<PAGE>
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
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 Rule 14a-11(c) or Rule 14a-12
GEERLINGS & WADE, INC.
- --------------------------------------------------------------------------------
(Name of Registrant as Specified In Its Charter)
- --------------------------------------------------------------------------------
(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)(1) and 9-11.
(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:
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(4) Date Filed:
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<PAGE>
Geerlings & Wade, Inc.
960 Turnpike Street
Canton, Massachusetts 02021
----------------
Notice of Annual Meeting of Stockholders
To be held May 9, 2000
----------------
The 2000 Annual Meeting of Stockholders of Geerlings & Wade, Inc. will be
held at the offices of Ropes & Gray, One International Place, 36th floor,
Boston, Massachusetts 02110, on Tuesday, May 9, 2000 at 3:00 p.m. for the
following purposes:
1. To re-elect two directors for three-year terms ending in 2003.
2. To consider and act upon a proposal to ratify the appointment of Arthur
Andersen LLP as independent accountants of Geerlings & Wade for the
fiscal year ending December 31, 2000.
3. To transact such other business as may properly come before the annual
meeting and any adjournment thereof.
The board of directors has fixed the close of business on March 28, 2000 as
the record date for determination of stockholders entitled to notice of and to
vote at the annual meeting and any adjournments thereof.
Whether or not you plan to attend, please sign and date the enclosed proxy
and return it promptly in the enclosed envelope.
By Order of the Board of Directors,
[Signature of Phillip D. Wade]
Phillip D. Wade
Clerk
Canton, Massachusetts
March 31, 2000
<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., a Massachusetts corporation, for use at
the annual meeting of stockholders to be held at the offices of Ropes & Gray,
One International Place, 36th floor, Boston, Massachusetts 02110 on Tuesday,
May 9, 2000 at 3:00 p.m. and any adjournments thereof for the purposes set
forth in the Notice of Annual Meeting of Stockholders.
Stockholders of record at the close of business on March 28, 2000 will be
entitled to vote at the annual meeting of stockholders. On that date, there
were 3,855,940 shares of common stock, par value $.01 per share, of Geerlings &
Wade outstanding, the holders of which are entitled to one vote per share on
each matter to come before the annual meeting. Proxies properly executed and
returned will be voted at the annual meeting in accordance with any directions
noted thereon or, if no direction is indicated, proxies will be voted FOR the
re-election of the two nominees for director set forth herein and FOR the
ratification of the appointment of Arthur Andersen LLP as independent
accountants of Geerlings & Wade. Proxies will be voted in the discretion of the
holders of the proxy in accordance with their best judgment with respect to any
other business that may properly come before the annual meeting and all matters
incidental to the conduct of the annual meeting. Any stockholder signing and
delivering a proxy may revoke it at any time before it is voted by delivering
to the Clerk of Geerlings & Wade 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 annual meeting in person may revoke his or her proxy
and vote his or her shares at the annual meeting.
It is expected that this proxy statement and the enclosed form of proxy
together with the Geerlings & Wade annual report for the fiscal year ended
December 31, 1999 will be mailed to stockholders on or about April 6, 2000.
RE-ELECTION OF DIRECTORS
(Proposal One)
Two directors are to be elected at the 2000 Annual Meeting of Stockholders
for three-year terms that expire in 2003. Under the terms of Geerlings & Wade's
by-laws, the board of directors consists of seven members. Three other
directors have been elected to terms that end in 2001, and two other directors
have been elected to terms that end in 2002, 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 re-
election of the nominees listed below for a term of three years expiring at the
2003 Annual Meeting of Stockholders and until a successor is elected and
qualified or until his earlier death, removal or resignation. The two nominees
named below are presently serving as directors of Geerlings & Wade. The two
nominees are anticipated to be available for election and able to serve. If
either nominee should become unavailable, however, such proxy will be voted for
substitute nominees designated by the board of directors. The two nominees for
election as a director at the annual meeting who receive the greatest number of
votes properly cast for the election of director shall be elected.
Set forth below is certain information concerning the nominees and the other
incumbent directors:
1
<PAGE>
Nominees for Re-Election as Director at the Annual Meeting
John M. Connors, Jr.--Mr. Connors has served as a director of Geerlings &
Wade since June 1997. Mr. Connors, who was a founding partner in 1968 of Hill,
Holliday, Connors, Cosmopulos, Inc., a leading full-service marketing
communications company, currently serves as Hill, Holliday's Chairman and Chief
Executive Officer. Hill, Holliday is a member of the Interpublic Group of
Companies, Inc. Mr. Connors is the Chairman of the Board of Directors of
Partners HealthCare System, Inc., a member of the Board of Trustees of Boston
College and a member of the Board of Directors of the John Hancock Financial
Services, Inc., Lycos, Inc., and Saucony, Inc. Mr. Connors received his
Bachelor of Science degree from Boston College in 1963. Mr. Connors is 57 years
old.
