UNITED STATES SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549 FORM 10-K/A
Amendment No. 1 to Annual Report Pursuant to Section 13 or 15(d) of
The Securities Exchange Act of 1934
For the Fiscal Year Ended December 31, 1995 Commission File No. 1-11465
IDEON GROUP,INC.
(Exact name of Registrant as specified in its charter)
Delaware 59-3293212
(State or other jurisdiction of (I.R.S. Employer Identification Number)
incorporation or organization)
7596 Centurion Parkway, Jacksonville, Florida 32256
(Address of principal executive offices) (Zip Code)
Registrant's telephone number, including area code: (904) 218-1800
Securities registered pursuant to Section 12(b) of the Act:
Title of Class Name of Exchange on Which Registered
Common Stock, $.01 Par Value New York Stock Exchange
Securities registered pursuant to Section 12(g) of the Act: NONE
Indicate by check mark whether the Registrant (1) has filed all reports
required to be filed by Section 13 or 15(d) of the Securities Exchange Act of
1934 during the preceding 12 months (or for such shorter period that the
registrant was required to file such reports), and (2) has been subject to such
filing requirements for the past 90 days.
Yes x No
Indicate by check mark if disclosure of delinquent filers pursuant to Item 405
of Regulation S-K is not contained herein, and will not be contained, to the
best of Registrant's knowledge, in definitive proxy or information statements
incorporated by reference in Part III of this Form 10-K or any amendment to this
Form 10-K. [ ]
State the aggregate market value of the voting stock held by non-affiliates of
the Registrant (based on the closing market price on March 15, 1996):
$332,284,243.
Indicate the number of shares outstanding of each of the Registrant's classes of
common stock (as of March 15, 1996): Common Stock, $.01 Par Value - 27,981,831
shares.
Documents Incorporated By Reference
None.
Total Number of Pages 13
<PAGE>
Registrant hereby amends its Form 10-K for its fiscal year ended December 31,
1995 by adding the following to Part III and deleting the incorporation by
reference to the definitive proxy statement of Ideon Group, Inc. (the
"Company").
PART III
Item 10. DIRECTORS AND EXECUTIVE OFFICERS OF THE REGISTRANT
Italicized terms indicate principal occupation.
WILLIAM T. BACON, JR., director since 1978, age 73, Associate, The Chicago
Corporation, an investment banking firm, November 1994 to present; Associate,
Bacon, Whipple, a division of Stifel, Nicolaus & Co., an investment banking
firm, 1983 to 1994; managing partner of Bacon, Whipple & Co., prior to 1983;
Director, Walbro Corporation, a manufacturer of small engine carburetors and
automobile fuel systems.
MARSHALL L.BURMAN, director since 1993, age 66, Of counsel, Wildman,
Harrold, Allen & Dixon, a Chicago, Illinois law firm, 1992 to present; Chairman,
Illinois State Board of Investment, a comingled investment fund whose
beneficiaries are Illinois state employees (Chairman since 1985, Board member
since 1979); Partner, Avery, Hodes, Costello & Burman, a Chicago, Illinois law
firm, prior to 1992; Director, CFI Industries, Inc., a manufacturer of
thermo-plastic packaging.
JOHN ELLIS BUSH, director since January 1995, age 43, President of The Codina
Group, Inc., a real estate development company, 1981 to present; Director,
American Heritage Life Insurance Company.(1)
ROBERT L.DILENSCHNEIDER, director since 1991, age 52, Chief Executive Officer
and majority owner of The Dilenschneider Group, Inc., a public relations firm,
1991 to present; Hill & Knowlton, an international public relations firm, 1967
to 1991 (Chief Executive Officer, 1986 to 1991).
ADAM W. HERBERT, JR., Ph.D., director since January 1995, age 52, President,
University of North Florida, 1989 to present; Director, Barnett Bank of
Jacksonville, N.A., a subsidiary of Barnett Banks, Inc., and Baptist Medical
Center (Jacksonville, Florida), a not-for-profit acute care hospital.
EUGENE MILLER, director since 1993, age 70, Chairman of the Board of Directors
of the Company and Chief Executive Officer, February 1996 to present; Professor
and Assistant to the Dean at the College of Business of Florida Atlantic
University, 1991 to present; Vice Chairman and Chief Financial Officer, USG
Corporation (formerly known as United States Gypsum Company), 1987 to 1991;
Director, MFRI, Incorporated, a manufacturer of filter bags, and a private
corporation.
