<PAGE>
================================================================================
SCHEDULE 14A INFORMATION
Proxy Statement Pursuant to Section 14(a) of the Securities
Exchange Act of 1934
Filed by the Registrant [X]
Filed by a Party other than the Registrant [_]
Check the appropriate box:
[_] Preliminary Proxy Statement [_] Confidential, for Use of the
Commission Only (as permitted by
Rule 14a-6(e)(2))
[X] Definitive Proxy Statement
[_] Definitive Additional Materials
[_] Soliciting Material Pursuant to Section 240.14a-11(c) or Section 240.14a-12
AVT CORPORATION
- --------------------------------------------------------------------------------
(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)(4) and 0-11.
(1) Title of each class of securities to which transaction applies:
-------------------------------------------------------------------------
(2) Aggregate number of securities to which transaction applies:
-------------------------------------------------------------------------
(3) Per unit price or other underlying value of transaction computed
pursuant to Exchange Act Rule 0-11 (Set forth the amount on which
the filing fee is calculated and state how it was determined):
-------------------------------------------------------------------------
(4) Proposed maximum aggregate value of transaction:
-------------------------------------------------------------------------
(5) Total fee paid:
-------------------------------------------------------------------------
[_] Fee paid previously with preliminary materials.
[_] Check box if any part of the fee is offset as provided by Exchange
Act Rule 0-11(a)(2) and identify the filing for which the offsetting fee
was paid previously. Identify the previous filing by registration statement
number, or the Form or Schedule and the date of its filing.
(1) Amount Previously Paid:
-------------------------------------------------------------------------
(2) Form, Schedule or Registration Statement No.:
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(3) Filing Party:
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(4) Date Filed:
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Notes:
<PAGE>
[LOGO OF AVT CORPORATION]
----------------
NOTICE OF
ANNUAL MEETING OF SHAREHOLDERS
TO BE HELD ON MAY 11, 1999
----------------
NOTICE IS HEREBY GIVEN that the Annual Meeting of Shareholders of AVT
Corporation, a Washington corporation (the "Company"), will be held at the
Hyatt Regency Bellevue, 900 Bellevue Way NE, Bellevue, Washington, at 11:00
a.m., local time, on Tuesday, May 11, 1999 (the "Annual Meeting") for the
following purposes:
(1) To elect two directors of the Company.
(2) To transact such other business as may come before the Annual Meeting
or any adjournment or postponement thereof.
The Board of Directors has fixed the close of business on March 12, 1999 as
the record date for the determination of shareholders entitled to notice of
and to vote at the Annual Meeting.
All shareholders are cordially invited to attend the Annual Meeting in
person.
To ensure representation at the Annual Meeting, shareholders are urged to
mark, sign, date and return the enclosed Proxy as promptly as possible, even
if they plan to attend the Annual Meeting. A return envelope, which requires
no postage if mailed in the United States, is enclosed for this purpose. Any
shareholder attending the Annual Meeting may vote in person even if such
shareholder has returned a Proxy if the Proxy is revoked in the manner
described in the accompanying Proxy Statement.
By order of the Board of Directors
/s/ Roger A. Fukai
Roger A. Fukai
Executive Vice President of Finance
and Administration, Chief Financial
Officer and Secretary
Kirkland, Washington
April 12, 1999
<PAGE>
AVT CORPORATION
----------------
PROXY STATEMENT
----------------
INFORMATION CONCERNING SOLICITATION AND VOTING
General
This Proxy Statement is furnished in connection with the solicitation by the
Board of Directors of AVT Corporation ("AVT" or the "Company") of proxies for
use at the Annual Meeting of Shareholders to be held at the Hyatt Regency
Bellevue, 900 Bellevue Way NE, Bellevue, Washington, at 11:00 a.m., local
time, on Tuesday, May 11, 1999 or at any adjournment or postponement thereof
(the "Annual Meeting"), for the purposes set forth in the accompanying Notice
of Annual Meeting of Shareholders. The principal executive offices of the
Company are located at 11410 N.E. 122nd Way, Kirkland, Washington 98034. It is
expected that this Proxy Statement and accompanying Proxy will be mailed to
shareholders on or about April 12, 1999.
Record Date and Outstanding Shares
Only holders of record of the Company's common stock (the "Common Stock") at
the close of business on March 12, 1999 are entitled to notice of and to vote
at the Annual Meeting. On that date there were 13,093,174 shares of Common
Stock outstanding.
Revocability of Proxies
Shares represented at the Annual Meeting by properly executed proxies in the
accompanying form will be voted at the Annual Meeting and, where the
shareholder giving the Proxy specifies a choice, the Proxy will be voted in
accordance with the shareholder's directions. A Proxy given for use at the
Annual Meeting may be revoked by the shareholder giving the Proxy at any time
prior to the vote at the Annual Meeting. A Proxy may be revoked either by (i)
filing with the Secretary of the Company prior to the Annual Meeting, at the
Company's principal executive offices, either a written revocation or a duly
executed Proxy bearing a later date or (ii) attending the Annual Meeting and
voting in person. Presence at the Annual Meeting will not revoke the
shareholder's Proxy unless the shareholder votes in person.