Huib E. Geerlings--Mr. Geerlings has served as Chairman of Geerlings &
Wade's board of directors since June 1988. In addition, from 1988 to 1995, he
served as Geerlings & Wade's Chief Executive Officer. Since 1996, Mr. Geerlings
has served as Chairman and Chief Financial Officer of Verbind, Inc., a software
company. Mr. Geerlings received his undergraduate degree and his Masters in
Business Administration from Erasmus University in Rotterdam. Mr. Geerlings is
45 years old.
Directors Whose Term Expires in 2001
Gordon R. Cooke--Mr. Cooke has been a director of Geerlings & Wade since
June 1997. Mr. Cooke has served as the President and Chief Executive Officer
and a director of the J. Jill Group, Inc. (formerly DM Management Company), a
women's apparel direct marketer operating the J. Jill catalog, stores and e-
commerce site, since December 1995 and Chairman of the J. Jill Group since
August 1997. Mr. Cooke served as President of Time-Warner Interactive
Merchandising, a division of Time Warner Inc., a media conglomerate, from
November 1993 until December 1995. Mr. Cooke received his Bachelor of Arts from
the University of Puget Sound in 1967 and his Masters of Business
Administration from the University of Oregon in 1968. Mr. Cooke is 54 years
old.
Jay L. Essa--Mr. Essa was appointed to Geerlings & Wade's board of directors
in October 1997 and elected to a three year term by the stockholders of
Geerlings & Wade in 1998. Mr. Essa has served as President and Chief Executive
Officer of Geerlings & Wade since September 1996. Mr. Essa served as Managing
Director for Europe for E&J Gallo Winery, one of the world's largest wineries,
from 1993 until he joined Geerlings & Wade in 1996. Mr. Essa is 56 years old.
Robert L. Webb--Mr. Webb has been a director of Geerlings & Wade since its
initial public offering in June 1994. Since 1997, Mr. Webb has served as the
Vice President of Catalog Ventures, Inc., a company he co-founded in 1989 and
which publishes five national direct-mail consumer gift catalogs. Mr. Webb also
co-founded Webb & Co., a direct marketing consulting firm, where he served as
President and Chief Executive Officer from 1973 until 1997. Mr. Webb received
his undergraduate degree from the United States Air Force Academy and holds a
Masters Degree from the Fletcher School of International Law and Diplomacy of
Tufts University. Mr. Webb is 52 years old.
Directors Whose Term Expires in 2002
James C. Curvey--Mr. Curvey has been a director of Geerlings & Wade since
its initial public offering in June 1994. Mr. Curvey, President of Fidelity
Investments since September 1998, also has served as Vice Chairman and Chief
Operating Officer of Fidelity Investments and Vice Chairman of FMR Corp.,
Fidelity's parent company, since May 1997. Mr. Curvey was President of Fidelity
Capital, Inc. from December 1986 until May 1997. Mr. Curvey received his
Bachelor of Science from Villanova University in 1957 and his Masters of Arts
from George Washington University in 1962. Mr. Curvey is 64 years old.
2
<PAGE>
Phillip D. Wade--Mr. Wade has been a director and the Clerk of Geerlings &
Wade since its inception in August 1986. Since July 1999, Mr. Wade has served
as Chief Executive Officer and a director of Rutherford Benchmarks, Inc. From
August 1998 to June 1999, Mr. Wade was employed by Fechter, Detwiler Company,
Inc. as Vice President of Investment Banking. Mr. Wade served as President of
Geerlings & Wade from August 1986 through August 1996. From February 1995 until
August 1996, Mr. Wade also served as Chief Executive Officer and Treasurer of
Geerlings & Wade. A graduate of Northeastern University, Mr. Wade is 41 years
old.
Meetings and Committees of the Board of Directors
In fiscal 1999, the board of directors held eight meetings and acted by
unanimous written consent in lieu of a meeting on two occasions. During fiscal
1999, each director attended at least 75% of the aggregate number of board
meetings and meetings of any committee of which he was a member.
