<PAGE> 1
SCHEDULE 14C INFORMATION
INFORMATION STATEMENT PURSUANT TO SECTION 14(c) OF THE
SECURITIES EXCHANGE ACT OF 1934
Check the appropriate box:
[ ] Preliminary Information Statement
[ ] Confidential, for Use of the Commission Only (as permitted by Rule
14c-5(d)(2))
[X] Definitive Information Statement
FTD CORPORATION
(Name of Registrant As Specified In Charter)
Payment of Filing Fee (Check the appropriate box):
[X] No Fee required.
[ ] Fee computed on table below per Exchange Act Rules 14c-5(g) 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 or
number, or the Form or Schedule and the date of its filing.
1) Amount Previously Paid:
2) Form, Schedule or Registration Statement No.:
3) Filing Party:
4) Date Filed:
<PAGE> 2
FTD CORPORATION
3113 Woodcreek Drive
Downers Grove, Illinois 60515
-------------------------
NOTICE OF ANNUAL MEETING OF STOCKHOLDERS
TO BE HELD THURSDAY, NOVEMBER 5, 1998
The Annual Meeting of the Stockholders of FTD Corporation (the "Meeting")
will be held at the offices of FTD Corporation located at 3113 Woodcreek Drive,
Downers Grove, Illinois 60515 on Thursday, November 5, 1998 at 10:00 a.m. CST
for the following purposes:
1. To elect a board of five directors to serve until the next meeting
or until their successors are duly elected and qualified; and
2. To transact such other business as may properly come before the
Meeting or any adjournment thereof.
The Board of Directors has fixed the close of business on October 5, 1998
as the record date (the "Record Date") for the determination of stockholders
entitled to notice of, and to vote at, the Meeting.
Each stockholder is entitled to one vote for each share of Class A Common
Stock held by him or her at the close of business on the Record Date. All
stockholders are encouraged to attend the Meeting and vote his or her shares of
Class A Common Stock in person as the Company is not providing proxies herewith
or soliciting any proxies.
By Order of the Board of
Directors,
Scott D. Levin
SCOTT D. LEVIN
Secretary
October 12, 1998
WE ARE NOT ASKING YOU FOR A PROXY
AND YOU ARE REQUESTED NOT TO SEND US A PROXY
<PAGE> 3
FTD CORPORATION
3113 Woodcreek Drive
Downers Grove, Illinois 60515
-------------------------
INFORMATION STATEMENT
FOR
1998 ANNUAL MEETING OF STOCKHOLDERS
TO BE HELD THURSDAY, NOVEMBER 5, 1998
INTRODUCTION
This Information Statement is furnished by the Board of Directors of FTD
Corporation (the "Company"), in connection with the Annual Meeting of
Stockholders of the Company (the "Meeting") to be held on Thursday, November 5,
1998 to elect a board of five directors. The Board of Directors has no knowledge
of any other business to come before the Meeting.
The holders of record of the Company's Class A Common Stock, par value $.01
per share (the "Class A Common Stock"), as of the close of business on October
5, 1998 (the "Record Date"), are entitled to vote on all matters brought before
the Meeting. As of October 5, 1998, there were 12,439,075 shares of Class A
Common Stock outstanding.
Each stockholder is entitled to one vote for each share of Class A Common
Stock held by him or her at the close of business on the Record Date. All
stockholders are encouraged to attend the Meeting and vote his or her shares in
person as the Company is not providing proxies herewith or soliciting any
proxies.
This Information Statement is first being mailed to stockholders on or
about October 12, 1998. A copy of the Company's Annual Report for the year ended
June 30, 1998 is being mailed to all stockholders with this Information
Statement.
PROPOSAL -- ELECTION OF DIRECTORS
Five directors are to be elected at the Meeting to hold office until the
next meeting or until their successors have been duly elected and qualified. The
election of directors requires the affirmative vote of at least a plurality of
shares of Class A Common Stock present or represented at a meeting at which a
quorum (a majority of the outstanding shares of Class A Common Stock entitled to
vote) is present or represented. For purposes of the election of directors,
abstentions and other shares not voted will not be counted as votes cast and
will have no effect on the result of the vote.
DIRECTORS
The following table sets forth the name and age of each nominee for
director, the year first elected a director and the positions held by them with
the Company.
<TABLE>
<CAPTION>
YEAR FIRST
NAME AGE ELECTED POSITION
---- --- ---------- --------
<S> <C> <C> <C>
Richard C. Perry............................ 43 1994 Chairman of the Board of Directors
Veronica K. Ho.............................. 38 1994 Director
Gary K. Silberberg.......................... 38 1994 Director
Geoffrey Rehnert............................ 41 1994 Director
Habib Y. Gorgi.............................. 42 1997 Director
</TABLE>
<PAGE> 4
Set forth below is certain biographical information about each of the
Company's directors.
RICHARD C. PERRY
Chairman of the Board of Directors
Mr. Perry has been Chairman of the Board of Directors of the Company since
December 1994. Mr. Perry is also Chairman of the Board of Directors of Florists'
Transworld Delivery, Inc. (the "Operating Company"). Mr. Perry is the President
and founder of Perry Capital LLC, a private money management firm. Prior to
forming the predecessor of Perry Capital LLC in 1988, Mr. Perry was with
Goldman, Sachs & Co. Mr. Perry is an Adjunct Associate Professor at the New York
University Stern School of Business Administration. He is also a director of
Radio & Records, Inc., Uniplast Holding, Inc. and a trustee of the Allen
Stevenson School and the Board of Facing History and Ourselves. Mr. Perry
received a B.S. from the Wharton School of the University of Pennsylvania in
1977 and an M.B.A. from New York University Graduate School of Business
Administration in 1980.
