SCHEDULE 14A INFORMATION
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INNOTRAC CORPORATION
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Sincerely, ![]() SCOTT D. DORTMAN Chairman of the Board, President and Chief Executive Officer |
1. | To elect one director whose term, if re-elected, will expire in 2008; and |
2. | To consider such other matters as may properly come before the meeting and any adjournment or postponement thereof. |
May 2, 2005 | BY ORDER OF THE BOARD OF DIRECTORS, SANDRA M. LANGLEY Secretary |
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Items for Vote: | |
Item No. 1:Election of Directors | 6 |
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Ø | For Item 1 on the Proxy Card, the election of directors, the nominee receiving the greatest number of votes at the Annual Meeting, assuming a quorum is present, shall be deemed elected, even though such nominee may not receive a majority of the votes cast. |
Ø | For any other business at the Annual Meeting,if more sharesarevotedin favor of the matter than against it, assuming a quorum is present,the mattershall beapproved, unless the vote of a greater number is required by law. |
Beneficial Owner | Number of SharesBeneficially Owned(1) | PercentageBeneficially Owned | |||||
Scott D. Dorfman | 5,619,503 (2)(3) | 46.4% | |||||
IPOF Group | 3,378,113 (4) | 27.9% | |||||
David L. Ellin | 399,388 (5) | 3.3% | |||||
Martin J. Blank | 120,750 (6) | 1.0% | |||||
David L. Gamsey | 104,541 (7) | * | |||||
Bruce V. Benator | 99,750 (8) | * | |||||
Joel E. Marks | 48,750 (9) | * | |||||
Robert J. Toner | 27,374 (10) | * | |||||
James R. McMurphy | 25,000 (11) | * | |||||
Alston Gardner | — | * | |||||
All directors and executive officers as a group (10 persons) | 6,559,097 | 54.1% |
* | Denotes less than 1% |
(1) | Beneficial ownership is determined under the rules of the Securities and Exchange Commission. These rules deem common stock subject to options currently exercisable, or exercisable within 60 days, to be outstanding for purposes of computing the percentage ownership of the person holding the options or of a group of which the person is a member, but they do not deem such stock to be outstanding for purposes of computing the percentage ownership of any other person or group. As of April 8, 2005, there were12,117,591 shares of Common Stock outstanding. |
(2) | Includes an aggregate of 178,003 shares owned by: (i) Mr. Dorfman’s wife individually and as custodian for the benefit of their three oldest children; (ii) Mr. Dorfman’s brother as trustee for the benefit of Mr. Dorfman’s three oldest children; (iii) shares held by Mr. Dorfman’s two oldest children directly; and (iv) shares held by Mr. Dorfman as custodian for his three youngest children. Mr. Dorfman’s address is 6655 Sugarloaf Parkway, Duluth, Georgia 30097. |
(3) | Includes 112,500 shares subject to presently exercisable options and options vesting in the next 60 days. |
(4) | The IPOF Group consists of IPOF Fund, LP (“IPOF”), the David Dadante Revocable Trust dated May 14, 2003 (the “Dadante Trust”) and David Dadante, individually (“Dadante”). According to a Schedule 13G filed February 28, 2005, IPOF is an Ohio limited partnership, Dadante is IPOF’s General Partner, and the Dadante Trust is a trust organized under the laws of Ohio of which Dadante is the sole trustee. The IPOF Group jointly owns and possesses voting and investment power with respect to the shares of Innotrac’s Common Stock owned. The address of IPOF, the Dadante Trust and Dadante is 773 Village Trail, Gates Mills, Ohio 44040. |
(5) | Includes 311,000 shares subject to presently exercisable stock options and options vesting in the next 60 days. |
(6) | Includes 136,500 shares subject to presently exercisable stock options and options vesting in the next 60 days. Mr. Gamsey resigned from all positions with the Company as of January 14, 2005. |
(7) | Includes 78,500 shares subject to presently exercisable stock options and options vesting in the next 60 days. |
(8) | Includes 98,750 shares subject to presently exercisable stock options and options vesting in the next 60 days. |
(9) | Includes 10,000 shares held by the Marks Family, LLP and 18,750 shares subject to presently exercisable stock options and options vesting in the next 60 days. |
(10) | Includes40,000 shares subject to options vesting in the next 60 days and options vesting in the next 60 days. |
(11) | Includes 25,000 shares subject to presently exercisable stock options and options vesting in the next 60 days. |
Name of Director | Audit | Compensation | Nominating/ Governance Committee |
Number of Meetings | 7 | 7 | 1 |
Bruce V. Benator | X | ||
Martin J. Blank | X | Chair | X |
Alston Gardner | X | Chair | |
Joel E. Marks | Chair | X | X |
Name (Age) | Information About the Nominee and the Continuing Directors |
