SCHEDULE 14A
(RULE 14A-101)
INFORMATION REQUIRED IN PROXY STATEMENT
SCHEDULE 14A INFORMATION
PROXY STATEMENT PURSUANT TO SECTION 14(A) OF THE SECURITIES
EXCHANGE ACT OF 1934
[X] Filed by the Registrant [ ] Filed by a Party other than the Registrant [ ]
Check the appropriate box:
[ ] Preliminary Proxy Statement [ ]Confidential, For Use of the Com-
mission Only (as permitted by
Rule 14a-6(e)(2))
[X] Definitive Proxy Statement
[ ] Definitive Additional Materials
[ ] Soliciting Material Pursuant to Rule 14a-11(c) or Rule 14a-12
PROGRAMMER'S PARADISE, 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. (1)
Title of each class of securities to which transaction applies:
- --------------------------------------------------------------------------------
(2) Aggregate number of securities to which transaction applies:
- --------------------------------------------------------------------------------
(3) Per unit price or other underlying value of transaction computed pursuant to
Exchange Act Rule 0-11 (set forth the amount on which the filing fee is
calculated and state how it was determined):
- --------------------------------------------------------------------------------
(4) Proposed maximum aggregate value of transaction:
- --------------------------------------------------------------------------------
(5) Total fee paid:
- --------------------------------------------------------------------------------
[ ] Fee paid previously with preliminary materials:
- --------------------------------------------------------------------------------
[ ] Check box if any part of the fee is offset as provided by Exchange Act Rule
0-11(a)(2) and identify the filing for which the offsetting fee was paid
previously. Identify the previous filing by registration statement number, or
the form or schedule and the date of its filing.
(1) Amount previously paid:
- --------------------------------------------------------------------------------
(2) Form, Schedule or Registration Statement no.:
- --------------------------------------------------------------------------------
(3) Filing Party:
- --------------------------------------------------------------------------------
(4) Date Filed:
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<PAGE>
PROGRAMMER'S PARADISE, INC.
1157 Shrewsbury Avenue
Shrewsbury, New Jersey 07702
NOTICE OF ANNUAL MEETING OF STOCKHOLDERS
TO BE HELD JUNE 13, 2000
To our Stockholders:
Notice is hereby given that the Annual Meeting of Stockholders of
Programmer's Paradise, Inc. (the "Company") will be held at the Molly Pitcher
Hotel, Red Bank, New Jersey, on June 13, 2000 at 9:00 a.m., local time, for the
following purposes:
1. To elect a Board of four Directors to serve until the next annual
meeting of stockholders or until their successors are elected and
qualified;
2. To ratify the appointment by the Board of Directors of Ernst & Young
LLP as the independent auditors of the Company to examine and report
on its financial statements for the fiscal year beginning January 1,
2000; and
3. To consider and take action upon such other matters as may properly
come before the Meeting and any adjournment or adjournments thereof.
The close of business on April 28, 2000 has been fixed as the record date
for the determination of stockholders entitled to notice of and to vote at the
Meeting. The transfer books of the Company will not be closed.
All stockholders are cordially invited to attend the Meeting. Whether or
not you expect to attend, you are respectfully requested to sign, date and
return the enclosed proxy promptly in the accompanying envelope, which requires
no postage if mailed in the United States.
By Order of the Board of Directors,
William H. Willett,
Chairman and Chief Executive Officer
May 3, 2000
I-1
<PAGE>
PROGRAMMER'S PARADISE, INC.
1157 SHREWSBURY AVENUE
SHREWSBURY, NEW JERSEY 07702
PROXY STATEMENT
This Proxy Statement is furnished in connection with the solicitation by
the Board of Directors of Programmer's Paradise, Inc. (the "Company") of proxies
to be voted at the Annual Meeting of Stockholders to be held at the Molly
Pitcher Hotel, Red Bank, New Jersey, on June 13, 2000 at 9:00 a.m., local time,
and at any adjournment or adjournments thereof, for the purposes set forth in
the accompanying Notice of Annual Meeting of Stockholders. Any stockholder
giving such a proxy may revoke it at any time before it is exercised by written
notice to the Secretary of the Company at the above-stated address or by giving
a later dated proxy. Attendance at the Meeting will not have the effect of
revoking the proxy unless such written notice is given, or unless the
stockholder votes by ballot at the Meeting.
The approximate date on which this Proxy Statement and the accompanying
form of proxy will first be sent or given to the Company's stockholders is May
3, 2000.
VOTING SECURITIES
Only holders of shares of Common Stock, $.01 par value per share ("Common
Stock"), of record at the close of business on April 28, 2000 are entitled to
vote at the Meeting. On the record date, the Company had issued and outstanding
5,207,500 shares of Common Stock. Each outstanding share of Common Stock is
entitled to one vote upon all matters to be acted upon at the Meeting. A
majority in interest of the outstanding Common Stock represented at the Meeting
in person or by proxy shall constitute a quorum. The affirmative vote of a
plurality of the shares present in person or represented by proxy at the Meeting
and entitled to vote is necessary to elect the nominees for election as
directors. The affirmative vote of a majority of shares present in person or
represented by proxy at the Meeting and entitled to vote is necessary to ratify
the selection of Ernst & Young LLP as the Company's independent auditors.