VERONICA K. HO
Director
Ms. Ho has been a member of the Board of Directors of the Company since
December 1994. Ms. Ho is also a member of the Board of Directors of the
Operating Company and a principal of Perry Capital LLC. Before joining Perry
Capital LLC in April 1993, Ms. Ho was principal financial officer of Whitehall
Corporation, a producer of defense, electronics, and technology systems, from
April 1991 to March 1993. Ms. Ho is also a member of the Board of Directors of
Radio & Records, Inc., Uniplast Holdings, Inc. and the New York Advisory Board
of Facing History and Ourselves. She received a B.A. from Brown University in
Economics and Applied Mathematics in 1982 and an M.B.A. from the Harvard
Graduate School of Business Administration in 1986. Ms. Ho is married to Mr.
Silberberg.
GARY K. SILBERBERG
Director
Mr. Silberberg has been a member of the Board of Directors of the Company
since December 1994. Mr. Silberberg is also a member of the Board of Directors
of the Operating Company. Mr. Silberberg is a Managing Director of Perry Capital
LLC. Prior to joining Perry Capital LLC in April 1994, Mr. Silberberg was a
principal of Baker Nye Investments, where he managed an investment portfolio for
seven years. Before that time, Mr. Silberberg practiced corporate law with
Skadden, Arps, Slate, Meagher & Flom. Mr. Silberberg received an Sc.B. in
Economics and Applied Mathematics from Brown University in 1982 and a J.D. from
Yale Law School in 1985. Mr. Silberberg is married to Ms. Ho.
GEOFFREY REHNERT
Director
Mr. Rehnert has been a member of the Board of Directors of the Company
since December 1994. Mr. Rehnert has been a General Partner and Managing
Director of Bain Capital, Inc. ("Bain") since 1986. He is a director of ICON
Health & Fitness, Inc., Nutra Ceutical, Inc., a manufacturer and distributor of
vitamins, minerals and supplements, and Kollmorgen Corporation. Mr. Rehnert
received a B.A. from Duke University in 1979 and a J.D. from Stanford Law School
in 1984.
HABIB Y. GORGI
Director
Mr. Gorgi has been a member of the Board of Directors of the Company since
January 1997. Mr. Gorgi is also a member of the Board of Directors of the
Operating Company. Mr. Gorgi was the Executive Vice President of various
investment funds controlled by Fleet Financial Group, Inc. ("FGR") from January
1986 to December 1995, when he became President of FGR. Mr. Gorgi serves on the
Board of Directors of several
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<PAGE> 5
non-public companies. Mr. Gorgi earned an A.B. from Brown University in 1978,
and an M.B.A. from Columbia University in 1983.
MEETINGS AND COMMITTEES OF THE BOARD OF DIRECTORS
In the fiscal year ending June 30, 1998, the Board of Directors held no
meetings and took action by unanimous written consent of the directors nine
times. There were no committees of the Board of Directors. All decisions
pertaining to audit, compensation and option grants were under the direct
jurisdiction of the full Board of Directors.
DIRECTORS FEES
Each non-employee director who is not affiliated with any of the Principal
Stockholders receives $1,000 for each Board of Directors meeting attended. All
directors are reimbursed for the reasonable expenses incurred in connection with
each meeting attended.
COMPENSATION COMMITTEE INTERLOCKS AND INSIDER PARTICIPATION
The Company currently does not have a compensation committee. All matters
which would otherwise be determined by the compensation committee are considered
by the entire Board of Directors.
BOARD OF DIRECTORS REPORT ON EXECUTIVE COMPENSATION
Notwithstanding anything to the contrary set forth in any of the Company's
previous filings under the Securities Act of 1933, as amended, or the Securities
Exchange Act of 1934, as amended, that might incorporate future filings,
including this Information Statement, in whole or in part, the following report
and the Performance Graph which follows shall not be deemed to be incorporated
by reference into any such filings.
The Board of Directors of the Company traditionally performs the functions
of a compensation committee, including the review and approval of compensation
and terms of employment for all officers of the Company and its subsidiaries.
The members of the Board of Directors in fiscal 1998 were Richard C. Perry,
Veronica K. Ho, Geoffrey Rehnert, Gary K. Silberberg and Habib Y. Gorgi.
The Company's executive compensation is intended to attract high-caliber
executives at the Company and Operating Company levels and to reward, retain and
motivate management based on corporate and individual annual and long-term
business performance. The primary component of compensation has been base
salary, however approximately 50 key employees of the Company and the Operating
Company are covered by the Key Management Incentive Plan ("KMIP"), which
provides bonuses in the event that (i) the Company achieves one or more targets
based on the Company's EBITDA (earnings before interest, taxes, depreciation and
amortization), and (ii) the individual achieves specified goals. The Company
also awards stock options to its officers and other employees pursuant to the
FTD Corporation 1994 Stock Award and Incentive Plan as amended (the "Option
Plan"). Such awards are designed to provide incentives to the participating
officers and key employees that are linked directly to increases in stockholder
value and that will therefore inure to the benefit of all stockholders of the
Company. The Board of Directors believes that the Company's executive
compensation arrangements are reasonable in light of the needs of the Company,
competitive compensation levels and the goals of retention and motivation of
management. In determining salary and other compensation levels for the
executive officers, primary consideration is given to each executive's level of
responsibility and individual performance.
At the beginning of the Company's fiscal year, the Board of Directors
reviews the Company's near and long-term strategies and objectives with the
President. These form the basis for adopting or modifying corporate annual
EBITDA and net income plan goals recommended by the President. Based on this
review, the Board of Directors establishes the Company's total compensation
structure for the year, including the elements and level of compensation
opportunities and the variable portion of "at risk" pay for performance and
equity participation. The Board of Directors considers, among other matters,
marketplace pay levels and
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<PAGE> 6
practices, as well as the Company's need to continue to attract, retain and
motivate employees. Such compensation structure is discussed with the Board of
Directors, which is asked to ratify base salary amounts and bonuses for officer
level employees, including the Company's executive officers.
At year-end, the Board of Directors in consultation with the President
assess results achieved and strategic progress relative to previously approved
goals, taking into consideration prevailing economic and business conditions and
opportunities, performance by comparable organizations, and stockholder value.
No particular weightings are assigned by the Board of Directors to any such
factors. Based on this assessment, the Board reviews and considers the
President's year-end compensation proposals.
