<PAGE>
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
------------------
SCHEDULE 14A INFORMATION
Proxy Statement Pursuant to Section 4(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
/X/ Definitive Additional Materials
/ / Soliciting Material Pursuant to Section 240.14a-11(c) or
Section 240.14a-12
THRUSTMASTER, INC.
-----------------------------------------------------------------------
(Name of Registrant as Specified in Its Charter)
-----------------------------------------------------------------------
(Name of Person(s) Filing Proxy Statement, if other than the Registrant)
Payment of Filing Fee (Check the appropriate box):
/X/ No fee required
/ / Fee computed on table below per Exchange Act Rules 14a-6(i)(1) and
0-11
CALCULATION OF FILING FEE
<TABLE>
<CAPTION>
PER UNIT PRICE OR OTHER UNDERLYING
VALUE OF TRANSACTION COMPUTED
AGGREGATE NUMBER PURSUANT TO EXCHANGE ACT RULE 0-11 PROPOSED
TITLE OF EACH CLASS OF OF SECURITIES TO (SET FORTH THE AMOUNT ON WHICH THE MAXIMUM
SECURITIES TO WHICH WHICH TRANSACTION FILING FEE IS CALCULATED AND STATE HOW AGGREGATE VALUE TOTAL FEE
TRANSACTION APPLIES: APPLIES: IT WAS DETERMINED): OF TRANSACTION: PAID
<S> <C> <C> <C> <C>
</TABLE>
/ / 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.
Amount previously paid: Filing Party:
------------------ -----------------
Form, Schedule or
Registration Statement no.: Date Filed:
-------------- -------------------
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<PAGE>
[LETTERHEAD]
To the Shareholders of ThrustMaster, Inc.:
NOTICE IS HEREBY GIVEN that the Annual Meeting of Shareholders of
ThrustMaster, Inc., an Oregon Corporation (the "Company"), will be held at the
RiverPlace Hotel, located at 1510 Southwest Harbor Way, Portland, Oregon, on May
22, 1997, at 2:00 p.m. local time, for the following purposes:
1. To elect directors of the Company;
2. To ratify the selection of Coopers & Lybrand L.L.P. as independent
accountants of the Company for the year ending December 31, 1997; and
3. To transact such other business as may properly come before the
meeting.
Stockholders of record at the close of business on March 28, 1997 will be
entitled to notice of and to vote at the meeting, and any adjournments thereof.
Information concerning the Company's activities and operating performance
during the year ended December 31, 1996 is contained in the Company's Annual
Report to Shareholders which is enclosed.
YOUR VOTE IS VERY IMPORTANT. All shareholders are invited to attend the
meeting. Whether or not you plan to attend the meeting, please complete the
accompanying proxy and return it promptly in the enclosed return envelope. If
you attend the meeting, you may vote in person if you wish even if you have
returned your proxy.
By order of the Board of Directors,
/s/ Kent E. Koski
--------------------------
Kent E. Koski,
Secretary
Hillsboro, Oregon
April 15, 1997
<PAGE>
[LOGO]
PROXY STATEMENT FOR 1997 ANNUAL MEETING OF SHAREHOLDERS
-------------------------------------------------------
GENERAL
This proxy statement and the enclosed form of proxy are being mailed on or
about April 15, 1997, to shareholders of ThrustMaster, Inc., an Oregon
corporation (the "Company"), in connection with the solicitation of proxies by
the Board of Directors of the Company for use at the annual meeting of
shareholders to be held on May 22, 1997, at 2:00 p.m. local time, at the
RiverPlace Hotel, located at 1510 Southwest Harbor Way, Portland, Oregon, and
any adjournment thereof (the "Annual Meeting").
REVOCABILITY OF PROXIES
A shareholder giving a proxy has the power to revoke that proxy at any time
before it is exercised by filing with the Secretary of the Company an instrument
of revocation, or a duly exercised proxy bearing a later date, or by personally
attending and voting at the Annual Meeting.
RECORD DATE AND OUTSTANDING SHARES
Only shareholders of record at the close of business on March 28, 1997 (the
"Record Date") will be entitled to vote at the meeting. At the close of
business on the Record Date, there were 4,253,964 shares of the Company's common
stock ("Common Stock") outstanding.
QUORUM AND VOTING
Each share of Common Stock entitles the holder thereof to one vote. Under
Oregon law, action may be taken on a matter submitted to shareholders only if a
quorum exists with respect to such matter. A majority of the outstanding shares
of Common Stock entitled to vote at the Annual Meeting, present in person or
represented by proxy, will constitute a quorum.
If a quorum is present, a nominee for election to the Board of Directors
will be elected by a plurality of the votes cast by shares entitled to vote at
the Annual Meeting. For all other matters, action will be approved if the votes
cast in favor of the action exceed the votes cast opposing the action.
Shares represented by a properly executed proxy will be voted in accordance
with the shareholder's instructions if given on the proxy. If no instructions
are given, shares will be voted "FOR" (i) the election of the nominees for
directors named herein, (ii) the ratification of the selection of Coopers &
Lybrand L.L.P. as independent accountants and (iii) in accordance with the
recommendations of management on any other matters properly brought before the
Annual Meeting.
