<PAGE> 1
SCHEDULE 14A
(RULE 14A-101)
INFORMATION REQUIRED IN PROXY STATEMENT
SCHEDULE 14A INFORMATION
PROXY STATEMENT PURSUANT TO SECTION 14(A) OF THE SECURITIES
EXCHANGE ACT OF 1934 (AMENDMENT NO. )
Filed by the Registrant [X]
Filed by a Party other than the Registrant [ ]
Check the appropriate box:
<TABLE>
<S> <C>
[ ] 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
</TABLE>
Integrity Incorporated
- --------------------------------------------------------------------------------
(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 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> 2
(Integrity Logo)
1000 CODY ROAD
MOBILE, ALABAMA 36695
April 10, 2000
Dear Stockholder:
You are cordially invited to attend the Annual Meeting of Stockholders of
Integrity Incorporated, which will be held at the Adam's Mark, 64 South
Waterstreet, Mobile, Alabama 36602, on Thursday, May 11, 2000, at 2:00 p.m.
local time.
We look forward to your attendance at the Annual Meeting so that you can
vote your shares in person and become better acquainted with members of the
Board of Directors and management team. Two items of business, which will be
considered and voted upon this year, are explained in the accompanying Proxy
Statement. Even if you are planning to attend, please complete the enclosed
proxy card and return it in the enclosed envelope so that your shares may be
voted. You will still be able to vote your shares in person if you attend the
Annual Meeting.
If you have any questions about the Proxy Statement or the 1999 Annual
Report, please contact Ms. Alison S. Richardson at (334) 633-9000.
Sincerely,
/s/ P. Michael Coleman
P. MICHAEL COLEMAN
Chairman, President and
Chief Executive Officer
<PAGE> 3
INTEGRITY INCORPORATED
1000 CODY ROAD
MOBILE, ALABAMA 36695
NOTICE TO THE HOLDERS OF CLASS A COMMON STOCK
OF ANNUAL MEETING OF STOCKHOLDERS
TO BE HELD ON MAY 11, 2000
Notice is hereby given to the holders of the $.01 par value per share
Class A common stock (the "Class A Common Stock") of Integrity Incorporated (the
"Company") that the Annual Meeting of Stockholders (the "Annual Meeting") of the
Company will be held at the Adam's Mark, 64 South Waterstreet, Mobile, Alabama
36602, on Thursday, May 11, 2000, at 2:00 p.m., local time, for the following
purposes:
(i) To elect five directors to serve until the 2001 Annual Meeting of
Stockholders;
(ii) To ratify the selection of PricewaterhouseCoopers LLP as independent
auditors for the fiscal year ending December 31, 2000; and
(iii) To transact such other business as may properly come before the
Annual Meeting or any adjournments thereof.
Only those stockholders of record at the close of business on March 13,
2000, are entitled to notice of and to vote at the Annual Meeting or any
adjournments thereof. The transfer books will not be closed. A complete list of
stockholders entitled to vote at the Annual Meeting will be available at the
Annual Meeting.
By Order of the Board of Directors,
/s/ Alison S. Richardson
ALISON S. RICHARDSON
Secretary
April 10, 2000
WHETHER OR NOT YOU EXPECT TO ATTEND THE ANNUAL MEETING, PLEASE VOTE, SIGN,
DATE, AND RETURN THE ENCLOSED PROXY PROMPTLY IN THE ENCLOSED BUSINESS REPLY
ENVELOPE. IF YOU ATTEND THE ANNUAL MEETING YOU MAY, IF YOU WISH, WITHDRAW YOUR
PROXY APPOINTMENT AND VOTE IN PERSON.
<PAGE> 4
INTEGRITY INCORPORATED
1000 CODY ROAD
MOBILE, ALABAMA 36695
APRIL 10, 2000
PROXY STATEMENT
FOR CLASS A COMMON STOCK
FOR ANNUAL MEETING OF STOCKHOLDERS
TO BE HELD ON MAY 11, 2000
INTRODUCTION
This Proxy Statement is furnished to holders of the $.01 par value per
share Class A common stock ("Class A Common Stock") of Integrity Incorporated, a
Delaware corporation (the "Company" or "Integrity"), in connection with the
solicitation of proxies by the Company's Board of Directors from holders of the
outstanding shares of Class A Common Stock for use at the Annual Meeting of
Stockholders to be held at 2:00 p.m. local time at the Adam's Mark, 64 South
Waterstreet, Mobile, Alabama 36602, on Thursday, May 11, 2000, and at any
adjournments thereof (the "Annual Meeting").
The Annual Meeting will be held for the following purposes: (i) to elect
five directors to serve until the 2001 Annual Meeting of Stockholders and until
their successors are elected and qualified; (ii) to ratify the selection of
PricewaterhouseCoopers LLP as independent auditors for the fiscal year ending
December 31, 2000; and (iii) to transact such other business as may properly
come before the Annual Meeting or any adjournments thereof.
The Company's mailing address and the location of its principal executive
offices is 1000 Cody Road, Mobile, Alabama 36695. This Proxy Statement and the
accompanying Proxy are first being mailed to stockholders of the Company on or
about April 10, 2000.
STOCKHOLDERS ENTITLED TO VOTE
Only stockholders of record of the Company at the close of business on
March 13, 2000 (the "Record Date") will be entitled to notice of, and to vote
at, the Annual Meeting. On the Record Date, there were 2,179,000 shares of the
Class A Common Stock issued and 2,079,000 shares of Class A Common Stock
outstanding held by approximately 108 stockholders of record and approximately
1,600 beneficial stockholders. In addition, there were 3,435,000 shares of the
Company's $.01 par value per share Class B common stock ("Class B Common Stock")
issued and outstanding held by 3 stockholders of record. The Company's stock
transfer books will not be closed and shares may be transferred subsequent to
the Record Date. However, all votes must be cast in the names of stockholders of
record on the Record Date.
Pursuant to the Certificate of Incorporation of the Company, holders of
Class A Common Stock are entitled to one vote per share. Holders of Class B
Common Stock are entitled to ten votes per share. All actions submitted to a
vote of stockholders are voted on by holders of Class A and Class B Common Stock
voting together as a single class.
<PAGE> 5
QUORUM AND VOTING REQUIREMENTS
Pursuant to the Company's Bylaws, the holders of shares of the Class A
Common Stock and Class B Common Stock entitled to cast a majority of the votes
on the matters at issue at the Annual Meeting, present in person or by proxy,
shall constitute a quorum. For the purpose of determining the presence of a
quorum, abstentions and votes withheld from any nominee will be considered to be
"votes entitled to be cast" and therefore will be counted as present for
purposes of determining the presence or absence of a quorum. Broker non-votes
will not be considered to be "votes entitled to be cast" and will not be counted
as present for quorum purposes. Broker non-votes are votes that brokers holding
shares of record for their customers are not permitted to cast under applicable
stock exchange rules because the brokers have not received specific instructions
from their customers as to certain proposals and as to which the brokers advised
the Company that they lack voting authority.
Proposal I, the election of five directors, requires the affirmative vote
of a plurality of the votes of the shares of Class A Common Stock and Class B
Common Stock represented and entitled to vote in the election of directors at
the Annual Meeting, provided a quorum is present. With respect to Proposal I,
the election of directors, stockholders may (1) vote "for" all five nominees,
(2) "withhold" authority to vote "for" all such nominees, or (3) "withhold"
authority to vote for any individual nominee or nominees but vote for all other
nominees. Because directors are elected by a plurality, withholding authority to
vote with respect to one or more nominees, broker non-votes and abstentions from
voting will have no effect on the outcome of the election of directors.