The board has two standing committees: the audit committee and the
compensation committee. The board does not have a standing nominating
committee.
The audit committee was established in June 1994 and held no meetings in
separate session during fiscal 1999. The duties of the audit committee are (i)
to review with management and the independent auditors the scope and results of
any and all audits, the nature of any other services provided by the
independent auditors, changes in the accounting principles applied to the
presentation of Geerlings & Wade's financial statements, and any comments by
the independent auditors on Geerlings & Wade'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. Messrs. Connors, Wade and Webb are members of the audit
committee.
The compensation committee was established in June 1994 and held one meeting
during fiscal 1999 and acted by unanimous written consent in lieu of a meeting
on three occasions. 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
Geerlings & Wade's Stock Option Plan. Accordingly, the Compensation Committee
has the discretionary authority, not inconsistent with the express provisions
of the Stock Option Plan, 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 Geerlings & Wade 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 decide any questions and settle all controversies and disputes
that may arise in connection with the Stock Option Plan. Messrs. Cooke, Curvey
and Webb are members of the compensation committee. All three members of the
compensation committee are "disinterested persons" as that term is used in
Rule16b-3 under the Securities Exchange Act of 1934, as amended.
Directors' Compensation
In fiscal 1999, each director of Geerlings & Wade who was not an employee of
Geerlings & Wade was paid $750 for each meeting of the board of directors
attended by such director. Directors who are employees of Geerlings & Wade are
not paid any fees or additional compensation for service as members of the
board of directors or either of its committees. All directors are reimbursed
for reasonable travel and other expenses of attending meetings of the board of
directors and its committees. In addition, pursuant to the Non-Employee
Director Stock Option Plan, non-employee directors receive options to purchase
2,500 shares of Geerlings & Wade common stock upon the anniversary of their
election to the board of directors. The options granted under the Non-Employee
Stock Option Plan are granted at fair market value and become exercisable in
three equal annual installments commencing on the first anniversary of the date
of grant.
3
<PAGE>
In addition, each of Mr. Geerlings and Mr. Wade has a consulting arrangement
with Geerlings & Wade, whereby each provides, at the request of Geerlings &
Wade, consulting services in connection with Geerlings & Wade's marketing
efforts and also provides Geerlings & Wade with the right to use his name in
connection with Geerlings & Wade's marketing literature. Pursuant to the
consulting arrangements, each of Mr. Geerlings and Mr. Wade is paid a fee of
$3,000 a month. The consulting arrangements may be terminated at any time at
the will of Geerlings & Wade. Geerlings & Wade also has committed to provide
free coverage under its health plan to Mr. Geerlings and Mr. Wade and their
families.
Mr. Connors, as the Chairman and Chief Executive Officer of Hill, Holliday,
received indirect benefits during fiscal 1999 from Geerlings & Wade related to
Hill, Holliday providing services to Geerlings & Wade. During 1999, Geerlings &
Wade paid Hill, Holliday approximately $1,305,000 for services provided in
connection with developing Geerlings & Wade's WineBins.com e-commerce site,
redesigning the geerwade.com e-commerce site and providing advertising
services.
The Board of Directors Recommends a Vote FOR the Re-Election
of the Nominees Described Above.
RATIFICATION OF THE SELECTION OF INDEPENDENT ACCOUNTANTS
(Proposal Two)
The Board of Directors recommends the ratification by the stockholders of
the appointment by the board of directors of Arthur Andersen LLP as Geerlings &
Wade's independent accountants for the fiscal year ending December 31, 2000.
Arthur Andersen LLP has served as Geerlings & Wade'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 Geerlings & Wade's 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 a Vote FOR the Ratification of the
Selection of Independent Accountants Described Above.
4
<PAGE>
EXECUTIVE COMPENSATION; CERTAIN ARRANGEMENTS
Executive Officers of Geerlings & Wade
The following table sets forth certain information with respect to the
executive officers of Geerlings & Wade and other significant employees as of
March 28, 2000. All of Geerlings & Wade'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............. 56 President and Chief Executive Officer
David R. Pearce......... 41 Vice President, Chief Financial Officer, Treasurer and Assistant Clerk
</TABLE>
Jay L. Essa--Mr. Essa has been President and Chief Executive Officer of
Geerlings & Wade since September 1996 and was appointed to the Board of
Directors in October 1997 and elected as director to a three year term by the
stockholders of Geerlings & Wade in 1998. Mr. Essa served as Managing Director
for Europe for E&J Gallo Winery, one of the world's largest wineries, from 1993
until he joined Geerlings & Wade in 1996. 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.