<PAGE>
Proxies that expressly indicate an abstention as to a particular proposal
and broker non-votes will be counted for purposes of determining whether a
quorum exists at the Annual Meeting, but will not be counted for any purposes in
determining whether a proposal is approved and have no effect on the
determination of whether a plurality exists with respect to a given nominee.
Proxies and ballots will be received and tabulated by ChaseMellon Shareholder
Services, the Company's transfer agent.
At the meeting, action will be taken on the matters set forth in the
accompanying Notice of Annual Meeting of Shareholders and described in this
proxy statement. The Board of Directors knows of no other matters to be
presented for action at the meeting. If any other matters do properly come
before the meeting, the persons named on the proxy will have discretionary
authority to vote thereon in accordance with their discretion.
SOLICITATION OF PROXIES
This solicitation is being made on behalf of and the cost of soliciting
proxies will be borne by the Company. In addition to solicitation by mail,
certain of the Company's directors, officers, and regular employees may solicit
proxies personally or by telephone or other means without additional
compensation. Brokers, nominees and fiduciaries will be reimbursed in
accordance with customary practice for expenses incurred in obtaining proxies or
authorizations from the beneficial shareholders. Your cooperation in promptly
completing, signing, dating and returning the enclosed proxy card will help
avoid additional expense.
2
<PAGE>
PROPOSAL 1: ELECTION OF DIRECTORS
CLASSIFIED BOARD OF DIRECTORS
In September 1996, the Board of Directors amended the Company's bylaws to
provide for a classified board of directors consisting of three classes of
directors, designated as Classes A, B, and C. Pursuant to the amended bylaws,
at the 1997 Annual Meeting, Class A Directors shall be elected for a term of one
year; Class B Directors shall be elected for a term of two years, and Class C
Directors shall be elected for a term of three years. Commencing in 1998 and at
each annual meeting of shareholders thereafter, the successors to the class of
directors whose terms expire at that meeting shall be elected to hold office for
a term of three years (or until their successors are elected and qualify), so
that the term of office of one class of directors shall expire each year. Prior
to the classification of the Board of Directors, directors served for one-year
terms.
Classification of the Board of Directors is intended to decrease the
likelihood of precipitous changes in the composition of the Board of Directors
and its powers, and thereby to moderate changes in the Company's policies and
direction that the Board of Directors does not deem to be in the best interests
of the shareholders. Classification also has the effect of making it more
difficult for a substantial shareholder abruptly to change the entire Board of
Directors without the approval or cooperation of incumbent directors, even if
the reason for such a change might be dissatisfaction with the performance of
the incumbent directors and unrelated to any attempt to change control of the
Company.
NOMINEES FOR ELECTION
The Board of Directors of the Company has nominated for election as
directors, the eight persons named in the table below. Each of the nominees for
election is a member of the present Board of Directors. Although the Board of
Directors anticipates that all nominees will be available to serve as directors
of the Company, if any of them do not accept the nomination, or otherwise are
unwilling or unable to serve, the proxies will be voted for the election of a
substitute nominee or nominees designated by the Board of Directors.
Nominees
--------
Class A Directors with Terms Expiring in 1998:
Robert L. Carter
G. Gerald Pratt
Milton R. Smith
Class B Directors with Terms Expiring in 1999:
Stephen A. Aanderud
General Merrill A. McPeak
C. Norman Winningstad
3
<PAGE>
Class C Directors with Terms Expiring in 2000:
Graham E. Dorland
Frederick M. Stevens
THE BOARD OF DIRECTORS RECOMMENDS THAT THE SHAREHOLDERS VOTE "FOR" THE
ELECTION OF ALL NOMINEES.
BOARD AND NOMINEE BIOGRAPHICAL INFORMATION
Set forth below are the ages and certain biographical information, as of
the Record Date, for each nominee.
C. NORMAN WINNINGSTAD, 71, has served as Chairman of the Board since
February 1994. He has served as a Director of the Company since its inception.
Mr. Winningstad has a B.S. in Electrical Engineering from the University of
California at Berkeley, an M.B.A. degree from Portland State University, and an
Honorary Doctorate of Law degree from Pacific University.
STEPHEN A. AANDERUD, 47, became a member of the Board of Directors in
August 1994. He has been employed by the Company since January 1993, serving as
President and Chief Executive Officer since May 1994 and as Vice President of
Finance and Administration prior to that time. From October 1991 to December
1992, he was the Director of Finance of Cray Research Superservers, Inc., a
wholly-owned subsidiary of Cray Research. He is a Certified Public Accountant
and received a B.S. degree in business from Portland State University.
ROBERT L. CARTER, 54, has been a director of the Company since 1990, and is
a former Chairman, President and Chief Executive Officer of the Company. Mr.
Carter was the Company's first full-time employee and played a key role in the
early design and development of certain ThrustMaster products. He has been the
President and Chief Executive officer of Military Simulations, Inc., a publisher
of entertainment software, since December, 1993. He received a B.S.M.E. degree
from the University of Missouri.
GRAHAM E. DORLAND, 55, became a member of the Board of Directors in
November 1993. Mr. Dorland is currently President of Dorland and Associates, a
consulting group, and President and Chief Executive Officer of Nautamatic Marine
Systems, Inc., a manufacturer of marine autopilots located in Newport, Oregon.
