SCHEDULE 14A INFORMATION
Proxy Statement Pursuant to Section 14(a) of the Securities Exchange Act
of 1934
Filed by the Registrant[X]
Filed by a Party other than the Registrant[ ]
Check the appropriate box:
[ ] Preliminary Proxy Statement
[ ] Confidential, for Use of the Commission Only (as permitted by Rule
14a-6(e)(2))
[X] Definitive Proxy Statement
[ ] Definitive Additional Materials
[ ] Soliciting Material Pursuant to Rule 14a-11(c) or Rule 14a-12
CHYRON CORPORATION
(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.
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[ ] Check box if any part of the fee is offset as provided by Exchange Act
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4) Date Filed:
CHYRON CORPORATION
5 Hub Drive
Melville, New York 11747
(516) 845-2000
April 7, 1999
Dear Shareholders:
On behalf of the Board of Directors and management of Chyron Corporation
(the "Company"), I cordially invite you to attend the Annual Meeting of
Shareholders to be held on Wednesday, May 12, 1999, at 9:30 a.m., at Loews
New York Hotel, located at 569 Lexington Avenue, New York, New York 10022.
The matters to be acted upon at the meeting are fully described in the
attached Notice of Annual Meeting of Shareholders and Proxy Statement. In
addition, the directors and executive officers of the Company will be
present to respond to any questions that you may have. Accompanying the
attached Proxy Statement is the Company's Annual Report for 1998. This
report describes the financial and operational activities of the Company.
Whether or not you plan to attend the annual meeting, please complete, sign
and date the enclosed proxy card and return it in the accompanying envelope
as promptly as possible. If you attend the Annual Meeting, and I hope you
will, you may vote your shares in person even if you have
previously mailed in a proxy card.
We look forward to greeting our shareholders at the meeting.
Sincerely,
/s/Edward Grebow
Edward Grebow
President, Chief Executive Officer
and Director
CHYRON CORPORATION
5 Hub Drive
Melville, New York 11747
NOTICE OF ANNUAL MEETING OF SHAREHOLDERS
TO BE HELD ON MAY 12, 1999
TO THE SHAREHOLDERS OF
CHYRON CORPORATION:
NOTICE IS HEREBY GIVEN that the Annual Meeting of Shareholders (the "Annual
Meeting") of Chyron Corporation, a New York corporation (hereinafter
"Company"), will be held at Loews New York Hotel, located at 569 Lexington
Avenue, New York, New York 10022, on Wednesday, May 12, 1999, at 9:30 a.m.,
for the following purposes:
1. To elect nine (9) directors of the Company to hold office until the
next Annual Meeting or until their respective successors are duly
elected and qualified;
2. To consider and act upon a proposal to adopt the Chyron 1999
Incentive Compensation Plan (the "Incentive Compensation Plan" or
"the 1999 Plan"); and
3. To transact such other business as may properly come before the
meeting or any adjournments thereof.
The Board of Directors has fixed the close of business on March 24, 1999 as
the record date for the determination of shareholders entitled to notice of,
and to vote at, the Annual Meeting or any adjournments thereof.
Representation of at least a majority of all outstanding shares of Common
Stock is required to constitute a quorum. Accordingly, it is important that
your stock be represented at the meeting. The list of shareholders entitled
to vote at the Annual Meeting will be available for examination by any
shareholder at the Company's offices at 5 Hub Drive, Melville, New York,
11747, for ten (10) days prior to May 12, 1999.
Whether or not you plan to attend the Annual Meeting, please complete, date
and sign the enclosed proxy card and mail it promptly in the self-addressed
envelope enclosed for your convenience. You may revoke your proxy at
anytime before it is voted.
By Order of the Board of Directors,
/s/Daniel I. DeWolf
Daniel I. DeWolf,
Secretary
Melville, New York
April 7, 1999
YOUR VOTE IS IMPORTANT, ACCORDINGLY, WE URGE YOU TO DATE, SIGN AND RETURN
THE ENCLOSED PROXY CARD REGARDLESS OF WHETHER YOU PLAN TO ATTEND THE
MEETING.
CHYRON CORPORATION
TABLE OF CONTENTS
Page
INFORMATION CONCERNING VOTE 1
ELECTION OF THE BOARD OF DIRECTORS 2
EXECUTIVE COMPENSATION AND OTHER INFORMATION 5
COMPENSATION AND STOCK OPTION COMMITTEE
REPORT ON EXECUTIVE COMPENSATION 10
STOCK PERFORMANCE CHART 11
PROPOSAL TO ADOPT THE 1999 INCENTIVE
COMPENSATION PLAN 12
OTHER MATTERS ARISING AT THE ANNUAL MEETING 13
PRINCIPAL SHAREHOLDERS 13
INDEMNIFICATION OF DIRECTORS AND OFFICERS 16
SHAREHOLDER PROPOSALS 16
COST OF SOLICITATION OF PROXIES 16
INDEPENDENT PUBLIC ACCOUNTANTS 16
SECTION 16(a) REPORTING DELINQUENCIES 17
ANNUAL REPORT ON FORM 10-K 17
EXHIBIT 1 18
CHYRON CORPORATION
5 Hub Drive
Melville, New York 11747
PROXY STATEMENT
For Annual Meeting of Shareholders
to be Held on May 12, 1999
Approximate Mailing Date of Proxy Statement and Form of Proxy: April 7,
1999.