Quorum and Voting
Holders of Common Stock will be entitled to one vote per share of Common
Stock held. Holders of Common Stock are not entitled to cumulative their votes
in the election of directors. A majority of the outstanding shares of Common
Stock entitled to vote at the Annual Meeting, present in person or represented
by Proxy constitutes a quorum for the Annual Meeting.
The nominees for election as director who receive the greatest number of
votes, present in person or represented by Proxy at the Annual Meeting, will
be elected directors. Abstention from voting on the election of the directors
will have no impact on the outcome of this proposal since no vote has been
cast in favor of any nominee. There can be no broker nonvotes on this matter
since brokers who hold shares for the accounts of their clients have
discretionary authority to vote such shares with respect to the election of
directors.
Solicitation of Proxies
The Company has retained W.F. Doring & Company to aid in the solicitation of
proxies. It is estimated that the cost of these services will be approximately
$2,700 plus expenses. The cost of soliciting proxies will be borne by the
Company. Proxies will be solicited by personal interview, mail and telephone.
In addition, the Company may reimburse brokerage firms and other persons
representing beneficial owners of shares of Common Stock for
<PAGE>
their expenses in forwarding solicitation materials to such beneficial owners.
Proxies may also be solicited by certain of the Company's directors, officers
and regular employees, without additional compensation, personally or by
telephone.
ELECTION OF DIRECTORS
At the Annual Meeting, two directors will be elected to hold office for a
term of three years until the Company's annual meeting of shareholders in
2002, and until their successors are elected and qualified. The Board of
Directors has no reason to believe that the nominees named below will be
unable to serve as directors. If, however, a nominee becomes unavailable, the
proxies will have discretionary authority to vote for any substitute nominee
selected by the Board of Directors.
Unless authority to do so is withheld, the persons named as proxies in the
accompanying form of Proxy will vote FOR the election of the nominees listed
below.
Nominees
Richard J. LaPorte (age 53) joined AVT in 1990 as President, Chief Executive
Officer and a director. He became Chairman of the Company's Board in 1994. He
has over 32 years of experience managing high-technology data processing,
computer software and communications companies. Mr. LaPorte was President and
Chief Executive Officer of Accountants Microsystems Inc. from 1985 to 1990 and
served as President and Chief Executive Officer of Gill Management Services,
Inc., from 1981 to 1985. Prior to that he held various senior management
positions at Xerox Computer Services, a division of Xerox Corporation, where
he served for eleven years.
Robert L. Lovely (age 62) has served as a director of the Company since
1983. He is President of The Lovely Corporation, d/b/a Admiral of the Fleet
Cruise Center, a travel agency system specializing in cruise vacations and
management consulting (since 1984). Mr. Lovely is also Executive Vice
President of Travel Automation Systems Corporation, a producer of application
software for the travel industry (since 1994). Mr. Lovely is a director of
Westar Financial Services (WEST). Prior to 1984, he was President, Chief
Executive Officer and a director of Satellite Information Systems Co., a
publicly owned software development company; founder, general manager and
director of Illuminet, Inc., a nationwide company servicing independent
telephone companies; and founder, manager, Chief Executive Officer and
director of Allied Data, a data processing services company. Mr. Lovely holds
a B.A. degree in mathematics from Washington State University and a M.B.A.
degree from Pacific Lutheran University.
The Board of Directors recommends a vote FOR the election of the nominees.
Continuing Director--term expires 2000
James S. Campbell (age 72) has served as a director of the Company since
1991. He has been President of Management Partners International, a management
consulting firm since 1987. Prior to 1987, Mr. Campbell served as Chairman,
President and Chief Executive Officer of Fortune Systems Corporation (now
Connectivity Technology, Inc.), President of Shugart Corp., Founder and
President of Xerox Computer Services and a Corporate Vice President of Xerox.
Mr. Campbell also serves as a director of Rational Software Corp. He holds a
B.A. degree in business administration from the University of Wisconsin and
attended the Graduate School of Business at Wisconsin.
Continuing Directors--term expires 2001
Robert F. Gilb (age 53) has been a director of the Company since 1998. He
has been the President of Robert F. Gilb Strategic & Business Consulting,
L.L.C. since May 1997. From 1992 to 1997 Mr. Gilb held
2
<PAGE>
several positions at Microsoft Corporation, including: General Manager,
Financial Analysis; General Manager, Finance; and General Manager, Worldwide
Business Operations. From 1979 to 1992 Mr. Gilb was a partner with Arthur
Andersen in Seattle, Washington. In his capacity as a partner at Arthur
Andersen & Co., Mr. Gilb assisted clients in the computer software, biotech,
retail, and distribution industries; provided services in international
mergers and acquisitions, and business process reengineering, among other
financial and consulting services. Mr. Gilb has served on the board of Hatch &
Kirk, Inc., since 1997; is an Associate Trustee to the Pacific Science Center
in Seattle; and is a member of the Seattle University Accounting Board of
Advisors. Mr. Gilb has a Bachelor of Science Degree, Accounting, from
California State University, Long Beach.
William L. True (age 44) has served as a director of the Company since 1985,
and served as Chairman of the Company's Board from 1990 to 1994. Mr. True has
also been Chairman of the Board of Gull Industries, Inc. ("Gull"), a privately
held full-line petroleum distributor in the Pacific Northwest, since 1990.