From June 1993 to January 1995, he was Managing Partner of Snobird Aircraft
Partners, a developer of experimental aircraft. From February 1965 to December
1992, Mr. Dorland was chairman and President of ABX Air Inc., a wholly-owned
subsidiary of Airborne Freight Corporation, doing business as Airborne Express.
GENERAL MERRILL A. MCPEAK, 61, became a member of the Board of Directors in
March 1996. He has been the President of McPeak and Associates, an
international aerospace consulting firm, since January 1995. Since March 1997,
he has been a member of the board of directors of Praegitzer Industries, Inc., a
manufacturer of printed circuit boards. General McPeak spent 37 years in the
United States Air Force, rising to become
4
<PAGE>
Chief of Staff from October 1990 to October 1994, when he retired. He also is a
member of the Board of Directors of Tektronix, Inc., and ECC, International
Corp. He holds a B.A. degree in economics from San Diego State University and
an M.S. degree in international relations from George Washington University.
G. GERALD PRATT, 69, has been a Director since the inception of the
Company. Since 1980, Mr. Pratt has been a private venture capitalist. Mr.
Pratt has been a trustee of the Meyer Memorial Trust, a charitable trust, since
1978.
MILTON R. SMITH, 61, has been a Director of the Company since its
inception. Mr. Smith served as the Company's President from October 1992 until
May 1994 and as the Company's Secretary from July 1990 until April 1993 and
again from December 1994 until May 1995. Since April 1997, Mr. Smith has been a
member of the board of directors of Integrated Measurement Systems, Inc., a
manufacturer of high performance engineering test stations. Mr. Smith was the
President and Chief Executive officer of Zeelan Technology, Inc., a software
engineering company, from October 1994 until April 1995. Since May 1995, Mr.
Smith has been a private venture capitalist. He received a B.S. degree in
physics from Portland State University, an M.S.E.E. degree from Oregon State
University and a J. D. degree from Lewis and Clark College.
FREDERICK M. STEVENS, 60, became a member of the Board of Directors in
December 1993. From April 1988 until his retirement in January 1991, Mr.
Stevens was the Chairman of the Board and Chief Executive Officer of Fred Meyer,
Inc., a regional retailer in the Northwest.
BOARD MEETINGS AND COMMITTEES
During 1996, there were seven meetings of the Board of Directors. Each
director during 1996 attended more than 75% of the aggregate number of Board of
Directors' meetings and meetings of board committees of which he was a member.
The Board of Directors has a standing Audit Committee, consisting of
Messrs. Dorland, Pratt, and Smith, that meets with the Company's Chief Executive
Officer, Chief Financial Officer and the Company's independent public
accountants to review the scope and findings of the annual audit. The Audit
Committee held two meeting during 1996.
The Board of Directors has a standing Compensation Committee currently
consisting of Messrs. Carter, Stevens, Winningstad, and since January 1997,
General McPeak. The Committee considers and acts upon management's
recommendations to the Board of Directors regarding salaries, bonuses, stock
options, and other forms of compensation for the Company's executive officers.
The Compensation Committee makes recommendations to the Board of Directors.
Executive officers who are also directors of the Company do not participate in
decisions affecting their own compensation. The Compensation Committee held two
meetings during 1996.
The Board of Directors does not have a Nominating Committee or any other
committee that performs a similar function.
5
<PAGE>
COMPENSATION OF DIRECTORS
Each nonemployee director receives an annual fee of $3,000 and $250 for
Board meetings and committee meeting attended, unless the committee meeting is
held on the same day as the Board meeting. Upon becoming a director, each
nonemployee director received options to purchase 16,480 shares of Common Stock
under the Directors' Nonqualified Stock Option Plan of the Company. In 1996,
each non-employee director who had been a director for more than one year
received options to purchase 4,120 shares of Common Stock at a price equal to
the fair market value on the date of grant. No employee of the Company receives
additional compensation for his service as a director.
COMPENSATION COMMITTEE INTERLOCKS AND INSIDER PARTICIPATION
The members of the Compensation Committee during 1996 were Messrs. Carter,
Stevens, and Winningstad. Mr. Carter is a former Chairman, President and Chief
Executive Officer of the Company. From December 1993 until February 1996, the
Company made certain payments pursuant to a consulting agreement with BOCAR,
Inc., a company of which Mr. Carter is the President and sole shareholder. See
"Certain Relationships and Related Transactions."
FAMILY RELATIONSHIPS
There are no family relationships between any director, executive officer
or person nominated or chosen to be a director or executive officer, and any
other director, executive officer or person nominated or chosen to become a
director or executive officer of the Company.
EXECUTIVE OFFICERS
Set forth below are the ages and certain biographical information, as of
the Record Date, for the executive officers of the Company.
NAME AGE POSITION
---- --- --------
Stephen A. Aanderud (1) 47 President, Chief Executive Officer
Frank M. Bouton 52 Vice President, New Technologies
G. Edward Brightman 39 Vice President, Operations
Kent E. Koski 53 Vice President, Finance and
Administration, Chief Financial
Officer and Secretary
Robert D. Martin 58 Vice President, Strategic Planning
Ronald J. Resnick 48 Vice President, Marketing
- -------------------------
(1) For information regarding Mr. Aanderud, see "Board and Nominee Biographical
Information."