Mr. Norton, President of the Company and President and Chief Executive
Officer of the Operating Company, received a base salary of $293,269 for the
fiscal year ended June 30, 1998. Mr. Norton did not receive a bonus for fiscal
1998. The amount of Mr. Norton's base salary was computed based upon the letter
agreements entered into between Mr. Norton and the Company dated October 17,
1996 and June 6, 1997 ("Old Norton Employment Arrangements"). In fiscal 1998 the
Company issued Mr. Norton 40,000 additional shares of Class A Common Stock,
which are subject to restrictions on transfer and forfeiture in the event of
termination of employment prior to the expiration of a specified period of time.
These shares were issued pursuant to the terms of the Old Norton Employment
Arrangements. Determination of whether or not Mr. Norton received a bonus for
fiscal 1998 was based upon meeting performance criteria established by the Board
of Directors. The Board of Directors believes that Mr. Norton's compensation is
competitive with that of Chief Executive Officers of comparable companies and
deems such compensation to be fair and appropriate.
The Board of Directors
Richard C. Perry
Veronica K. Ho
Gary K. Silberberg
Geoffrey Rehnert
Habib Y. Gorgi
4
<PAGE> 7
PERFORMANCE GRAPH
The following graph provides a comparison of the cumulative total return of
the Company's Class A Common Stock with the Standard & Poor's MidCap 400 Stock
Index and the cumulative total return on the index for the standard industrial
classification code, Business Services. The cumulative total returns for each
index were prepared by Media General Financial Services. Each case assumes an
initial investment of $100 after the close of the market on August 25, 1996, as
well as the reinvestment of any dividends.
COMPARE CUMULATIVE TOTAL RETURN
AMONG FTD CORPORATION,
S&P MID-CAP INDEX AND SIC CODE INDEX
<TABLE>
<CAPTION>
MEASUREMENT PERIOD FTD SIC CODE S&P MID-
(FISCAL YEAR COVERED) CORPORATION(1) INDEX CAP
<S> <C> <C> <C>
1996 100.00 100.00 100.00
1997 206.67 98.81 125.06
1998 280.00 92.95 159.02
</TABLE>
ASSUMES $100 INVESTED ON AUGUST 25, 1996
ASSUMES DIVIDEND REINVESTED
FISCAL YEAR ENDING JUNE 30, 1998
- -------------------------
(1) Because no established public trading market exists for the Company's Class
A Common Stock, values were based on an assumed stock price of $3.75, $7.75
and $10.50 per share (as adjusted for the Stock Split), at August 25, 1996,
June 30, 1997 and June 30, 1998, respectively. The foregoing prices were
used by FTD for purposes of granting stock options to employees under the
Option Plan. There can be no assurance that such price per share represents
the actual fair market value of a Share of Class A Common Stock.
5
<PAGE> 8
COMPENSATION OF DIRECTORS AND EXECUTIVE OFFICERS
The following table sets forth, for the Company's last three fiscal years,
the compensation of those persons who were, at June 30, 1998, the chief
executive officer and the other four most highly compensated executive officers
of the Company (the "Named Officers").
On February 2, 1998 the Board of Directors of the Company declared a 100%
stock dividend (2 for 1 stock split) of the Company's Class A Common Stock and
Class B Common Stock for stockholders of record as of February 9, 1998 (the
"Stock Split"). All references to the capital stock of the Company have been
restated to reflect the Stock Split.
SUMMARY COMPENSATION TABLE
<TABLE>
<CAPTION>
LONG-TERM
COMPENSATION AWARDS
------------------------
RESTRICTED
ANNUAL COMPENSATION(1) STOCK SECURITIES
---------------------------- AWARDS(2) UNDERLYING ALL OTHER
NAME AND PRINCIPAL POSITION YEAR SALARY BONUS ($) OPTIONS(#) COMPENSATION
--------------------------- ---- ------ ----- ---------- ---------- ------------
<S> <C> <C> <C> <C> <C> <C>
Robert L. Norton......................... 1998 $293,269 $ -- $150,000(3) -- $20,311(4)
President -- FTD Corporation 1997 185,096 275,000 200,000 2,147 2,147(5)
President and Chief Executive Officer
-- Operating Company
Fred Johnson............................. 1998 172,384 15,130(6) 155,000(7) 100,000 21,687(8)
Executive Vice President of
Technology -- Operating Company
Francis Piccirillo....................... 1998 150,385 13,320(6) 155,000(9) 80,000 61,176(10)
Treasurer -- FTD Corporation
Vice President, Chief Financial Officer
and Treasurer -- Operating Company
Scott D. Levin........................... 1998 156,923 12,380 -- -- 51,832(11)
Secretary -- FTD Corporation 1997 137,885 75,000 -- 60,000 18,127(12)
Vice President, General 1996 17,788 25,000 -- -- 11,271(13)
Counsel and Secretary --
Operating Company
Michael Soenen........................... 1998 115,771 9,380 -- 10,000 8,570(14)
Vice President of Marketing -- 1997 77,884 50,000 -- -- --
Operating Company
</TABLE>
- -------------------------
(1) Includes cash bonuses paid in the fiscal year following the referenced
fiscal year with respect to services rendered in the prior fiscal year. See
"CERTAIN RELATIONSHIPS AMD RELATED TRANSACTIONS -- Key Management Incentive
Plan."
(2) Because no established public trading market exists for the underlying
securities, restricted stock award values on the date of grant thereof were
based on an assumed stock price of $3.75 per share for Robert L. Norton,
and $7.75 per share for Fred Johnson and Francis Piccirillo, which prices
were used by FTD at the date of grant for purposes of granting additional
options under the Company's Option Plan. Fiscal year-end restricted stock
award values were based on an assumed stock price of $10.50 per share,
which price is currently used by FTD for purposes of granting additional
options under the Company's Option Plan. There can be no assurance that
such price per share represents the actual fair market value of a share.
Holders of shares of restricted stock will be entitled to receive dividends
if and when declared by the Board of Directors.
(3) As of June 30, 1998, Mr. Norton holds 40,000 shares of restricted stock
with an aggregate value of $420,000.
(4) Represents $17,587 in compensation for moving expenses and $2,724 in
flexible dollars for use in connection with the Company's benefit plans.