Proposal II, the ratification of auditors, requires the affirmative vote
of a majority of the votes of the shares of Class A Common Stock and Class B
Common Stock represented and entitled to vote at the Annual Meeting, provided a
quorum is present. With respect to Proposal II, the ratification of auditors,
stockholders may (1) vote "for," (2) vote "against," or (3) "abstain" from
voting on the proposal. An abstention will have the same effect as a vote
"against," while broker non-votes will not be considered "votes entitled to be
cast" and will have no effect on the outcome of the ratification of auditors.
PROXIES
The accompanying proxy card is for use at the Annual Meeting if a
stockholder is unable to attend or is able to attend but does not wish to vote
in person. Stockholders should specify their choices with regard to each
proposal on the enclosed proxy card. All properly executed and dated proxy cards
delivered by stockholders to the Company in time to be voted at the Annual
Meeting and not revoked will be voted at the Annual Meeting in accordance with
the instructions given. If no specific instructions are given, the shares
represented by a signed and dated proxy card will be voted "for" (i) the
election of all director nominees and (ii) ratification of
PricewaterhouseCoopers LLP as independent auditors for the fiscal year ending
December 31, 2000. If any other matters properly come before the Annual Meeting,
the persons named as proxies will vote upon such matters according to their
judgment.
The Board of Directors is not aware of any other business to be presented
for a vote of the stockholders at the Annual Meeting. As permitted by Rule
14a-4(c) under the Securities Exchange Act of 1934, as amended, the persons
named as proxies on the proxy cards will have discretionary authority to vote in
their judgment on any proposals presented by stockholders for consideration at
the Annual Meeting that were submitted to the Company after February 26, 2000.
Such proxies also will have discretionary authority to vote in their judgment
upon the election of any person as a director if a director nominee is unable to
serve for good cause or will not serve, and on matters incident to the conduct
of the Annual Meeting.
The giving of a proxy does not affect the right to vote in person should
the stockholder attend the Annual Meeting. Any stockholder that has given a
proxy has the power to revoke it at any time
2
<PAGE> 6
before it is voted by giving written notice of revocation to Alison S.
Richardson, the Secretary of the Company, at 1000 Cody Road, Mobile, Alabama
36695, by executing and delivering to Ms. Richardson a proxy card bearing a
later date, or by voting in person at the Annual Meeting. If a stockholder is
not attending the Annual Meeting, any proxy or notice should be returned in time
for receipt no later than the close of business on the date preceding the Annual
Meeting.
PROPOSAL I
ELECTION OF DIRECTORS
The Bylaws of the Company provide that the Board of Directors shall
consist of not less than three, nor more than twelve individuals with the exact
number of directors determined by resolution of the Board of Directors. Pursuant
to the Company's Bylaws, the Board of Directors has set the number of directors
of the Company at five and has nominated the following individuals for election
by the holders of Class A Common Stock and Class B Common Stock as directors of
the Company:
P. Michael Coleman
Jean C. Coleman
Charles V. Simpson
Heeth Varnedoe III
Jimmy M. Woodward
Each director will be elected to hold office until the 2001 Annual Meeting
of Stockholders or until their earlier death, resignation or removal. The
persons designated as proxies intend to vote the shares represented thereby in
favor of the election to the Board of Directors of the nominees whose names
appear above, unless either authority to vote for any or all of the nominees is
withheld or such proxy has previously been revoked. It is believed that the
nominees will be available and able to serve as directors. In the event that a
nominee is unable to serve (which is not anticipated), the persons designated as
proxies will cast votes for the remaining nominees and for such other person as
they may select. It is anticipated that management stockholders of the Company
will vote for the election of the nominees.
THE BOARD OF DIRECTORS RECOMMENDS A VOTE FOR THE NOMINEES FOR ELECTION AS
DIRECTORS. IF A CHOICE IS SPECIFIED ON THE PROXY BY THE STOCKHOLDER, THE SHARES
WILL BE VOTED AS SPECIFIED. IF NO SPECIFICATION IS MADE, THE SHARES WILL BE
VOTED FOR THE NOMINEES. THE AFFIRMATIVE VOTE OF A PLURALITY OF THE VOTES OF THE
SHARES OF CLASS A COMMON STOCK AND CLASS B COMMON STOCK, VOTING TOGETHER AS A
SINGLE CLASS, REPRESENTED AND ENTITLED TO VOTE IN THE ELECTION AT THE ANNUAL
MEETING AT WHICH A QUORUM IS PRESENT IS REQUIRED FOR THE ELECTION OF THE
NOMINEES.
3
<PAGE> 7
CERTAIN INFORMATION CONCERNING NOMINEES
The following table sets forth the names of the nominees for election as
directors, their ages, the year in which they were first elected a director,
their positions with the Company, their principal occupations and employers for
at least the last five years, and any other directorships held by them in
certain other companies. For information concerning membership on Committees of
the Board of Directors, see "Meetings of the Board of Directors and Committees"
below. For information concerning directors' ownership of common stock, see
"Beneficial Owners of More Than Five Percent of the Company's Common Stock;
Shares Held by Directors and Executive Officers" below.
<TABLE>
<CAPTION>
NAME AND YEAR FIRST POSITIONS WITH THE COMPANY, PRINCIPAL OCCUPATIONS DURING
ELECTED DIRECTOR AGE AT LEAST THE PAST FIVE YEARS, AND OTHER DIRECTORSHIPS
- ------------------- --- --------------------------------------------------------
<S> <C> <C>
P. Michael Coleman 46 Mr. Coleman co-founded the Company in 1987 when he and a
(1987) partner purchased the music operations of Integrity
Communications, Inc. from Charles Simpson Ministries,
Inc. He has served as Chairman, President and the Chief
Executive Officer of the Company since 1987. Prior to
1987, Mr. Coleman served as president of several
different organizations in the Christian communications
industry. In December 1999, Mr. Coleman earned a Master
of Business Administration degree for global executives
from Duke University.
Jean C. Coleman 53 Mrs. Coleman is a full-time homemaker in Mobile, Alabama
(1993) and is the wife of P. Michael Coleman.
Charles V. Simpson 63 Mr. Simpson is the retired Senior Pastor of the Covenant
(1987) Church of Mobile where he previously served for more
than five years. Reverend Simpson is Chairman of Charles
Simpson Ministries which publishes Christian Conquest
magazine, The Covenant and the Kingdom Curriculum, and a
monthly pastoral letter.
Heeth Varnedoe III 63 Mr. Varnedoe was President and Chief Operating Officer
(1993) of Flowers Industries Inc., a publicly-traded company
which produces bread and other baked products from 1986
to 1997.
Jimmy M. Woodward 39 Mr. Woodward has served as Chief Financial Officer of
(1999) Flowers Industries Inc. since 2000. Prior to becoming
Chief Financial Officer, he was Vice President and Chief
Administrative Officer of Flowers Industries Inc. since
1997. Mr. Woodward has been a director of Keebler Foods
Company since February 1998. Mr. Woodward joined Flowers
Industries Inc. in 1985 as Tax Accounting Manager and
served as Assistant Treasurer of Flowers Industries Inc.
from 1990 to 1997.
</TABLE>
MEETINGS OF THE BOARD OF DIRECTORS AND COMMITTEES
Board of Directors. The property, affairs and business of the Company are
under the general management of its Board of Directors as provided by the laws
of Delaware and the Bylaws of the Company. The Company has standing Audit and
Compensation Committees of the Board of Directors.