THOMAS F. PETWAY, III, director since 1994, age 55, Chairman and Chief Executive
Officer, Home Builders Insurance Services, Inc., a national marketing and
administrative services company specializing in services and insurance programs
for residential contractors, 1977 to present; Principal, Network Realty
Associates, a real estate agency operating under the name Prudential Network
Realty and a member of Prudential Real Estate Affiliates, Inc., 1988 to present.
(1) The Company received on April 29, 1996, a letter from Mr. Bush dated
April 26, 1996, notifying the Company of his decision to resign from the Board
of Directors.
<PAGE>
Directors of the Company are divided into three classes with each class serving
staggered three year terms.
Section 16(a) of the Securities Exchange Act of 1934 requires executive officers
and directors, and persons who beneficially own more than ten percent of the
Company's stock, to file initial reports of their beneficial ownership and
reports of changes in such ownership with the Securities and Exchange Commission
(the "Commission"). Copies of such reports also are required to be filed with
the Company. Based solely on a review of the copies of such reports furnished to
the Company and written representations from the executive officers and
directors regarding Form 5 reports, the following reports were not filed on a
timely basis: two Forms 4 of Mr. Richard Interdonato for the months of June and
May regarding transactions under the Company's stock purchase plan were filed
late.
Item 11. EXECUTIVE COMPENSATION
In 1994 the Company effected a change in its fiscal year end from October 31 to
December 31. The following table shows, for the year ending December 31, 1995,
the transition period from November 1, 1994 to December 31, 1994 (the
"Transition Period") and for years ending October 31, 1994, the cash and other
compensation paid, accrued or earned and certain long term awards made to the
named executives for all services to the Company in all capacities. None of the
following persons were officers of the Company during the year ending October
31, 1993. Mr. Birk joined the Company as of September 14, 1994. Mr. Walsh joined
the Company in February 1995.
SUMMARY COMPENSATION TABLE
<TABLE>
<CAPTION>
<S> <C> <C> <C> <C> <C> <C>
Annual Compensation Long Term Compensation
Other
Annual Restricted All Other
Name and Compen- Stock Compen-
Principal Salary Bonus sation Award(s) Options/ sation
Position Year ($) ($)(1) ($)(2) ($)(3) SARs (#) ($)(4)
Paul G. Kahn 1995 $749,683 $0 $51,528 0 0 58,887
Chairman and CEO 1994T 120,346 0 ---- 0 0 8,719
1994 686,538 950,000 ---- 63,750 1,000,000 49,227
Francis J. Marino 1995 364,760 0 ---- 0 0 38,365
Vice Chairman and 1994T 53,846 0 ---- 0 0 3,919
General Counsel 1994 261,154 259,548 ---- ---- 300,000 21,864
G. Thomas Frankland 1995 364,760 0 ---- 0 0 31,923
Vice Chairman and 1994T 53,846 0 ---- 0 0 3,919
Chief Financial Officer 1994 175,000 189,875 ---- ---- 300,000 43,990
Paul F.Walsh 1995 229,167 201,000 35,210 0 50,000 57,036
President and CEO
of Wright Express
Corporation
<PAGE>
Robert M. Frechette 1995 248,269 69,652 6,840 0 0 59,964
President and 1994T 35,385 0 ---- 0 0 ----
Chief Executive Officer 1994 128,269 147,200 ---- 0 60,000 71,626
of SafeCard
Services, Inc.
John R. Birk 1995 329,949 0 79,588 0 300,000 870,066
Former President and 1994T 45,833 0 ---- 0 0 3,079
Chief Operating Officer 1994 34,375 76,375 ---- 0 0 ----
of Ideon Group, Inc.
</TABLE>
(1) The amounts shown in 1995 include a signing bonus for Mr. Walsh of $50,000
and in 1994 the following restricted stock grants: Mr. Marino - 1,000 shares
with a market value on the date of grant of $18,625 vested on August 1, 1994,
Mr. Frankland - 1,000 shares with a market value on the date of grant of $17,875
vested on November 1, 1994 and Mr. Birk - 1,000 shares with a market value on
the date of grant of $16,375 vested on March 14, 1995. Mr. Birk's cash bonus of
$60,000 was earned in calendar year 1994.