(5) Represents flexible dollars for use in connection with the Company's
benefit plans.
(6) Includes cash bonuses of $1,630 for Fred Johnson and Francis Piccirillo
paid in the referenced fiscal year pursuant to the KMIP.
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<PAGE> 9
(7) As of June 30, 1998, Mr. Johnson holds 20,000 shares of restricted stock
with an aggregate value of $210,000.
(8) Reflects $19,831 in compensation for moving expenses and $1,856 in flexible
dollars for use in connection with the Company's benefit plans.
(9) As of June 30, 1998, Mr. Piccirillo holds 20,000 shares of restricted stock
with an aggregate value of $210,000.
(10) Reflects $59,397 in compensation for moving expenses and $1,779 in flexible
dollars for use in connection with the Company's benefit plans.
(11) Reflects $49,536 in compensation for moving expenses and $2,296 in flexible
dollars for use in connection with the Company's benefit plans.
(12) Reflects $15,703 in compensation for moving expenses and $2,424 in flexible
dollars for use in connection with the Company's benefit plans.
(13) Reflects $10,996 in compensation for moving expenses and $275 in flexible
dollars for use in connection with the Company's benefit plans.
(14) Reflects $7,402 in compensation for moving expenses and $1,168 in flexible
dollars for use in connection with the Company's benefit plans.
The following table sets forth individual grants of stock options made to
the Named Officers during the fiscal year ended June 30, 1998. Options are
exercisable for Class A Common Stock, par value $.01 per share, of the Company.
OPTION GRANTS IN LAST FISCAL YEAR
<TABLE>
<CAPTION>
INDIVIDUAL GRANTS POTENTIAL REALIZABLE
------------------------------ VALUE AT ASSUMED
PERCENT OF ANNUAL RATES OF
NUMBER OF TOTAL STOCK PRICE
SECURITIES OPTIONS APPRECIATION FOR
UNDERLYING GRANTED TO EXERCISE OR OPTION TERM
OPTIONS EMPLOYEES IN BASE PRICE EXPIRATION ----------------------
NAME GRANTED (#)(1) FISCAL YEAR ($/SH) DATE 5% 10%
---- -------------- ------------ ----------- ---------- -- ---
<S> <C> <C> <C> <C> <C> <C>
Fred Johnson.......... 50,000(2) 24.2% $ 7.75 10/28/2007 814,447 1,237,923
50,000(2) 24.2 15.00 10/28/2007 -- --
Francis Piccirillo.... 40,000(2) 19.3 7.75 10/28/2007 651,558 990,338
40,000(2) 19.3 15.00 10/28/2007 -- --
Michael Soenen........ 10,000(2) 4.8 7.75 10/28/2007 162,889 247,585
</TABLE>
- -------------------------
(1) Options granted under the Company's Option Plan.
(2) Such options vest and become exercisable in four equal, cumulative
installments, with the first vesting date being July 1, 1998 for Fred
Johnson and Francis Piccirillo and January 1, 1998 for Michael Soenen.
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<PAGE> 10
The following table sets forth the June 30, 1998 aggregate value of
unexercised options held by each of the Named Officers.
FISCAL YEAR-END OPTION VALUES(1)
<TABLE>
<CAPTION>
NUMBER OF SECURITIES UNDERLYING
UNEXERCISED OPTIONS AT FISCAL YEAR-END VALUE OF UNEXERCISED
------------------------------------------------------- IN-THE-MONEY OPTIONS AT
SHARES FISCAL YEAR-END
ACQUIRED ON VALUE ----------------------------
NAME EXERCISE REALIZED EXERCISABLE UNEXERCISABLE EXERCISABLE UNEXERCISABLE
---- ----------- -------- ----------- ------------- ----------- -------------
<S> <C> <C> <C> <C> <C> <C>
Robert L. Norton............ -- -- -- 220,000 $ -- $810,000
Fred Johnson................ -- -- -- 100,000 -- 137,500
Francis Piccirillo.......... -- -- -- 80,000 -- 110,000
Scott D. Levin.............. -- -- 12,500 47,500 33,750 168,750
Michael Soenen.............. -- -- -- 10,000 -- 13,750
</TABLE>
- -------------------------
(1) Because no established public trading market exists for the underlying
securities, fiscal year-end option values were based on an assumed stock
price of $10.50 per share, which price is currently used by the Company for
purposes of granting additional options under the Company's Option Plan.
There can be no assurance that such price per share represents the actual
fair market value of a share.
No options were exercised during the fiscal year ended June 30, 1998 by a
Named Officer.
1994 Stock Award and Incentive Plan. The Option Plan was adopted by the
Board of Directors of the Company and approved by the Company's stockholders on
December 9, 1994 and amended on June 12, 1995. The maximum number of shares of
Class A Common Stock and Class B Common Stock, par value $.0005 per share (the
"Class B Common Stock" and, together with the Class A Common Stock, the "Common
Stock"), authorized for issuance under the Option Plan is equal to 15% of the
initial equity capital of the Company. The Option Plan is not subject to any
provisions of the Employee Retirement Income Security Act of 1974, as amended,
nor is the Option Plan a qualified plan within meaning of Section 401(a) of the
Internal Revenue Code ("Code").
The Option Plan is designed to enable the Company to attract and retain
highly qualified personnel who will contribute to the Company's success by their
ability, ingenuity and to provide incentives to the participating officers and
other key employees that are linked directly to increases in stockholder value
and will therefore inure to the benefit of all stockholders of the Company.
Options may be granted to officers, other key employees of the Company
(collectively, the officers and key employees are referred to as "Eligible
Employees"), directors of the Company (other than members of the Compensation
Committee of the Board of Directors), and consultants and advisors to the
Company who are responsible for or contribute to the management, growth and/or
profitability of the business of the Company (each a "Participant"). As of June
30, 1998, stock options to purchase an aggregate of 519,000 shares of Class A
Common Stock were outstanding (506,500 of which have not yet vested).
The Option Plan is administered by the Board of Directors or, if appointed
by the Board, the Compensation Committee (as applicable, the "Administrator").