Abstentions and broker non-votes are counted for purposes of determining the
presence or absence of a quorum for the transaction of business. If a
stockholder, present in person or by proxy, abstains on any matter, the
stockholder's Common Stock will not be voted on such matter. Thus, an abstention
for voting on any matter has the same legal effect as a vote "against" the
matter even though the stockholder may interpret such action differently. Broker
non-votes are not counted for any purpose in determining whether a matter has
been approved.
If the enclosed proxy is properly executed and returned, the Common Stock
represented thereby will be voted in accordance with the instructions thereon.
If no instructions are indicated, the Common Stock represented thereby will be
voted (i) FOR the election of the nominees set forth under the caption "Election
of Directors" and (ii) FOR ratification of Ernst & Young LLP as the independent
auditors of the Company for fiscal 2000.
If you are a participant in the Company's 401(k) Savings Plan, the proxy
represents the number of shares in your plan account as well as other shares
registered in your name. For those shares in your plan account, the proxy will
serve as a voting instruction for the trustee of the plan. If voting
instructions are not received by the trustee for shares in your plan account,
the trustee will not be able to vote those shares on your behalf.
Your vote is important. Accordingly, you are urged to sign and return the
accompanying proxy card whether or not you plan to attend the Meeting. If you do
attend, you may vote by ballot at the Meeting, thereby canceling any proxy
previously given.
I-2
<PAGE>
PRINCIPAL STOCKHOLDERS
The following table sets forth certain information known to the Company
with respect to beneficial ownership of the Company's Common Stock as of March
31, 2000, based on information provided to the Company, by (i) each of the
Company's directors, (ii) the Named Executive Officers and (iii) all executive
officers and directors of the Company as a group.
<TABLE>
<CAPTION>
BENEFICIAL OWNERSHIP (1)
--------------------------
BENEFICIAL OWNER NUMBER PERCENT
---------------- -------- ---------
<S> <C> <C>
Edwin Morgens (2) 187,421 2.9%
Allan Weingarten (3) 26,250 *
F. Duffield Meyercord (4) 46,275 *
William Willett (5) 222,187 3.4%
John Broderick (6) 63,400 *
Jeffrey Largiader (7) 70,950 1.1%
All Directors and Executive Officers as a Group (8) 654,983 12.58%
</TABLE>
* Less than 1 percent.
(1) To the Company's knowledge, except as set forth in the footnotes to this
table and subject to applicable community property laws, each person named
in the table has "beneficial ownership" with respect to the shares set
forth opposite such person's name. The information as to beneficial
ownership is based on statements furnished to the Company by the beneficial
owners. For purposes of computing the percentage of outstanding shares held
by each person named above, pursuant to the rules of the Securities and
Exchange Commission, any security that such person has the right to acquire
within 60 days of the date of calculation is deemed to be outstanding, but
is not deemed to be outstanding for purposes of computing the percentage
ownership of any other person.
(2) Includes options to purchase 34,125 shares of Common Stock. Also includes
36,439 shares of Common Stock held by a trust for the benefit of Mr.
Morgens' daughter, with respect to which Mr. Morgens disclaims beneficial
ownership.
(3) Includes options to purchase 26,250 shares of Common Stock
(4) Includes options to purchase 35,025 shares of Common Stock.
(5) Includes options to purchase 212,187 shares of Common Stock.
(6) Represents options to purchase shares of Common Stock
(7) Includes options to purchase 60,950 shares of Common Stock.
(8) Consists of shares beneficially owned by the above-named directors and
executive officers and certain executive officers engaged since December
31, 1999. Includes 470,437 shares of common stock, which may be acquired
upon the exercise of options within 60 days of March 31, 2000.
I-3
<PAGE>
The following stockholders are known by the Company to own beneficially
more than 5% of the Company's Common Stock as of March 31, 2000:
<TABLE>
<CAPTION>
Beneficial Owner Beneficial Ownership (1)
- ---------------- ------------------------
Number Percent
---------- ----------
<S> <C> <C>
ROI Capital Management, Inc. (2)
17 E. Sir Francis Drake Blvd.
Suite 225
Larkspur, CA 94939 516,600 10%
Matador Capital Management Corp. (3)
200 1st Avenue North
Suite 203
St. Petersburg, FL 33701 473,600 9.3%
Dimensional Fund Advisors, Inc. (4)
1299 Ocean Avenue
11th Floor
Santa Monica, CA 90401 322,900 6.32%
</TABLE>
(1) To the Company's knowledge, except as set forth in the footnotes to this
table and subject to applicable community property laws, each person named
in the table has "beneficial ownership" with respect to the shares set
forth opposite such person's name.