(2) The amounts shown as other annual compensation in 1995 include the
following: (i) for Mr. Walsh, $35,210 paid as reimbursement for taxes payable on
relocation benefits; (ii) for Mr. Frechette, $6,840 paid as reimbursement for
taxes payable on relocation benefits; and (iii) for Mr. Birk, $79,588 paid as
reimbursement of taxes payable on relocation benefits. The amounts shown also
include the value of all personal benefits and perquisites received by the
executives that exceed the required reporting threshold of the lesser of either
$50,000 or 10% of the salary and bonus shown above for the named executive
officers. For Mr. Kahn, the amount reported as personal benefits and perquisites
includes a $30,000 executive expense allowance as provided in his employment
agreement with the Company.
(3) The amount shown in the table is equal to the closing market price on the
date of grant multiplied by the number of shares of restricted stock granted to
Mr. Kahn. Mr. Kahn was granted 5,000 shares of restricted stock as of December
6, 1993, vesting as to 1,000 shares after December 5, 1994, as to an additional
2,000 shares after December 5, 1995, as to an additional 1,000 shares after
December 5, 1996 and as to the remaining 1,000 shares after December 5, 1997. As
of the end of the Transition Period, his 4,000 unvested shares were valued at
$75,500. As of December 31, 1995, his 2,000 unvested shares were valued at
$20,250
(4) Amounts shown in this column for 1995 and the Transition Period include the
following payments: (i) for Mr. Kahn, payments of term life insurance premiums
of $4,395 in 1995; contributions by the Company under its 401(k) and profit
sharing plan of $4,620 in 1995; and contributions to a grantor trust as a
supplemental retirement benefit of $49,872 in 1995 and $8,719 in the Transition
Period; (ii) for Mr. Marino, payments of term life insurance premiums of $9,287
in 1995; contributions by the Company under its 401(k) and profit sharing plan
of $4,620 in 1995; and contributions to a grantor trust as a supplemental
retirement benefit of $24,458 in 1995 and $3,919 in the Transition Period; (iii)
for Mr. Frankland, payments of term life insurance premiums of $2,845 in 1995;
contributions by the Company under its 401(k) and profit sharing plan of $4,620
in 1995; and contributions to a grantor trust as a supplemental retirement
benefit of $24,458 and $3,919 in the Transition Period and in 1995; (iv) for Mr.
Walsh, payment of term life insurance premiums of $6,263 in 1995 and relocation
benefits of $50,773 in 1995; (v) for Mr. Frechette, relocation benefits of
$58,199 in 1995; and contributions by the Company under its 401(k) and profit
sharing plan of $1,765 in 1995; and (vi) for Mr. Birk, payment of term life
insurance premiums of $2,188 in 1995; relocation benefits of $149,470 in 1995;
<PAGE>
contributions by the Company under its 401(k) and profit sharing plan of $4,620
in 1995; contributions to a grantor trust as a supplemental retirement benefit
of $21,309 in 1995 and $3,079 in the Transition Period; and payments under his
employment agreement upon termination of employment by the Company as provided
under his employment agreement of $692,479. See "Employment Contracts and
Termination of Employment Agreements".
The following table contains information concerning the grant of stock options
made during the Transition Period and fiscal year 1995 pursuant to the 1994
Plan.
Option Grants in Transition Period and Last Fiscal Year
<TABLE>
<CAPTION>
<S> <C> <C> <C> <C> <C> <C> <C>
Potential Realizable Value at
Assumed Annual Rates of Stock
Individual Price Appreciation for Option
Grants Term
Name Options/ % of Total Exercise Expiration 0%(4) 5%(4) 10%(4)
SARs Options/SARs or Base Date
Granted Granted to Price
Employees ($/Sh)
(#) in Fiscal Year
(1)(2)(3)
John R. Birk 150,000 13.4% $16.375 09/14/2004 $0 $1,544,655 $3,914,520
150,000 13.4% $15.875 12/09/2004 0 1,497,480 3,795,000
Paul F. Walsh 50,000 4.4% $18.500 1/31/2005 0 581,705 1,474,190
</TABLE>
(1) By the terms of the 1994 Long Term Stock-Based Incentive Plan (the "1994
Plan"), options granted thereunder are exercisable over a period not to exceed
ten years. Sixty percent of the options granted to Messrs. Birk and Walsh vest
over a period of four years in annual cumulative increments of 25% on each
anniversary of the date of the grant. Forty percent of the options granted to
each executive vest in three equal increments when the price of the Company's
common stock trades at or above $21, $24 and $27, respectively, over twenty
consecutive days and in any case when nine years have elapsed from the date of
grant. Under the 1994 Plan, all options will immediately vest and become
exercisable in the event that a Change in Control (as defined in the 1994 Plan)
of the Company occurs.