Prior to that, Mr. True served as Executive Vice President and a Director of
Gull from 1989 to 1990. Presently, Mr. True also serves on the boards of the
Seattle Art Museum and the Pike Place Market Foundation, where he is
President. Mr. True holds a B.A. degree from Duke University.
Compensation of Directors
Currently, the Company pays non employee directors other than Mr. True and
Mr. Lovely an attendance fee of $1,000 for attending board meetings in person,
and $500 for each telephonic meeting of the Board of Directors, in addition to
reimbursing them for reasonable expenses incurred in connection with attending
such meetings. In addition, beginning on January 1, 1999, each of Mr. Gilb,
Mr. Lovely and Mr. Campbell became entitled to receive an annual retainer of
$10,000, payable in quarterly installments. All nonemployee directors receive
certain automatic stock option grants pursuant to the Company's Nonemployee
Directors Program under the 1989 Restated Stock Option Plan (the "Plan"). The
Directors Program provides for the automatic grant of an option to purchase
10,000 shares of Common Stock to each eligible director upon his or her
initial election or appointment to the Board of Directors. In addition, each
eligible director automatically receives the grant of an option to purchase
4,000 shares of Common Stock immediately following each annual meeting of the
Company's shareholders. The exercise price for the options is the fair market
value of the Common Stock on the date of grant. Each option vests one year
after it is granted and expires 10 years from the date of grant or, if
earlier, 12 months after the director's termination of service with the
Company, the director's death or the director's total disability. In the event
of certain acquisitions of the Company or upon liquidation of the Company,
each outstanding option will accelerate in full immediately prior to the event
and will terminate upon the occurrence of the event.
Information on Committees of the Board of Directors and Meetings
The Company's Board of Directors has established a Compensation Committee
and an Audit Committee.
The Compensation Committee establishes salaries, incentives and other forms
of compensation for directors, officers and other key employees of the
Company, administers the Restated 1989 Stock Option Plan and recommends
policies relating to benefit plans. The Compensation Committee consists of
William L. True, Robert L. Lovely and Robert F. Gilb. The Compensation
Committee held 9 meetings in 1998.
The Audit Committee reviews the Company's accounting practices, internal
accounting controls and financial results and oversees the engagement of the
Company's independent auditors. The Audit Committee consists of William L.
True, James S. Campbell and Robert F. Gilb. The Audit Committee held one
meeting in 1998.
During 1998, there were 10 meetings of the Board of Directors. Each board
member attended at least 75% of the meetings of the Board and of each
Committee of which he was a member.
3
<PAGE>
SECURITY OWNERSHIP OF CERTAIN
BENEFICIAL OWNERS AND MANAGEMENT
The following table sets forth as of March 5, 1998 information regarding the
beneficial ownership of the Common Stock by (i) each person known by the
Company to beneficially own more than 5% of the Common Stock, (ii) each
director and director nominee of the Company, (iii) each of the Company's
executive officers for whom compensation is reported in this Proxy Statement,
and (iv) all directors and executive officers of the Company as a group.
Except as otherwise noted, the Company believes that the beneficial owners of
the Common Stock listed below, based on information furnished by such owners,
have sole voting and investment power with respect to such shares.
<TABLE>
<CAPTION>
SHARES BENEFICIALLY OWNED
-------------------------
NAME OF BENEFICIAL OWNER NUMBER PERCENT
- ------------------------ ---------- ---------
<S> <C> <C>
Gull Industries, Inc.(1).......................... 1,187,145 9.1%
3404 4th Avenue South
Seattle, WA 98124
William L. True(1)................................ 1,206,645 9.2%
3404 4th Avenue South
Seattle, WA 98124
Kopp Investment Advisors, Inc.(2)................. 1,334,500 10.2%
7701 France Avenue South, Suite 500
Edina, MN 55435
Pilgrim Baxter & Associates, LTD (3).............. 1,229,900 9.4%
825 Duportail Rail
Wayne, PA 19087
Nicholas-Applegate Capital Management (4)......... 760,800 5.8%
600 West Broadway, 29th Floor
San Diego, CA 92101
Richard J. LaPorte(5)............................. 576,990 4.4%
Roger A. Fukai(6)................................. 172,309 1.3%
Bradley H. Feder (7).............................. 126,225 *
Robert Lovely(8).................................. 59,500 *
Timothy A. Wudi(9)................................ 47,216 *
Max V. Anhoury (10)............................... 30,000 *
James S. Campbell(11)............................. 12,000 *
Robert F. Gilb (12)............................... 10,000 *
All directors and current executive officers as a
group (13 persons) (13).......................... 2,334,407 17.8%
</TABLE>
- --------
* Less than 1%
(1) Includes 1,187,145 shares owned by Gull. Mr. True is Chairman of the
Board of Gull, and shares voting power and the ability to control the
dispositions of such shares. In addition to these shares, Mr. True is the
beneficial owner of 19,500 shares issuable upon exercise of stock options
that are currently exercisable or that are exercisable within 60 days.