(2) This figure is based upon information set forth in Schedule 13G dated
February 11, 2000.
(3) This figure is based upon information set forth in Schedule 13G dated
February 14, 2000.
(4) This figure is based upon information set forth in Schedule 13G dated
February 11, 2000.
PROPOSAL 1
ELECTION OF DIRECTORS
At the Meeting, four Directors will be elected by the stockholders to serve
until the next annual meeting or until their successors are elected and
qualified. The accompanying proxy will be voted for the election as Directors of
the nominees listed below, all of whom are currently Directors, unless the proxy
contains contrary instructions. Management has no reason to believe that any of
the nominees will not be a candidate or will be unable to serve as a Director.
However, in the event that any of the nominees should become unable or unwilling
to serve as a Director, the proxy will be voted for the election of such person
or persons as shall be designated by the Directors.
I-4
<PAGE>
Set forth below is certain information with respect to each nominee:
<TABLE>
<CAPTION>
Name Age Position(s)
---- --- -----------
<S> <C> <C>
William H. Willett(1)(2) 63 President, Chief Executive Officer and Chairman of
the Board
F. Duffield Meyercord(1)(2) 53 Director
Edwin H. Morgens 58 Director
Allan Weingarten(1)(2) 62 Director
</TABLE>
- ----------------
(1) Member of Audit Committee
(2) Member of Compensation Committee
WILLIAM H. WILLETT has served as a director of the Company since December
1996. In July 1998, Mr. Willett was appointed to the position of Chairman,
President and Chief Executive Officer. Prior to joining the Company and since
1994, Mr. Willett was the President and Chief Operating Officer of Colorado
Prime Foods, located in New York. Mr. Willett also serves on the board of
directors of Concord Financial Services, Inc. Mr. Willett has a B.A. degree in
Marketing from the University of Bridgeport.
F. DUFFIELD MEYERCORD has served as a director of the Company since 1991.
Mr. Meyercord is a Managing Partner and a Director of Carl Marks Consulting
Group, LLC in New York. He is also the Managing Director and founder of
Meyercord Advisors, Inc. and a partner and founder of Venturtech Management
Inc., an affiliate of the Venturtech Group, both of which are management
consulting firms. Mr. Meyercord currently serves as a director of the Peapack
Gladstone Bank. Mr. Meyercord has a B.A. degree in accounting and economics from
Birmingham-Southern College.
EDWIN H. MORGENS was a founder of the Company and has served as a director
of the Company since 1982. Mr. Morgens is and has been the Chairman and
co-founder of Morgens, Waterfall, Vintiadis & Co. Inc., an investment firm in
New York, New York since 1968. Mr. Morgens currently serves as a director of two
other public companies: TransMontaigne Oil Company and Intrenet, Inc. Mr.
Morgens has a B.A. degree in English from Cornell University and an M.B.A.
degree from The Harvard Graduate School of Business Administration.
ALLAN D. WEINGARTEN has served as a director of the Company since April
1997. Mr. Weingarten is a former partner of Ernst & Young LLP, having served as
the engagement audit partner to the Company until his retirement in 1995. Mr.
Weingarten currently is a business consultant. Mr. Weingarten holds a B.A.
degree in Business Administration from Pace University.
All directors hold office until the next annual meeting of stockholders and
until their successor are duly elected and qualified. Officers are elected to
serve, subject to the discretion of the Board of Directors, until their
successors are appointed. There are no family relationships among any of the
directors or executive officers of the Company.
The Board of Directors held seven meetings during the last fiscal year.
None of the directors attended fewer than 75% of the number of meetings of the
Board of Directors or any committee of which he is a member, held during the
period in which he was a director or a committee member, as applicable.
I-5
<PAGE>
The Compensation Committee, presently consisting of Messrs. Meyercord,
Weingarten and Willett, reviews and recommends to the Board of Directors the
compensation and benefits of all officers of the Company, reviews general policy
matters relating to compensation and benefits of employees of the Company, and
administers the issuance of stock options to the Company's employees, directors
and consultants. The Compensation Committee held one meeting during the last
fiscal year. The Audit Committee, consisting of Messrs. Meyercord, Weingarten
and Willett, meets with management and the Company's independent auditors to
determine the adequacy of internal controls and other financial reporting
matters. The Audit Committee held two meetings during the last fiscal year.
There is no nominating committee of the Board of Directors.
The directors of the Company receive a fee of $1,000 per quarter and $500
per meeting for their services and are reimbursed for reasonable expenses
incurred in connection with attendance at Board and committee meetings. In April
1995, the Company adopted the 1995 Non-Employee Director Plan pursuant to which
the Company's non-employee directors received automatic grants of options to
purchase shares of Common Stock, and Messrs. Morgens, and Meyercord were each
granted options to purchase 18,750 shares of Common Stock, which vest in an
installment of 20% of the total option grant upon the expiration of one year
from the date of the option grant, and thereafter vests in equal quarterly
installments of 5%, and have an exercise price of $4.00 per share. Messrs.