INFORMATION CONCERNING VOTE
General
This Proxy Statement and the enclosed form of proxy are furnished in
connection with the solicitation of proxies by the Board of Directors of
Chyron Corporation, a New York corporation (hereinafter, the "Company"), for
use at the annual meeting of shareholders to be held on Wednesday, May 12,
1999, at 9:30 a.m., and at any and all adjournments thereof (the "Annual
Meeting"), with respect to the matters referred to in the accompanying
notice. The Annual Meeting will be held at Loews New York Hotel, located
at 569 Lexington Avenue, New York, New York 10022.
Voting Rights and Outstanding Shares
Only shareholders of record at the close of business on March 24, 1999 are
entitled to notice of and to vote at the Annual Meeting. As of the close
of business on March 12, 1999, 32,058,026 shares of common stock, par value
$.01 per share (the "Common Stock"), of the Company were issued and
outstanding. Each share of Common Stock entitles the record holder thereof
to one (1) vote on all matters properly brought before the Annual Meeting.
Revocability of Proxies
A shareholder who executes and mails a proxy in the enclosed return envelope
may revoke such proxy at any time prior to its use by notice in writing to
the Secretary of the Company, at the above address, or by revocation in
person at the Annual Meeting. Unless so revoked, the shares represented by
duly executed proxies received by the Company prior to the Annual Meeting
will be presented at the Annual Meeting and voted in accordance with the
shareholder's instructions marked thereon. If no instructions are marked
thereon, proxies will be voted (1) FOR the election as directors of the
nominees named below under the caption "ELECTION OF THE BOARD OF
DIRECTORS," and (2) FOR the adoption of the Company's 1999 Incentive
Compensation Plan as discussed under the caption "PROPOSAL TO ADOPT THE 1999
INCENTIVE COMPENSATION PLAN." In their discretion, the proxies are
authorized to consider and vote upon such matters incident to the conduct
of the Annual Meeting and upon such other business matters or proposals as
may properly come before the Annual Meeting that the Board of Directors of
the Company does not know a reasonable time prior to this solicitation will
be presented at the Annual Meeting.
Voting Procedures
All votes shall be tabulated by the inspector of elections appointed for the
Annual Meeting, who shall separately tabulate affirmative and negative
votes, abstentions and broker non-votes. The presence of a quorum for the
Annual Meeting, defined here as a majority of the votes entitled to be cast
at the Annual Meeting, is required. Votes withheld from director nominees
and abstentions will be counted in determining whether a quorum has been
reached. Broker-dealer non-votes are not counted for quorum purposes.
Assuming a quorum has been reached, a determination must be made as to the
results of the vote on each matter submitted for shareholder approval.
Director nominees must receive a plurality of the votes cast at the Annual
Meeting, which means that a vote withheld from a particular nominee or
nominees will not affect the outcome of the Annual Meeting. The adoption
of the Company's 1999 Incentive Compensation Plan must be approved by a
majority of the votes cast at the Annual Meeting. Abstentions are not
counted in determining the number of votes cast in connection with the
adoption of the Company's Incentive Compensation Plan.
ELECTION OF THE BOARD OF DIRECTORS
The Board of Directors has nominated nine (9) persons to be elected as
Directors at the Annual Meeting and to hold office until the next annual
meeting or until their successors have been duly elected and qualified. It
is intended that each proxy received by the Company will be voted FOR the
election, as directors of the Company, of the nominees listed below, unless
authority is withheld by the shareholder executing such proxy. Shares may
not be voted cumulatively. Each of such nominees has consented to being
nominated and to serve as a director of the Company if elected. If any
nominee should become unavailable for election or unable to serve, it is
intended that the proxies will be voted for a substitute nominee designated
by the Board of Directors. At the present time, the Board of Directors
knows of no reason why any nominee might be unavailable for election or
unable to serve. The proxies cannot be voted for a greater number of
persons than the number of nominees named herein.
THE BOARD OF DIRECTORS RECOMMENDS A VOTE IN FAVOR OF THIS PROPOSAL.
Director Nominees
The following table sets forth certain information with respect to the
nominees for directors:
Name Company Position and Director of the
Offices Held Company Since
Charles M. Diker Director, Member of
the Audit Committee,
Member of the
Compensation and Stock
Option Committee September, 1995
Joseph A. Flaherty Director October, 1998
Edward Grebow President and Chief
Executive Officer,
Director June, 1997
Donald P. Greenberg Director September, 1996
Roger Henderson Executive Vice President,
Director February, 1999
Alan J. Hirschfield Director, Member of
the Audit Committee July, 1995
Wesley W. Lang, Jr. Director, Member of
the Compensation and
Stock Option
Committee July, 1995
Eugene M. Weber Director, Member of
the Audit Committee July, 1995
Michael I. Wellesley-Wesley Chairman of the Board,
Member of the Compensation
and Stock Option
Committee May, 1995
Charles M. Diker, age 64, is a non-managing principal with the investment
management company of Weiss, Peck & Greer, L.L.C. ("Weiss, Peck & Greer")
and has been associated with such company since 1976. Mr. Diker is the
Chairman of the Board of Directors of Cantel Industries, Inc. ("Cantel"),
a manufacturer of infection control equipment and distributor of diagnostic
devices. Mr. Diker is also a member of the Board of Directors of Data
Broadcasting Corporation ("DBC"), a provider of various financial data and
proprietary information, BeautiControl Cosmetics, Inc., an international
direct sales skin care, cosmetics, health and image company, International
Specialty Products Inc., a manufacturer of specialty chemicals, and AMF
Bowling Inc., an operator of bowling centers.