(2) The 1994 Plan provides that the Committee administering the Plan may award
tax bonuses to grantees under the 1994 Plan to be paid upon the exercise of
options or lapse of restrictions on restricted stock.
(3) The total number of shares granted pursuant to options to all employees
under the 1994 Plan and the Employees Stock Option Plan during the Transition
Period were 193,500 and 21,500 shares, respectively. The total number of shares
granted pursuant to options to all employees under the 1994 Plan and the
Employees Stock Option Plan during 1995 were 1,049,200 and 74,300 shares,
respectively. Mr. Birk's options were granted subject to stockholder approval of
an increase in the number of shares issuable under the 1994 Plan which was
obtained at the annual meeting in April 1995.
<PAGE>
(4) The dollar amount under the columns assumes that the market price of the
common stock from the date of the option grant appreciates at cumulative annual
rates of 0%, 5% and 10%, respectively, over the option term of ten years. The
assumed rates of 5% and 10% were established by the Commission and therefore are
not intended to forecast possible future appreciation of the common stock. No
gain to the optionees is possible without an increase in stock price, which will
benefit all stockholders commensurately. A zero percent increase in stock price
will result in zero dollars for the optionee. Based on a December 9, 1994 grant
price ($15.875 per share) and at an annual hypothetical appreciation of 5% for
ten years, the common stock would be valued at $25.858 per share. At the
hypothetical 10% annual appreciation rate for ten years, the common stock would
be valued at $41.175 per share.
The following table sets forth information regarding the value of the
unexercised options held by these individuals as of December 31, 1995, based on
the market value ($10.125) of the common stock on December 29, 1995.
Aggregated Option/SAR Exercises in Last Fiscal Year and Fiscal Year-End
Option/SAR Values
<TABLE>
<CAPTION>
<S> <C> <C> <C> <C>
(a) (b) (c) (d) (e)
Value of
Number of Unexercised
Unexercised In-the-Money
Options/SARs at Options/SARs at
FY-End (#) FY- End(#)
Shares Acquired Value Exercisable/ Exercisable/
Name on Exercise (#) Realized ($) Unexercisable Unexercisable
Paul G. Kahn -0- -0- 433,333/566,667(1) 0/0
Francis J. Marino -0- -0- 45,000/255,000 0/0
G.Thomas Frankland -0- -0- 45,000/255,000 0/0
Paul F. Walsh -0- -0- 0/50,0000 0/0
Robert M. Frechette -0- -0- 9,000/51,000 0/0
John R. Birk -0- -0- 0/0(2) 0/0
</TABLE>
(1) Mr. Kahn's employment was terminated effective as of February 5, 1996. His
options were exercisable for a period of thirty days after termination of
employment.
(2) Mr. Birk's employment was terminated effective as of November 15,
1995. His options were exercisable for a period of thirty days after
termination of employment.
<PAGE>
Employment Contracts and Termination of Employment Arrangements
Employment Agreement Paul G. Kahn. In December 1993, the Company named Paul G.
Kahn as its Chief Executive Officer and Chairman of its Board of Directors. On
February 5, 1996, Mr. Kahn's employment with the Company was terminated. Under
his employment agreement dated as of December 1, 1994 (the "Kahn Agreement"),
Mr. Kahn received an annual base salary of at least $750,000 and was entitled to
participate in the annual performance based incentive bonus plan of the Company.
Mr. Kahn was also granted a $250,000 bonus upon execution of the Kahn Agreement
and 5,000 restricted shares of common stock with restrictions lapsing on each of
the first four anniversary dates of his employment. Mr. Kahn was also granted
options to acquire 1,000,000 shares of common stock under the 1994 Plan.
The initial term of the Kahn Agreement was to expire on December 31, 1996 and
would have been automatically renewed thereafter for additional one year terms
unless either party notified the other within 180 days prior to any such renewal
date that the Agreement would not be extended. The Kahn Agreement provided that
if Mr. Kahn terminated his employment during the employment term for "good
reason" or was terminated by the Company during the employment term other than
for "cause", death or "disability" (all as defined in the Kahn Agreement), he
would generally be entitled to severance pay in an amount equal to 150% of the
sum of his then current base salary plus the highest amount of incentive
compensation received for any bonus period during the employment term, provided,
that if the termination occurred within three years following a "change of
control", 300% would be substituted for 150%. In addition, all of his options
would immediately vest.