Bruce V. Benator (47) | Mr. Benator is the Managing Partner of Williams Benator & Libby, LLP, certified public accountants and consultants, and has been a director since 1997. He has been affiliated with the firm since 1984 and is the firm’s Director of Accounting and Auditing Services. From 1979 to 1984, Mr. Benator was employed by Ernst & Young, LLP. |
Name (Age) | Information About the Nominee and the Continuing Directors |
Martin J. Blank (58) | Mr. Blank has been a director of Innotrac since 1997 and currently serves as an independent legal consultant. Mr. Blank was a co-founder of Automobile Protection Corporation, or APCO, a subsidiary of the Ford Motor Company engaged in the marketing of extended vehicle service contracts and warranty programs. Mr. Blank served as Secretary and Director of APCO since its inception in 1984 and as Chairman of the Board and Chief Operating Officer since 1988 until his retirement on December 31, 2003. Prior to co-founding APCO, Mr. Blank practiced law and represented and provided financial management for professional athletes. Mr. Blank is admitted to the bar in the States of Georgia and California. |
Joel E. Marks (48) | Mr. Marks has been a director of Innotrac since 2002 and serves as an independent consultant to the financial services industry. As of July 1, 2004, Mr. Marks has served as Vice Chairman & COO of Advanced Equities Financial Corporation. Mr. Marks was formerly the President of Innovative Brokerage Solutions, Inc. from May 2002 until July 2004, providing investment banking services. From January 2001 to April 2002, Mr. Marks served as a Senior Vice President and Managing Director of First Union Securities, Inc., a securities firm. Prior to that,Mr. Marks served as Vice Chairman and Chief Operating Officerof securities firm JWGenesis Financial Corp. Mr. Marks co-founded JWGenesisin1983 and served in variouscapacities with that firm until itsmerger with First Union Securities, Inc. in January 2001. From 1987 through 1994, Mr. Marks served as Chief Financial Officer and Senior Vice President of APCO. Mr. Marks obtained his certification as a public accountant in 1978 and was employed in various capacities in both the audit and tax departments of the accounting firm of Deloitte Haskins & Sells (now Deloitte & Touche LLP). |
Name (Age) | Information About the Nominee and the Continuing Directors |
Scott D. Dorfman (47) | Mr. Dorfman founded Innotrac and has served as Chairman of the Board, President and Chief Executive Officer since its inception in 1984. Prior to founding Innotrac, Mr. Dorfman was employed by Paymaster Checkwriter Company, Inc. (“Paymaster”), an equipment distributor. At Paymaster, Mr. Dorfman gained experience in distribution, tracking and inventory control by developing and managing Paymaster’s mail order catalog. |
Alston Gardner (49) | Mr. Gardner joined the Company’s Board of Directors in March 2004. Mr. Gardner is the founder and principal of Fulcrum Ventures, LLC, a venture capital development firm focused on early stage information technology, biotechnology and health care companies in the southeast United States. In 1989, before founding Fulcrum Ventures, Mr. Gardner founded OnTarget, Inc., a leading sales training and consulting firm, where he served as Chief Executive Officer until it was acquired by Siebel Systems in November 1999. Mr. Gardner’s earlier employment experience includes sales and sales management positions with Dun & Bradstreet Computing Services, Information Science, and Automatic Data Processing. |
Summary Compensation Table | ||||||||||||||
Annual Compensation | Long Term Compensation | |||||||||||||
Restricted | Securities | All | ||||||||||||
Fiscal | Stock | Underlying | Other | |||||||||||
Name | Year | Salary | Bonus | Awards | Options (#) | Compensation | ||||||||
Scott D. Dorfman | 2004 | $333,606 | $75,000 | $ — | — | $ 1,854 | (1) | |||||||
Chairman of the Board, | 2003 | 321,250 | — | — | — | 1,854 | ||||||||
President and Chief | 2002 | 346,250 | 27,440 | 41,200 | (2) | 50,000 | 1,854 | |||||||
Executive Officer | ||||||||||||||
David L. Gamsey (3) | 2004 | $261,692 | $ — | $ — | — | $ — | ||||||||
Senior Vice President, | 2003 | 252,000 | 35,000 | — | — | — | ||||||||
Chief Financial Officer, | 2002 | 252,000 | 27,440 | 41,200 | (2) | 50,000 | — | |||||||
Treasurer and Secretary | ||||||||||||||
David L. Ellin | 2004 | $280,652* | $ — | $ — | — | $ — | ||||||||
Senior Vice President - | 2003 | 222,634* | — | — | — | — | ||||||||
Sales | 2002 | 194,250 | 16,940 | 41,200 | (2) | 50,000 | — | |||||||
Robert J. Toner | 2004 | $212,885 | $45,000 | $ — | — | $ — | ||||||||
Vice President- | 2003 | 189,616 | 40,000 | — | — | — | ||||||||
Logistics | 2002 | 185,000 | 27,440 | 41,200 | (2) | 50,000 | — | |||||||
James R. McMurphy (4) | 2004 | $212,885 | $50,000 | $ — | — | $ — | ||||||||
Vice President and Chief | 2003 | 141,923 | 50,000 | — | 50,000 | — | ||||||||
Information Officer |
* | Includes commissions |
(1) | Includes the full dollar amount of premiums paid by Innotrac with respect to split-dollar life insurance on the life of Mr. Dorfman. |