Joseph A. Flaherty, age 68, is Senior Vice President, Technology for CBS
Corporation, where he is responsible for new television technologies. He has
held such position since 1990. He has been a major force behind the
development and introduction of digital TV and HDTV in the U.S., and directs
all CBS national and international technical standard activities. This
election marks his first to a corporate board of directors. Dr. Flaherty
is a frequent lecturer on television technology and has published over 100
technical articles.
Edward Grebow, age 49, is President and Chief Executive Officer of the
Company and has held such positions since June 1997. Prior to joining
Chyron, Mr. Grebow was President of TELE-TV Systems, a joint venture of Bell
Atlantic, NYNEX and Pacific Telesis, from July 1995 through June 1997. From
February 1988 to July 1995 Mr. Grebow was Senior Vice President Operations
and Administration at CBS, Inc. Prior to his position at CBS, Inc., Mr.
Grebow served as Executive Vice President of the Bowery Savings Bank from
1985 to 1988 and Vice President of JP Morgan & Co. Inc. from 1972 to 1985.
Mr. Grebow is a member of the Board of Trustees of The George Washington
University.
Donald P. Greenberg, age 65, is the Jacob Gould Schurman Professor of
Computer Graphics and Founding Director, Program of Computer Graphics, at
Cornell University. He has been a professor at Cornell University since
1968. He is also a member of the Board of Directors of DBC and PCA
International, an operator of portrait studios.
Roger Henderson, age 42, is Executive Vice President of the Company and has
held such position since May 1996. He also serves as the Managing Director
of Pro-Bel since April 1996. From 1987 to March 1996, he was Software
Director of Pro-Bel and Managing Director of Pro-Bel Software Ltd.
Alan J. Hirschfield, age 63, is Co-Chairman of the Board of Directors and
Co-Chief Executive Officer of DBC and has held such positions since June
1992. Prior to his current positions, he served as Chief Executive Officer
of Twentieth Century-Fox Film Corp., from 1980 to 1985, and Columbia
Pictures Entertainment Inc., from 1973 to 1978. Mr. Hirschfield is also a
member of the Board of Directors of Cantel.
Wesley W. Lang, Jr., age 41, is a Managing Director with the investment
management company of Weiss, Peck & Greer, L.L.C. and has been associated
with such company since 1985. Weiss, Peck & Greer manages, directly or
indirectly, the following funds: WPG Corporate Development Associates IV,
L.L.C., WPG PE Fund Advisor, L.P. and WPG Venture Partners III, L.P. These
funds are shareholders of the Company.
Eugene M. Weber, age 48, is the President of Bluewater Capital Management,
Inc., an investment consulting firm. From 1994 to 1995, Mr. Weber was an
independent consultant to Westpool Investment Trust plc, a shareholder of
the Company and from 1983 to 1994 he was with Weiss, Peck & Greer, L.L.C.,
becoming a partner in 1987.
Michael I. Wellesley-Wesley, age 46, is Chairman of the Board of Directors
and formerly held the position of Chief Executive Officer of the Company
from July 1995 through June 1997. From 1992 until 1995, he was a Director
and Executive Vice President of DBC and from 1990 until 1992 he was a
consultant to that corporation's predecessor. Mr. Wellesley-Wesley was an
executive director of Stephen Rose & Partners Ltd., a London-based
investment banking firm, from 1980 to 1990.
Committees of the Board of Directors and Meeting Attendance
The Board of Directors held six (6) meetings during fiscal year 1998. The
Board of Directors appointed a Compensation and Stock Option Committee (the
"Compensation Committee") and an Audit Committee. Each director attended at
least 75% of the meetings of the Board of Directors and the committees on
which he served.
The Compensation Committee is authorized to review and make recommendations
to the Board of Directors on all matters regarding the remuneration of the
Company's executive officers, including the administration of the Company's
compensation plans. The current members of the Committee are Messrs. Diker,
Lang and Wellesley-Wesley. The Committee held two (2) meetings during
fiscal year 1998.
The Audit Committee is responsible for making recommendations to the Board
of Directors as to the selection of the Company's independent auditor,
maintaining communication between the Board and the independent auditor,
reviewing the annual audit report submitted by the independent auditor and
determining the nature and extent of problems, if any, presented by such
audit warranting consideration by the Board. The current members of the
Audit Committee are Messrs. Diker, Hirschfield and Weber. The Committee
held two (2) meetings during fiscal year 1998.
Executive Officers
In addition to Messrs. Grebow and Henderson, the executive officers of the
Company are as follows:
Roi Agneta - Executive Vice President, age 52. Mr. Agneta was appointed
Executive Vice President of Strategic Planning in May 1996. From October
1995 to May 1996, Mr. Agneta was Vice President of the Company. From 1974
to 1993, he held several executive management positions at the Company,
including Vice President of Engineering and Corporate Marketing. From 1993
to October 1995, he held several senior management positions with Dynatech
Corporation's Video Group, including General Manager, Production Business
Unit.
Dawn R. Johnston - Senior Vice President and Chief Financial Officer, age
46. Ms. Johnston joined the Company in September 1998 as the Company's
Senior Vice President and Chief Financial Officer. Prior to joining Chyron,
she held the position of Vice President of Finance at Cardion, Inc., a
Siemens Company, from 1996-1998. From 1993 to 1996, she was the Chief
Financial Officer at Frequency Electronics, Inc. From 1983 to 1993 she was
a Senior Audit Manager with PricewaterhouseCoopers.