Unless approved by a majority of the directors then in office who were also
directors immediately after the adoption of the Kahn Agreement and not preceded
in the prior year by a public disclosure (which was not approved by the Company)
made by an acquiring person of a proposal regarding any of the following events,
the following events are defined as a change in control: (i) the acquisition by
any person of direct or indirect beneficial ownership of 25% of the combined
voting power of the Company's then outstanding securities; (ii) an exchange or
tender offer for the common stock; (iii) stockholder approval of a merger or
consolidation of the Company unless the Company is the surviving corporation and
no capital reorganization or reclassification or other change in the Company's
then outstanding shares of common stock occurs, a sale or disposition of all or
substantially all of the Company's assets, or liquidation or dissolution of the
Company; or (iv) turnover of more than one third of the directors in a two year
period, unless the nomination or election of each new director was approved by
at least two thirds of the directors then still in office who were directors at
the beginning of the two year period.
The Kahn Agreement also provided for certain executive benefits, including
individual life and long term disability insurance policies, an annual executive
allowance for automobile and certain professional services, and a supplemental
retirement benefit consisting of a grantor trust to be funded by annual
contributions by the Company equal to 6.7% of Mr. Kahn's annual base salary.
Mr. Kahn agreed not to compete with, solicit any key employees of, or make any
public statements critical of, the Company during the term of his employment or
for a period of twelve months thereafter.
Pursuant to a settlement agreement dated April 18, 1996 and based on the terms
of the Kahn Agreement, the Company paid Mr. Kahn $2,580,000 in connection with
the termination of his employment and in full settlement of the Company's
obligations thereunder.
Employment Agreement Francis J. Marino, G. Thomas Frankland and John R. Birk. On
February 1, 1994 the Company named Francis J. Marino as its Vice Chairman, and
<PAGE>
on May 1, 1994 the Company named G. Thomas Frankland its Vice Chairman and Chief
Financial Officer. On September 14, 1994 with the closing of the acquisition of
Wright Express Corporation, the Company entered into an agreement with John R.
Birk as President and Chief Executive Officer of Wright Express Corporation.
When Mr. Birk was promoted to President and Chief Operating Officer of the
Company effective January 1, 1995, his agreement was amended to increase his
base salary and to reflect the change in his title. The Company's employment
agreement with Mr. Marino (the "Marino Agreement"), its employment agreement
with Mr. Frankland (the "Frankland Agreement"), and its employment agreement
with Mr. Birk (as amended, the "Birk Agreement") provided that each of Messrs.
Marino, Frankland and Birk would receive an annual base salary of at least
$350,000 and be eligible to participate in the short term incentive plan.
Messrs. Marino, Frankland and Birk each was also granted a $32,000 bonus upon
execution of his employment agreement and 1,000 restricted shares of the common
stock with restrictions lapsing after six months from the date of grant. Each of
Messrs. Marino and Frankland was further granted options to acquire 300,000
shares of common stock under the 1994 Plan. Mr. Birk was granted options to
purchase 150,000 shares upon the Company's acquisition of Wright Express
Corporation and additional options to purchase 150,000 shares upon his promotion
to President and Chief Operating Officer of the Company.
The initial term of the Marino Agreement expires on December 31, 1996. The
initial term of the Frankland Agreement expires May 31, 1997, and the initial
term of the Birk Agreement would have expired on September 13, 1997. Each of the
agreements provided for automatic renewal after the initial term for additional
one year terms unless either party notifies the other within 180 days prior to
any such renewal date that the Agreement will not be extended. The Marino,
Frankland and Birk Agreements contain the same provisions as the Kahn Agreement
regarding severance pay due to such officers upon termination with "good reason"
or other than for "cause", death or "disability", and upon a "change of
control", and regarding vesting of options.
The Marino, Frankland and Birk Agreements also provide for certain executive
benefits during the term of employment, including individual life and long term
disability insurance policies, an annual executive allowance for automobile and
certain professional services, and for a supplemental retirement benefit
consisting of a grantor trust to be funded by annual contributions by the
Company equal to 6.7% of annual base salary. The Marino, Frankland and Birk
Agreements would also entitle the executives to the relocation benefits (but not
the relocation bonus) provided to other Company employees, with certain
adjustments.
Under the Agreements, Messrs. Marino, Frankland and Birk agreed not to compete
with, solicit any key employees of, or make any public statements critical of,
the Company during the term of their employment or for a period of twelve months
thereafter.
Mr. Birk's employment was terminated on November 15, 1995. The Company paid him
$692,479 pursuant to the Birk Agreement. The Company is arbitrating a dispute
with Mr. Birk regarding the Birk Agreement under which he claims he is due
additional severance pay of approximately $600,000.