(2) | On February 28, 2003, the Company granted each of its executive officers 10,510 shares of restricted stock in connection with services rendered in fiscal year 2002, which vested on March 1, 2004. The aggregate value of each such grant as of March 1, 2004, basedon the opening price of our Common Stock on the Nasdaq Stock Market on such date, was $122,861.90. Outstanding shares of restricted stock are entitled to receive dividends when and if declared on Innotrac’s Common Stock. |
(3) | Mr. Gamsey resigned all positions with the Company effective January 14, 2005. |
(4) | Mr. McMurphy joined the Company in April 2003. |
Aggregate Options Exercised During 2004 | Number of Securities Underlying Unexercised Options at December 31, 2004 | Value of Unexercised In-the-Money Options at December 31, 2004(1) | ||||
Name | Shares Acquired | Value Realized | Exercisable | Unexercisable | Exercisable | Unexercisable |
Scott D. Dorfman | — | — | 100,000 | 25,000 | $331,625 | $127,750 |
David L. Gamsey | 12,500 | $67,500 | 136,500 | 25,000 | $424,941 | $127,750 |
David L. Ellin | 12,500 | $67,500 | 298,500 | 25,000 | $489,813 | $127,750 |
Robert J. Toner | 10,000 | $54,683 | 21,250 | 31,250 | $86,150 | $137,250 |
James R. McMurphy | — | — | — | 50,000 | — | $210,000 |
(1) | Represents aggregate excess of market value of shares under option as of December 31, 2004, using the closing price of $8.51 at such date, over the exercise price of the options. |
- | Competitive base salaries; |
- | Annual incentive bonuses; |
- | Long-term incentive stock options or bonuses; and |
- | Customary benefits. |
STOCKPERFORMANCE GRAPH
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Cumulative Total Return | |||||||
12/1999 | 12/2000 | 12/2001 | 12/2002 | 12/2003 | 12/2004 | ||
Innotrac Corporation | 100 | 25 | 50 | 16 | 76 | 62 | |
NASDAQ Stock Market (U.S.) Index | 100 | 59 | 45 | 26 | 38 | 40 | |
NASDAQ Non-Financial Index | 100 | 61 | 52 | 35 | 52 | 54 |
Plan Category | Number of Securities to be Issued Upon Exercise of Outstanding Options, Warrants and Rights | Weighted-Average Exercise Price of Outstanding Options, Warrants and Rights | Number of Securities Remaining Available for Future Issuance Under Equity Compensation Plans |
Equity Compensation Plans Approved by Shareholders | 1,515,100 | $6.30 | 1,581,100 |
Equity Compensation PlansNot Approved by Shareholders | N/A | N/A | N/A |
($ in thousands) | 2004 | 2003 | |||||||||||
BDO Seidman, LLP | Deloitte & Touche LLP | BDO Seidman, LLP | Deloitte & Touche LLP | ||||||||||
Audit Fees (1) | $ | 120 | $ | 0 | $ | 0 | $ | 203 | |||||
Audit-Related Fees (2) | 0 | 18 | 0 | 23 | |||||||||
Tax Fees | 0 | 0 | 0 | 0 | |||||||||
All Other Fees (3) | 3 | 20 | 0 | 0 | |||||||||
Total | $ | 123 | $ | 38 | $ | 0 | $ | 226 | |||||
(1) | Fees for audit services billed in 2004 and 2003 consisted of an audit of the Company’s annual financial statements and reviews of the Company’s quarterly financial statements. |
(2) | Fees for audit-related services billed in 2004 and 2003 consisted of employee benefit plan audits and agreed-upon procedures engagements. |
(3) | $3,000 paid to BDO for other fees is related to agreed upon procedures performed in connection with collecting a delinquent receivable. $20,000 paid to Deloitte & Touche for other fees is for a debt compliance letter for the revolving credit agreement, successor auditor review and procedures related to covenant compliance with the Kentucky Economic Development Finance Authority Service. |
1. | The service is not an audit, review or other attest service; |
2. | The aggregate amount of all such services provided under this provision does not exceed the lesser of $25,000 or five percent of total fees paid to the independent auditor in a given fiscal year; |
3. | Such services were not recognized at the time of the engagement to be non-audit services (to date, the SEC has not provided any guidance with respect to determining whether or not a service was “recognized” at the time of the engagement. We believe that the SEC intended the term “recognized” to mean “identified”); |
4. | Such services are promptly brought to the attention of the Audit Committee and approved by the Audit Committee or its designee; and |
5. | The service and fee are specifically disclosed in the Proxy Statement as meeting the de minimis requirements. |
BY ORDER OF THE BOARD OF DIRECTORS, SANDRA M. LANGLEY Secretary |
1. | Election of Directors Bruce V. Benator |
r | FOR all nominees for Director listed above (except as marked to the contrary | r | WITHOUT AUTHORITY to vote for an individual nominee. Write name(s). |
2. | In accordance with their best judgement with respect to any other matters that may properly come before the meeting. |
Date:______________________________________, 2005 Please sign this Proxy exactly as name appears on the proxy. Note: When signing as attorney, trustee, administrator, or guardian, please give your title as such. In the case of joint tenants, each joint owner must sign. |