James M. Paul - Senior Vice President, Human Resources, age 55. Mr. Paul
joined the Company as Senior Vice President, Human Resources in October
1997. From February 1995 through September 1997 he held the position of
Senior Vice President, Human Resources with TELE-TV. From 1993 to 1995, Mr.
Paul was Human Resource Director for Bell Atlantic Information and Video
Services. From 1975 to 1993 he held several management positions at PRC
Inc., a subsidiary of Black and Decker Corporation, including Vice
President, Human Resource Policy and Programs and Vice President of Human
Resources for the Commercial and International Group.
EXECUTIVE COMPENSATION AND OTHER INFORMATION
Summary Compensation Table
The following table sets forth the cash and noncash compensation awarded to
or earned by all Chief Executive Officers who served in that position during
fiscal year 1998 and, the most highly compensated executive officers of the
Company who held such positions at the end of fiscal year 1998, and received
in excess of $100,000 in annual salary and bonus.
Summary Compensation Table
Annual Compensation(1) Long Term Compensation
Name and Principal Position Securities
Underlying All Other
Year Salary Bonus Options(2) Compensation(3)
Edward Grebow
President, CEO and Director
1998 $400,000 $103,500 (4) 50,000 $11,331
1997 215,385 105,000 700,000 474
Roi Agneta
Executive Vice President, Strategic Planning
1998 164,066 23,000 20,000 3,305
1997 158,146 30,000 20,000 2,195
1996 156,105 31,320 50,000 1,021
Roger Henderson
Executive Vice President, Managing Director Pro-Bel and Director
1998 154,284 31,025 (5) 35,000
1997 131,040 26,200 25,000
1996 88,329 16,900 50,000
James M. Paul
Senior Vice President, Human Resources
1998 150,000 24,000 25,000 1,137
(1) Other Annual Compensation has been excluded since such amounts do not
exceed the lesser of $50,000 or 10% of the total annual base salary and
bonus disclosed in this table for the respective officer.
(2) 1998 excludes any previously issued options that were canceled and
reissued on December 14, 1998 pursuant to the Board Resolution.
(3) All other compensation includes Company contributions under the
Company's 401(k) plan. In addition, for Mr. Grebow includes amounts paid
with respect to term life insurance of $10,301 for 1998.
(4) For 1998, one half of Mr. Grebow's bonus was paid in 28,463 shares of
restricted stock and the balance of $51,750 was paid in cash.
(5) For 1998, one tenth of Mr. Henderson's bonus was paid in 1,550 shares
of restricted stock and the balance of $27,923 was paid in cash.
Stock Option Grants
Set forth below is information on grants of stock options under the
Company's 1995 Long-Term Incentive Plan (the "1995 Plan") for the named
executive officers for the period January 1, 1998 to December 31, 1998.
Individual Grants(1) Grant Value
Percent of
Number of Total
Securities Options Grant
Underlying Granted to Exercise Date
Options Employees in Price Expiration Present
Granted(2) Fiscal Year Per Share Date Value
Edward Grebow 50,000 7.5% $2.00 10/28/08 $43,500
Roi Agneta 20,000 3.0% $2.00 10/28/08 17,400
Roger Henderson 35,000 5.2% $2.00 10/28/08 30,450
Dawn R. Johnston 25,000 3.7% $2.00 10/28/08 21,750
James M. Paul 25,000 3.7% $2.00 10/28/08 21,750
(1) Excludes any previously issued options that were canceled and reissued
on December 14, 1998 pursuant to the Board resolution.
(2) All options reported above were awarded under the 1995 Plan. The
Company has not granted any stock appreciation rights.
"Grant Date Present Value" is determined under the Black-Scholes pricing
model, a widely recognized method of determining the present value of
options. The factors used in this model are as follows: stock price -
$2.00; exercise price - $2.00; dividend yield - 0.0%; volatility -50%;
risk-free rate of return - 4.13% and option terms of 4-5 years. The actual
value, if any, an executive officer may realize will depend on the extent
to which conditions as to exercisability of the option are satisfied and the
excess of the stock price over the exercise price on the date the option is
exercised. There is no assurance that the value realized by an executive
officer will be consistent with the value estimated by the Black-Scholes
model. The estimated values under the model are based on assumptions
regarding interest rates, stock price volatility and future dividend yield.
The model is used for valuing market traded options and is not directly
applicable to valuing stock options granted under the 1995 Plan which cannot
be transferred.
The purpose of the 1995 Plan, among other things, was to retain and motivate
key employees by enabling such employees to own shares of company stock.
During 1998, however, it was determined that the objectives of the plan were
not being achieved due to the fact that all stock options that were then
outstanding had an exercise price greater than the market value of the
common stock. Therefore, the Compensation Committee believed that it was in
the best interests of the Company to cancel the stock options that were
previously granted and to issue new stock options in a manner that will
incentivize such employees. Therefore, on December 14, 1998, pursuant to a
board resolution, the Company offered certain option holders (including the
executive officers) who held stock options issued prior to September 30,
1998, and were current employees of the Company, the opportunity to exchange
those existing options (which ranged in exercise price from $2.50 to
$16.125) for new options. As a result, options to purchase approximately
0.9 million shares of Common Stock were reissued with the following terms:
(a) fifty percent of such new stock options were granted with an exercise
price equal to the higher of (i) the closing price of the Common Stock on
December 14, 1998, or (ii) the average closing price of the Common Stock for
the 90 trading days prior to December 14, 1998 (the "Repricing Formula");
all of such stock options have a term of ten years and shall vest in equal
installments over three years, commencing on December 15, 1999; and (b) the
remaining fifty percent of such new stock options were granted with an
exercise price in accordance with the Repricing Formula; all of such stock
options also have a term of ten years but such stock options shall vest in
their entirety on December 15, 2003; provided, however, that such options
shall vest earlier upon the occurrence of the following: (i) one-third of
such stock options shall vest if the Company reports an earnings per share
of at least $0.16 in any given fiscal year ("Base Year"), (ii) an additional
one-third of such stock options shall vest if the Company reports an
earnings per share of at least $0.20 in any fiscal year subsequent to the
Base Year (the "Second Year"), and (iii) the final one-third of such stock
options shall vest if the Company reports earnings per share of $0.25 in any
fiscal year subsequent to the Second Year.