6
<PAGE>
FRANK M. BOUTON joined the company in June 1992, having previously
consulted with Mr. Carter on the development of the Company's original products.
He has been Vice President, New Technologies, since January 1996. From October
1992 to January 1996, he was Vice President, Engineering. From January 1987 to
June 1992, Mr. Bouton was the president and owner of THECO Logic, Inc., a
designer and manufacturer of hardware and software products for the medical
field.
G. EDWARD BRIGHTMAN has been employed by the Company since August 1992 and
became Vice President, Operations in October 1992. He has 14 years' experience
in manufacturing and operation management. Prior to joining the Company, Mr.
Brightman worked for Toyota Motor Sales, Toyota Motor Manufacturing and Vehicle
Processors Inc. in management positions at several assembly plants and import
facilities from October 1983 to August 1992.
KENT E. KOSKI has been employed by the Company since May 1995 as Vice
President, Finance and Administration, Chief Financial Officer, and Secretary.
For the five years prior to joining the Company, he was the Vice President of
Finance for Avia Group International, Inc., an athletic footwear and apparel
design and distribution company. Mr. Koski is a Certified Public Accountant and
received B.S. and M.B.A. degrees from the University of Utah.
ROBERT D. MARTIN has been employed by the Company since November 1994 and
became Vice President, Strategic Planning, in January 1996. Immediately prior to
joining the Company he was a private consultant and in that capacity assisted
the Company with the procurement of government contracts. Mr. Martin was a
regional and line of business manager for National System & Research Company
from May 1990 until December 1992. He has over 20 years' experience in senior
management with medical electronics, systems integration and software
development companies.
RONALD J. RESNICK has been employed by the Company since May 1996 as Vice
President, Marketing. Prior to joining the Company, he was a marketing
consultant from August 1995 until April 1996. From April 1994 through July 1995,
Mr. Resnick was the Vice President and Publisher at Infotainment World, Inc., a
book and magazine publishing company. He was Vice President, Business
Development at Prima Publishing, a book publishing company, from March 1992
until March 1994, and Product Marketing Manager at Software Toolworks, Inc., an
entertainment software publishing company, from July 1990 to December 1991. Mr.
Resnick has a B.S. degree in electrical engineering from Rutgers University.
There are no arrangements or understandings pursuant to which any person
has been appointed an executive officer. The Company has no employment
contracts with any of its executive officers.
7
<PAGE>
EXECUTIVE COMPENSATION
The following table sets forth the compensation paid or to be paid by the
Company for 1996 to the Company's Chief Executive Officer and the other four
most highly compensated executive officers of the Company (collectively, the
"Named Executive Officers").
SUMMARY COMPENSATION TABLE
<TABLE>
<CAPTION>
LONG-TERM
COMPENSATION
AWARDS
-------------- ALL OTHER
ANNUAL COMPENSATION SECURITIES COMPEN-
-------------------------- UNDERLYING SATION
NAME AND PRINCIPAL POSITION YEAR SALARY BONUS (1) OPTIONS (2) (4)
- ---------------------------- ------ ----------- ----------- ------------- ---------
<S> <C> <C> <C> <C> <C>
Stephen A. Aanderud
President and CEO 1996 $135,000 $65,299 25,750 (3) $2,250
1995 120,000 20,160 10,300 1,650
1994 81,747 19,130 16,480 --
Robert D. Martin
Vice President, 1996 90,000 38,591 48,925 (3) 1,209
Strategic Planning 1995 55,208 2,650 3,605 448
G. Edward Brightman
Vice President, 1996 90,000 32,445 18,540 (3) 988
Operations 1995 80,000 9,600 10,300 1,100
1994 66,000 15,444 --
Frank Bouton
Vice President, 1996 85,000 36,770 16,480 (3) 970
New Technologies 1995 80,000 11,520 6,180 1,100
1994 66,000 15,444 -- --
Kent E. Koski
Vice President, Finance
and Administration, 1996 90,000 25,956 49,440 (3) 1,424
CFO, Secretary 1995 51,846 4,977 41,200 --
</TABLE>
- -------------------------
(1) Cash bonuses are paid to executive officers of the Company based upon
their individual contributions to the Company and the Company's overall
performance. Bonuses for a given year are paid in the first quarter of the
following year.
(2) The number of shares reflects a 3% stock dividend declared by the Board of
Directors on January 21, 1997.
(3) Includes replacement options granted upon surrender of options granted in
1995. See "Repricing of Options."
(4) Consists of the Company's matching contribution under its 401(k) plan.
8
<PAGE>
OPTION GRANTS
The following table sets forth information with respect to grants of stock
options to the Named Executive Officers during 1996.