David R. Pearce--Mr. Pearce has been Vice President and Chief Financial
Officer of Geerlings & Wade since November 1996. In addition, Mr. Pearce was
appointed Treasurer and Assistant Clerk of Geerlings & Wade by the board of
directors in February 1997. Prior to joining Geerlings & Wade, Mr. Pearce
served as Chief Financial Officer of State Line Tack, Inc. from January 1995 to
August 1996, and served as a director of State Line Tack from 1993 to 1996. Mr.
Pearce received his undergraduate degree from Brown University and his Masters
of Business Administration from the University of California, Berkeley.
Other Key Personnel
Geerlings & Wade's other key personnel are:
<TABLE>
<CAPTION>
Name Age Position
---- --- --------
<S> <C> <C>
Gregg A. Kober.............. 37 Director of Operations
Francis A. Sanders.......... 44 Wine Director
Eric Welter................. 30 Director of Marketing
</TABLE>
Gregg A. Kober--Mr. Kober joined Geerlings & Wade in September 1996. Prior
to joining Geerlings & Wade, Mr. Kober served as the Manager of Business
Operations at the Bose Corporation where he had been employed since 1989. Mr.
Kober is a graduate of Northeastern University.
Francis Sanders--Mr. Sanders joined Geerlings & Wade in May 1997. Previously
he served for eight years as the wine supervisor for Boston's Blanchard's
retail chain and has over 21 years experience in the beverage industry. Mr.
Sanders is a graduate of the University of Lowell.
Eric Welter--Mr. Welter joined Geerlings & Wade in May 1999. Prior to
joining Geerlings & Wade, he worked from 1994 to 1999 at Grand Circle
Corporation as Director of Database Marketing. Mr. Welter graduated from St.
Cloud State University in Minnesota.
5
<PAGE>
Summary Compensation Table
The following summary compensation table sets forth compensation earned for
all services rendered to Geerlings & Wade during each of the last three fiscal
years, as applicable, by persons serving as Geerlings & Wade's Chief Executive
Officer and President and each other officer or employee of Geerlings & Wade
who earned salary and bonuses in excess of $100,000 for the year ended December
31, 1999.
<TABLE>
<CAPTION>
Long-Term
Annual Compensation Compensation
------------------------- ------------
Securities
Underlying
Name and Principal Position Year Salary ($) Bonus ($) Options
- --------------------------- ---- ---------- --------- ------------
<S> <C> <C> <C> <C>
Jay L. Essa............................. 1999 200,000 100,000 100,000(1)
President and Chief Executive Officer 1998 200,000 50,000 25,000(2)
1997 200,000 25,000 --
David R. Pearce......................... 1999 175,000 17,500 --
Vice President, Treasurer and Chief Fi- 1998 166,250 3,416 20,000(3)
nancial Officer 1997 142,500 -- --
</TABLE>
- --------
(1) Mr. Essa was awarded 100,000 incentive stock options on April 2, 1999.
(2) Mr. Essa was awarded 25,000 incentive stock options on January 21, 1998.
(3) Mr. Pearce was awarded 10,000 incentive stock options on February 2, 1998
and 10,000 incentive stock options on September 22, 1998.
Option Grants
The following table sets forth certain information regarding stock option
grants made to the executive officers during the fiscal year ended December 31,
1999.
Option Grants in Last Fiscal Year
<TABLE>
<CAPTION>
Individual Grants(1)
-------------------------------
Percent of
Total Potential Realization Value at
Number of Options Assumed Annual Rates of Stock
Securities Granted to Exercise Price Appreciation for Option
Underlying Employees Price per Term(2)
Options in Fiscal Share Expiration -------------------------------
Granted Year ($/sh) Date 5% ($) 10% ($)
---------- ---------- --------- ---------- --------------- ---------------
<S> <C> <C> <C> <C> <C> <C>
Jay L. Essa............. 100,000 48.3% $6.0625 4/2/09 $ 381,267.37 $ 966,206.37
</TABLE>
- --------
(1) No stock appreciation rights were granted during fiscal 1999. All options
grants are incentive stock options having a term of 10 years. Fifty percent
are currently exercisable, and fifty percent will vest on July 2, 2000. All
options were granted at fair market value measured by the closing price for
the Geerlings & Wade common stock on the NASDAQ National Market system on
the date of the grant.