Audit Committee. The members of the Audit Committee are Jimmy M. Woodward
(Chairman) Heeth Varnedoe III. The Audit Committee makes recommendations
concerning the engagement of independent public accountants, reviews with the
independent public accountants the plans and results of the audit engagement,
approves professional services provided by the independent public accountants,
reviews the independence of the independent public accountants, considers the
4
<PAGE> 8
range of audit and non-audit fees and reviews the adequacy of the Company's
internal accounting controls. The Audit Committee held three meetings during
1999.
Compensation Committee. The members of the Compensation Committee are
Heeth Varnedoe III (Chairman) and Jimmy M. Woodward. The function of the
Compensation Committee is to review and approve the compensation of executive
officers and establish targets and incentive awards under incentive compensation
plans of the Company. The Compensation Committee held three meetings during
1999.
The Board of Directors held five meetings during 1999. Each director,
during the period he or she was a director, attended at least 75% of the
meetings of the Board of Directors. Each member of a committee, during the
period he or she was a committee member, attended at least 75% of the meetings
of each committee on which they served.
COMPENSATION OF DIRECTORS
The Company pays a fee of $1,500 for each Board and committee meeting
attended by its directors who are not employees of the Company, former employees
of the Company or members of the immediate family of a current or former
employee of the Company. The Company also reimburses the directors for travel
expenses incurred in connection with their activities on behalf of the Company.
Pursuant to the Integrity Incorporated 1994 Stock Option Plan for Outside
Directors (the "Director Plan") adopted by the Company, each director (other
than employees, former employees or immediate family members of current or
former employees) automatically receives on the day following each annual
meeting of stockholders a grant of options to purchase 1,000 shares of Class A
Common Stock. Such options will have an exercise price equal to 100% of the fair
market value of the Class A Common Stock at the date of grant of such option.
5
<PAGE> 9
BENEFICIAL OWNERS OF MORE THAN FIVE PERCENT OF THE COMPANY'S COMMON STOCK;
SHARES HELD BY DIRECTORS AND EXECUTIVE OFFICERS
Based solely upon information made available to the Company, the following
table sets forth certain information with respect to the beneficial ownership of
Class A Common Stock and Class B Common Stock as of December 31, 1999, by (i)
each person who is known by the Company to beneficially own more than five
percent of either Class A or Class B Common Stock; (ii) each nominee for
director of the Company; (iii) each of the Named Executive Officers (as defined
under "Executive Compensation" below); and (iv) all officers and directors as a
group. Except as otherwise indicated, the holders listed below have sole voting
and investment power with respect to all shares of Class A or Class B Common
Stock beneficially owned by them.
<TABLE>
<CAPTION>
SHARES OF CLASS A SHARES OF CLASS B
COMMON STOCK COMMON STOCK PERCENTAGE OF
NAME AND ADDRESS ----------------------- ------------------------- CLASS A AND CLASS B
OF BENEFICIAL OWNER NUMBER PERCENTAGE(1) NUMBER PERCENTAGE(1) COMMON STOCK(1)
- ------------------- ------- ------------- --------- ------------- -------------------
<S> <C> <C> <C> <C> <C>
Financial & Investment 177,398 8.5 -- -- 3.2%
Management Group, Ltd.(2)
417 St. Joseph Street
P.O. Box 40
Suttons Bay, MI 49682
The Coleman Limited
Partnership -- -- 223,021 6.5% 4.0%
c/o Mr. P. Michael Coleman
8561 Dawes Lake Road
Mobile, Alabama 36619
P. Michael Coleman(3) 35,100 1.6% 3,435,000 100.0% 61.8%
Jean C. Coleman -- -- 208,633 6.1% 3.7%
Jimmy M. Woodward(9) 2,000 * -- -- *
Charles V. Simpson(4) 5,500 * -- -- *
Heeth Varnedoe III(4) 5,500 * -- -- *
Jerry W. Weimer(5) 83,000 3.8% -- -- 1.5%
Donald J. Moen(6) 53,233 2.4% -- -- *
Daniel D. McGuffey(7) 30,000 1.4% -- -- *
Keith J. Manwaring(8) 15,000 * -- -- *
All executive officers and
directors as a group (13
persons)(10) 260,333 11.1% 3,435,000 100.0% 64.0%
</TABLE>
- ---------------------------------------
* Less than 1%.
(1) Based upon 2,179,000 shares of Class A Common Stock issued and 2,079,000
outstanding as of December 31, 1999 and 3,435,000 shares of Class B
Common Stock issued and outstanding as of December 31, 1999. Except as
indicated in the footnotes below, the information presented does not
include 325,000 shares of Class A Common Stock reserved for issuance upon
exercise of stock options under the Incentive Plan, 25,000 shares of
Class A Common Stock reserved for issuance upon exercise of stock options
under the Director Plan and 400,000 shares of Class A Common Stock
reserved for issuance under the 1999 Long-Term Incentive Plan.
(2) Based on a Schedule 13G filed on June 16, 1999. Financial and Investment
Management Group has shared voting and dispositive power over 177,398
shares owned by its investment advisory clients.
(3) Includes 35,000 shares of Class A Common Stock held by The Coleman
Charitable Foundation, Inc. over which Mr. Coleman, as Chairman, has
shared voting and dispositive power; 223,021 shares of Class B Common
Stock held by The Coleman Limited Partnership, over which Mr. Coleman, as
General Partner, has sole voting and dispositive power; and 208,633
shares of Class B Common Stock held by Jean C. Coleman.
(4) Includes options to purchase 5,000 shares of Class A Common Stock granted
under the Director Plan, which are immediately exercisable.
6
<PAGE> 10
(5) Includes options to purchase 80,000 shares of Class A Common Stock,
60,000 of which were immediately exercisable on December 31, 1999 and
20,000 of which became immediately exercisable on February 11, 2000.
(6) Includes options to purchase 45,833 shares of Class A Common Stock,
43,889 of which were immediately exercisable on December 31, 1999, and
1,944 of which became immediately exercisable on February 14, 2000.
(7) Includes options to purchase 30,000 shares of Class A Common Stock, which
are immediately exercisable.
(8) Includes options to purchase 15,000 shares of Class A Common Stock,
10,000 of which were immediately exercisable on December 31, 1999, and
5,000 of which became immediately exercisable on February 14, 2000.
(9) Includes options to purchase 1,000 shares of Class A Common Stock, which
are immediately exercisable.
(10) Includes options to purchase 158,889 shares of Class A Common Stock,
which are immediately exercisable.
EXECUTIVE OFFICERS OF THE COMPANY
Except for Mr. Coleman, discussed above, the following table sets forth
the names of the executive officers of the Company, their ages, their positions
with the Company and their principal occupations and employers for at least the
last five years. For information concerning executive officers' ownership of
Common Stock, see "Beneficial Owners of More Than Five Percent of the Company's
Common Stock; Shares Held by Directors and Executive Officers."
<TABLE>
<CAPTION>
POSITIONS WITH THE COMPANY AND PRINCIPAL
NAME AGE OCCUPATIONS DURING AT LEAST THE PAST FIVE YEARS
- ---- --- -----------------------------------------------
<S> <C> <C>
Jerry W. Weimer 52 Mr. Weimer joined the Company in March 1996 as
Executive Vice President, Chief Operating Officer.