The Company currently does not have a Compensation Committee. The Option Plan
permits the Administrator to determine which Participants shall receive awards,
the times when awards are to be granted and the number of shares, terms and
conditions on which the awards will be granted (not inconsistent with the terms
of the Option Plan). The Administrator is entitled to determine whether and to
what extent stock options, Stock Appreciation Rights ("SARs"), Limited Stock
Appreciation Rights ("LSARs"), Restricted Stock, Deferred Stock, Performance
Shares or a combination of the foregoing, are to be granted thereunder.
The Option Plan provides for grants of Incentive Stock Options ("ISOs"),
meeting the requirements of Section 422 of the Code and Non-qualified Stock
Options ("NSOs"), which do not qualify as ISOs. Eligible Employees may be
granted ISOs, NSOs, or both, while all other Participants may only be granted
NSOs, although all awards may be with or without SARs or LSARs. The option price
per share under each ISO or
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<PAGE> 11
NSO is to be determined by the Administrator in its sole discretion at the time
of grant but shall not, in the case of ISOs, be less than 100% of the Fair
Market Value (as defined therein) of the stock on such date. If an employee owns
or is deemed to own (by reason of the attribution rules applicable under Section
425(d) of the Code) more than 10% of the combined voting power of all classes of
stock of the Company and an ISO is granted to such employee, the option price of
such ISO (to the extent required by the Code at the time of grant) shall be no
less than 110% of the Fair Market Value of the Stock on the date such ISO is
granted. The Company is authorized to make loans available to Participants in
connection with the exercise of outstanding options granted under the Option
Plan as the Administrator, in its sole discretion, may determine appropriate.
Unless otherwise determined by the Administrator, the options shall not be
transferable and shall only be exercisable during the optionee's lifetime by the
optionee. In the event that an employee is terminated for any reason, the stock
option may thereafter be exercised to the extent provided in the applicable
subscription or award agreement.
SARs and LSARs may be granted either alone ("Free Standing") or in
conjunction with all or part of any option granted under the Option Plan
("Related Rights"). LSARs may only be exercised within the 30-day period
following a Change of Control (as defined by the Administrator in the agreement
evidencing such LSAR), and, with respect to LSARs that are Related Rights, only
to the extent that the stock options to which they relate shall be exercisable
in accordance with the provisions of the Option Plan.
SARs that are Related Rights are exercisable only at such time or times and
to the extent that the stock options to which they relate shall be exercisable.
Upon the exercise of a SAR that is a Related Right, an optionee shall be
entitled to receive up to, but not more than, an amount in cash or that number
of shares of Common Stock (or in some combination of cash and shares of Common
Stock) equal in value to the excess of the Fair Market Value of one share of
Common Stock as of the date of exercise over the option price per share
specified in the related stock option multiplied by the number of shares of
Common Stock in respect of which such Related Right SAR is being exercised. The
Administrator has the right to determine the form of payment.
SARs that are Free Standing are exercisable at such time or times and
subject to such terms and conditions as are determined by the Administrator at
or after the grant thereof. Upon the exercise of a SAR that is Free Standing, a
recipient shall be entitled to receive up to, but not more than, an amount in
cash or that number of shares of Common Stock (or any combination of cash or
shares of Common Stock) equal in value to the excess of the Fair Market Value of
one share of Common Stock as of the date of exercise over the price per share
specified in the grant thereof (which price shall be no less than 100% of the
Fair Market Value of the Common Stock on the date of grant) multiplied by the
number of shares of Common Stock in respect to which the right is being
exercised. The Administrator has the right to determine the form of payment.
Restricted Stock, Deferred Stock or Performance Share awards may be issued
either alone or in addition to other awards granted under the Option Plan. Such
awards are generally subject to restrictions on transfer and termination
determined in the discretion of the Administrator. Such restrictions may be
accelerated or waived in whole or in part based on such factors and such
circumstances as the Administrator may determine, in its sole discretion,
including, but not limited to, the attainment of certain performance related
goals, the Participant's termination of employment or service, death or
disability or the occurrence of a Change of Control (as defined in the agreement
evidencing such award).
Upon the award of any restricted stock or performance shares, the
participant will have the rights of a stockholder with respect to the shares,
including dividend rights, subject to the conditions and restrictions generally
applicable to restricted stock specifically set forth in the award agreement for
the participant's restricted stock or performance shares. Upon an award of
deferred stock, the participant will not have any rights of a stockholder, other
than the right to receive dividends, during the specified deferral period.
The Administrator may amend, alter or discontinue the Option Plan, provided
that any amendment which would (i) increase the total number of shares of stock
reserved for the purpose of the Option Plan, (ii) change the class of employees,
directors, consultants and advisors eligible to participate in the Option Plan
or (iii) extend the maximum option period must be approved by the stockholders
to the extent such
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<PAGE> 12
amendment would affect the qualified status of the Option Plan under Rule 16b-3
of the Securities Exchange Act of 1934 ("Act").
Pension Plan. Prior to January 1, 1997, the Company provided a qualified
defined benefit pension plan (the "Pension Plan") which covered all employees
who received a regular salary and who did not work a varied schedule for
purposes of meeting the peak demand requirements of the Company's business
(provisional employees). Effective January 1, 1997, amendments to the Pension
Plan were adopted, including the elimination of the accrual of future benefits
under the Pension Plan.