In addition, pursuant to the Board resolution, the options previously
granted to Mr. Grebow were canceled and reissued with the following terms:
(a) 250,000 options with an exercise price in accordance with the Repricing
Formula that vest in three equal installments on the date of the grant and
on the first and second anniversary of the date of grant; (b) 250,000
options with an exercise price in accordance with the Repricing formula that
will vest in their entirety on the fifth anniversary of the date of the
grant provided, however, that such options shall vest earlier upon the
occurrence of the following: (i) one-third if the Company reports earnings
per share of at least $0.16 in any given fiscal year ("Base Year"), (ii) an
additional one-third if the Company reports earnings per share of at least
$0.20 in any given fiscal year subsequent to the Base Year (the "Second
Year"), and (iii) the final one-third if the Company reports earnings per
share of at least $0.25 in any given fiscal year subsequent to the Second
Year; (c) 200,000 options at $2.00 per share that will vest in their
entirety on the fifth anniversary of the date of the grant provided,
however, as long as Mr. Grebow is an employee of the Company, that such
options shall vest earlier as follows: (i) 100,000 of such options if the
average closing price per share of Common Stock of the Company as reported
by the New York Stock Exchange ("NYSE") for any consecutive 30 trading days
is $3.333 or greater; (ii) the remaining 100,000 options shall vest if the
average closing price per share of Common Stock of the Company as reported
by the NYSE for any consecutive 30 trading days is $4.444 or greater; or
(iii) all 200,000 options (or any unvested options) if the Company's
earnings per share from operations for any fiscal year equals or exceeds
$0.66. All of such options have a term of ten years.
Option Repricing
Number of Market Exercise Length of
securities price of price of original option
underlying stock at stock at New term remaining
options time of time of exercise at date of
Date repriced repricing repricing price repricing
Edward Grebow
12/14/98 500,000 $ 2.00 $ 4.250 $ 2.125 77 months
200,000 $ 2.00 $ 4.250 $ 2.000 77 months
Roi Agneta
12/14/98 50,000 $ 2.00 $ 5.625 $ 2.125 24 months
20,000 $ 2.00 $ 5.375 $ 2.125 107 months
Roger Henderson
12/14/98 50,000 $ 2.00 $ 5.875 $ 2.125 39 months
25,000 $ 2.00 $ 5.375 $ 2.125 107 months
James M. Paul
12/14/98 25,000 $ 2.00 $ 5.375 $ 2.125 107 months
Pension Plans
The Company maintains a domestic, qualified non-contributory defined benefit
pension plan (the "U.S. Pension Plan") for all employees of Chyron
Corporation. Under the U.S. Pension Plan, a participant retiring at normal
retirement age receives a pension benefit equal to the sum of: (i) 25% of
his or her average monthly total compensation up to the level of social
security covered compensation plus 38% of such earnings in excess of social
security covered earnings for years of service prior to July 1, 1998 and
(ii) 32% of his or her average monthly base compensation up to the level of
social security covered compensation plus 48% of such earnings in excess of
social security covered earnings for years of service subsequent to July 1,
1998. A participant's average monthly compensation is his or her monthly
compensation averaged during the five consecutive years during the ten-year
period prior to his or her termination that produces the highest average
monthly compensation.
Participants in the U.S. Pension Plan vest according to the following
schedule:
Employees Hired Prior to Employees Hired On or After
July 1, 1998 July 1, 1998
Years of Service Amount Vested Years of Service Amount Vested
Less than 2 0% Less than 5 0%
2 20% 5 or more 100%
3 40%
4 60%
5 or more 100%
As of December 31, 1998, the number of years of service for the named
executive officers is as follows: Mr. Grebow, 1 year; Mr. Agneta, 3 years;
Ms. Johnston, 0 years; and Mr. Paul, 1 year.
The following table shows the aggregate annual benefits under the U.S.
Pension Plan as now in effect that would be currently payable to
participants retiring at age sixty-five on a single-life basis under various
assumptions as to salary and years of service. Benefits under the U.S.
Pension Plan are payable in the form of a monthly, lifetime annuity
commencing on the later of normal retirement age or the participant's date
of retirement, or, at the participant's election, in a lump sum or
installment payments. The amounts shown reflect the level of social
security covered compensation for a participant reaching age sixty-five in
1998. In addition, the participant is entitled to receive social security
benefits. The Employee Retirement Income Security Act of 1974 and the
Internal Revenue Code of 1986, as amended, limit the annual retirement
benefit that may be paid out of funds accumulated under a qualified pension
plan. The current maximum annual benefit payable under the U.S. Pension
Plan is $130,000. This maximum is proportionately reduced for years of plan
participation less than ten. Compensation in excess of $160,000 may not be
taken into account in the determination of benefits under the U.S. Pension
Plan.