In this position, Mr. Weimer manages and oversees
Integrity's day-to-day operations in all areas
except finance and administration. Mr. Weimer's
previous experience includes more than 15 years in
the music industry. From 1992 to 1996, he held the
position of Executive Vice President of Word, Inc.,
the former Christian music division of Thomas
Nelson, Inc., and prior to 1991, he was President of
the Gaither Management Group, which is involved in
Christian music publishing.
Donald J. Moen 49 Mr. Moen joined the Company as Creative/Product
Director in February 1988 and is currently Executive
Vice President and Creative Director. In this
position, Mr. Moen provides creative input to the
product creation process. Also, as an artist and
songwriter, Mr. Moen has completed numerous
recordings for the Company and has been a worship
leader for the Hosanna! Music series. In 1994, the
Company's musical "God With Us," for which Mr. Moen
was the key creative director, won a Dove Award for
best musical. In 1993, he was a Dove Award nominee
for his recording "Worship with Don Moen," and in
1992, he was a nominee for his song "God Will Make a
Way."
</TABLE>
7
<PAGE> 11
<TABLE>
<CAPTION>
POSITIONS WITH THE COMPANY AND PRINCIPAL
NAME AGE OCCUPATIONS DURING AT LEAST THE PAST FIVE YEARS
- ---- --- -----------------------------------------------
<S> <C> <C>
Keith J. Manwaring 53 Mr. Manwaring joined the Company in November 1990 as the
Managing Director of the Company's Australian
subsidiary. In February 1992, Mr. Manwaring transferred
to the Company's headquarters in Mobile, Alabama where
he assumed the position of Vice President,
International, Church Resources and Special Sales. In
September 1995, certain areas of the Company were
restructured and Mr. Manwaring became solely responsible
for international sales as Senior Vice President,
International. In December 1996, Mr. Manwaring's title
was changed to Senior Vice President, General Manager
International Group to again reflect some restructuring
of the Company.
Alison S. Richardson 34 Mrs. Richardson joined the Company in May 1989 as a
Financial Analyst. She was promoted to Accounting
Manager in August 1991, to the position of Corporate
Controller in April 1992, Vice President, Corporate
Controller in May 1994, and to her current position of
Senior Vice President of Finance and Administration in
December 1996. Mrs. Richardson's responsibilities
include management of the accounting department and all
aspects of internal and external financial reporting.
She also is responsible for the administrative function
of the Company, including facilities management, risk
management, human resources and information systems and
operations. Prior to joining the Company, Mrs.
Richardson was employed by the national accounting firm
of Pannell, Kerr, Forster from January 1987 to May 1989.
Mr. McGuffey joined the Company in December 1996 as
Senior Vice President, General Manager of the Integrity
Label Group. In August 1999,
Daniel D. McGuffey 46 Mr. McGuffey joined the Company in December 1996 as
Senior Vice President, General Manager of the Integrity
Label Group. In August 1999, Mr. McGuffey was promoted
to his current position of Chief Marketing Officer and
Senior Vice President. In this position, he is
responsible for U.S. consumer marketing, sales, creative
services and special markets. Prior to joining
Integrity, Mr. McGuffey was Vice President of Marketing
and Sales for Star Song Communications, a Christian
music publisher, from 1992 to December 1996, where he
was instrumental in the marketing and sales development
of over 30 artists and labels. He also held the position
of Vice President of Marketing and Sales for Reunion
Records from 1991 to 1992 and began his career in the
music industry in 1980 with the Sparrow Corporation, a
Christian music publisher.
Jeffrey K. Friend 45 Mr. Friend joined the Company on February 7, 2000, as
Vice President of Operations. Prior to joining the
Company, Mr. Friend served as a Manager at Conseco
Insurance, a leading provider of consumer financial
services. in Carmel, Indiana at their distribution
center for approximately three years. Prior to Conseco,
Mr. Friend had approximately 14 years of experience in
operations at locations including Target Stores National
Distribution Center, Intrada Music Group, and Alexandria
House, a music distribution center.
</TABLE>
8
<PAGE> 12
<TABLE>
<CAPTION>
POSITIONS WITH THE COMPANY AND PRINCIPAL
NAME AGE OCCUPATIONS DURING AT LEAST THE PAST FIVE YEARS
- ---- --- -----------------------------------------------
<S> <C> <C>
Debra Mayes 45 Mrs. Mayes joined the Company in October 1995, as
Director, Music Administration. In April 1999, she was
promoted to her current position, Vice President, Music
Administration. Her responsibilities include the general
management of the Company's copyrights and other
intellectual properties, royalty administration and
product administration. Prior to joining the company,
Mrs. Mayes was Director of Gaither Copyright Management,
a division of Gaither Music Company, from 1984 to 1995.
During that time she was also adjunct professor in the
Music Business Degree program of Anderson University.
She has been involved in the music industry for almost
25 years and has held various positions with CBS
records, The Benson Company and Paragon Associates. Mrs.
Mayes is also President of the Church Music Publisher's
Association.
Robert G. Rist 53 Mr. Rist joined the Company on March 31, 1997, as Vice
President, Church Resources. The Church Resources
division of the Company specializes in providing
material to be used by local congregations specifically
in the area of worship. Prior to joining the Company,
Mr. Rist served as President of Warner Press in
Anderson, Indiana, for seven years and prior to that in
various positions at Alexandria House, Inc., a music
distribution company in Alexandria, Indiana for 14
years.
</TABLE>
9
<PAGE> 13
EXECUTIVE COMPENSATION
The following table presents certain summary information concerning
compensation paid or accrued by the Company for services rendered in all
capacities during the fiscal years ended December 31, 1997, 1998, and 1999 for
(i) the President and Chief Executive Officer of the Company; and (ii) the four
other most highly compensated executive officers of the Company whose total
salary and bonus exceeded $100,000 (determined as of December 31, 1999 and
collectively, the "Named Executive Officers").
SUMMARY COMPENSATION TABLE
<TABLE>
<CAPTION>
LONG TERM COMPENSATION
-------------------------------------
ANNUAL COMPENSATION AWARDS PAYOUTS
-------------------- ------------------------ ----------
RESTRICTED SECURITIES
NAME AND STOCK UNDERLYING LTIP ALL OTHER
PRINCIPAL POSITION YEAR SALARY BONUS AWARDS OPTIONS/SAR PAYOUTS(1) COMPENSATION
------------------ ---- --------- -------- ---------- ----------- ---------- ------------
($) (#)
<S> <C> <C> <C> <C> <C> <C> <C>
P. Michael Coleman 1999 $300,927 $75,232 -- -- -- $19,043(2)
Chairman, President and 1998 296,206 73,041 -- -- -- 7,695
Chief Executive Officer 1997 282,293 50,000 -- -- -- 28,473
Jerry W. Weimer 1999 207,773 71,500 375,000 100,000 -- 18,634(3)
Executive Vice President, 1998 200,000 50,000 -- -- -- 7,219
Chief Operating Officer 1997 175,294 31,000 -- -- -- 24,723
Donald J. Moen 1999 139,851 32,916 -- -- -- 7,189(4)
Executive Vice President, 1998 142,299 40,977 -- -- $19,440 6,509
Creative Director 1997 138,727 -- -- 9,722 -- 19,048
Daniel D. McGuffey 1999 133,649 80,190 -- 50,000 -- 18,880(5)
Chief Marketing Officer 1998 120,386 71,240 -- -- -- 9,878
Senior Vice President 1997 111,758 112,000 -- -- -- 15,291
Keith J. Manwaring
Senior Vice President, 1999 113,609 32,196 -- -- -- 5,850(6)
General Manager 1998 102,102 21,829 -- -- 17,010 5,844
International Group 1997 94,925 23,726 -- -- -- 2,578
</TABLE>
- ---------------------------------------
(1) Comprised of payments made under the Company's 1995 Cash Incentive Plan.