The following table shows the estimated annual pension benefits payable to
a covered participant upon normal retirement at age 65 under the Pension Plan,
based on the remuneration that is covered under the Pension Plan and years of
service with the Company and its subsidiaries:
<TABLE>
<CAPTION>
YEARS OF SERVICE
--------------------------------------------------------------
5 10 15 20 25 30
REMUNERATION - -- -- -- -- --
------------ --------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C>
$ 50,000............................. $ 4,150 $ 8,300 $12,450 $16,600 $20,750 $24,900
60,000............................. 5,025 10,050 15,075 20,100 25,125 30,150
70,000............................. 5,900 11,800 17,700 23,600 29,500 35,400
80,000............................. 6,775 13,550 20,325 27,100 33,875 40,650
90,000............................. 7,650 15,300 22,950 30,600 38,250 45,900
100,000............................. 8,625 17,050 25,575 34,100 42,625 51,150
110,000............................. 9,400 18,800 28,200 37,600 47,000 56,400
120,000............................. 10,275 20,550 30,825 41,100 51,375 61,650
130,000............................. 11,150 22,300 33,450 44,600 55,750 66,900
140,000............................. 12,025 24,050 36,075 48,100 60,125 72,150
150,000 to 270,000.................. 12,900 25,600 38,700 51,600 64,500 77,400
</TABLE>
Pension Plan benefits, as shown above, are calculated based upon total
years of services to a maximum of 30 years and the average of the five highest
consecutive calendar years' salary, bonus and certain elements of other
compensation and assume that participants have contributed all years to the Tax
Deferred Account-Mandatory under the Company's 401(k) Retirement Savings Plan
(as amended, the "401(k) Plan"). The annual pension benefits shown are computed
as a straight life annuity with ten years certain period beginning at age 65,
and assume that participants will transfer the balance of the Tax Deferred
Account-Mandatory from the 401(k) Plan to the Pension Plan. The amounts paid
under the Pension Plan are not offset by any social security payments. There are
no Named Officers eligible to receive benefits under the Pension Plan.
401(k) Plan. The Company has amended, effective January 1, 1997, its 401(k)
Plan for all of its eligible employees to replace certain benefits eliminated
under the Pension Plan. Generally, any employee who has completed 12 months of
service and is over 21 years of age is eligible to participate in the 401(k)
Plan. Each eligible employee may elect to contribute to the 401(k) Plan, through
payroll deductions, up to 15% of his or her compensation for services rendered
in any year, not to exceed a statutorily prescribed annual limit. Participants
in the 401(k) Plan are always fully vested in their own contributions. The
401(k) Plan provides that the Company may make matching contributions to the
401(k) Plan based on the Company's net income and at the discretion of the Board
of Directors. Each participant becomes fully vested in the Company's
contributions allocated to his or her account upon completion of five years of
service. The Company's contributions are tax-deductible to the Company. Company
contributions to the 401(k) Plan for fiscal 1998 were $211,312 and contributions
of $15,649 were made by the Company to the accounts of the Named Officers.
SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT
The following table sets forth certain information concerning the ownership
of the Company's Common Stock as of August 31, 1998, as adjusted to reflect the
Stock Split, by: (i) each person who is known to the Company to own beneficially
more than 5% of the outstanding shares of Class A Common Stock or Class B Common
Stock; (ii) each director and each of the Named Officers owning equity
securities of the Company;
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<PAGE> 13
and (iii) all executive officers and directors of the Company as a group. To the
knowledge of the Company, each of such stockholders has sole voting and
dispositive power as to the shares beneficially owned unless otherwise noted.
<TABLE>
<CAPTION>
CLASS A CLASS B
COMMON STOCK COMMON STOCK
(VOTING) (NONVOTING)
---------------------- ---------------------
NUMBER PERCENT NUMBER PERCENT
OF SHARES OF CLASS OF SHARES OF CLASS
--------- -------- --------- --------
<S> <C> <C> <C> <C>
Perry Partners(1)...................................... 7,458,862 59.78% -- --
599 Lexington Avenue
New York, NY 10022
Bain Funds(2).......................................... 2,679,616 21.47 -- --
Two Copley Place
Boston, MA 02116
Richard C. Perry(3).................................... 7,458,862 59.78 -- --
Habib Y. Gorgi(4)...................................... 430,904 3.45 698,750 23.70%
Geoffrey Rehnert(5).................................... 2,679,616 21.47 -- --
Robert L. Norton(6).................................... 260,000 * -- --
Fred Johnson(7)........................................ 51,450 * -- --
Francis Piccirillo(8).................................. 46,450 * -- --
Scott D. Levin(9)...................................... 44,166 * -- --
Michael Soenen(10)..................................... 19,166 * -- --
All executive officers and directors of FTD as a group
(8 people)(11)....................................... 10,990,614 86.70% 698,750 23.70%
</TABLE>
- -------------------------
* Represents less than 1%
(1) Perry Acquisition Partners, L.P. ("Perry Partners").
(2) A group of five investment funds (the "Bain Funds") controlled by Bain.
(3) The address of Mr. Perry is c/o the Company, 3113 Woodcreek Drive, Downers
Grove, Illinois 60515. All of the shares shown are held by Perry Partners.
Mr. Perry has a controlling interest in Perry Investors, LLC, the general
partner of Perry Partners. Accordingly, Mr. Perry may be deemed to have
voting and dispositive power with respect to the shares held by Perry
Partners. Mr. Perry disclaims beneficial ownership of such shares.
(4) The address of Mr. Gorgi is c/o Fleet Equity Partners, 50 Kennedy Place,
Providence, Rhode Island 02903. Includes shares owned by FGR, Fleet Equity
Partners VII, L.P. ("FEP"), and Chisholm Partners II, L.P. ("CPII") (the
"Fleet Funds"). Two of the Fleet Funds are controlled by FFG, and one of
the Fleet Funds is controlled by an affiliate of a FFG subsidiary. Mr.
Gorgi is the President of FGR, Silverado V Corp. ("SVC") and Silverado II
Corp. ("SIIC"). FGR and SVC are general partners of FEP, and SIIC is the
general partner of Silverado II L.P. ("SIILP"), which is the general
partner of CPII. Mr. Gorgi is also a limited partner of FEP and SIILP. As
President of FGR, SVC and SIIC, Mr. Gorgi may be deemed to share voting and
dispositive power with Robert M. Van Degna, Chairman & CEO of those
entities. Mr. Gorgi disclaims beneficial ownership of all shares which are
directly owned by FGR and those shares which are directly owned by FEP and
CPII, except for his pecuniary interest therein.
(5) The address of Mr. Rehnert is c/o Bain Capital, Inc., Two Copley Place,
Boston, Massachusetts 02116. All of the shares shown are owned by the Bain
Funds. Mr. Rehnert is a Managing Director of Bain, which is a general
partner of the Bain Funds. Accordingly, Mr. Rehnert may be deemed to share
voting and dispositive power as to the shares held by the Bain Funds. Mr.