OPTION GRANTS IN 1996
<TABLE>
<CAPTION>
POTENTIAL REALIZABLE VALUE
NUMBER OF PERCENT OF AT ASSUMED ANNUAL RATES
SHARES TOTAL EXERCISE OF STOCK PRICE
UNDERLYING OPTIONS PRICE APPRECIATION FOR OPTION
OPTIONS GRANTED TO PER TERM (5)
GRANTED EMPLOYEES SHARE EXPIRATION --------------------------
NAME (1) (2) IN YEAR (1) (4) DATE 5% 10%
- --------------------- ----------- ---------- -------- ---------- ----------- -----------
<S> <C> <C> <C> <C> <C> <C>
Stephen A. Aanderud 10,300 (3) 3.5 $4.733 2/13/06 $ 30,659 $ 77,695
15,450 5.2 5.340 5/21/06 51,884 131,484
Robert D. Martin 3,605 (3) 1.2 4.733 2/13/06 10,731 27,193
41,200 13.8 5.097 4/25/06 132,068 334,686
4,120 1.4 5.340 5/21/06 13,836 35,062
G. Edward Brightman 10,300 (3) 3.5 4.733 2/13/06 30,659 77,695
8,240 2.8 5.340 5/21/06 27,671 70,125
Frank M. Bouton 6,180 (3) 2.1 4.733 2/13/06 18,395 46,617
10,300 3.5 5.340 5/21/06 34,589 87,656
Kent E. Koski 41,200 (3) 13.8 4.733 2/13/06 122,634 310,780
8,240 2.8 5.340 5/21/06 27,671 70,125
</TABLE>
- -------------------------
(1) The number of shares and the exercise price reflect adjustments due to a
3% stock dividend declared by the Board of Directors on January 21, 1997.
(2) Options may terminate before their expiration dates if the optionee's
status as an employee or director is terminated. One-fourth of the shares of
Common Stock covered by each such option vests and becomes exercisable on each
of the first, second, third and fourth anniversaries of the grant date.
(3) Replacement options granted upon cancellation of options granted in 1995.
See "Repricing of Options."
(4) Based on the closing prices of the Common Stock as reported on The Nasdaq
National Market on the respective grant dates.
(5) This column shows the hypothetical gains or option spreads of the options
granted based on assumed annual compound stock appreciation rates of 5% and 10%
over the full 10-year term of the options. The assumed rates of appreciation
are mandated by the rules of the Securities and Exchange Commission and do not
represent the Company's estimate or projection of future Common Stock prices.
9
<PAGE>
AGGREGATE OPTION EXERCISES AND YEAR-END OPTION VALUES
The following table sets forth certain information regarding the year-end
value of options held by the Named Executive Officers. No options were
exercised by the Named Executive Officers during 1996.
AGGREGATE OPTION EXERCISES IN 1996 AND YEAR-END OPTION VALUES
<TABLE>
<CAPTION>
NUMBER OF SHARES SUBJECT TO VALUE OF UNEXERCISED
UNEXERCISED OPTIONS AT IN-THE-MONEY OPTIONS AT
DECEMBER 31, 1996 (1) DECEMBER 31, 1996 (2)
------------------------------ -------------------------------
NAME EXERCISABLE UNEXERCISABLE EXERCISABLE UNEXERCISABLE
--------------------- ------------- --------------- ------------- ---------------
<S> <C> <C> <C> <C>
Stephen A. Aanderud 98,880 25,750 $661,500 $ 59,375
Robert D. Martin -- 48,925 -- 113,125
G. Edward Brightman 57,680 18,540 404,250 44,500
Frank M. Bouton -- 16,480 -- 37,750
Kent E. Koski -- 49,440 -- 127,000
</TABLE>
- -------------------------
(1) Gives effect to the 3% stock dividend declared by the Board of Directors
on January 21, 1997.
(2) Calculated based on the difference between the option exercise price and
the closing price of the Common Stock on December 31, 1996 ($7.625 per share).
The potential values have not been, and may never be, realized. The underlying
options have not been, and may never be, exercised. Actual gains, if any, on
exercise will depend on the value of the Common Stock on the date of exercise.
Repricing of Options
On February 13, 1996, the Board of Directors cancelled certain options
issued in 1995 and granted replacement options. The following table sets forth
information with respect to cancellations and replacement grants of stock
options to all executive officers since the Company's inception.
TEN-YEAR OPTION REPRICINGS
<TABLE>
<CAPTION>
NUMBER OF MARKET LENGTH OF
SECURITIES PRICE OF EXERCISE ORIGINAL
UNDERLYING STOCK AT PRICE AT NEW OPTION TERM
OPTIONS TIME OF TIME OF EXERCISE REMAINING AT
REPRICED REPRICING REPRICING PRICE DATE OF
NAME DATE (1) (1) (1) (1) REPRICING
- -------------------------- --------- ------------- ----------- ------------- ----------- -----------------
<S> <C> <C> <C> <C> <C> <C>
Stephen A. Aanderud 2/13/96 10,300 $4.733 $8.616 $4.733 9 yrs., 3 mos.
President & CEO
Robert D. Martin
Vice President, 2/13/96 3,605 4.733 8.495 4.733 9 yrs., 1 mo.
Strategic Planning
G. Edward Brightman
Vice President, 2/13/96 10,300 4.733 8.616 4.733 9 yrs., 3 mos.
Operations
Frank M. Bouton
Vice President, New 2/13/96 6,180 4.733 8.616 4.733 9 yrs., 3 mos.
Technologies
Kent E. Koski
Vice President,
Finance and
Administration, 2/13/96 41,200 4.733 8.616 4.733 9 yrs., 3 mos.
CFO, Secretary
</TABLE>
- -------------------------
(1) The number of shares and exercise prices reflect adjustments due to a 3%
stock dividend declared by the Board of Directors on January 21, 1997.