Executive Agreements. The Company has executive agreements with Messrs. Walsh
and Frechette and certain other officers. The executive agreements provide that
if, following a "change of control" (defined similarly to the definition in the
Kahn Agreement) of the Company, an executive's employment is terminated by the
Company other than for "cause", retirement, "disability" or death, or by the
officer for "good reason" (all as defined in the executive agreements), the
executive will be entitled to receive (i) a lump sum payment equal to one year's
base salary; (ii) immediate vesting of all stock options and restricted stock
grants; (iii) twelve months of medical insurance coverage reimbursed by the
Company; (iv) if the Company pays such bonus to others in the executive's class,
the bonus that the executive would have earned under the Company's Short-Term
<PAGE>
Incentive Plan, pro-rated for the executive's length of service; (v) certain
outplacement assistance; and (vi) any amounts accrued and owing to the executive
prior to termination. If the Company terminates the executive other than for
"cause", death, "disability" or retirement prior to a "change in control", the
executive will be entitled to receive the benefits described in the foregoing
sentence except that the vesting of any options or restricted stock will not be
accelerated and no bonus payments will be made to the executive. The agreement
also includes provisions preventing Mr. Walsh from competing with Wright Express
Corporation for one year after termination of employment.
Directors' Fees and Other Compensation
Fees. Directors who are not employees of the Company receive a quarterly
retainer of $12,500. Effective as of October 1, 1995, the Board reduced its
retainer to $6,250 per quarter until the Company reported two quarters of
profitability. Each chairman of a committee and the vice chairman of the Board
of Directors receives an additional retainer of $1,500 per annum. No separate
retainer is paid for membership on committees. Directors receive separate fees
for attendance at meetings of the Board and committees which are $2,000 for in
person meetings and $500 for telephonic meetings. Fees are paid for only one
meeting on any one date, regardless of how many meetings may be held on that
date. Directors who are employees of the Company receive no fees for service on
the Board or committees or for attendance at meetings. Directors are reimbursed
for their customary and usual expenses incurred in attending Board, committee
and stockholder meetings, including those for travel, food and lodging. A
directors deferral plan allows directors to defer all or part of their retainer
and fees to an account which accrues interest until the later of their
termination of service to the Company or upon reaching age 65.
In January 1996, the Board established a Strategic Direction Committee and paid
each member (Messrs. Petway and Burman) and the chairman (Mr. Miller) of the
committee a retainer of $12,500 and $25,000, respectively, for their service to
the Company during the strategic direction process.
Stock Option Plan for Directors. Under the plan for directors adopted by the
stockholders at the 1995 annual meeting (the "Directors Stock Plan"),
non-employee directors are automatically granted an option to purchase 15,000
shares of common stock upon their initial election or appointment to the Board
of Directors. The Directors Stock Plan also allows directors to elect to receive
their retainer and/or meeting fees in the form of common stock.
Stock Ownership Requirement. To insure that directors have a substantial
personal stake in the Company, in January 1995 the Board of Directors adopted a
requirement that directors joining the Board after 1994 must own 1,000 shares of
common stock or elect to receive their retainer and meeting fees in the form of
common stock until 1,000 shares have been purchased.
Directors' Retirement Plan. In 1991, the Company adopted an unfunded retirement
plan that provides annual retirement benefits to nonemployee directors who have
served on the Board of Directors for five or more years, are at least sixtyfive
years of age and were not employees of the Company. Prior to its amendment in
January 1995, the retirement benefit was a life annuity equal to the annual
retainer paid to nonemployee directors at the time of retirement, or as
subsequently modified, whichever was higher. In January 1995, the Board voted to
limit the annual retirement benefit to one half of the annual retainer paid to
non-employee directors at the time of retirement. It also eliminated the life
annuity paid to a surviving spouse of a director which had been equal to
one-half of the annuity paid to the deceased director. These changes do not
apply to the vested and payable benefits of Mr. Bacon. The retirement benefits
remain subject to a vesting schedule whereby directors become fifty percent
<PAGE>
vested in their retirement benefit after five years of service to the Company
and vest an additional ten percent for each additional year of service. A
director who is not at least sixtyfive years of age upon retirement but who is
otherwise eligible is entitled to receive the retirement benefits upon reaching
sixtyfive years of age. In January 1995, the Board also adopted a mandatory
retirement age for directors of 75 years of age.