(2) Based on Schedule 13G dated February 6, 1999, Kopp Investment Advisors,
Inc. beneficially owns 1,334,500 shares, and voting and dispositive power
as to those shares is shared with Kopp Holding Company and LeRoy C. Kopp.
(3) Based on Schedule 13G dated January 19, 1999, Pilgrim Baxter &
Associates, LTD beneficially owns 1,229,900 shares, and voting and
dispositive power as to those shares is shared with certain of it's
affiliates.
(4) Based on Schedule 13G dated February 12, 1999, Nicholas-Applegate Capital
Management beneficially owns 760,800 shares.
4
<PAGE>
(5) Includes 501,900 shares issuable upon exercise of stock options that are
currently exercisable or will become exercisable within 60 days.
(6) Includes 126,758 shares issuable upon exercise of stock options that are
currently exercisable or will become exercisable within 60 days.
(7) Includes 38,208 shares issuable upon exercise of stock options that are
currently exercisable or will become exercisable within 60 days.
(8) Includes 32,500 shares issuable upon exercise of stock options that are
currently exercisable or will become exercisable within 60 days.
(9) Includes 39,216 shares issuable upon exercise of stock options that are
currently exercisable or will become exercisable within 60 days.
(10) Consists of 30,000 shares issuable upon exercise of stock options that
are currently exercisable or will become exercisable within 60 days.
(11) Includes 4,000 shares issuable upon exercise of stock options that are
currently exercisable or will become exercisable within 60 days.
(12) Consists of 10,000 shares issuable upon exercise of stock options that
are currently exerciseable or will become exercisable within 60 days.
(13) Includes 876,104 shares issuable upon exercise of stock options that are
currently exercisable or will become exercisable within 60 days.
EXECUTIVE OFFICERS
The executive officers of the Company and their ages as of March 5, 1999 are
as follows:
<TABLE>
<CAPTION>
Officer
Name Age Position Since
---- --- -------- -------
<S> <C> <C> <C>
Richard J. LaPorte.......... 53 Chairman of the Board, President and 1990
Chief Executive Officer
Greg R. Blanpied............ 51 Executive Vice President & Chief 1991
Technology Officer
Roger A. Fukai.............. 46 Executive Vice President of Finance & 1991
Administration and Chief Financial
Officer
Max V. Anhoury.............. 34 President, CommercePath Product Group 1997
Bradley H. Feder............ 33 President, RightFax Products Group 1997
Randall J. Ottinger......... 41 President, Computer Telephony Software 1997
Products Group
Michael (Corey) Freebairn... 35 Senior Vice President of International 1996
Joseph A. Staples........... 39 Senior Vice President of Worldwide 1996
Marketing
Timothy A. Wudi............. 49 Senior Vice President of North 1996
American Dealer Sales
</TABLE>
For Mr. LaPorte's biographical summary, see "Election of Directors."
Mr. Blanpied is an Executive Vice President and Chief Technical Officer and
a member of the "Office of the President." Mr. Blanpied is responsible for the
oversight of all engineering projects in the corporation and for setting long
range technical direction. In addition, he has joint responsibility for the
identification and evaluation of strategic partners and acquisition
candidates. Mr. Blanpied has over 28 years of experience in systems
engineering. Prior to coming to AVT in 1991, he was Vice President of R & D at
Votan, a voice recognition company, Vice President of Development and
Operations for Compufact, a division of CSC, the
5
<PAGE>
Managing Partner in Trillium, a software engineering consulting company; and
Vice President of Technology Planning & Development and Vice President of
Systems Programming for Xerox Computer Services, where he served for 14 years.
Mr. Fukai is Chief Financial Officer and Executive Vice President of Finance
and Administration and a member of the "Office of the President." He is
responsible for the accounting and treasury functions, MIS, Human Resources,
and other administrative functions throughout the Company. Prior to joining
AVT in 1988, Mr. Fukai was Controller at Advanced Technology Laboratories
(ATL), a manufacturer of diagnostic medical imaging equipment. He is a CPA and
holds a B.A. in Business Administration from Washington State University.
Mr. Feder is President of RightFax, Software Group, which was acquired by
AVT in 1996. As co-founder of RightFAX, Mr. Feder has played an instrumental
role in establishing the division's overall direction. Prior to founding
RightFax, Mr. Feder served as a LAN administrator for Pima County, in Southern
Arizona from 1986 to 1987, where his responsibilities included overseeing
general Novell network administration, the Community Action Agency (CAA) and
the Job Training Placement Act databases. Mr. Feder holds a Bachelor of
Science degree in business and public administration, with a major in
management information systems, from the University of Arizona.
Mr. Anhoury is the President of CommercePath Software Group, an AVT company,
located in Portland Oregon. Mr. Anhoury oversees CommercePath's business
operations. Prior to his current position, Anhoury served as CommercePath Vice
President of worldwide Sales and Marketing programs. Prior to joining
CommercePath, Anhoury held positions in large account sales and management
with BusinessLand. He holds a B.S. degree in Mathematical Sciences from Oregon
State University.
Mr. Ottinger joined AVT in June 1998 as President of the CTI Sofware Group
("CTG"). Prior to joining AVT, Mr. Ottinger was Senior Vice President of
Marketing and Business Development for Richter Systems, Inc. from 1997 to
1998. Prior to that, he served as President and Senior Vice President of Sales
and Marketing of Globaltel Resources, Inc., from 1995 to 1997, a company
selling private voice and data network services to large corporations. Mr.
