Directors recommends the ratification by the stockholders of
the appointment by the Board of Directors of Arthur Andersen LLP as the
Company's independent accountants for the fiscal year ending December 31, 1997.
Arthur Andersen LLP has served as the Company's independent accountants since
1992. Unless instructions are given to the contrary, it is the intention of the
persons named as proxies to vote the shares to which the proxy is related FOR
the ratification of the appointment of Arthur Andersen LLP. The affirmative
vote of the holders of a majority of shares properly cast on the proposal, in
person or by proxy, will be required to ratify the appointment of Arthur
Andersen LLP. In the event that the stockholders do not ratify the appointment
of Arthur Andersen LLP as an independent accounting firm, the Board of Directors
will consider the selection of another firm of independent accountants. A
representative of Arthur Andersen LLP is expected to be present at the Annual
Meeting and will be available to respond to appropriate questions and make such
statements as he or she may desire.
THE BOARD OF DIRECTORS RECOMMENDS RATIFICATION OF THE SELECTION
OF INDEPENDENT ACCOUNTANTS DESCRIBED ABOVE
QUORUM REQUIREMENT AND METHOD OF TABULATION
Consistent with Massachusetts state corporate law and under the Company's
By-Laws, a majority of the shares entitled to be cast on a particular matter,
present in person or represented by proxy, constitutes a quorum as to such
matter. Votes cast by proxy or in person at the Annual Meeting will be counted
by persons appointed by the Company to act as election inspectors for the
meeting. The election inspectors will count shares represented by proxies that
withhold authority to vote for a nominee for election as a director or that
reflect abstentions and "broker non-votes" (i.e., shares represented at the
meeting held by brokers or nominees as to which (i) instructions have not been
received from the beneficial owners or persons entitled to vote, and (ii) the
broker or nominee does not have the discretionary voting power on a particular
matter) only as shares that are present and entitled to vote on the matter for
purposes of determining the presence of a quorum, but neither abstentions nor
broker non-votes have any effect on the outcome of voting on the matter.
FINANCIAL STATEMENTS
The Company's audited financial statements for the fiscal year ended
December 31, 1996 and certain other related financial and business information
of the Company are contained in the Company's Annual Report. The Company's
Annual Report on Form 10-K, without exhibits, for the fiscal year ended December
31, 1996, filed by the Company with the Securities and Exchange Commission, may
be obtained without charge by contacting Geerlings & Wade, 960 Turnpike Street,
Canton, Massachusetts 02021, Attention: Investor Relations.
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<PAGE>
STOCKHOLDER PROPOSALS
Pursuant to Rule 14a-8 promulgated by the SEC, stockholder proposals
intended to be included in the Company's proxy material for the Company's 1998
Annual Meeting of Stockholders must be received by the Company on or before
December 12, 1997 at its principal office, 960 Turnpike Street, Canton,
Massachusetts 02021 Attention: Investor Relations.
OTHER MATTERS
The management has no knowledge of any other matter that may come before
the Annual Meeting and does not, itself, currently intend to present any such
other matter. However, if any such other matters properly come before the
meeting or any adjournment thereof, the persons named as proxies will have
discretionary authority to vote the shares represented by the accompanying proxy
in accordance with their own judgement.
PROXY SOLICITATION
The cost of soliciting proxies will be paid by the Company. Proxies may be
solicited without extra compensation by certain directors, officers and regular
employees of the Company by mail, telegram or personally.
Stockholders are urged to send their proxies without delay. Your
cooperation is appreciated.
-17-
<PAGE>
DETACH HERE GRW F
GEERLINGS & WADE, INC.
P PROXY FOR ANNUAL MEETING, MAY 13, 1997 SOLICITED BY THE BOARD OF DIRECTORS
R Huib E. Geerlings and Phillip D. Wade, each of them (with full power to
act without the other and with power of substitution) are hereby appointed
O attorneys and proxies of the undersigned to attend the Annual Stockholders
Meeting on May 13, 1997, and any adjournment thereof, and to vote and act for
X the undersigned on reverse side.
Y THIS PROXY REVOKES ALL PREVIOUS PROXIES. UNLESS SPECIFIED TO THE CONTRARY
IT WILL BE VOTED FOR ITEMS (1), (2) AND (3).
-----------
CONTINUED AND TO BE SIGNED ON REVERSE SIDE SEE REVERSE
SIDE
-----------
<PAGE>
Dear Stockholder:
You are cordially invited to attend the Annual Meeting of Stockholders to be
held at 2:00 p.m. on May 13, 1997 at Ropes & Gray, One International Place,
Boston, Massachusetts. Detailed information as to the business to be transacted
at the meeting is contained in the accompanying Notice of Annual Meeting and
Proxy Statement.
Regardless of whether you plan to attend the meeting, it is important that your
shares be voted. Accordingly, we ask that you sign and return your proxy as soon
as possible in the envelope provided.
Sincerely
/s/ Huib E. Geerlings
Huib E. Geerlings
Chairman
DETACH HERE GRW F
[X] PLEASE MARK VOTES AS IN THIS EXAMPLE
THE BOARD OF DIRECTORS RECOMMENDS A VOTE "FOR" ITEMS (1), (2) AND (3).
1. Election of Director to serve for the ensuing three years.
NOMINEE: Huib E. Geerlings
FOR WITHHELD
[ ] [ ]
2. To approve an increase of 150,000 shares in the aggregate number of shares
reserved for issuance under the Company's Stock Option Plan.
FOR AGAINST ABSTAIN
[ ] [ ] [ ]
3. To ratify the appointment of Arthur Andersen LLP as independent auditors of
the Company.
FOR AGAINST ABSTAIN
[ ] [ ] [ ]
4. In their discretion, the proxies are authorized to vote upon any other
matters which may properly come before the meeting or any adjournment.
MARK HERE FOR ADDRESS CHANGE AND NOTE AT LEFT [ ]
Please date, sign exactly as name appears at left, and return in the enclosed
envelope. Executors, administrators, trustees, guardians or attorneys should
indicate the capacity in which they sign. Corporate owners should sign in their
corporate names and affix their seals.
Signature: _________________________ Date: ___________
Signature: _________________________ Date: ___________