(2) The potential realizable value is calculated based on the term of the
option at its time of grant. It is calculated by assuming that the stock
price on the date of grant appreciates at the indicated annual rate,
compounded annually for the entire term of the option.
6
<PAGE>
Option Values
The table below sets forth information for the executive officers with
respect to fiscal 1999 year-end option values.
Fiscal Year-End Option Values
<TABLE>
<CAPTION>
Number of Securities
Underlying Unexercised Value of Unexercised
Options In-the-Money Options
at Fiscal Year-End (#) at Fiscal Year-End ($)(1)
------------------------- -------------------------
Name Exercisable Unexercisable Exercisable Unexercisable
---- ----------- ------------- ----------- -------------
<S> <C> <C> <C> <C>
Jay L. Essa................. 86,250 138,750 $268,511.63 $198,670.87
David R. Pearce............. 33,000 22,000 $ 63,500.00 $ 60,562.50
</TABLE>
- --------
(1) The closing price for the Geerlings & Wade common stock on the NASDAQ
National Market System on December 31, 1999, the last trading day of the
fiscal year, was $6.9375 per share.
Employment Arrangements
Effective September 9, 1996, Mr. Essa and Geerlings & Wade entered into a
letter agreement pursuant to which Mr. Essa agreed to serve as Geerlings &
Wade's President and Chief Executive Officer. The agreement provides that Mr.
Essa will be paid a base salary of $200,000 and granted 100,000 stock options
under the Stock Option Plan. The agreement is terminable at will at the option
of Geerlings & Wade or Mr. Essa. As additional compensation for services
provided to Geerlings & Wade in 1999, Mr. Essa was awarded a bonus in the
amount of $100,000 payable in two installments, the first in 1999 and the
second in the first quarter of 2000.
Effective April 2, 1999, Mr. Essa and Geerlings & Wade entered into a
Severance Agreement. Pursuant to the Severance Agreement, Mr. Essa will receive
$200,000 in the event Geerlings & Wade terminates Mr. Essa's employment for
reasons other than for cause. The $200,000 severance payment would be reduced
by 50% of the income Mr. Essa receives from any position he takes with another
company with a maximum reduction of $100,000. The Severance Agreement provides
that Mr. Essa shall not compete with Geerlings & Wade or engage in any manner
in any activity that involves the retail sale of wine or wine accessories via
the mails or the Internet for a period of twelve months after termination of
his employment with Geerlings & Wade.
Effective November 11, 1996, Mr. Pearce and the Company entered into a
letter agreement pursuant to which Mr. Pearce has agreed to serve as the
Company's Vice President and Chief Financial Officer. The letter agreement with
Mr. Pearce provided for a base salary of $130,000 and for a grant of 35,000
stock options under the Stock Option Plan. The agreement is terminable at will
at the option of the Company or Mr. Pearce. Mr. Pearce's base salary was
increased, effective August 1, 1998, to $175,000.
7
<PAGE>
COMPENSATION COMMITTEE REPORT
Notwithstanding anything to the contrary set forth in any of Geerlings &
Wade'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 Geerlings & Wade board of directors is
currently composed of three outside directors, Messrs. Cooke, Curvey and Webb.
The committee's responsibilities include recommending the annual compensation
arrangements for the President and Chief Executive Officer of Geerlings & Wade,
reviewing the annual compensation arrangements for all other officers and
significant employees of Geerlings & Wade and administering Geerlings & Wade's
Stock Option Plan. No member of this committee was an officer or employee of
Geerlings & Wade during 1999.
Geerlings & Wade believes that all of its employees are vital to its
continued success. It is crucial that employees understand Geerlings & Wade's
objectives and the role they play in the achievement of these objectives. With
this in mind, Geerlings & Wade 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, Geerlings & Wade has
developed and implemented compensation policies and plans that seek to tie the
financial interests of Geerlings & Wade's senior management with the interests
of its stockholders. As a result, Geerlings & Wade 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 Geerlings & Wade's business plan. Geerlings & Wade
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 Geerlings & Wade's employees, employee training and employee
opportunity for advancement. In addition, Geerlings & Wade seeks to provide
total compensation packages that will attract the best talent to Geerlings &
Wade, 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, Geerlings &
Wade's compensation structure has three components: base salary, cash bonuses
and stock options.
Jay L. Essa, Geerlings & Wade's President and Chief Executive Officer, and
David R. Pearce, the Chief Financial Officer, are parties to employment
agreements with Geerlings & Wade. Mr. Essa is also party to a severance
agreement with Geerlings & Wade. For details regarding the employment
agreements and the severance agreement, see "Employment Arrangements" on page 7
of this proxy statement.