Rehnert disclaims beneficial ownership of such shares. In addition, the
other Managing Directors of Bain, Joshua Bekenstein,
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<PAGE> 14
Edward Conrad, David Dominik, Paul Edgerley, Robert Gay, Adam Kirsch, Mark
Nunnelly, Mitt Romney, Stephan Pagliuca, Mark B. Wolpow and Robert White,
may also be deemed to share voting and dispositive power as to, and also
disclaim beneficial ownership of, such shares.
(6) The address of Mr. Norton is c/o the Company, 3113 Woodcreek Drive, Downers
Grove, Illinois 60515. Includes 110,000 shares issuable upon exercise of
outstanding options which are currently exercisable, 40,000 restricted
shares which will vest in three equal annual installments commencing
September 30, 1999 and 50,000 restricted shares which will vest in three
equal annual installments commencing September 30, 2001. The shares owned
by Mr. Norton are subject to certain restrictions on transfer.
(7) The address of Mr. Johnson is c/o the Company, 3113 Woodcreek Drive,
Downers Grove, Illinois 60515. Includes 25,000 shares issuable upon
exercise of outstanding options which are currently exercisable and 20,000
restricted shares which will vest in three equal annual installments
commencing September 30, 2000. The shares owned by Mr. Johnson are subject
to certain restrictions on transfer.
(8) The address of Mr. Piccirillo is c/o the Company, 3113 Woodcreek Drive,
Downers Grove, Illinois 60515. Includes 20,000 shares issuable upon
exercise of outstanding options which are currently exercisable and 20,000
restricted shares which will vest in three equal annual installments
commencing September 30, 2000. The shares owned by Mr. Piccirillo are
subject to certain restrictions on transfer.
(9) The address of Mr. Levin is c/o the Company, 3113 Woodcreek Drive, Downers
Grove, Illinois 60515. Includes 27,500 shares issuable upon exercise of
outstanding options which are currently exercisable and 10,000 restricted
shares which will vest in three equal annual installments commencing
September 30, 2001. The shares owned by Mr. Levin are subject to certain
restrictions on transfer.
(10) The address of Mr. Soenen is c/o the Company, 3113 Woodcreek Drive, Downers
Grove, Illinois 60515. Includes 2,500 shares issuable upon exercise of
outstanding options which are currently exercisable and 10,000 restricted
shares which will vest in three equal annual installments commencing
September 30, 2001. The shares owned by Mr. Soenen are subject to certain
restrictions on transfer.
(11) Includes 150,000 restricted shares which will vest in three equal annual
installments commencing September 30, 1999 with respect to 40,000 shares,
September 30, 2000 with respect to 40,000 shares and September 30, 2001
with respect to 70,000 shares, and includes 185,000 shares issuable upon
exercise of outstanding options which are currently exercisable.
Except as described above, no directors or executive officers of the
Company beneficially own any shares of Common Stock.
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<PAGE> 15
CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS
Management Consulting Services Agreement. Parties related to each of Perry
Partners, the Bain Funds and the Fleet Funds (the "Principal Stockholders") have
entered into an agreement for management consulting services (the "Management
Consulting Services Agreement") with the Company pursuant to which they will
make available to the Operating Company's management, financial and other
corporate advisory services. Subject to certain limitations contained in the
Company's $100 million Credit Agreement dated as of November 20, 1997 with First
Chicago Capital Markets, Inc. (the "Bank Credit Facilities") and the indenture
with respect to the Operating Company's $60.0 million aggregate principal amount
of 14% Senior Subordinate Notes due 2001 (the "Notes"), for each fiscal year of
the Operating Company, the Operating Company will pay dividends to the Company
sufficient to allow the Company to pay such affiliates the annual fee of
$400,000 plus up to an additional $1.6 million per year conditioned upon the
achievement of certain levels of EBITDA (earnings before interest, taxes,
depreciation and amortization), and reimbursement of reasonable out-of-pocket
expenses. Subject to certain conditions, such fee will be shared by the parties
thereto in proportion to their relative ownership interests in the Company.
Pursuant to the Management Consulting Services Agreement, the Principal
Stockholders will receive $2.0 million for the year ended June 30, 1998.
Certain directors of the Company will receive indirectly a portion of the
management fee as a result of their ownership interest in or other relationship
with the entities providing services to the Operating Company. Mr. Rehnert, a
director of the Company designated by the Bain Funds, is a Managing Director of
Bain Capital, Inc. Mr. Gorgi, a director of the Company designated by the Bain
Funds, is the President of certain entities which own shares, directly or
indirectly through general partnership interests. Mr. Perry, Ms. Ho and Mr.
Silberberg, directors of the Company designated by Perry Partners, have an
interest in Perry Investors, LLC. Assuming the relative ownership interest among
the Principal Stockholders remains unchanged, Bain Capital, Inc., Fleet Growth
Resources, Inc. and Perry Investors, LLC will be entitled to 23.33%, 11.67% and
65%, respectively, of the fees to be paid by the Company under the Management
Consulting Services Agreement. The portion of such fee each of such directors
will receive, if any, is discretionary.
Stockholders' Agreement. Pursuant to the Stockholders' Agreement, dated
December 19, 1994, among the Company and the Principal Stockholders (the
"Stockholders' Agreement"), each of the Principal Stockholders has agreed, among
other things, (i) to vote its shares of common stock in order to elect and
maintain a board of directors of the Company and each of its subsidiaries
(including the Operating Company), which consists of a designated number of
nominees of Perry Partners and the Bain Funds and, in the case of the Operating
Company, FTD Association, an Ohio non-profit corporation, nominees as well, (ii)
that certain actions taken by the Company, including (A) amending the
certificate of incorporation or by-laws of the Company, (B) entering into
acquisitions of assets or stock exceeding $4.0 million or (C) effectuating any
merger, consolidation or sale of the Operating Company, require the approval of
two of the directors nominated by Perry Partners and two of the directors
nominated by the Bain Funds and (iii) to certain restrictions on transferring
its shares of Class A Common Stock, including grants to the other Principal
Stockholders of certain rights with respect to the sale of its Class A Common
Stock.