U.S. Pension Plan Table
Highest Consecutive Five-Year Years of Credited Service at
Average Compensation During Retirement at Age 65
the Last Ten Years of Employment
10 20 30 35
$ 50,000 $ 5,400 $10,900 $16,300 $19,000
$100,000 $12,300 $24,600 $36,900 $43,000
$150,000 $19,100 $38,300 $57,400 $67,000
$160,000 $20,500 $41,000 $61,600 $71,800
The Company's U.K. subsidiary, Pro-Bel, has a non-contributory defined
benefit pension plan (the "U.K. Pension Plan") covering all permanent
employees of Pro-Bel. Under the U.K. Pension Plan, a participant retiring
after working 40 years with Pro-Bel will receive 66.66% of his or her basic
earnings averaged over the last thirty-six (36) months of employment in
addition to the U.K.'s basic and earnings related pension. Under U.K.
legislation, benefits vest on a pro rata basis following completion of two
(2) years membership. Spouses' pension of 50% of the members pension are
payable on the death of the plan member whether in service or following
retirement. As of December 31, 1998, Mr. Henderson, a participant in the
U.K. Pension Plan, has 20 years of credited service.
Directors' Compensation
Directors of the Company who are also salaried officers or employees of the
Company do not receive special or additional compensation for serving on the
Board of Directors or any of its committees. Each director who is not a
salaried officer or employee of the Company receives an annual fee of
$5,000, plus $1,000 for attending each meeting of the Board of Directors and
$500 for attending each committee meeting. In addition, each non-employee
director receives options, to purchase 5,000 shares of Common Stock at an
exercise price equal to the market value on the last trading day of each
July.
Employment Contracts and Termination of Employment
and Change-In-Control Arrangements
The Company has an employment agreement with Mr. Edward Grebow, President
and Chief Executive Officer. The agreement runs until June 4, 2000 and
contains an automatic renewal provision for successive one (1) year terms
unless terminated by the Company or Mr. Grebow. Mr. Grebow currently
receives a base salary of $414,000 and is eligible to receive an additional
bonus of up to 50% of his base salary, of which $50,000 is guaranteed. If
the agreement is terminated with cause then Mr. Grebow is entitled only to
receive that portion of his base salary and guaranteed bonus owed through
date of termination. If he is terminated without cause prior to the end of
the first two years of employment, Mr. Grebow is entitled to a severance
payment equal to eighteen months of his base salary plus the pro-rata
portion of his guaranteed bonus for such period and additionally, all
options granted to Mr. Grebow that have not vested at date of termination
shall immediately vest. If the agreement is terminated without cause or Mr.
Grebow resigns for good reason during the third-year of the employment term,
Mr. Grebow is entitled to receive a severance payment equal to his entire
base salary and the pro-rata portion of his guaranteed bonus for a period
of twelve months and all options granted which have not vested at the date
of termination shall immediately vest. In the event of a change-in control
of the Company, the Company shall pay Mr. Grebow all compensation due under
his employment agreement through the remainder of the employment term and
all options that were not vested shall vest immediately. The agreement also
contains certain restrictions on competition.
The Company has an employment agreement with Mr. Roger Henderson, Executive
Vice President and Managing Director, Pro-Bel, which is in effect until
November 30, 2001. Under the agreement, Mr. Henderson is entitled to receive
a base salary of 102,000 British pounds sterling ($170,000 at the exchange
rate at December 31, 1998). If the agreement is terminated with cause, Mr.
Henderson is entitled only to receive that portion of his base salary owed
through date of termination. If the agreement is terminated without cause,
Mr. Henderson is entitled to receive his salary through November 30, 2001.
If the contract is not renewed upon expiration, Mr. Henderson is entitled
to twelve months of salary. The agreement also contains certain restrictions
on competition.
The Company has an employment agreement with Mr. Paul, Senior Vice
President, Human Resources, which runs until June 30, 2001. Mr. Paul is
entitled to receive an annual base salary of $150,000 and is eligible for
a bonus of up to 20% of his base salary subject to the achievement of
certain annual performance criteria which can be increased at the discretion
of the Chief Executive Officer. If the agreement is terminated with cause,
Mr. Paul is entitled only to receive that portion of his base salary owed
through date of termination. If the agreement is terminated without cause,
Mr. Paul will be entitled to his base salary and bonus for the lesser of
eighteen months or the balance of his employment term. In addition, all
options granted which have not vested at the date of termination shall
immediately vest. The agreement also contains certain restrictions on
competition.
COMPENSATION AND STOCK OPTION COMMITTEE
REPORT ON EXECUTIVE COMPENSATION
It is the duty of the Compensation Committee to develop, administer, and
review the Company's compensation plans, programs, and policies, to monitor
the performance and compensation of executive officers and other key
employees and to make appropriate recommendations and reports to the Board
of Directors relating to executive compensation.
The Company's compensation program is intended to motivate, retain and
attract management, linking incentives to financial performance and enhanced
shareholder value. The program's fundamental philosophy is to tie the
amount of compensation "at risk" for an executive to his or her contribution
to the Company's success in achieving superior performance objectives.