See "--Cash Incentive Plan."
(2) Comprised of (i) contributions made by the Company to the Company's
401(k) Plan and Profit Sharing Plan in the amounts of $15,000, $3,652 and
$24,430 in 1999, 1998, and 1997, respectively and (ii) payments made by
the Company on behalf of the officer for Personal Disability Insurance in
the amounts of $4,043 in each of 1999, 1998 and 1997, respectively.
(3) Comprised of (i) contributions made by the Company to the Company's
401(k) Plan and Profit Sharing Plan in the amounts of $15,000, $3,585 and
$24,430 in 1999, 1998, and 1997, respectively and (ii) payments made by
the Company on behalf of the officer for Personal Disability Insurance in
the amounts of $3,634, $3,634 and $293 in each of 1999, 1998 and 1997,
respectively.
(4) Comprised of (i) contributions made by the Company to the Company's
401(k) Plan and Profit Sharing Plan in the amounts of $5,000, $4,352 and
$17,066 in 1999, 1998, and 1997, respectively and (ii) payments made by
the Company on behalf of the officer for Personal Disability Insurance in
the amounts of $2,189, $2,157 and $1,982 in each of 1999, 1998 and 1997,
respectively.
(5) Comprised of (i) contributions made by the Company to the Company's
401(k) Plan and Profit Sharing Plan in the amounts of $5,000, $2,700 and
$4,750 in 1999, 1998, and 1997, respectively; (ii) reimbursement by the
Company of living expenses in the amounts of $11,890, $7,178 and $10,541,
in each of 1999, 1998 and 1997, respectively; and (iii) in 1999 a payment
by the Company of disability insurance premiums in the amount of $1,190.
(6) Comprised of (i) contributions made by the Company to the Company's
401(k) Plan and Profit Sharing Plan in the amounts of $4,852, $4,900 and
$1,686 in 1999, 1998, and 1997, respectively and (ii) payments made by
the Company on behalf of the officer for Personal Disability Insurance in
the amounts of $998, $994 and $892 in each of 1999, 1998 and 1997,
respectively.
10
<PAGE> 14
FISCAL YEAR-END OPTION VALUES
<TABLE>
<CAPTION>
NUMBER OF SECURITIES
UNDERLYING VALUE OF UNEXERCISED
UNEXERCISED OPTIONS IN-THE-MONEY OPTIONS
AT FISCAL YEAR-END(1) AT FISCAL YEAR-END(2)
--------------------------- ---------------------------
NAME EXERCISABLE UNEXERCISABLE EXERCISABLE UNEXERCISABLE
---- ----------- ------------- ----------- -------------
<S> <C> <C> <C> <C>
P. Michael Coleman -- -- -- --
Jerry W. Weimer 60,000 140,000 $38,616 $25,744
Donald J. Moen 43,889 15,833 $ 5,347 $ 8,020
Daniel D. McGuffey 30,000 70,000 $37,500 $25,000
Keith J. Manwaring 10,000 15,000 $13,750 $20,625
</TABLE>
- ---------------------------------------
(1) No options were exercised by the Named Executive Officers in 1999.
(2) Represents the fair market value of a share of Class A Common Stock as of
December 31, 1999 of $3.125, less the option exercise price, multiplied by
the total number of exercisable or unexercisable options; however; the
exercise price of some of the options to purchase shares of Class A Common
Stock was higher than the fair market value of the Class A Common Stock as
of December 31, 1999 and thus such options were "out-the-money" as of such
date.
OPTION GRANTS IN LAST FISCAL YEAR
<TABLE>
<CAPTION>
INDIVIDUAL GRANT POTENTIAL REALIZABLE
--------------------------------------------------------------------- VALUE AT
PERCENT OF TOTAL ASSUMED ANNUAL
OPTIONS RATES OF STOCK
NUMBER OF GRANTED TO PRICE APPRECIATION
SECURITIES EMPLOYEES IN FOR OPTION TERM
UNDERLYING OPTIONS FISCAL EXERCISE OR BASE EXPIRATION ---------------------
NAME GRANTED YEAR(3) PRICE DATE 5% 10%
---- ------------------ ---------------- ---------------- ---------- --------- ---------
<S> <C> <C> <C> <C> <C> <C>
Daniel D. McGuffey 50,000(1) 29.6% $3.188 8/6/2009 $100,246 $254,043
Jerry W. Weimer 100,000(2) 59.1% 3.750 4/11/2009 235,835 597,653
</TABLE>
- ---------------------------------------
(1) All options were granted on August 6, 1999, and vest on each anniversary
of the grant in increments of 7,000 per year for the first six years and a
final increment of 8,000 in the seventh year.
(2) All options were granted on February 11, 1999, and vest on each
anniversary of the grant in increments of 20,000 per year for the next
five years.
(3) Percent of total options based on 169,000 total options granted to
employees in 1999.
11
<PAGE> 15
LONG-TERM INCENTIVE PLANS -- AWARDS IN LAST FISCAL YEAR
<TABLE>
<CAPTION>
PERFORMANCE OR
NUMBER OF OTHER PERIOD
SHARES, UNITS OR UNTIL MATURATION
NAME OTHER RIGHTS OR PAYOUT
---- ---------------- ----------------
<S> <C> <C>
Jerry W. Weimer 100,000(1) 2/11/2006
</TABLE>
- ---------------
(1) Consists of an award of 100,000 shares of restricted stock that was
granted on February 11, 1999, and vests in its entirety on February 11,
2006, if Mr. Weimer is still an employee of the Company at that time.
Employment Arrangements
Employment Agreements. The Company has entered into an employment
agreement (the "Weimer Employment Agreement") with Mr. Weimer for the position
of Executive Vice President/Chief Operating Officer. The Weimer Employment
Agreement provides for a base salary of $175,000, and Mr. Weimer is eligible to
receive cash bonuses under the executive cash bonus compensation system
established from time to time by the Company. The term of the Weimer Employment
Agreement began on March 28, 1996, and continues until terminated for death,
disability, cause or upon mutual written agreement. The Weimer Employment
Agreement also may be terminated after Mr. Weimer has been employed by the
Company for at least eighteen (18) months, upon six (6) months prior written
notice of termination from the Company to Mr. Weimer. The Company, at its sole
discretion, may elect to pay Mr. Weimer an amount equal to his salary for six
(6) months in lieu of providing the above-mentioned notice. The Weimer
Employment Agreement contains non-competition, non-solicitation and
confidentiality provisions and expressly incorporates the Change in Control
Agreement agreed to and executed by Mr. Weimer and the Company.
In addition, the Company has entered into an employment agreement (the
"Moen Employment Agreement") with Mr. Moen for the position of Executive Vice
President/Creative Director. The Moen Employment Agreement provides for a
non-refundable, non-recoupable cash signing bonus of $25,000 and a base salary
of $143,581, and Mr. Moen is eligible to receive cash bonuses under the
executive cash bonus compensation system established from time to time by the
Company. The term of the Moen Employment Agreement began on October 1, 1998, and
continues for a period of three (3) years from that date, unless earlier
terminated for death, disability, cause, or upon mutual written agreement. The
Moen Employment Agreement contains non-competition, non-solicitation and
confidentiality provisions and expressly incorporates the 1995 Cash Incentive
Plan, Severance Agreement and Change in Control Agreement agreed to and executed
by Mr. Moen and the Company.