Under Mr. Essa's employment agreement, he receives an annual base salary of
$200,000. This committee, acting by unanimous written consent on January 3,
2000, approved the grant of a bonus for 1999 in the amount of $100,000 for Mr.
Essa, payable in two installments, the first in 1999 and the second in the
first quarter of 2000, in recognition of Mr. Essa's strong performance in 1999.
Additionally, in 1999, Mr. Essa was granted performance-based options to
purchase shares of Geerlings & Wade common stock as an additional incentive
that is linked to the future performance of Geerlings & Wade's common stock. On
April 16, 1999, this committee approved the grant to Mr. Essa of 100,000
incentive stock options pursuant to Geerlings & Wade's Stock Option Plan. The
options granted to Mr. Essa have an exercise price of the fair market value on
the date of grant, expire 10 years from the date of grant, and vest in two
equal increments. The compensation committee believes the grant of such options
provides appropriate incentive to Mr. Essa by making a significant amount of
his future remuneration contingent upon either a significant increase in the
price of the Geerlings & Wade common stock or a long period of future service
to Geerlings & Wade.
8
<PAGE>
With respect to Geerlings & Wade's other employees and executives,
compensation is determined based upon the recommendations to the compensation
committee of the President and Chief Executive Officer and, as applicable, the
Chief Financial Officer upon consideration of such individuals' performance and
any changes in their functional responsibilities.
Employee and executive compensation is generally comprised of a combination
of cash compensation and grants of options under Geerlings & Wade'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 Geerlings & Wade. There is no set formula for
the award of options. Factors considered in making option awards to employees
and executives of Geerlings & Wade in 1999 included prior grants to such
individual, the importance of retaining such individual's services, such
employee's potential to contribute to the success of Geerlings & Wade and such
employee's past contributions to Geerlings & Wade.
Compensation Committee
of the Board of Directors
Gordon R. Cooke
James C. Curvey
Robert Webb
March 2000
9
<PAGE>
PERFORMANCE GRAPH
The following graph compares the yearly percentage change in Geerlings &
Wade'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,* for the five years preceding December 31,
1999, the last trading day of fiscal 1999. The cumulative total shareholder
return is based on $100 invested in Geerlings & Wade common stock and in the
respective indices on December 30, 1994 (including reinvestment of dividends).
The stock prices on the performance graph are not necessarily indicative of
future price performance.
[PERFORMANCE GRAPH APPEARS HERE]
- --------
* The peer group index is comprised of the following direct-mail retail
marketing companies: J. Jill Group, Inc. (JILL), Green Mountain Coffee Inc.
(GMCR), Hanover Direct (HNV), 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>
SECURITIES OWNERSHIP OF CERTAIN
BENEFICIAL OWNERS AND MANAGEMENT
The following table sets forth information regarding the beneficial
ownership of the Geerlings & Wade common stock as of March 28, 2000, by each
person known to Geerlings & Wade to be the beneficial owner of more than five
percent of the Geerlings & Wade common stock, each director of Geerlings &
Wade, each executive officer of Geerlings & Wade and all directors and
executive officers of Geerlings & Wade as a group. Except as otherwise
indicated, the beneficial owners of the Geerlings & Wade common stock listed
below, based on information furnished by such owners, have sole investment and
voting power with respect to such shares, subject to applicable community
property laws.
<TABLE>
<CAPTION>
Amount and
Nature of
Beneficial Percent of
Name of Beneficial Owner Ownership(1) Class(2)
------------------------ ------------ ----------
<S> <C> <C>
Palo Alto Investors/William L. Edwards(3)........ 341,300 8.9%
Pequot Capital Management, Inc.(4)............... 348,800 9.1%
DIRECTORS & EXECUTIVE OFFICERS
John M. Connors, Jr. ............................ 42,499(5) 1.1%
Gordon R. Cooke.................................. 2,499(5) *
James C. Curvey.................................. 90,798(6) 2.3%
Jay L. Essa...................................... 147,863(7) 3.7%
Huib E. Geerlings................................ 886,499(5) 22.5%
David R. Pearce.................................. 40,178(8) 1.0%
Phillip D. Wade.................................. 452,499(5) 11.7%
Robert L. Webb................................... 9,999(6) *
All directors and executive officers as a group
(8 persons)..................................... 1,652,834 42.9%
</TABLE>
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* Less than 1%.