Ottinger has also held key executive management positions at Egghead.com, Inc.
and the Claircom business unit of McCaw/AT&T wireless. He earned a BA in
Industrial Psychology from Cornell University and an MBA from Harvard Graduate
School of Business.
Mr. Freebairn joined AVT in March 1996 and serves as CTG's Senior Vice
President International. Prior to joining AVT, Mr. Freebairn was Director of
Worldwide Sales for Canopy Technologies, Inc. from 1994 to 1996 and prior to
that he was Regional Director of International for WordPerfect Corporation, a
division of Novell, Inc. from 1988 to 1994. Mr. Freebairn has amassed over
nine years of experience in international high technology markets, including
work in sales, strategic planning, overseas operations, business management,
and marketing. He holds a BA in English from Brigham Young University and an
MBA from the University of Phoenix.
Mr. Staples serves as CTG's Senior Vice President of Worldwide Marketing. In
addition to his responsibilities within the CTG Group, Mr. Staples also
oversees general AVT corporate marketing and public relations. Prior to
joining AVT in February 1996, Mr. Staples was Vice President of Marketing at
Callware Technologies, Inc. from 1994 to 1996. Prior to that, he was Senior
Product Marketing Manager for Novell, Inc. Mr. Staples holds a B.A. degree in
business administration from the University of Phoenix.
Mr. Wudi serves as CTG's Senior Vice President of North American Sales. Mr.
Wudi joined the Company in 1991 as Business Development Manager, and served as
Vice President, U.S. Dealer Sales from 1993 until his appointment to his
current position in January 1996. Prior to that, Mr. Wudi was employed from
1990 to 1991 at VMX, a subsidiary of Octel Communications Corporation, as
National Account Manager. Mr. Wudi is a CPA. and holds a B.S. degree in
business administration, accounting and marketing from Central Michigan
University.
6
<PAGE>
EXECUTIVE COMPENSATION
Compensation Summary
The following table sets forth certain compensation information as to the
Company's Chief Executive Officer, and each of the four other most highly
compensated executive officers for services rendered in all capacities for the
Company during the fiscal years ended December 31, 1998, 1997 and 1996 (the
"Named Executive Officers").
Summary Compensation Table
<TABLE>
<CAPTION>
Long Term
Compensation
Annual Compensation Awards
---------------------------------------- ------------
Securities All Other
Name and Principal Other Annual Underlying Compensation
Position Year Salary($) Bonus($)(1) Compensation($)(2) Options(#) ($)(3)
------------------ ---- --------- ----------- ------------------ ------------ ------------
<S> <C> <C> <C> <C> <C> <C>
Richard J. LaPorte...... 1998 $257,500 $109,014 -- -- $3,000
President & Chief 1997 227,240 110,484 -- -- 2,850
Executive Officer 1996 210,025 90,714 -- -- 2,747
Bradley H. Feder........ 1998 $156,250 $ 20,609 $164,261 15,600 $3,000
President, RightFax 1997 130,000 18,800 12,500 -- 2,850
Software Group 1996 130,000 18,335 56,224 200,000 2,850
Max V. Anhoury.......... 1998 $130,000 $ 20,609 $175,540 -- $3,000
President, CommercePath 1997 105,667 52,439 -- 120,000 --
Software Group 1996 -- -- -- -- --
Timothy A. Wudi......... 1998 $115,750 $ 53,670 $ 32,255 7,800 $3,000
Senior Vice President 1997 110,167 13,838 40,830 10,000 2,850
of North American 1996 88,916 -- 45,438 25,000 2,850
Dealer Sales--CTG
Roger A. Fukai.......... 1998 $144,333 $ 54,855 -- 13,800 $3,000
Executive Vice 1997 137,000 39,506 -- -- 2,850
President of Finance 1996 102,500 26,752 -- 50,000 2,850
and Administration
& Chief Financial
Officer
</TABLE>
- --------
(1) Represents bonuses paid pursuant to the Company's Management Incentive
Compensation Plan described in the Compensation Committee Report below.
(2) Consists of sales commissions.
(3) Consists of matching contributions to the Company's 401 (k) plan.
7
<PAGE>
Option Grants in 1998
The following table provides information on grants of stock options in 1998
to the Named Executive Officers.
<TABLE>
<CAPTION>
Potential
Realizable Value
Individual Grants) at Assumed Annual
------------------------------------------------ Rates of Stock
Number of Percent of Price
Securities Total Options Appreciation for
Underlying Granted to Exercise Option Term($)(3)
Options Employees in or Base Expiration -----------------
Name Granted(#)(1) Fiscal Year(2) Price($) Date 5% 10%
- ---- ------------- -------------- -------- ---------- -------- --------
<S> <C> <C> <C> <C> <C> <C>
Richard J. LaPorte...... -- -- -- -- -- --
Bradley H. Feder........ 15,600 1.88% $15.24 1/20/2008 $149,516 $378,902
Max V. Anhoury.......... -- -- -- -- -- --
Timothy A. Wudi......... 7,800 0.94% $18.25 4/20/2008 $ 89,523 $226,869
Roger A. Fukai.......... 13,800 1.66% $15.24 1/20/2008 $132,264 $335,183
</TABLE>
Stock Options Grants in 1998
- --------
(1) The options vest on a three year schedule, with 32.8% of the options
becoming exercisable one year after the grant date and an additional 2.8%
becoming exercisable each month thereafter until the options are fully
vested three years after the grant date. The exercise price of the options
is the fair market value of the Company's stock on the grant date.