Public Relations and Investor Relations Consulting. In December 1994, the
Company paid the Dilenschneider Group, Inc., a public relations firm of which
the majority shareholder is director Robert L. Dilenschneider, $180,000 for
market communications and promotion/publicity services to the Company in
connection with certain specified projects. See "Certain Relationships and
Related Transactions".
Item 12. SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT
Directors, Nominees and Executive Officers.
The following table sets forth, as of April 14, 1996, beneficial ownership of
the Company's common stock by each current director, the named executive
officers of the Company, and all of the foregoing, together with all other
executive officers, as a group. Except as described below, each of the persons
and group listed below has sole voting and investment power with respect to the
shares shown.
<TABLE>
<CAPTION>
<S> <C> <C> <C> <C>
Number of
Shares Which Total
May Be Number
Names of Directors, Acquired of Shares Percent of
Nominees and Executive Number Within 60 Beneficially Class
Officers Shares Owned Days (7) Owned (%)
William T. Bacon, Jr. (1)105,300 0 105,300 *
John R. Birk (2)8,500 0 8,500 *
Marshall L. Burman 2,000 100,000 102,000 *
John Ellis Bush 2,444 2,250 4,694 *
Robert L. Dilenschneider 100 100,000 100,100 *
G. Thomas Frankland 4,010 90,000 94,010 *
Robert M. Frechette (3)11,762 18,000 29,762 *
Adam W. Herbert, Jr. 1,277 2,250 3,527 *
Paul G. Kahn (4) 9,100 0 9,100 *
Francis J. Marino (5) 2,500 90,000 92,500 *
Eugene Miller 500 100,000 100,500 *
Thomas F. Petway, III 26,848 100,000 126,848 *
Paul F. Walsh 0 7,500 7,500 *
All Directors, Nominees and
Executive Officers as a group 226,755(6) 659,500 886,255 3.2
</TABLE>
* Less than one percent.
(1) The shares shown include 5,000 shares owned by the wife of Mr. Bacon,
as to which he disclaims beneficial ownership.
(2) The shares shown include 1,000 shares owned by the sons of Mr.Birk, as
to which he disclaims beneficial ownership. Mr. Birk's employment was terminated
as of November 15, 1995. His options to purchase 300,000 shares terminated
pursuant to their terms on December 15, 1995.
(3) The shares shown include 103 shares owned by the wife of Mr. Frechette,
as to which he disclaims beneficial ownership.
<PAGE>
(4) The shares shown exclude 2,000 shares of restricted stock that were
forfeited upon Mr. Kahn's termination from the Company in February 1996. His
options to purchase 1,000,000 shares of the Company's common stock expired on
March 6, 1996.
(5) The shares shown include 1,000 shares owned by the wife of Mr. Marino,
as to which he disclaims beneficial ownership.
(6) The shares shown include the pro-rata portion of shares issuable under
the asset purchase agreement pursuant to which National Leisure Group, Inc.
("NLG") was acquired by the Company to a corporation of which two NLG officers
are shareholders. These two officers, who are executive officers of the Company,
also have earn-out rights to an additional 82,936 shares issuable to the
corporation if NLG achieves certain operating results.
(7) The shares shown consist of the Company's common stock subject to stock
options currently exercisable or exercisable within sixty days of April 14,
1996. Not shown are options to purchase the Company's common stock not currently
exercisable and not becoming exercisable sixty days after April 14, 1996,
including 210,000 shares subject to options granted to each of Messrs. Frankland
and Marino, 12,750 shares each subject to options granted to Messrs. Bush and
Herbert, 42,500 shares subject to options granted to Mr. Walsh, 42,000 shares
subject to options granted to Mr. Frechette and 185,500 shares subject to
options granted to other executive officers of the Company.
Principal Holders
The following table sets forth, as of December 31, 1995, beneficial
ownership of the Company's common stock by persons known by the Company to
beneficially own more than 5% of the Company common stock:
<TABLE>
<CAPTION>
<S> <C> <C>
Name and Address Amount and Nature
of Beneficial Holder of Beneficial Ownership Percent of Class(%)
FMR Corp 3,761,300(1) 13.19%
82 Devonshire Street
Boston, MA 02109
Pioneering Management 2,835,000(2) 9.95%
Corporation
60 State Street
Boston, Massachusetts
02109-1820
Legg Mason, Inc. 2,556,400(3) 8.97%
7 East Redwood Street
Baltimore, Maryland
21203-7023
The Equitable Companies
Incorporated 2,378,600(4) 8.35%
787 Seventh Avenue
New York, New York 10019
</TABLE>
1. According to a Schedule 13G filed with the Commission by FMR Corp.
("FMR"), FMR beneficially owned 3,761,300 shares of the Company's common stock
as of December 31, 1995. FMR claimed sole or shared voting power with respect to
none of the shares and sole dispositive power with respect to all of the shares.