Willett and Weingarten also received similar grants upon their election to the
board at the appropriate fair market value of the stock on the date of grant.
See "Stock Option Plans." During 1998 each director was awarded an additional
stock option grant for 15,000 shares under the 1995 Employee Stock Option Plan
with an exercise price of $6.375. These options vest over a two-year period with
two thirds vested on July 23, 1999 and the balance one year thereafter. This
particular option grant also includes acceleration of vesting under change of
control provisions.
COMPLIANCE WITH SECTION 16(a) OF THE EXCHANGE ACT. Section 16(a) under the
Securities Exchange Act of 1934 (the "Exchange Act"), requires the Company's
officers and directors and holders of more than ten percent of the Company's
outstanding Common Stock to file reports of ownership and changes in ownership
with the Securities and Exchange Commission and to furnish the Company with
copies of these reports. Based solely upon a review of such forms, or on written
representations from certain reporting persons that no reports were required for
such persons, the Company believed that during 1999 all required events of its
officers, directors and 10% stockholders required to be so reported, have been
filed.
EXECUTIVE COMPENSATION
The following table sets forth, for the last three completed fiscal years,
the annual and long-term compensation for services in all capacities of the
Company's Chief Executive Officer and the four other most highly compensated
executive officers of the Company whose total salary and bonus exceeded $100,000
(the "Named Executive Officers").
I-6
<PAGE>
SUMMARY COMPENSATION TABLE
<TABLE>
<CAPTION>
SECURITIES
FISCAL UNDERLYING ALL OTHER
NAME AND POSITION YEAR ENDED SALARY BONUS OPTIONS (#) COMPENSATION (1)
----------------- ---------- ------ ----- ----------- ----------------
<S> <C> <C> <C> <C> <C>
William H. Willett, President and 1999 $225,000 0 0 $5,976
Chief Executive Officer 1998 105,865 0 200,000(2) 2,711
1997 0 0 0 0
John P. Broderick, Former Senior 1999 166,250 10,000 0 5,862
Vice President and Chief Financial 1998 155,000 0 30,000(3) 4,805
Officer 1997 137,150 20,000 11,000(4) 4,487
Peter Lindsey, Vice President Pan- 1999 139,948 0 0
European Catalog Operations 1998 136,388 14,053 0 3,011
1997 124,194 52,379 6,000(4)
Jeffrey Largiader, Vice President 1999 125,000 0 0 4,248
Marketing 1998 119,800 0 15,000(3) 3,929
1997 118,000 0 14,000(4) 3,888
Frans van der Helm, Vice President 1999 142,001 0 0 0
European Operations 1998 114,971 45,988 0 0
1997 26,326 5,243 20,000(5)(6) 0
</TABLE>
(1) Represents (i) matching contributions paid by the Company to such
executive's account under the Company's 401(k) Savings Plan and (ii)
premiums paid by the company in respect of term life insurance for the
benefit of such executive.
(2) Mr. Willett was hired by the Company in July 1998. Represents the portion
of his salary of $225,00 paid in 1998 since such date. Represents options
to purchase Common Stock with an exercise price of $6.375 per share, which
are fully vested.
(3) Represents options to purchase Common Stock with an exercise price of
$6.375 per share, vesting in equal annual installments over a five-year
period.
(4) Represents options to purchase Common Stock with an exercise price of
$6.875 per share, vesting in equal annual installments over a five-year
period.
(5) Represents options to purchase Common Stock with an exercise price of
$12.935 per share, which are fully vested.
(6) Mr. Van der Helm was hired by the Company in September 1997. Represents a
portion of his salary of $104,866 paid since such date.
I-7
<PAGE>
EMPLOYEE BENEFIT PLANS
The Company provides all employees, including executive officers, with
group medical, dental and disability insurance on a non-discriminatory basis.
Employees are required to contribute 20% of the premium costs of such policies.
The Company has a 401(k) savings and investment plan intended to qualify under
Section 401(a) of the Internal Revenue Code of 1986, as amended (the "Code"),
for its domestic employees, which permits employee salary reductions for
tax-deferred savings purposes pursuant to Section 401(k) of the Code. The
Company matches 50% of domestic employee contributions up to the first 6% of
compensation. The Company's total contributions for 1999 were approximately
$89,000.
The Company maintains a performance bonus plan for its senior executives
which provides for a bonus of up to 25% of the executive's base salary in the
event certain performance targets, based upon revenue and operating
profitability, are achieved and also provides for additional incentive bonuses
based upon pre-established metrics (the "Performance Bonus Plan"). The
Performance Bonus Plan also provides for an increase in the available bonus pool
for performance in excess of a specified net income after tax performance target
(the "over target bonus"). Subject to approval by its Board of Directors, the
Company anticipates that a similar type bonus plan will continue in effect for
the 2000 fiscal and subsequent years and that bonuses under this plan in the
2000 fiscal year and thereafter will be based on the Company's meeting or
exceeding profitability targets established by the Compensation Committee.