10
<PAGE>
COMPENSATION COMMITTEE REPORT ON REPRICING OF OPTIONS
Options granted to executive officers of the Company under the Company's
1994 Stock Option Plan are an important part of their compensation. The award
of options is intended to align the interest of the executive officers and
employees with the long-range interest of the shareholders. During the fourth
quarter of 1995, a fundamental change occurred in the market in which the
company competes due to the entrance of a significant competitor, resulting in a
substantial decline in the market value of the Company's shares. As a result,
in the opinion of the Board of Directors, the underlying value of options
granted on March 23, 1995 and May 25, 1995 no longer provided the financial
incentive originally intended. In order to reestablish the incentive, the Board
of Directors decided to offer to issue new options to replace options granted in
1995. Most, but not all, option holders accepted the offer. Replacement
options were granted on February 16, 1996 at a price equal to fair market value
on that date to all officers and employees who elected to surrender their 1995
options for cancellation.
C. Norman Winningstad, Chairman
Robert L. Carter
Fredrick M. Stevens
COMPENSATION COMMITTEE REPORT ON EXECUTIVE COMPENSATION *
It is the duty of the Compensation Committee to evaluate the performance of
management, review levels of compensation, and consider related matters.
The compensation policy of the Company, which is endorsed by the
Compensation Committee, is that a substantial portion of the annual compensation
of executive officers should be contingent upon the performance of the Company
and the individual executive officer as well. As a result, a substantial
portion of an executive officer's compensation is "at risk," with annual bonus
compensation constituting a significant portion of total compensation.
The compensation programs of the Company are designed to align the
executive officers' compensation with the strategic goals and performance of the
Company and underlying interests of the Company's shareholders. Accordingly,
executive officers are generally granted options to purchase shares of the
Company's stock under the Company's 1994 Stock Option Plan tied to their level
of compensation and contribution.
In order to assure that executive officers' compensation is competitive and
provides the incentives necessary to attract and maintain quality leadership,
the Compensation Committee reviews compensation surveys prepared by third
parties to assist in the performance of its duties. Factors considered by the
Committee, among others, are how the Company's compensation compares to
compensation paid by similar companies as well as the Company's current
performance.
- -------------------------
* Neither this Report nor the graph set forth below shall be deemed to be
incorporated by reference into any filing by the Company under either the
Securities Act of 1933, as amended, or the Securities Exchange Act of 1934, as
amended, except to the extent that the Company specifically incorporates the
same by reference.
11
<PAGE>
The 1996 base compensation for Stephen A Aanderud, the Company's President
and Chief Executive Officer, was established in January 1996 by the Board of
Directors upon recommendation of the Compensation Committee based on the
performance of the Company and Mr. Aanderud's contribution thereto during 1995.
For purposes of determining Mr. Aanderud's annual bonus for 1996 and base
compensation for 1997, the Compensation Committee reviewed in January 1997 the
Company's 1996 operating performance. The Compensation Committee noted that
under Mr. Aanderud's leadership, the following had been achieved by the Company
during 1996: (i) revenues increased to $30,821,000, a 58.7% increase over
1995; (ii) net income increased to $2,259,000, a 66.0% increase over 1995; and
(iii) earnings per share increased to $0.49, a 53.1% increase over 1995. All of
the performance factors achieved by the Company during 1996 exceeded the initial
1996 targets established by the Company.
C. Norman Winningstad, Chairman
Robert L. Carter
Frederick M. Stevens
12
<PAGE>
COMPARISON OF TOTAL CUMULATIVE SHAREHOLDER RETURN
The following graph and table set forth the Company's total cumulative
shareholder return as compared to that of The Nasdaq Stock Market and of the
Nasdaq Electronic Components Stocks for the period from February 24, 1995 (the
first trading day of the Common Stock) through December 31, 1996. The total
shareholder return assumes that $100 was invested at the beginning of the
period in Common Stock of the Company, The Nasdaq Stock Market Index, and the
Nasdaq Electronic Components Stocks Index, with all cash dividends reinvested on
the date paid. Historical stock price performance is not necessarily indicative
of future stock price performance.
COMPARISON OF CUMULATIVE TOTAL SHAREHOLDER RETURN
- --------------------------------------------------------------------------------
2/24/95 12/31/95 12/31/96
---------------------------------------
NASDAQ Stock Market $100.00 $144.15 $164.80
- --------------------------------------------------------------------------------
NASDAQ Electronic Components Stocks $100.00 $133.89 $248.85
- --------------------------------------------------------------------------------
ThrustMaster, Inc. $100.00 $101.92 $117.31
- --------------------------------------------------------------------------------
CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS
In December 1993, the Company entered into a consulting agreement with
BOCAR, Inc. ("BOCAR"), pursuant to which BOCAR provided consulting services to
the Company with respect to product concepts, mechanical design, mold and metal
working design and mechanical engineering. Robert L. Carter, a director,
principal shareholder, and the former Chairman, President and Chief Executive
Officer of the Company, is the President and sole shareholder of BOCAR.
Payments by the Company to BOCAR under the consulting agreement were $188,334,
$203,334, and $54,584 respectively, for the three successive years commencing
December 10, 1993. The consulting agreement terminated in February 1996.