(2) The Company granted 852,978 stock options to employees and officers in
1998.
(3) Assumes all options are exercised at the end of their respective ten-year
terms. Stock price appreciation based on growth rates assumed for each
option individually.
Option Exercises and Year-End Values
The following table sets forth certain information regarding option
exercises in 1998 and options held as of December 31, 1998 by each of the
Named Executive Officers.
Aggregated Option Exercises in Last Fiscal Year and Fiscal Year-End Option
Values
<TABLE>
<CAPTION>
Number of Securities
Underlying Unexercised Value of Unexercised
Options Held at In-the-Money Options at
Value December 31, 1997(#) December 31, 1997($)(1)
Shares Acquired Realized ------------------------- -------------------------
Name on Exercise (#) ($) Exercisable Unexercisable Exercisable Unexercisable
- ---- --------------- ---------- ----------- ------------- ----------- -------------
<S> <C> <C> <C> <C> <C> <C>
Richard J. LaPorte...... 251,426 $3,564,779 691,990 -- $16,356,125 --
Bradley H. Feder........ 40,000 $ 900,000 26,668 67,578 $ 589,896 $1,487,201
Max V. Anhoury.......... -- -- 30,000 90,000 $ 448,500 $1,345,500
Timothy A. Wudi......... 86,500 $1,321,172 41,418 17,880 $ 961,086 $ 312,700
Roger A. Fukai.......... 190,526 $2,307,024 109,874 82,428 $ 2,433,706 $1,742,253
</TABLE>
- --------
(1) Calculated based on the difference between the option exercise price and
the fair market value of the Common Stock on December 31, 1998.
Compensation Committee Report on Executive Compensation
The Compensation Committee (the "Committee") consists of Robert L. Lovely,
William L. True and Robert F. Gilb, each of whom is a nonemployee director of
the Company. The Committee is responsible for establishing and administering
compensation policies and programs for executive officers of the Company. This
report reflects the Company's compensation philosophy as endorsed by the
Committee.
The Company's executive compensation program has been designed to ensure
that compensation provided to executive officers is closely aligned with the
Company's business objectives and financial performance, and to enable the
Company to attract and retain those officers who contribute to the Company's
long-term success.
8
<PAGE>
Executive compensation generally consists of three components: base salary,
annual cash bonus, and long-term incentive awards. The Committee establishes
each executive's compensation package by considering: (i) the salaries of
executive officers in similar positions in companies in the same industry as
the Company and in related industries; (ii) the experience and contribution
levels of the individual executive officer; and (iii) the Company's financial
performance. The Committee also relies on the recommendations of the Chief
Executive Officer in matters related to the individual performance of the
other executive officers, because the Committee believes that the Chief
Executive Officer is the most qualified to make this assessment.
Executive Officer Compensation
The Chief Executive Officer annually recommends executive officer
compensation programs to the Committee after the Board of Directors has
approved the annual operating plan. Individual base salaries are based on
historical practice, subjective evaluation of individual performance levels
and contributions to Company business objectives, as well as comparisons to
the salaries of executive officers in similar positions in companies in the
same industry as the Company and in related industries as determined from
surveys obtained from various sources. In general, base salaries paid to the
Company's executive officers are near the median for comparable positions in
the surveyed companies. The Committee does not assign relative weights to the
factors it considers in establishing base salaries. The companies in the
surveys reviewed may include some, but not all, of the companies that comprise
the Hambrecht & Quist Communications Sector Index shown in the performance
graph following this report.
Annual cash bonuses for executive officers (other than those who receive
commissions) are awarded under the Company's Management Incentive Compensation
Plan (which also includes other key employees), and are based on the Company's
annual financial and individual performance goals, as approved in the annual
operating plan. The target total incentive award is established as a
percentage of each executive officer's annual base salary. The largest portion
of this potential award relates to achievement of the Company's operating
income goals. If the Company's operating income is less than 70% of the goal,
no profit-oriented incentive award is paid. If the 70% threshold is satisfied,
each individual's profit-oriented incentive award is calculated by dividing
actual operating income achieved by the approved goal and multiplying the
result by such individual's target. In 1998, the Company achieved 94% of its
operating income goal. Total executive officer cash bonuses in 1998 (including
individual performance awards and commissions) averaged 42% of base salary in
1998.
The Committee also grants stock options to executive officers to provide
long-term incentives that are aligned with the creation of increased
shareholder value over time. Options typically are granted at fair market
value at the date of grant. In 1998 the Committee granted options to purchase
351,000 shares to executive officers at an exercise price equal to fair market
value on the date of grant. As discussed below, no options were granted to the
Company's Chief Executive Officer or to certain other executives in 1998
because grants with performance vesting provisions were made to these
individuals in 1995 and were intended to be the only grants to these
individuals for approximately 3 years.