(1) For purposes of determining beneficial ownership of Geerlings & Wade's
common stock, owners of options that are exercisable within 60 days of
March 28, 2000 are considered to be the beneficial owners of the shares of
the common stock for which such securities are exercisable.
(2) Shares which may be acquired through the exercise of options are deemed to
be outstanding for the purpose of computing the percentage ownership of the
person holding such shares, but are not deemed outstanding for purposes of
computing the percentage of any other person shown on the table.
(3) As reported on Schedule 13G filed with the Securities and Exchange
Commission on February 14, 2000. Palo Alto Investors, a California
corporation, and William L. Edwards, an individual, may be deemed to have
shared voting and investment power over 341,300 shares. Neither Palo Alto
Investors nor Mr. Edwards has sole power to vote or dispose or direct the
disposition of any of their shares. The business address for Palo Alto
Investors and Mr. Edwards is 470 University Avenue, Palo Alto, California
94301.
(4) As reported on Schedule 13G filed with the Securities and Exchange
Commission on February 11, 2000. The business address for Pequot Capital
Management, Inc. is 500 Nyala Farm Road, Westport, Connecticut 06880.
(5) Includes options to purchase 2,499 shares of Geerlings & Wade common stock
issued pursuant to the Non-Employee Director Stock Option Plan which are
currently exercisable.
(6) Includes options to purchase 9,999 shares of Geerlings & Wade common stock
issued pursuant to the Non-Employee Director Stock Option Plan which are
currently exercisable.
(7) Includes options to purchase 142,500 shares of Geerlings & Wade common
stock which are currently exercisable.
(8) Includes options to purchase 35,500 shares of Geerlings & Wade common stock
which are currently exercisable.
11
<PAGE>
SECTION 16(A) BENEFICIAL OWNERSHIP REPORTING COMPLIANCE
Section 16(a) of the Securities Exchange Act of 1934, as amended, requires
Geerlings & Wade's executive officers and directors, and persons who
beneficially own more than ten percent of Geerlings & Wade's common stock, to
file reports of ownership and changes in ownership on Forms 3, 4 and 5 with the
Securities and Exchange Commission. Executive officers, directors and greater
than ten percent stockholders are required by SEC regulation to furnish to
Geerlings & Wade copies of all Forms 3, 4 and 5 they file. Based solely on
Geerlings & Wade's review of the copies of such forms it has received,
Geerlings & Wade believes that a Form 5 filed by Mr. Wade, a director and owner
of greater than 10% of Geerlings & Wade's common stock, was filed with the SEC
one day late.
QUORUM REQUIREMENT AND METHOD OF TABULATION
Consistent with Massachusetts corporate law and Geerlings & Wade's by-laws,
a majority of the shares entitled to vote, present in person or represented by
proxy, constitutes a quorum for the transaction of business at the annual
meeting. Votes cast by proxy or in person at the annual meeting will be counted
by persons appointed by Geerlings & Wade to act as election inspectors for such
annual meeting. The two nominees for election as director at the annual meeting
who receive the greatest number of votes properly cast for the election of
director shall be elected. A majority vote of the number of shares present in
person or represented by proxy at the annual meeting entitled to vote thereon
is necessary to approve the ratification of accountants as well as any other
matter which comes before the annual meeting, except where law, Geerlings &
Wade's restated articles of organization or by-laws require otherwise. 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 annual
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) 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.
At least 10 days before the 2000 Annual Meeting of Stockholders, Geerlings &
Wade shall make a complete list of the stockholders entitled to vote at the
annual meeting open to the examination of any stockholder for any purpose
germane to the annual meeting at its principal executive offices at 960
Turnpike Street, Canton, Massachusetts 02021. The list shall also be made
available to stockholders present at the annual meeting.
FINANCIAL STATEMENTS
Geerlings & Wade's audited financial statements for the fiscal year ended
December 31, 1999 and certain other related financial and business information
of Geerlings & Wade are contained in Geerlings & Wade's Annual Report on Form
10-K for the fiscal year ended December 31, 1999, as filed by Geerlings & Wade
with the Securities and Exchange Commission on March 30, 2000 (including
exhibits). Copies of such Annual Report on Form 10-K (excluding exhibits) are
being mailed to stockholders concurrently with this proxy statement. Copies of
such Annual Report on Form 10-K (excluding exhibits) also may be obtained
without charge by contacting Geerlings & Wade, 960 Turnpike Street, Canton,
Massachusetts 02021, Attention: Investor Relations.