2. According to a Schedule a 13G filed with the Commission, Pioneering
Management Corporation claimed sole voting power with respect to all 2,835,000
shares and shared dispositive power with respect to all 2,835,000 shares.
<PAGE>
3. According to a Schedule 13G filed with the Commission by Legg Mason,
nc., Legg Mason Special Investment Trust holds 2,553,500 shares, with Legg Mason
Fund Advisor, Inc. having dispositive power and the remainder is held by various
clients of Legg Mason Managed Investment Portfolio which has dispositive power.
4. According to a Schedule 13G filed with the Commission jointly by five
French mutual insurance companies, AXA Assurances I.A.R.D. Mutuelle, AXA
Assurances Vie Mutuelle, Alpha Assurances I.A.R.D. Mutuelle, Alpha Assurances
Vie Mutuelle and Uni Europe Assurance Mutuelle, as a group, AXA and The
Equitable Companies Incorporated and its subsidiaries, these entities
beneficially owned 2,378,600 shares of the Company's common stock as of December
31, 1995. These entities claimed sole voting power with respect to 1,910,000 of
such shares and shared voting power with respect to 40,400 of such shares and
claimed sole dispositive power with respect to 2,378,300 of the shares and
shared dispositive power with respect to 300 shares shown as of December 31,
1995.
Item 13. CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS
Museum Art Properties, Inc. Effective September 1994, the Company entered
into an agreement with Museum Art Properties, Inc. ("MAP") pursuant to which the
Company was granted a license to market products inspired by works in the 13
Vatican Museums. The agreement provided that the Company would pay MAP certain
royalties and other fees from the sale of such products. In 1994, the Company
paid a promotion fee of $250,000 upon award of the license and an advance
against royalties of $1,500,000 to MAP. In addition, if the Company conducted
sales under the agreement, the Company guaranteed certain royalties to MAP in
1996 and 1997. The agreement was amended twice to extend the time for testing
the products through its Collections of the Vatican Museums catalog. Under a
second amendment to the agreement, the Company had until May 1, 1995 to decide
whether to terminate the agreement without being liable for any minimum
royalties in 1996 or thereafter. On April 18, 1996, the Company notified MAP
that it was terminating the agreement and filed suit in the Florida State Court
for Duval County seeking a declaration of its rights to terminate the amended
agreement. On April 19, 1996, MAP filed a suit in New York state court alleging
the Company breached the agreement. Mr. Dilenschneider, one of the Company's
directors, was a director of MAP until his resignation on April 18, 1996. He is
a 10% shareholder of MAP and has recused himself from issues relating to the
Company's dispute with MAP.
Public Relations and Investor Relations Consulting. In December 1994, the
Company paid the Dilenschneider Group, Inc., a public relations firm of which
the majority shareholder is director Robert L. Dilenschneider, $180,000 for
market communications and promotion/publicity services to the Company in
connection with certain specified projects. In 1995, the Company reimbursed the
Dilenschneider Group, Inc. for out-of-pocket expenses incurred in connection
with providing market communications and promotion/publicity services to the
Company. This arrangement has not been renewed for 1996.
Jacksonville Jaguars. The Company has entered into an agreement with the
Jacksonville Jaguars, Ltd. to license a suite located in the stadium in
Jacksonville, Florida at which the Jacksonville franchise of the National
Football League plays its games. Under the suite license, the Company has paid a
security deposit of $75,000 and license fees of $75,000 and $79,458 for 1995 and
1996, respectively. The Company also paid $10,000 for an upgrade of the suite.
Director Thomas F. Petway, III is a limited partner owning 10% of the
Jacksonville Jaguars, Ltd., and director John Ellis Bush is a limited partner
owning 1% of the Jacksonville Jaguars, Ltd.
<PAGE>
SIGNATURES
Pursuant to the requirements of Section 13 or 15(d) of the Securities Exchange
Act of 1934, the Registrant has duly caused this report to be signed on its
behalf by the undersigned thereunto duly authorized.
IDEON GROUP, INC.
By: /s/ G. Thomas Frankland
G. Thomas Frankland
Vice Chairman & Chief Financial
Officer
April 29, 1996
<PAGE>