In 1995, the Committee granted options to purchase 480,000 shares to Mr.
LaPorte and options to purchase an aggregate of 190,000 shares to the other
current named executive officers. In 1996 the Committee amended the vesting
provisions of these options because it determined that the vesting provisions
were not competitive in the current marketplace and, therefore, the options
were not achieving the objective of motivating and retaining the Company's key
employees. On October 13, 1997 the Committee determined that the stock price
performance requirement under the amended vesting schedule had been
substantially met and, accordingly, 50% of these options vested. The remaining
50% of these options vested on August 4, 1998 when the Committee determined
that the stock price performance goal for 1998 had been met.
Compensation of the Chief Executive Officer
Mr. LaPorte's compensation program follows the same general philosophy and
framework as other executive officers, consisting of base salary, annual cash
bonuses and long-term incentive awards. The Committee believes that Mr.
LaPorte's total compensation package is near the median for chief executive
officers
9
<PAGE>
of other companies in the Company's industry and in related industries. Like
all key employees of the Company, Mr. LaPorte participates in the Management
Incentive Compensation Plan. For 1998, the largest portion of his annual cash
bonus related to the Company's achievement of 94% of operating income target
as described above. Mr. LaPorte's total annual cash bonus for 1998 represented
42% of his base salary.
Section 162(m) of the Internal Revenue Code of 1986, as amended, includes
potential limitations on the deductibility for federal income tax purposes of
compensation in excess of $1 million paid or accrued with respect to any of
the Company's five highest-paid executives. Qualifying performance-based
compensation is not subject to the deduction limit if certain requirements are
met. The Committee does not anticipate there will be any such nondeductible
compensation in the foreseeable future.
Compensation Committee
Robert F. Gilb
Robert L. Lovely
William L. True
Performance Graph
The following graph compares the cumulative total return to holders of the
Company's Common Stock with the cumulative total return of the Nasdaq US Stock
Market and the Hambrecht & Quist Communications Sector Index for the period
beginning December 8, 1994, the first day of trading of the Common Stock, and
ending December 31, 1998, the end of the Company's last fiscal year.
Comparison of Cumulative Total Return Among
AVT Corporation
Nasdaq US Stock Market and
Hambrecht & Quist Communications Sector Index
[PERFORMANCE GRAPH APPEARS HERE]
<TABLE>
<CAPTION>
H&Q
AVT Nasdaq Stock Communications
Dates Corporation Market-U.S. Sector
<S> <C> <C> <C>
12/8/94 100.00 100.00 100.00
12/31/94 128.85 104.56 118.52
12/31/95 105.77 147.88 188.87
12/31/96 94.23 181.85 216.69
12/31/97 217.31 223.10 205.15
12/31/98 446.15 313.63 302.88
</TABLE>
Assumes $100 invested in each of AVT Corporation Common Stock, the Nasdaq US
Stock Market and the Hambrecht & Quist Communications Sector Index, with all
dividends reinvested. The stock price shown above for the Common Stock is
historical and not necessarily indicative of future price performance.
10
<PAGE>
Compliance with Section 16(a) of the Securities Exchange Act of 1934
Section 16(a) of the Securities Exchange Act of 1934, as amended, requires
the Company's officers and directors, and persons who own more than 10% of a
registered class of the Company's equity securities, to file reports of
ownership and changes in ownership with the Securities and Exchange Commission
(the "Commission"). Officers, directors and greater than 10% shareholders are
required by Commission regulation to furnish the Company with copies of all
Section 16(a) forms they file.
Based solely on its review of the copies of such forms received by it, or
written representations from certain reporting persons that no forms were
required for those persons, the Company believes that during the 1998 fiscal
year all filing requirements applicable to its officers, directors and greater
than 10% beneficial owners were complied with by such persons, except that Mr.
True filed a late Form 4 for a transaction that occurred in February 1998 and
Mr. Wudi filed late Forms 4 for transactions that occurred in May 1998, June
1998, July 1998 and August 1998. In addition, the Company inadvertently failed
in previous proxy statements to disclose the following late filings that
occurred in earlier periods: a late Form 4 filed by Mr. Blanpied for a
transaction that occurred in February 1997, a late Form 4 filed by Mr. LaPorte
for a transaction that occurred in February 1997, and late Forms 4 filed by
Mr. Wudi in December 1996 and June 1997.
CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS
Richard J. LaPorte, Chairman of the Board, President and Chief Executive
Officer of the Company, is party to an Employment Agreement (the "Employment
Agreement") with the Company dated May 1, 1993. The Employment Agreement
provided for an initial option grant to Mr. LaPorte and established Mr.
LaPortes initial base salary, which has subsequently been increased by the
Compensation Committee based upon Company and individual performance, and
provided for an annual bonus based on the achievement of personal and
financial objectives agreed upon by the Compensation Committee and Mr.
LaPorte. Under the Employment Agreement, Mr. LaPorte is entitled to a bonus of
at least 50% of his base salary if all specific objectives are met. Mr.