Norton Employment Arrangements. The Company and the Operating Company have
entered into a letter agreement, dated August 18, 1998 (the "Norton Employment
Agreement"), with Mr. Norton to serve as President of the Company and President
and Chief Executive Officer of the Operating Company. The term of the Norton
Employment Agreement expires on September 30, 2003. Mr. Norton's base salary
under the Norton Employment Agreement is currently $350,000 per year, subject to
merit increases in base salary as the Board of Directors may determine, in its
discretion, plus an annual performance bonus as set by the Board of Directors
based upon performance criteria set by the Board. Mr. Norton's annual bonus is
paid at the end of the first quarter of the fiscal year based upon performance
criteria met as of the end of the immediately preceding fiscal year. The Norton
Employment Agreement also provides for participation by Mr. Norton in all
benefit programs, including life, health and disability, available to senior
executives of the Operating Company.
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<PAGE> 16
Pursuant to the Norton Employment Agreement, the Company issued Mr. Norton
50,000 shares of Class A Common Stock, which are subject to restrictions on
transfer and forfeiture in the event of termination of employment prior to the
expiration of a specified period of time.
The Norton Employment Agreement provides that Mr. Norton shall be paid an
amount equal to twenty-four months salary if his employment is terminated (other
than for cause) by the Company, provided that no severance payments will be made
beyond September 30, 2003 and such severance obligations are subject to Mr.
Norton's best efforts to mitigate. In addition, pursuant to the Norton
Employment Agreement Mr. Norton has entered into a separate agreement with the
Operating Company which provides for (i) nondisclosure of confidential
information, (ii) noncompetition and (iii) nonsolicitation of customers,
suppliers and employees. Such agreement is effective until three years after Mr.
Norton's employment with the Company is terminated.
The Operating Company has agreed to make a loan in the principal amount of
$200,000 to Mr. Norton pursuant to a five-year, interest bearing recourse note
(the "Norton Note"), with accrued interest and principal due and payable at
Maturity. The Norton Note bears interest at 7% per annum. At September 30, 1998,
the funds have not been borrowed under the Norton Note. All indebtedness
evidenced by the Norton Note will be secured by shares of Common Stock owned by
Mr. Norton. The proceeds of the loan will be used by Mr. Norton to purchase a
primary residence and to assist Mr. Norton with other relocation expenses.
Levin Note. The Operating Company loaned $150,000 to Mr. Levin pursuant to
a five-year, interest bearing recourse note dated June 30, 1997 (the "Levin
Note"), with accrued interest and principal due and payable at maturity. The
Levin Note bears interest at 7% per annum. The proceeds of the loan were used by
Mr. Levin to purchase a primary residence and to assist Mr. Levin with other
relocation expenses. At September 30, 1998, $163,125 in principal and interest
was outstanding under the Levin Note.
Severance Arrangements. Pursuant to the Company's severance policy, the
executive officers of the Company (other than Mr. Norton) will be paid an amount
equal to twelve months salary if such executive officer's employment is
terminated (other than for cause) by the Operating Company (subject to the
executive officer's obligation to mitigate).
Key Management Incentive Plan. Mr. Johnson, Mr. Piccirillo, Mr. Levin and
Mr. Soenen are participants in the Company's Key Management Incentive Plan which
covers approximately 50 key employees of the Company and provide bonuses in the
event that (i) the Company achieves one or more targets based on the Company's
EBITDA (earnings before interest, taxes, depreciation and amortization), and
(ii) the individual achieves specified goals.
SECTION 16(A) BENEFICIAL OWNERSHIP REPORTING COMPLIANCE:
Section 16(a) of the Securities Exchange Act of 1934 requires the Company's
executive officers and directors, and persons who own more than 10% of the
Company's Common Stock, to file reports of ownership and changes in ownership on
Forms 3, 4 and 5 with the United States Securities and Exchange Commission
("SEC"). Executive officers, directors and greater than 10% stockholders are
required to furnish the Company with copies of all Forms 3, 4 and 5 they file.
Based solely on the Company's review of the copies of such Forms it has received
and written representations from certain reporting persons that they were not
required to file Form 5 for specified fiscal years, the Company believes that
all of its executive officers, directors and greater than 10% stockholders
complied with all Section 16(a) filing requirements applicable to them during
the Company's fiscal year ended June 30, 1998.
APPOINTMENT OF AUDITORS
The Board of Directors has selected KPMG Peat Marwick LLP to audit the
books and financial records of the Company for the year ending June 30, 1999.
Representatives of KPMG Peat Marwick LLP are expected to be present at the
Meeting, will be available to respond to appropriate questions, and will be
afforded the opportunity to make a statement if they desire to do so.
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<PAGE> 17
ANNUAL REPORT/FORM 10-K
The Company's 1998 Annual Report to its stockholders is a reproduction of
its Form 10-K filed with the SEC, excluding the Index to Exhibits and any filed
exhibits, and is being mailed to all stockholders concurrently with this
Information Statement. Copies of the Company's Form 10-K (without exhibits) as
filed with the SEC may be obtained by writing to Attention: Secretary, FTD
Corporation, 3113 Woodcreek Drive, Dowers Grove, Illinois 60515.
STOCKHOLDERS PROPOSALS
To be considered for presentation at the annual meeting of the Company's
stockholders to be held in 1999, a stockholder proposal must be received by
Scott D. Levin, Secretary, FTD Corporation, 3113 Woodcreek Drive, Downers Grove,
Illinois 60515, no later than September 9, 1999.
OTHER MATTERS
The Board of Directors knows of no other business which will be presented
at the Meeting.
INCORPORATION BY REFERENCE
The Financial Statements contained in the Annual Report accompanying this
Information Statement are incorporated herein by reference.
By Order of the Board of
Directors,
Robert L. Norton
ROBERT L. NORTON
President
Downers Grove, Illinois
October 12, 1998
15