The Company has also entered into an employment agreement (the "McGuffey
Employment Agreement") with Mr. McGuffey for the position of Senior Vice
President and General Manager, Integrity Label Group. The McGuffey Employment
Agreement currently provides for a base annual salary of $116,000. The Company
also agreed to pay Mr. McGuffey those amounts necessary to cover the commuting
and living expenses associated with maintaining two residences, and Mr. McGuffey
is eligible to receive an annual cash bonus of $10,000 plus additional cash
bonuses for meeting certain performance goals as established from time to time
by the Company. The term of the McGuffey Employment Agreement began on January
1, 1998, and continues until terminated for death, disability, cause or upon
mutual written agreement. The McGuffey Employment Agreement also may be
terminated upon six (6) months prior written notice of termination from the
Company to Mr. McGuffey; however, the Company, at its sole discretion, may elect
to pay Mr. McGuffey an amount equal to his salary for six (6) months in lieu of
providing such notice. If Mr. McGuffey is terminated upon six months notice, he
will be entitled to receive a severance benefit equal to the greater of (1)
three times his base salary less 1/12 of his base salary for each full month he
has been
12
<PAGE> 16
employed following the date of the McGuffey Employment Agreement, or (2) 1/2 of
his base salary. In either case his severance would be reduced by any amount the
Company paid Mr. McGuffey in lieu of the six months notice. The McGuffey
Employment Agreement contains non-competition, non-solicitation and
confidentiality provisions and expressly incorporates the Change in Control
Agreement agreed to and executed by Mr. McGuffey and the Company.
Change in Control Agreements. The Company has entered into change in
control agreements (the "Change in Control Agreements") with certain Named
Executive Officers as well as other senior officers of the Company. The Change
in Control Agreements provide that in the event the officer is employed by the
Company at the time of a Change in Control (as defined in the Change in Control
Agreement), the officer shall be entitled to supplemental employment benefits
should his employment with the Company terminate within 18 months after the
Change in Control has occurred. The Change in Control Agreements provide that
such termination of employment can be involuntary, other than termination for
cause or the result of death, disability, or retirement age, or voluntary,
following a material change in the nature or location of his position or a
material change in the benefits provided to the officer by the Company. The
supplemental benefits that are required to be provided to the officer upon such
a termination include a severance payment in an amount equal to one-half of the
officer's annual base salary as well as various other benefits including basic
life insurance, long-term disability insurance, health insurance and other
medical benefits.
Without the consent of the officer, the terms of the Change in Control
Agreement may be terminated or amended by the Company following the first
anniversary of its execution at any time prior to the first to occur of (1) a
Change in Control, (ii) the public announcement of a proposal for a transaction
that, if consummated, will constitute a Change in Control, or (iii) the Board of
Directors learns of a proposal for a transaction that, if consummated, would
constitute a Change in Control. Upon the occurrence of any of the foregoing
events, the Change in Control Agreements continue in effect at such time without
termination or further change by the Company until the earlier of (x) 18 months
following any Change in Control, or (y) the final withdrawal or termination of a
proposal under item (ii) or (iii) that, had it been consummated, would have
constituted a Change in Control, at which time the Change in Control Agreement
may, once again, be amended or terminated by the Company until one of such
events occurs.
A Change in Control, as defined in the Change in Control Agreements,
includes, among other things: a change of control of the Company such that any
person, other than current affiliates of the Company, becomes the beneficial
owner of securities of the Company representing 50% or more of the combined
voting power of the Company's then outstanding securities; any consolidation,
merger or share exchange involving the Company in which the Company is not the
continuing or surviving corporation or pursuant to which shares of Company stock
would be converted into cash, securities or other property; the stockholders of
the Company approve any plan or proposal for the liquidation or dissolution of
the Company; or substantially all of the assets of the Company are sold or
otherwise transferred to parties that are not within a controlled group of
corporations in which the Company is a member.
Cash Incentive Plan. The Company has adopted the Integrity Incorporated
1995 Cash Incentive Plan (the "Cash Incentive Plan"). Under the Cash Incentive
Plan key employees of the Company are eligible to be awarded Units which are
payable only in cash. The Units vest in one-fifth increments on each anniversary
of the date of grant until vested in full. In addition, a participant becomes
fully vested, but not paid, in all of the Units of his or her award on the date
which is six months after the occurrence of a Change in Control (as defined in
the Cash Incentive Plan) of the Company if he or she is an employee of the
Company on such date (such six-month period being referred to as the "Transition
Period") or upon his or her termination of employment with the Company as a
result of death, disability, retirement after attaining retirement age, or
termination by the Company other than for cause during the Transition Period.
Participants are entitled to interim payments under the Cash Incentive Plan on
January 15 of each of the five years beginning
13
<PAGE> 17
January 15, 1997, unless the participant has previously received a final
payment. Participants are entitled to a final payment on January 15, 2001, or
January 15 of the year following the participant's termination of employment or
next following the end of the Transition Period following a Change in Control.
The value of the Units, and the calculation of interim and final payments, is
determined based on the difference between the fair market value of a number of
shares of the Class A Common Stock of the Company equal to the number of Units
at the date of determination and the fair market value of the same number of
shares on the date of grant of the Units. The Board of Directors may discontinue
the Cash Incentive Plan at any time, and may amend it from time to time;
however, no outstanding award under the Cash Incentive Plan may be revoked or
altered in a manner unfavorable to the participant without the consent of the
participant. In 1995, awards were made under the Cash Incentive Plan to certain
of the Named Executive Officers, as well as other senior officers of the
Company, which awards, individually, currently do not have a value in excess of
$100,000. In 1996, one award was made under the Cash Incentive Plan to one of
the Named Executive Officers, which currently does not have a value in excess of
$100,000. No further awards were made under the Cash Incentive Plan in 1997, in
1998 or in 1999.
Severance Agreements. The Company has entered into severance agreements
(the "Severance Agreements") with certain Named Executive Officers as well as
other senior officers of the Company. The Severance Agreements provide for the
payment of severance benefits to such persons upon their termination of
employment by the Company without cause. Such persons are not entitled to
severance benefits under the Severance Agreement if they voluntarily resign,
quit, abandon their job or cannot perform their duties due to death or
disability. In addition, if an officer is entitled to severance benefits upon
termination of employment under the terms of a Change in Control Agreement, as
described above, the officer shall not be entitled to any benefits under the
Severance Agreement.
14
<PAGE> 18
STOCKHOLDER RETURN COMPARISON.
The following line graph presentation compares cumulative stockholder
returns of the Company with the Nasdaq Stock Market (U.S. Companies) and a Peer
Index over the period beginning with the December 31, 1994 through December 31,
1999 (assuming the investment of $100 in the Company's Class A Common Stock, the
Nasdaq Stock Market (U.S. Companies) and the Peer Index on December 31, 1994,
and reinvestment of all dividends).