LaPorte is also entitled to be reimbursed by the Company for reasonable
expenses incurred in performing his duties under the Employment Agreement, and
to participate in such benefit plans as are generally available to the
Company's executive officers. Mr. LaPorte is also entitled, in the event that
he is terminated without cause, to his annual base salary and bonus pro rated
through the termination date, in addition to a severance package consisting of
his annual base salary and benefits for a period of 12 months from the
termination date (or until he commences other full-time employment). The
Employment Agreement is automatically extended on each January 1 for
consecutive one-year terms if neither the Company nor Mr. LaPorte notifies the
other party to the contrary by October 1 of the prior year.
RELATIONSHIP WITH INDEPENDENT PUBLIC ACCOUNTANTS
The Board of Directors has selected Arthur Andersen LLP, independent public
accountants, to act as independent auditor of the Company for the fiscal year
ending December 31, 1999. Arthur Andersen LLP has been the Company's auditor
since November 1990.
A representative of Arthur Andersen LLP is expected to be present at the
Annual Meeting, with the opportunity to make a statement, if the
representative so desires, and is expected to be available to respond to
appropriate questions from shareholders.
11
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OTHER BUSINESS
The Board of Directors does not intend to present any business at the Annual
Meeting other than as set forth in the accompanying Notice of Annual Meeting
of Shareholders, and has no present knowledge that any others intend to
present business at the meeting. If, however, other matters requiring the vote
of the shareholders properly come before the Annual Meeting or any adjournment
or postponement thereof, the persons named in the accompanying form of Proxy
intend to exercise their discretionary authority to vote the proxies held by
them in accordance with their judgment as to such matters.
SHAREHOLDER PROPOSALS
Shareholder proposals intended for inclusion in the proxy materials for the
Company's year 2000 Annual Meeting of Shareholders must be received by the
Company not later than December 8, 1999.
Such proposals should be directed to the Corporate Secretary,
AVT Corporation 11410 N.E. 122nd Way, Kirkland, Washington 98034.
ANNUAL REPORT AND FINANCIAL STATEMENTS
A copy of the Company's 1998 Annual Report to Shareholders, which includes
the Company's Annual Report on Form 10-K for the fiscal year ended December
31, 1998, accompanies this Proxy Statement.
By Order of the Board of Directors
/s/ Roger A. Fukai
Roger A. Fukai
Senior Vice President of Finance and
Administration, Chief Financial
Officer and Secretary
Kirkland, Washington
April 7, 1999
12
<PAGE>
AVT Corporation
PROXY FOR THE 1999 ANNUAL MEETING OF SHAREHOLDERS TO BE HELD MAY 11, 1999
THIS PROXY IS SOLICITED ON BEHALF OF THE BOARD OF DIRECTORS
The undersigned hereby appoint(s) Richard J. LaPorte and Roger A. Fukai,
and each of them, as Proxies with full power of substitution and hereby
authorizes them to represent and to vote as designated below all shares of
Common Stock AVT Corporation held of record by the undersigned on March 12, 1999
at the 1999 Annual Meeting of Shareholders to be held at the Hyatt Regency
Bellevue, 900 Bellevue Way NE, Bellevue, Washington, at 11:00 a.m. on Tuesday,
May 11, 1999, with authority to vote upon the following matter and with
discretionary authority as to any other matters that may properly come before
the meeting or any adjournment or postponement thereof.
In their discretion, the Proxies are authorized to vote upon such other
business as may properly be brought before the meeting or any adjournment or
postponement thereof, This Proxy, when properly executed, will be voted in the
manner directed herein by the undersigned. IF NO DIRECTION IS MADE, THIS PROXY
WILL BE VOTED "FOR ALL NOMINEES" IN ITEM 1.
The undersigned acknowledges receipt from the Company prior to the
execution of this Proxy of a Notice of Annual Meeting of Shareholders and a
Proxy Statement dated April 12, 1998.
IMPORTANT--Please Date and Sign on the Other Side
- --------------------------------------------------------------------------------
.FOLD AND DETACH HERE.
<PAGE>
Please mark your votes as indicated [X]
WITHHOLD WITHHOLD
AUTHORITY AUTHORITY
FOR all to vote for to vote for
nominees all nominees the following:
1. ELECTION OF DIRECTORS [ ] [ ] [ ]
Election of the following two nominees to serve as directors for three-year
term or until their successors are elected and qualified:
Richard J. LaPorte Robert L. Lovely
______________________________________________________________________
(write the name(s) of the nominee(s) in this space)
Unless otherwise directed, all votes will be appointed equally among those
persons for whom authority is given to vote.
YOUR VOTE IS IMPORTANT. PROMPT RETURN OF THIS
PROXY CARD WILL HELD SAVE THE EXPENSE OF
ADDITIONAL SOLICIATION EFFORTS
I plan to attend the Annual Meeting [ ]
Please sign below exactly as your name appears on your stock certificate. When
shares are held jointly, each person must sign. When signing as attorney,
executor, administrator, trustee or guardian, please give full title as such. An
authorized person should sign on behalf of corporations, partnerships and
associations and give his or her title.
Dated:______________________________________, 1999
__________________________________________________
Signature
__________________________________________________
Signature if held jointly
- --------------------------------------------------------------------------------
.FOLD AND DETACH HERE.