STOCK OPTION PLANS
1986 STOCK OPTION PLAN. The Company's 1986 Stock Option Plan (the "1986
Option Plan") expired in accordance with its terms in March 1996. Pursuant to
the 1986 Stock Option Plan "incentive stock options" ("ISO" or "ISOs") to
purchase shares of Common Stock were granted to officers and other key employees
(some of whom are also directors) of the Company. Additionally, the Directors of
the Company were granted non-qualified options pursuant to the 1986 Option Plan.
A total of 567,336 shares of Common Stock are subject to outstanding options and
have been reserved for issuance under the 1986 Option Plan, with exercise prices
ranging from $0.24 to $6.00 per share. Due to its expiration and termination, no
additional options may be granted under the 1986 Stock Option Plan.
1995 STOCK PLAN. The purpose of the Company's 1995 Stock Plan (the "1995
Stock Plan") is to provide incentives to officers, directors, employees and
consultants of the Company. Under the 1995 Stock Plan, officers and employees of
the Company and any present or future subsidiary are provided with opportunities
to purchase shares of Common Stock of the Company pursuant to options which may
qualify as ISOs, or which do not qualify as ISOs ("Non-Qualified Options") and,
in addition, such persons may be granted awards of stock in the Company
("Awards") and opportunities to make direct purchases of stock in the Company
("Purchases"). Both ISOs and Non-Qualified Options are referred to hereafter
individually as an "Option" and collectively as "Options." Options, Awards and
Purchases are referred to hereafter collectively as "Stock Rights." The 1995
Stock Plan contains terms and conditions relating to ISOs necessary to comply
with the provisions of Section 422 of the Code.
The 1995 Stock Plan currently authorizes the grant of Stock Rights to
acquire up to 1,137,500 shares of Common Stock. A total of 507,720 shares of
Common Stock are presently subject to outstanding Options under the 1995 Stock
Plan at exercise prices ranging from $4.00 to $12.94 per share. Unless sooner
terminated, the 1995 Stock Plan will terminate on April 21, 2005. The 1995 Stock
Plan requires that each Option shall expire on the date specified by the
Compensation Committee, but not more than ten years from its date of grant in
the case of ISOs and ten years and one day in the case of Non-Qualified Options.
However, in the case of any ISO granted to an employee or officer owning more
than 10% of the total combined voting power of all classes of stock of the
Company or any present or future subsidiary, the ISO expires no more than five
years from its date of grant.
1995 NON-EMPLOYEE DIRECTOR PLAN. The purpose of the Company's 1995
Non-Employee Director Plan (the "1995 Director Plan") is to promote the
interests of the Company by providing an inducement to obtain and
I-8
<PAGE>
retain the services of qualified persons who are not employees or officers of
the Company to serve as members of its Board of Directors ("Outside Directors").
The 1995 Director Plan authorizes the grant of options for up to 187,500 shares
of Common Stock and provides for automatic grants of nonqualified stock options
to Outside Directors. Under the 1995 Option Plan, each current Outside Director
has received, and each Outside Director who first joins the Board after April
1995 will automatically receive at that time, options to purchase 18,750 shares
of Common Stock. The 88,125 options granted to the current Outside Directors
have exercise prices ranging from $4.00 to $7.50. All options granted to Outside
Directors have an exercise price equal to 100% of the fair market value on the
date of grant. There are currently 54,375 shares of Common Stock available for
grant under the 1995 Director Plan. The 1995 Director Plan requires that options
granted thereunder will expire on the date which is ten years from the date of
grant. Each option granted under the 1995 Director Plan becomes exercisable over
a five-year period, and vests in an installment of 20% of the total option grant
upon the expiration of one year from the date of the option grant, and
thereafter vests in equal quarterly installments of 5%.
OPTIONS. There were no options granted to the Named Executive Officers
during the fiscal year ended December 31, 1999.
AGGREGATED OPTION EXERCISES IN LAST FISCAL YEAR AND
FISCAL YEAR-END OPTION VALUE TABLE
<TABLE>
<CAPTION>
NUMBER OF SECURITIES VALUE OF UNEXERCISED
SHARES UNDERLYING UNEXERCISED IN-THE MONEY OPTIONS
ACQUIRED OPTIONS AT FISCAL YEAR-END AT FISCAL YEAR-END (1)
ON VALUE ---------------------------- --------------------------
NAME EXERCISE (#) REALIZED ($) EXERCISABLE UNEXERCISABLE EXERCISABLE UNEXERCISABLE
---- ------------ ------------ ----------- ------------- ----------- -------------
<S> <C> <C> <C> <C> <C> <C>
William Willett . . . . . __ __ 194,583 24,167 230,572 $21,771
John P. Broderick . . . . 7,500 90,500 63,400 30,600 154,112 34,950
Peter Lindsey . . . . . . 20,000 121,250 7,400 3,600 2,425 2,700
Jeffrey Largiader . . . . 5,000 113,329 59,075 21,975 277,398 27,009
</TABLE>
(1) Calculated on the basis of the fair market value of the Common Stock of the
Company on December 31, 1999 of $7.625 per share as determined by the
closing price for the Company's Common Stock as reported on the NASDAQ
National Market.