The compensation program currently consists of two components: (1) a base
salary and (2) the potential for an annual cash bonus of up to 50% of base
salary for the Chief Executive Officer, and up to 25% of base salary for the
other executive officers, based upon the satisfaction of certain performance
criteria set annually by the Compensation Committee for each position. The
criteria may relate to overall Company performance, the individual
executive's performance or a combination of the two, depending upon the
particular position at issue. The second component constitutes the "at
risk" portion of the compensation program. Additionally, employees
(including executive officers) are eligible to receive awards pursuant to
the Company's long-term incentive plan.
All amounts paid or accrued during fiscal year 1998 under the
above-described compensation program are included in the table found in the
section captioned "Summary Compensation Table."
The Compensation and Stock Option Committee
Respectfully submitted,
Charles M. Diker, Wesley W. Lang, Jr., and
Michael I. Wellesley-Wesley
April 7, 1999
STOCK PERFORMANCE CHART
The following chart compares the yearly percentage change in the cumulative
total shareholder return on the Common Stock during the five fiscal years
ended December 31, 1998 with the cumulative total return on the Russell 2000
Index and a peer group selected by the Company consisting of businesses
engaged in supplying equipment to the broadcast and video industry. The
comparison assumes $100 was invested on December 31, 1993 in the Common
Stock and in each of the foregoing indices and assumes reinvestment of
dividends.
The businesses included in the Company-selected peer group are: Avid
Technology Inc., Carlton Communications Plc, Leitch Technology Corp.,
Philips Electronics NV, Sony Corp., Tektronix Inc. The returns of each
component issuer in the foregoing group have been weighted according to the
respective issuer's stock market capitalization.
[PERFORMANCE CHART APPEARS HERE]
Chyron Peer Group Russell 2000
December 31, 1993 $100 $100 $100
Year ended December 31, 1994 73 118 98
Year ended December 31, 1995 400 133 126
Year ended December 31, 1996 418 147 147
Year ended December 31, 1997 215 201 180
Year ended December 31, 1998 91 188 179
On February 7, 1997 the Company effected a one-for-three reverse stock split
of its Common Stock. The table above reflects the one-for-three reverse
stock split. On March 12, 1999, 32,058,026 shares of Common Stock were
outstanding.
PROPOSAL TO ADOPT THE 1999 INCENTIVE COMPENSATION PLAN
Upon recommendation of the Board of Directors of the Company, the Board is
hereby submitting to the shareholders of the Company for their approval the
proposed adoption of the 1999 Incentive Compensation Plan. The proposed plan
is included as Exhibit 1. The principal features of the Plan are described
below.
THE BOARD OF DIRECTORS RECOMMENDS A VOTE IN FAVOR OF THIS PROPOSAL.
Summary of the Plan
The purpose of the 1999 Plan is to assist the Company in attracting,
retaining, and rewarding high-quality executives, employees, directors and
other persons who provide services to the Company, enabling such persons to
acquire or increase a proprietary interest in the Company and to strengthen
the mutuality of interests between such persons and to provide annual and
long-term incentives to expend their maximum efforts in the creation of
shareholder value. The 1999 Plan will be administered by the Compensation
Committee, consisting of two or more members of the Board of Directors
appointed by the Board. The 1999 Plan does not limit the availability of
awards to any particular class or classes of Eligible Employees. If an
award were to lapse or rights to an award otherwise were to terminate, the
shares subject to the award would be available for future awards to the
extent permitted by applicable federal securities laws. Awards granted under
the Plan are not transferable, except in the event of the participant's
death. In the event of a change in control, a right to exercise that was not
previously exercisable and vested shall become fully exercisable and vested
at the time of change in control. The total number of shares reserved and
available for delivery in connection with awards under the Plan shall be
1,500,000 plus the number of shares remaining available under the 1995 Plan.
Awards to Eligible Employees under the Plan will be made in the form of
stock options, stock appreciation rights ("SARs"), restricted stock,
restricted stock units ("RSUs") and annual incentive and performance awards.
A non-employee director will automatically be granted options at the close
of business on the last trading day of each July. The Compensation
Committee, in its sole discretion, designates whom is eligible to receive
awards, determines the form of each award, determines the number of shares
of stock subject to each award, establishes the exercise price of each award
and such other terms and conditions applicable to the award as the
Compensation Committee deems appropriate.
Stock option awards can be either incentive or non-incentive. In either
case, the exercise price of the option would not be less than the fair
market value of the underlying shares as of the date the award is granted.
Options would become exercisable at such times as may be established by the
Compensation Committee when granting the award. No stock option could be
exercised more than ten years after the date the option is granted.
A SAR allows the holder, upon exercise, to receive the excess of the fair
market value of one share of Common Stock of the Company on the date of
exercise over the grant price of the SAR. The Compensation Committee shall
determine the circumstances under which a SAR may be exercised, the month
of exercise and method of settlement. SARs may be awarded independently or
in tandem with other awards.
Restricted stock awards are awards of shares subject to such restrictions
as to transferability and risk of forfeiture as imposed by the Compensation
Committee, which restrictions may lapse separately under such circumstances
such as achievement of performance goals and/or future service requirements.
Except to the extent restricted under the terms of the 1999 Plan, any
employee granted restricted stock shall have all the rights of a shareholder
including the right to vote and receive dividends.
The Compensation Committee is authorized to grant RSUs to participants which
are rights to receive stock, cash, or a combination thereof at the end of
a specified deferral period. The Compensation Committee is also authorized
to grant stock as a bonus or to grant stock in lieu of obligations to pay
cash under the 1999 Plan or under other compensatory arrangements.