13
<PAGE>
SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT
The following table sets forth certain information regarding beneficial
ownership as of March 28, 1997 of the Company's Common Stock by (i) each
shareholder known by the Company to be the beneficial owner of more than 5% of
the outstanding Common Stock, (ii) each director of the Company, (iii) each of
the Named Executive Officers and (iv) all directors and executive officers as a
group. Except as otherwise indicated, the Company believes that the beneficial
owners of the Common Stock listed below, based on information furnished by such
owners, have sole investment and voting power with respect to such shares.
SHARES PERCENT
NAME AND ADDRESS BENEFICIALLY BENEFICIALLY
OF BENEFICIAL OWNER (1) OWNED (2) OWNED (2)
- -------------------------------------- -------------- --------------
C. Norman Winningstad (3) 486,160 11.4
Milton R. Smith (4) 454,100 10.5
G. Gerald Pratt (5) 445,938 10.4
Robert L. Carter (6) 401,030 9.4
Simms Capital Management, Inc.
55 Railroad Avenue,
Greenwich, Connecticut 06830 278,100 6.5
Stephen A. Aanderud (7) 97,818 2.2
Frank Bouton (8) 94,142 2.2
G. Edward Brightman (9) 62,399 1.4
Graham E. Dorland (10) 33,990 *
Frederick M. Stevens (11) 22,248 *
Kent E. Koski (12) 14,935 *
Robert D. Martin (13) 12,746 *
General Merrill A. McPeak (14) 4,120 *
All Executive Officers and
Directors as a group (14 persons)(15) 2,418,026 52.7
________________________________
* Less than 1%
(1) Unless otherwise indicated, the address of each beneficial owner
identified is ThrustMaster, Inc., 7175 NW Evergreen Parkway #400, Hillsboro,
Oregon 97124.
(2) Beneficial ownership is determined in accordance with the rules of the
SEC. For purposes of this table, a person is deemed to be the beneficial owner
of securities that (i) can be acquired by such person within 60 days upon the
exercise of options or warrants and (ii) are held by such person's spouse or
other immediate family member sharing such person's household. Each beneficial
owner's percentage ownership set forth below is determined by assuming that
options and warrants that are held by such person (but not those held by any
other person) and that are exercisable or convertible within 60 days after March
28, 1997 have been exercised or converted.
(3) Includes 69,010 shares beneficially owned with spouse and 17,510 shares
subject to options exercisable within 60 days after March 28, 1997. Excludes
7,210 shares subject to options exercisable more than 60 days after March 28,
1997.
(4) Includes 66,950 shares subject to options exercisable within 60 days after
March 28, 1997. Excludes 7,210 shares subject to options exercisable more than
60 days after March 28, 1997.
(5) Includes 17,510 shares subject to options exercisable within 60 days after
March 28, 1997. Excludes 7,210 shares subject to options exercisable more than
60 days after March 28, 1997.
(6) Includes 1,030 shares subject to options exercisable within 60 days after
March 28, 1997. Excludes 7,210 shares subject to options exercisable more than
60 days after March 28, 1997.
14
<PAGE>
(7) Includes 97,818 shares subject to options exercisable within 60 days after
March 28, 1997. Excludes 34,763 shares subject to options exercisable more than
60 days after March 28, 1997.
(8) Includes 90,022 shares beneficially owned with spouse and 4,120 shares
subject to options exercisable within 60 days after March 28, 1997. Excludes
21,630 shares subject to options exercisable more than 60 days after March 28,
1997.
(9) Includes 57,315 shares subject to options exercisable within 60 days after
March 28, 1997. Excludes 23,175 shares subject to options exercisable more than
60 days after March 28, 1997.
(10) Includes 16,480 shares beneficially owned with spouse and 17,510 shares
subject to options exercisable within 60 days after March 28, 1997. Excludes
7,210 shares subject to options exercisable more than 60 days after March 28,
1997.
(11) Includes 4,738 shares beneficially owned with spouse and 17,510 shares
subject to options exercisable within 60 days after March 28, 1997. Excludes
7,210 shares subject to options exercisable more than 60 days after March 28,
1997.
(12) Includes 2,575 shares beneficially owned with spouse and 12,360 shares
subject to options exercisable within 60 days after March 28, 1997. Excludes
46,350 shares subject to options exercisable more than 60 days after March 28,
1997.
(13) Includes 12,231 shares subject to options exercisable within 60 days after
March 28, 1997. Excludes 45,964 shares subject to options exercisable more than
60 days after March 28, 1997.
(14) Includes 4,120 shares subject to options exercisable within 60 days after
March 28, 1997. Excludes 16,480 shares subject to options exercisable more than
60 days after March 28, 1997.
(15) Includes 336,284 shares subject to options exercisable within 60 days
after March 28, 1997. Excludes 271,791 shares subject to options exercisable
more than 60 days after March 28, 1997.
SECTION 16(A) BENEFICIAL OWNERSHIP REPORTING COMPLIANCE
Section 16(a) of the Securities Exchange Act of 1934, as amended (the
"Exchange Act"), requires the Company's directors and executive officers and any
persons who beneficially own more than 10 percent of the Company's Common Stock
to report their initial ownership of Common Stock and any subsequent changes in
that ownership to the Securities and Exchange Commission (the "SEC"). Specific
due dates for such reports have been established. Persons subject to the
Section 16(a) reporting requirements are required to furnish the Company copies
of all Section 16(a) reports they file with the SEC. To the Company's
knowledge, based solely on a review of copies of such reports furnished to the
Company and representations that no other reports are required, all Section
16(a) filing requirements applicable to such reporting persons have been
complied with since the Company became subject to the Exchange Act provisions in
March 1995.