EMPLOYMENT AGREEMENTS
Each of the Named Executive Officers has entered into an agreement that
includes a covenant not-to-compete and a confidentiality provision (a
"Confidentiality and Non-Compete Agreement"). The covenant not-to-compete
prohibits the executive for a period of one year after termination from engaging
in a competing business. Such covenant also prohibits the executive from
directly or indirectly soliciting the Company's customers or employees.
The Company entered into an employment agreement with William Willett in
July 1998, which provides for a base salary of $225,000 per year. The agreement
expires on January 15, 2001 and is subject to automatic renewal for a
twelve-month period unless either party provides ninety-day advance notice. The
agreement includes the grant of certain stock options, an automobile allowance
and participation in the Company's benefit plans. The agreement also provides a
performance bonus tied to stock price. Mr. Willett has the right to terminate
his employment at any time on not less than 90 days prior written notice. The
Company has the right to terminate Mr. Willett's employment with or without
"cause" (as defined in the employment letter), without prior written notice. In
the event that Mr. Willett's employment is terminated without cause or by the
rendering of a non-renewal notification, he is entitled to receive
I-9
<PAGE>
severance payments equal to six months salary, immediate vesting of all
outstanding stock awards and a pro-rata performance bonus based upon stock price
up to the date of separation. Additionally, in the event that a change of
control of the Company occurs (as described in the employment agreement), Mr.
Willett's outstanding stock awards become immediately vested and he is entitled
to the pro-rata performance bonus based upon stock price at the date of such
change in control.
The Company entered into an employment agreement with John P. Broderick in
June 1998, which provides for a base salary of $155,000 per year and includes
participation in the Company's benefit plans and participation in the executive
bonus program. Under certain circumstances, Mr. Broderick shall be entitled to
receive severance payments equal to twelve months salary as well as any earned
but unpaid bonus. Additionally, in the event that a change of control of the
Company occurs (as described in the employment agreement), Mr. Broderick shall
be entitled to a maximum of twelve months severance. In August 1998, Mr.
Broderick received a loan in the amount of $75,000 from the Company, such loan
is payable January 31, 2001. In February 2000, Mr. Broderick tendered his
resignation with the Company. Mr. Broderick is receiving severance payments
equal to one year's salary.
Also in December 1998, the Company entered into an employment agreement
with Frans van der Helm who assumed the duties and responsibilities of Chief
Operating Office for European Operations. Under the terms of the contract, Mr.
van der Helm will receive a base salary of $160,000, participation in an
executive bonus plan as well as participation in the Company's benefit plans.
The agreement expires on December 14, 2000 and may be terminated by either party
on four months notice. Should the agreement be terminated by the Company, Mr.
Van der Helm will be entitled to severance payments equal to six months salary.
In November 1999, Mr. van der Helm tendered his resignation with the Company.
CERTAIN TRANSACTIONS
The Company has adopted a policy whereby all transactions between the
Company and its principal officer, directors and affiliates must be on terms no
less favorable to the Company than could be obtained from unrelated third
parties and will be approved by a majority of the disinterested members of the
Company's board of directors.
During 1999, options with respect to shares were granted to employees of
the Company pursuant to the 1995 Stock Plan in accordance with Rule 701
promulgated under the Exchange Act.
COMPENSATION COMMITTEE INTERLOCKS AND INSIDER PARTICIPATION
William H. Willett, Duffield Meyercord and Allan Weingarten served as
members of the Compensation Committee during the last completed fiscal year.
Neither Messrs. Meyercord and Weingarten (i) was, during the last completed
fiscal year, an officer or employee of the Company or any of its subsidiaries,
(ii) was formerly an officer of the registrant or any of its subsidiaries, or
(iii) had any relationship requiring disclosure by the Company under any
paragraph of Item 404 of Regulation S-K which has not been already disclosed.
REPORT OF THE COMPENSATION COMMITTEE ON EXECUTIVE COMPENSATION
The report of the Compensation Committee shall not be deemed incorporated
by reference by any general statement incorporating by reference this proxy
statement into any filing under the Securities Act of 1933, as amended, Exchange
Act, except to the extent that the Company specifically incorporates this
information by reference, and shall not otherwise be deemed filed under such
Acts.