12
<PAGE>
STOCKHOLDER PROPOSALS
In order for stockholder proposals which are submitted pursuant to Rule 14a-
8 of the Securities Exchange Act of 1934 to be considered by Geerlings & Wade
for inclusion in Geerlings & Wade's proxy material for Geerlings & Wade's 2001
Annual Meeting of Stockholders, they must be received by Geerlings & Wade on or
before December 10, 2000 at its principal executive office, 960 Turnpike
Street, Canton, Massachusetts 02021, Attention: Investor Relations.
For proposals that stockholders intend to present at the 2001 Annual Meeting
of Stockholders outside the processes of the Rule 14a-8 of the Securities
Exchange Act of 1934, unless the stockholder notifies Geerlings & Wade of such
intent on or before February 25, 2001, any proxy that management solicits for
such annual meeting will confer on the holder of the proxy discretionary
authority to vote on the proposal so long as such proposal is properly
presented at the meeting.
OTHER MATTERS
Management has no knowledge of any other matter that may come before the
2000 Annual Meeting of Stockholders and does not, itself, currently intend to
present any such other matter. However, if any such other matters properly come
before the annual 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 judgment.
PROXY SOLICITATION
The cost of soliciting proxies will be paid by Geerlings & Wade. Proxies may
be solicited without extra compensation by certain directors, officers and
regular employees of Geerlings & Wade by mail, telegram or in person.
Stockholders are urged to send their proxies without delay. Your cooperation
is appreciated.
13
<PAGE>
FORM OF PROXY FOR GEERLINGS & WADE, INC.'s 2000 ANNUAL MEETING
Geerlings & Wade, Inc.
Proxy Solicited on behalf of the Board of Directors of Geerlings & Wade, Inc.
for Annual Meeting of Stockholders to be held May 9, 2000
The undersigned, having received the Notice of Annual Meeting of
Stockholders and the Proxy Statement on behalf of the Board of Directors of
Geerlings & Wade, Inc. (the "Company"), hereby appoints each of Jay L. Essa and
David R. Pearce proxies of the undersigned (with full power of substitution) to
attend the Annual Meeting of Stockholders of Geerlings & Wade to be held on May
9, 2000 at 3:00 p.m. at the offices of Ropes & Gray, One International Place,
Boston, MA 02110 and all adjournments thereof (the "Meeting") and to vote all
shares of Common Stock of Geerlings & Wade that the undersigned would be
entitled to vote, if personally present, in regard to all matters which may come
before the Annual Meeting, and without limiting the general authorization hereby
given, the undersigned directs that his or her vote be cast as specified in this
Proxy.
This Proxy when properly executed will be voted in the manner
specified herein. If no specification is made, the Proxies will be voted for the
nominees and for the other proposal set forth herein and described in the Board
of Directors' Proxy Statement. If any of the nominees are not available to
serve, this Proxy may be voted for a substitute. This Proxy delegates
discretionary authority with respect to matters not known or determined at the
time of solicitation of this Proxy. The undersigned hereby revokes any other
proxy previously granted to vote the same shares of Common Stock for the Annual
Meeting.
SEE REVERSE SIDE. If you wish to vote in accordance with the
recommendations of the Board of Directors, just sign on the reverse side. You
need not mark any boxes.
CONTINUED AND TO BE SIGNED ON REVERSE SIDE
- --------------------------------------------------------------------------------
<PAGE>
The Board of Directors recommends a vote FOR each of the following matters:
1. The election of two directors, each FOR WITHHELD
for a term ending 2003. [_] [_]
Nominees: John M. Connors, Jr.
Huib E. Geerlings
INSTRUCTION: To withhold authority to
vote for any individual nominee, write
that nominee's name in the space
provided below.
- ----------------------
2. To consider and act upon a proposal FOR AGAINST ABSTAIN
to ratify the appointment of [_] [_] [_]
Arthur Andersen LLP as independent
auditors of Geerlings & Wade.
PLEASE PROMPTLY DATE AND RETURN THIS PROXY FORM USING THE ENCLOSED ENVELOPE.
I plan to attend the meeting. [_]
I do not plan to attend the meeting. [_]
Signature ______________________________________ Date _________________________
Signature ______________________________________ Date _________________________
NOTE: Please sign name exactly as it appears on this Proxy. 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 President or other authorized
officer. If a partnership, please sign in partnership name by an authorized
person.