15
<PAGE>
PROPOSAL 2: RATIFICATION OF APPOINTMENT OF INDEPENDENT ACCOUNTANTS
On January 21, 1997, the Board of Directors appointed Coopers & Lybrand
L.L.P. to act as the independent accountants of the Company for the period
ending December 31, 1997, subject to ratification of the appointment by the
shareholders. Coopers & Lybrand L.L.P. has served as the Company's independent
accounts since the Company's inception. Representatives of Coopers & Lybrand
L.L.P. will be in attendance at the Annual Meeting and will be given the
opportunity to make a statement if they wish to do so and will be available to
respond to appropriate questions.
THE BOARD OF DIRECTORS RECOMMENDS THAT THE SHAREHOLDERS VOTE "FOR" THE
RATIFICATION OF COOPERS & LYBRAND L.L.P. AS THE COMPANY'S INDEPENDENT
ACCOUNTANTS FOR THE YEAR ENDING DECEMBER 31, 1997.
SHAREHOLDER PROPOSALS FOR 1998 ANNUAL MEETING
Shareholder proposals to be presented at the 1998 Annual Meeting of
Shareholders must be received at the Company's principal executive offices no
later than December 16, 1997 in order to be included in the Company's proxy
statement and form of proxy relating to that meeting.
/s/ Kent E. Koski
------------------
Kent E. Koski, Secretary
Portland, Oregon
April 15, 1997
16
<PAGE>
THRUSTMASTER, INC.
7175 N.W. Evergreen Parkway #400
Hillsboro, OR 97124-5839
PROXY FOR THE MAY 22, 1997 ANNUAL MEETING OF SHAREHOLDERS
This Proxy is Solicited By The Board of Directors of ThrustMaster, Inc.
The undersigned shareholder(s) of ThrustMaster, Inc. (the "Company")
hereby appoint _____________________________________________and
_____________________________________________, and each of them, as proxies,
each with the power of substitution to represent and to vote, as designated
on this proxy, all the shares of Common Stock of the Company held of record
by the undersigned on March 28, 1997, at the Annual Meeting of Shareholders
to be held at 2:00 p.m., Thursday, May 22, 1997, and at any and all
adjournments thereof.
- -----------------------------------------------------------------------------
FOLD AND DETACH HERE
This proxy represents your shares of ThrustMaster, Inc.
Common Stock. You must execute and return this proxy if you wish
to vote these shares.
PLEASE RETURN ONLY THIS PROXY CARD IN THE ENCLOSED ENVELOPE.
<PAGE>
Please mark your votes as
indicated in this example /X/
1. ELECTION OF DIRECTORS FOR all nominees WITHHOLD AUTHORITY
listed below to vote for all
(except as marked nominees listed below
to the contrary below)
/ / / /
INSTRUCTION: To withhold authority to vote for any individual nominee, strike a
line through the nominee's name in the list below.
CLASS A NOMINEES (Term Will Expire in 1998): Robert L. Carter
G. Gerald Pratt
Milton R. Smith
CLASS B NOMINEES (Term Will Expire in 1999): Stephen A. Aanderud
Merrill A. McPeak
C. Norman Winningstad
CLASS C NOMINEES (Term Will Expire in 2000): Graham E. Dorland
Frederick M. Stevens
2. RATIFICATION OF APPOINTMENT OF DELOITTE & TOUCHE LLP FOR AGAINST ABSTAIN
as the Company's independent auditors / / / / / /
3. ANNUAL MEETING R.S.V.P: WILL be WILL NOT be
attending the attending the
_______________________ I/WE Annual Meeting Annual Meeting
(ENTER NUMBER OF PEOPLE / / / /
ATTENDING).
Shares represented by properly executed proxies will be voted in accordance
with instructions appearing on the proxy and in the discretion of the proxy
holders as to any other matters that may properly come before the Annual
Meeting of Shareholders. THE BOARD OF DIRECTORS RECOMMENDS A VOTE FOR ITEMS 1
AND 2. IN THE ABSENCE OF SPECIFIC INSTRUCTIONS, PROXIES WILL BE VOTED FOR
ITEMS 1 AND 2 AND IN THE DISCRETION OF THE PROXY HOLDERS AS TO ANY OTHER
MATTERS THAT MAY PROPERLY COME BEFORE THE ANNUAL MEETING OF SHAREHOLDERS
DATED: , 1997
--------------------------------
SIGNATURE(S)
--------------------------------
- --------------------------------------------
Please sign exactly as name(s) appear on your
stock certificate and date this proxy. If a
joint account, each joint owner must sign.
If signing for a corporation or partnership or
as agent, attorney or fiduciary, indicate the
capacity in which you are signing.
- -------------------------------------------------------------------------------
FOLD AND DETACH HERE
THRUSTMASTER, INC.
ANNUAL MEETING OF SHAREHOLDERS
Thursday, May 22, 1997
2:00 p.m.
RiverPlace Hotel
1510 Southwest Harbor Way
Portland, Oregon