In evaluating the reasonableness of compensation paid to the Company's
executive officers, the
I-10
<PAGE>
Compensation Committee takes into account, among other factors, how compensation
compares to compensation paid by competing companies, individual contributions
and the Company's performance. Base salary is determined based upon individual
performance, competitive compensation trends and a review of salaries for like
jobs at similar companies. The Company also maintains the Performance Bonus Plan
for its senior executive which provides for a bonus of up to 25% of the
executive's base salary in the event certain performance targets, based upon
revenue and operating profitability, are achieved. The Performance Bonus Plan
also provides for an increase in the available bonus pool for performance in
excess of a specified net income after tax performance target. For a further
discussion of the Performance Bonus Plan, and amounts paid in respect of the
1999 fiscal year, see the discussion under "Employee Benefit Plans."
It is the Company's policy that the compensation of executive officers also
be based, in part, on the grant of stock options as an incentive to enhance the
Company's performance. Stock options are granted based upon a review of such
executive's responsibilities and relative position in the Company, such
executive's overall job performance and such executive's existing stock option
position. In 1999, in accordance with the above criteria, the executive officers
received stock options that are exercisable ratably over a five-year period.
The compensation of the Company's Chief Executive Officer in 1999 consisted
of a base salary. In 1999, no performance-based cash bonuses were paid and no
stock options were granted. Of the total cash bonus earned, 50% was based upon
reaching preset consolidated net income targets (i.e., the Performance Bonus
Plan). Stock option grants to the Chief Executive Officer were made in line with
those granted to other executive officers primarily considering responsibilities
and relative position to other members of the senior management team. Base
salary level was established considering base salaries of peer Chief Executive
Officers with similar executive responsibilities.
The Compensation Committee
William H. Willett
Duffield Meyercord
Allan Weingarten
STOCK PRICE PERFORMANCE GRAPH
The following graph and table illustrates a comparison of cumulative
shareholder return among the Company, the Standard & Poor's Midcap 400 Index and
an index of peer companies selected by the Company (the "Custom Peer Group
Index"). The members of the peer group are as follows: Creative Computers, Inc.,
Egghead Inc., Merisel, Inc., Microwarehouse, Inc. and Software Spectrum, Inc.
For the purpose of calculating the peer group average, the returns of each
company have been weighted according to its market capitalization. The
measurements assume that on July 18,1995 (the effective date of the Company's
Registration Statement on Form S-1), $100 was invested, alternatively, in the
Company's Common Stock, the Standard & Poor's Midcap 400 Index and the Custom
Peer Group Index.
[GRAPH]
<PAGE>
<TABLE>
<CAPTION>
BASE
PERIOD RETURN RETURN RETURN RETURN RETURN RETURN
7/18/95 12/31/95 3/31/96 6/30/96 9/30/96 12/31/96 3/31/97
----------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C> <C>
PROGRAMMER'S PARADISE, INC. $100.00 $ 67.50 $ 56.25 $ 61.25 $ 65.00 $ 72.50 $ 68.75
S&P MIDCAP 400 INDEX $100.00 $105.89 $112.41 $115.65 $119.01 $126.22 $124.34
PEER GROUP $100.00 $ 78.52 $ 71.94 $ 97.93 $105.86 $ 61.89 $ 59.58
</TABLE>
<TABLE>
<CAPTION>
RETURN RETURN RETURN RETURN RETURN RETURN RETURN
6/30/97 9/30/97 12/31/97 3/31/98 6/30/98 9/30/98 12/31/98
--------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C> <C>
PROGRAMMER'S PARADISE, INC. $ 95.00 $132.50 $ 93.75 $ 95.00 $ 82.50 $ 56.25 $126.25
S&P MIDCAP 400 INDEX $142.62 $165.56 $166.94 $185.32 $181.35 $155.12 $198.83
PEER GROUP $ 70.85 $104.33 $ 73.30 $ 79.50 $ 72.22 $ 66.67 $144.59
</TABLE>
<TABLE>
<CAPTION>
RETURN RETURN RETURN RETURN
3/31/99 6/30/99 9/30/99 12/31/99
-------------------------------------------------
<S> <C> <C> <C> <C>
PROGRAMMER'S PARADISE, INC. $121.25 $122.50 $ 66.88 $ 76.25
S&P MIDCAP 400 INDEX $186.14 $212.49 $194.65 $228.10
PEER GROUP $ 92.03 $ 85.57 $ 61.07 $ 78.52
</TABLE>
I-12
<PAGE>
PROPOSAL 2
APPOINTMENT OF INDEPENDENT PUBLIC ACCOUNTANTS
The Board of Directors of the Company has designated Ernst & Young LLP as
the Company's independent auditors for the current fiscal year and recommends
ratification of their appointment. Representatives of Ernst & Young LLP are
expected to be present at the annual meeting of stockholders and will be
available to respond to appropriate questions and will be given the opportunity
to make a statement if they so desire.
GENERAL
The Management of the Company does not know of any matters other than those
stated in this Proxy Statement which are to be presented for action at the
Meeting. If any other matters should properly come before the Meeting, proxies
will be voted on these other matters in accordance with the judgment of the
persons voting the proxies. Discretionary authority to vote on such matters is
conferred by such proxies upon the persons voting them.