COMPARISON OF CUMULATIVE TOTAL RETURNS
<TABLE>
<CAPTION>
Year-End Cumulative Returns
December 31
-------------------------------------------------------------
1994 1995 1996 1997 1998 1999
------ ------ ------ ------ ------ ------
<S> <C> <C> <C> <C> <C> <C>
Integrity Incorporated 100.00 35.4 27.1 20.8 62.5 52.1
The Nasdaq Stock Market 100.00 141.3 173.9 213.1 300.2 545.7
Peer Index 100.00 120.0 135.7 203.6 211.3 269.0
</TABLE>
Total return calculations for the Nasdaq Stock Market (U.S. Companies) and
the Peer Index were prepared by the Center for Research in Security Prices, The
University of Chicago. The Peer Index is based upon the companies comprising the
Publishing Index in the Dow Jones Media Industry Group. Specific information
regarding the companies comprising the Peer Index will be provided to any
stockholder upon request to Alison S. Richardson, at the Company.
COMPENSATION COMMITTEE REPORT ON EXECUTIVE COMPENSATION.
The Compensation Committee of the Board of Directors has furnished the
following report on executive compensation:
Overview and Philosophy. The Compensation Committee of the Board of
Directors (the "Compensation Committee") is responsible for reviewing and making
decisions under a delegation of authority from the Board with respect to
salaries, wages, bonuses, stock options and other benefits for officers of the
Company.
The objectives of the Company's executive compensation program are to:
- Encourage the achievement of Company performance by providing
compensation which directly relates to the performance of the
individual and the achievement of internal strategic objectives.
15
<PAGE> 19
- Establish compensation policies and guidelines that will attract
and retain qualified personnel through an overall level of
compensation opportunity that is competitive within the Company's
industry.
- Promote a direct relationship between compensation and Company
performance by facilitating executive officer stock ownership
through stock option awards.
Overall, the Company's executive officer compensation program is comprised
of base salary, annual cash incentive bonus compensation, long-term incentive
compensation in the form of stock options, and various other benefits, including
a medical plan, which are generally available to all employees of the Company.
Base Salary. The base salaries for the Company's executive officers vary
depending on the responsibilities of the officers. While the executive officer
base salary compensation is designed to be competitive with other companies in
the Company's industry, the Company believes that bonus compensation described
below better serves the compensation philosophy of the Company.
1999 Cash Incentive Compensation. In order to maximize the common
interests of the Company's stockholders and its management, the Company awards
cash bonuses based on the Company's operating performance. The Company's
budgeted financial performance goals are set at the beginning of each fiscal
year and cash bonuses are then awarded in the judgment of the Compensation
Committee based on the achievement of budgeted targets and the individual
performance of the executive officer. As a result of their performance, eight of
the Company's executive officers received cash bonuses in fiscal 1999.
Stock Options and Restricted Stock. The stock option programs of the
Company are long-term incentive plans for executive officers and employees
intended to relate employee and stockholder long-term interests by creating a
strong and direct link between compensation and stockholder returns. In general,
stock option awards are granted on an annual basis if warranted by the Company's
growth and profitability. To encourage long-term performance, options generally
vest over a five-year period. The Compensation Committee considers current stock
ownership and option holdings in deciding the number of options to be awarded to
each recipient. In fiscal 1999, the Company awarded stock options underlying
100,000 shares of Class A common stock to its executive officers and also
awarded 100,000 shares of restricted stock to Mr. Weimer.
Compensation of Chief Executive Officer. In fiscal 1999, the Chief
Executive Officer of the Company, Mr. P. Michael Coleman, was compensated
pursuant to an unwritten employment agreement approved by the Board of Directors
of the Company prior to the Company's initial public offering in July 1994.
Under the agreement, Mr. Coleman received a base salary of $300,927 during
fiscal 1999. As a participant in the Company's 1999 Incentive Plan, Mr. Coleman
received a bonus award equal to 25% of his base salary. The Compensation
Committee made this award based on Mr. Coleman's performance during 1999. The
Company did not make any awards, including stock options or restricted stock, to
Mr. Coleman under the 1999 Long-Term Incentive Plan in 1999.
The Compensation Committee has adopted several plans and agreements
designed to assist the Company in retaining key employees of outstanding ability
when considering various alternatives to enhance stockholder value, including
business transactions with third parties. These plans and agreements are
designed to offer key employees an increased incentive to join or continue in
the service of the Company and to increase their efforts for its welfare by
participating in the growth of the Company. Specifically, the Compensation
Committee adopted a form of Change in Control Agreement, the Cash Incentive
Plan, and a form of Severance Agreement, which were utilized with various key
employees. See "Proposal I -- Election of Directors -- Executive Compensation
- -- Employment Arrangements."
16
<PAGE> 20
Section 162(m) of the Internal Revenue Code (the "Code") adopted as part
of the Revenue Reconciliation Act of 1993, generally limits to $1 million the
deduction that can be claimed by any publicly-held corporation for compensation
paid to any "covered employee" in any taxable year beginning after December 31,
1993. The term covered employee for this purpose is defined generally as the
Chief Executive Officer and the four other highest paid employees of the
corporation. Performance-based compensation is outside the scope of the $1
million limitation, and hence, generally can be deducted by a publicly-held
corporation without regard to amount, provided that, among other requirements,
such compensation is approved by the stockholders. The Compensation Committee
has not, and, given the current levels of executive compensation in the Company,
does not foresee the need in the immediate future, to formulate a policy for the
Company with regard to Section 162(m) and executive compensation. Generally
speaking, the Compensation Committee's executive compensation policies are
performance-based.
COMPENSATION COMMITTEE
Heeth Varnedoe III
Jimmy M. Woodward
CERTAIN TRANSACTIONS
Donald J. Moen. Mr. Donald J. Moen, Integrity's Executive Vice President
and Creative Director, is also one of the Company's exclusive songwriters and
artists. Mr. Moen received royalties of $276,264 in 1999.
The Board of Directors of the Company has adopted a policy which requires
that transactions between the Company and its officers, directors or other
affiliates shall be on terms no less favorable to the Company than could be
obtained from unaffiliated third parties on an arm's-length basis and, further,
that any such transaction shall be approved by a majority of the Company's
directors who have no interest in any such transaction.
PROPOSAL II
APPROVAL OF SELECTION OF AUDITORS
The Company's Board of Directors has selected PricewaterhouseCoopers LLP
to conduct the annual audit of the financial statements of the Company for the
fiscal year ending December 31, 2000. PricewaterhouseCoopers LLP has no
financial interest, direct or indirect, in the Company, and does not have any
connection with the Company except in its professional capacity as an
independent auditor.
The ratification by the holders of Class A Common Stock of the selection
of PricewaterhouseCoopers LLP as independent auditors is not required by law or
by the Bylaws of the Company. The Board of Directors, consistent with the
practice of many publicly held corporations, is nevertheless submitting this
selection to the holders of Class A Common Stock and the Class B Common Stock.
If this selection is not ratified at the Annual Meeting, the Board of Directors
intends to reconsider its selection of independent auditors for the fiscal year
ending December 31, 2000. Even if the selection is ratified, the Board of
Directors in its sole discretion may direct the appointment of a different
independent accounting firm at any time during the fiscal year if the Board
determines that such a change would be in the best interest of the Company and
its stockholders.
The Audit Committee, which is composed of directors who are not employees
of the Company, approves in advance all material non-audit services to be
provided by PricewaterhouseCoopers LLP and approves only those services that it
believes will have no effect on audit independence.
17
<PAGE> 21
Representatives of PricewaterhouseCoopers LLP will be present at the
Annual Meeting and will have an opportunity to make a statement, if they so
desire, and respond to appropriate questions.