The Company will bear the cost of preparing, printing, assembling and
mailing all proxy material which may be sent to stockholders in connection with
this solicitation. Arrangements will also be made with brokerage houses, other
custodians, nominees and fiduciaries, to forward soliciting material to the
beneficial owners of the Company's Common Stock held by such persons. The
Company will reimburse such persons for reasonable out-of-pocket expenses
incurred by them. In addition to the solicitation of proxies by use of the
mails, officers and regular employees of the Company may solicit proxies without
additional compensation, by telephone, telecopier or telegraph. The Company does
not expect to pay any compensation for the solicitation of proxies.
The Annual Report of the Company on Form 10-K for the fiscal year ended
December 31, 1999 (the "Annual Report") has been forwarded to all stockholders.
The Annual Report, which includes audited financial statements, does not form
any part of the material for the solicitation of proxies.
The Company will furnish without charge to each person whose proxy is being
solicited, upon written request of any such person, a copy of the Annual Report
as filed with the Securities and Exchange Commission, including the financial
statements and schedules. Requests for copies of such report should be directed
to William H. Willett, President, Programmer's Paradise, Inc, 1157 Shrewsbury
Avenue, Shrewsbury New Jersey 07702.
STOCKHOLDER PROPOSALS
The Annual Meeting of Stockholders for the fiscal year ending December 31,
2000 is expected to be held on or about June 15, 2001, with the mailing of proxy
materials for such meeting to be made on or about April 30, 2001. All proposals
of stockholders intended to be presented at the Company's next Annual Meeting of
Stockholders must be received at the Company's executive office no later than
November 30, 2000 in order to be consulted for inclusion in the proxy statement
and form of proxy related to that meeting.
By Order of the Board of Directors,
William H. Willett, Chairman
and Chief Executive Officer
May 3, 2000
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<PAGE>
PROGRAMMER'S PARADISE, INC.
1157 SHREWSBURY AVENUE
SHREWSBURY, NEW JERSEY 07702
THIS PROXY IS SOLICITED ON BEHALF OF THE BOARD OF DIRECTORS
The undersigned hereby appoints WILLIAM H. WILLETT and WILLIAM H. SHEEHY
with the power to appoint their substitutes, and hereby authorizes them to
represent and to vote on behalf of the undersigned all the shares of common
stock par value $.01 per share (the "Common Stock"), of Programmer's Paradise,
Inc., held of record by the undersigned on April 28, 2000, at the Annual Meeting
of Stockholders to be held on June 13, 2000 at 9:00 A.M. local time at the Molly
Pitcher Hotel, Red Bank, New Jersey, or any adjournment or adjournments thereof,
hereby revoking all proxies heretofore given with respect to such shares, upon
the following proposals more fully described in the notice of and proxy
statement for the Meeting (receipt whereof is hereby acknowledged).
1. ELECTION OF DIRECTORS
FOR all nominees listed below / /
WITHHOLD AUTHORITY to vote for nominees listed below / /
(except as marked to the contrary below)
(INSTRUCTION: TO WITHHOLD AUTHORITY TO VOTE FOR ANY INDIVIDUAL NOMINEE
WRITE THAT NOMINEE'S NAME ON THE SPACE PROVIDED BELOW)
- --------------------------------------------------------------------------------
WILLIAM H. WILLETT, F. DUFFIELD MEYERCORD, EDWIN H. MORGENS and ALLAN
WEINGARTEN
2. PROPOSAL TO RATIFY AND APPROVE the appointment of Ernst & Young LLP as the
Company's independent accountants for the fiscal year ending December 31,
2000.
/ / For / / Against / / Abstain
3. In their discretion the Proxies are authorized to vote upon such other
business as may properly be brought before the Meeting.
(continued, and to be executed, on the reverse side)
THIS PROXY WHEN PROPERLY EXECUTED, WILL BE VOTED IN THE MANNER DIRECTED HEREIN
BY THE UNDERSIGNED STOCKHOLDER. IF NO DIRECTION IS MADE, THIS PROXY WILL BE
VOTED FOR PROPOSALS 1, 2 and 3.
Please sign exactly as the name appears below. When shares are held by
joint tenants, both should sign. When signing as attorney, as executor,
administrator, trustee or guardian, please give full title as such. If a
corporation, please sign in full corporate name by President or other authorized
officer. If a Partnership, please sign in partnership name by authorized person.
I will / / will not / / attend this Meeting.
Dated: , 2000
------------------------------
------------------------------------------
SIGNATURE
------------------------------------------
SIGNATURE IF HELD JOINTLY.
PLEASE MARK, SIGN, DATE AND RETURN THE PROXY CARD PROMPTLY USING THE ENCLOSED
ENVELOPE
THIS PROXY IS SOLICITED ON BEHALF OF THE BOARD OF DIRECTORS
I-14