THE BOARD OF DIRECTORS RECOMMENDS THAT STOCKHOLDERS VOTE FOR RATIFICATION
OF THE SELECTION OF PRICEWATERHOUSECOOPERS LLP AS INDEPENDENT AUDITORS FOR THE
FISCAL YEAR ENDING DECEMBER 31, 2000. IF A CHOICE IS SPECIFIED ON THE PROXY BY
THE STOCKHOLDER, THE SHARES WILL BE VOTED AS SPECIFIED. IF NO SPECIFICATION IS
MADE, THE SHARES WILL BE VOTED FOR RATIFICATION. THE AFFIRMATIVE VOTE OF A
MAJORITY OF THE VOTES OF THE SHARES OF CLASS A COMMON STOCK AND CLASS B COMMON
STOCK, VOTING TOGETHER AS A SINGLE CLASS, REPRESENTED AND ENTITLED TO VOTE AT
THE ANNUAL MEETING AT WHICH A QUORUM IS PRESENT IS REQUIRED FOR APPROVAL OF
PROPOSAL II.
STOCKHOLDER PROPOSALS
FOR 2001 ANNUAL MEETING OF STOCKHOLDERS
Nominations by stockholders for director elections and other proposals of
stockholders, intended to be presented at the annual meeting of stockholders to
be held in 2001, together with certain related information specified in Rule
14a-8 of the Securities and Exchange Commission, should be submitted by
certified mail, return receipt requested, and must be received by the Company at
its executive offices in Mobile, Alabama on or before December 10, 2000, to be
eligible for inclusion in the Company's Proxy Statement and Proxy relating to
that meeting. Any stockholder proposal must be in writing and must set forth (i)
a description of the business desired to be brought before the meeting and the
reasons for conducting the business at the meeting, (ii) the name and address,
as they appear on the Company's books, of the stockholder submitting the
proposal, (iii) the class and number of shares that are beneficially owned by
such stockholder, (iv) a statement in support of the proposal and (v) any other
information required by the rules and regulations of the Securities and Exchange
Commission. Nominations and other proposals of stockholders that are submitted
to the Company after December 10, 2000, may be excluded from the Company's proxy
materials for the 2001 Annual Meeting of Stockholders and will otherwise be
subject to Rule 14a-8 of the Securities and Exchange Commission.
OTHER MATTERS
SECTION 16(A) BENEFICIAL OWNERSHIP REPORTING COMPLIANCE
Section 16(a) of the Securities Exchange Act of 1934 requires the
Company's officers and directors, and persons who own more than ten percent of a
registered class of the Company's equity securities to file reports of ownership
and changes in ownership of such securities with the Securities and Exchange
Commission and the National Association of Securities Dealers, Inc. Officers,
directors and greater than ten percent beneficial owners are required by
applicable regulations to furnish the Company with copies of all Section 16(a)
forms they file.
Based solely upon a review of the copies of the forms furnished to the
Company, or written representations from certain reporting persons that no Forms
5 were required, the Company believes that during fiscal 1999 all of its
officers and directors complied with all applicable filing requirements.
EXPENSES OF SOLICITATION
The cost of soliciting proxies in the accompanying form will be borne by
the Company. In addition to the use of the mails, proxies may be solicited by
directors, officers or other employees of the Company, personally, by telephone
or by telegraph. The Company does not expect to pay any compensation for the
solicitation of proxies, but may reimburse brokers, custodians or other persons
18
<PAGE> 22
holding stock in their names or in the names of nominees for their expenses in
sending proxy materials to principals and obtaining their instructions.
MISCELLANEOUS
Management does not know of any matters to be brought before the Annual
Meeting other than as described in this Proxy Statement. Should any other
matters properly come before the Annual Meeting, the persons designated as
proxies will vote in accordance with their best judgment on such matters.
AVAILABILITY OF ANNUAL REPORT
ACCOMPANYING THIS PROXY STATEMENT IS A COPY OF THE COMPANY'S ANNUAL REPORT
FOR THE YEAR ENDED DECEMBER 31, 1999. STOCKHOLDERS WHO WOULD LIKE ADDITIONAL
COPIES OF THE ANNUAL REPORT SHOULD DIRECT THEIR REQUESTS IN WRITING TO:
INTEGRITY INCORPORATED, 1000 CODY ROAD, MOBILE, ALABAMA 36695, ATTENTION: ALISON
S. RICHARDSON.
19
<PAGE> 23
PROXY INTEGRITY INCORPORATED
MOBILE, ALABAMA
ANNUAL MEETING OF STOCKHOLDERS
The undersigned stockholder of Integrity Incorporated (the "Company"),
Mobile, Alabama, hereby constitutes and appoints P. Michael Coleman or Alison S.
Richardson, or either one of them, each with full power of substitution, to vote
the number of shares of Class A Common Stock which the undersigned would be
entitled to vote if personally present at the Annual Meeting of Stockholders to
be held at the Adam's Mark, 64 South Waterstreet, Mobile, Alabama, 36602, on
Thursday, May 11, 2000, at 2:00 p.m., local time, or at any adjournments thereof
(the "Annual Meeting"), upon the proposals described in the Notice of Annual
Meeting of Stockholders and Proxy Statement, both dated April 10, 2000, the
receipt of which is acknowledged, in the manner specified below. The proxies, in
their discretion, are further authorized to vote on any stockholder proposals
subsequently presented for a vote of the stockholders at the Annual Meeting, as
well as on the election of any person as a director if any nominee named herein
is unable to serve or for good cause will not serve, and on matters incident to
the Annual Meeting and any adjournments thereof. At the present time, the Board
of Directors knows of no other business to be presented to a vote of the
stockholders at the Annual Meeting. The Board of Directors recommends a vote FOR
Proposals 1 and 2.
1. ELECTION OF DIRECTORS. On the proposal to elect the following slate of
directors to serve until the 2001 Annual Meeting of Stockholders of the
Company and until their successors are elected and qualified:
P. Michael Coleman, Jean C. Coleman, Charles V. Simpson, Heeth Varnedoe III,
Jimmy M. Woodward
<TABLE>
<S> <C> <C> <C>
FOR [ ] WITHHOLD AUTHORITY [ ]
</TABLE>
To withhold authority for any individual nominee(s), write the name of the
nominee(s) in the space provided:
---------------------------------------------------------------------------
2. SELECTION OF AUDITORS. On the proposal to ratify the selection of
PricewaterhouseCoopers LLP as the Company's independent auditors for the
fiscal year ending December 31, 2000:
FOR [ ] AGAINST [ ] ABSTAIN [ ]
(Continued and to be dated and signed on reverse side)
THIS PROXY, WHEN PROPERLY EXECUTED, WILL BE VOTED IN THE MANNER DIRECTED BY
THE UNDERSIGNED STOCKHOLDER. IF NO DIRECTION IS MADE, THIS PROXY WILL BE VOTED
FOR PROPOSALS 1 AND 2 AND WITH DISCRETIONARY AUTHORITY ON CERTAIN OTHER MATTERS
THAT MAY PROPERLY COME BEFORE THE ANNUAL MEETING OF ANY ADJOURNMENTS THEREOF.
Please sign exactly as your name appears on your stock certificate and
date. Where shares are held jointly, each stockholder should sign. When signing
as 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
authorized person.
Shares Held:
------------------------------
------------------------------
Signature of Shareholder
------------------------------
Signature of Shareholder (If
held jointly)
Dated: ----------------, 2000
Month Day
THIS PROXY IS SOLICITED ON BEHALF OF INTEGRITY INCORPORATED'S BOARD OF DIRECTORS
AND MAY BE
REVOKED BY THE STOCKHOLDER PRIOR TO ITS EXERCISE.