The Board of Directors of the Company may amend or terminate the 1999 Plan
at any time without the consent of shareholders, except that any amendment
or alteration to the Plan shall be subject to the approval of the
Corporation's shareholders not later than the annual meeting next following
such Board action if such shareholder approval is required by any federal
or state law or regulation or the rules of any stock exchange, provided
that, without the consent of an affected Participant, no such Board action
may materially and adversely affect the rights of such Participant under any
previously granted and outstanding award.
OTHER MATTERS ARISING AT THE ANNUAL MEETING
The matters referred to in the Notice of Annual Meeting and described in
this Proxy Statement are, to the knowledge of the Board of Directors, the
only matters that will be presented for consideration at the Annual Meeting.
If any other matters should properly come before the Annual Meeting, the
persons appointed by the accompanying proxy will vote on such matters in
accordance with their best judgment pursuant to the discretionary authority
granted to them in the proxy.
PRINCIPAL SHAREHOLDERS
Security Ownership of Certain Beneficial Owners
The following table sets forth, as of March 16, 1999, certain information
about all persons who, to the Company's knowledge, were beneficial owners
of 5% or more of Common Stock of the Company(1).
Name and Address of Amount and Nature of Percent of
Beneficial Owner Beneficial Ownership(2) Class(2)(3)
Philip Greer (4) 10,367,965 32.02%
Weiss, Peck & Greer, L.L.C.
555 California Street
San Francisco, California 94104
WPG Corporate Development 6,112,095 18.90%
Associates IV, L.L.C.(5)
One New York Plaza
New York, New York 10004
WPG PE Fund Advisor, L.P.(6) 6,112,095 18.90%
One New York Plaza
New York, New York 10004
London Merchant Securities plc(7) 3,541,596 11.00%
Carlton House
33 Robert Adam Street
London, W1M 5AH
England
WPG Venture Partners III, L.P.(8) 2,781,675 8.65%
555 California Street
San Francisco, California 94104
Gill Cogan (9) 2,781,675 8.65%
Weiss, Peck & Greer, L.L.C.
555 California Street
San Francisco, California 94104
Security Ownership of Management
The following table sets forth, as of March 16, 1999, certain information
with respect to the beneficial ownership of each class of the Company's
equity securities by each director and the named executive officer of the
Company and all directors and executive officers of the Company as a
group(1).
Name of Amount and Nature of Percent of
Beneficial Owner Beneficial Ownership(2) Total(2)(3)
Wesley W. Lang(10) 7,601,290 23.54%
Michael I. Wellesley-Wesley(11) 2,912,462 9.08%
Charles M. Diker(12) 545,941 1.70%
Alan J. Hirschfield(13) 506,513 1.56%
Edward Grebow(14) 223,061 *
Roger Henderson(15) 36,298 *
Eugene M. Weber(16) 34,109 *
James M. Paul(17) 12,500 *
Donald P. Greenberg(18) 11,666 *
Roi Agneta 2,198 *
Joseph Flaherty 1,000 *
Dawn R. Johnston 0 *
All directors and executive 11,887,038 36.53%
officers as a group
(12 persons)
* Less than one percent (1%).
(1) These tables are based upon information supplied by Schedules 13D and
13G, if any, filed with the Securities and Exchange Commission (the
"SEC"). Unless otherwise indicated in the footnotes to the table and
subject to the community property laws where applicable, each of the
shareholders named in this table has sole voting and investment
power with respect to the shares shown as beneficially owned by
him/her. Applicable percentage of ownership is based on 32,058,026
shares of Common Stock, which were outstanding on March 12, 1999.
(2) Beneficial ownership is determined in accordance with the rules of
the SEC. In computing the number of shares beneficially owned by a
person and the percentage of ownership of that person, shares of
Common Stock subject to options held by that person that are
currently exercisable or exercisable within 60 days of March 12,
1999 are deemed outstanding. 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 sole
voting and investment power with respect to the shares set forth
opposite such person's name.
(3) In calculating the percent of the outstanding shares of Common Stock,
all shares issuable on exercise of stock options held by the
particular beneficial owner that are included in the column to the
left of this column are deemed to be outstanding.
(4) Mr. Greer is a General Partner of WPG PE Fund Advisor, L.P. ("PEA"),
WPG Venture Partners III, L.P. ("WPGVP") and WPG Private Equity
Partners Overseas, L.P. ("PEPO"). PEPO serves as the General Partner
of WPG Corporate Development Associates IV (Overseas), L.P. ("CDAO")
which beneficially owns 1,474,204 shares (which includes 45,832
shares which may be acquired upon the conversion of presently
convertible debentures). Mr. Greer disclaims beneficial ownership
of such shares, except to the extent of his interest in such
entities.
(5) Includes 188,564 shares which may be acquired upon the conversion of
presently convertible debentures.
(6) PEA serves as the Fund Investment Advisor of WPG Corporate
Development Associates IV, L.L.C. ("CDA"). PEA disclaims beneficial
ownership of such shares, except to the extent of its interest in
CDA.
(7) Includes 2,403,123 shares beneficially owned by Westpool Investment
Trust plc and 1,138,473 shares beneficially owned by Lion Investments
Limited (of which 75,020 shares and 35,685 shares, respectively, may
be acquired upon the conversion of presently convertible debentures).
These entities are wholly owned subsidiaries of London Merchant
Securities plc.
(8) WPGVP serves as the Managing Member of WPG Enterprise Fund II, L.L.C.
("WPGEF") and Weiss, Peck & Greer Venture Associates III, L.L.C.
("WPGVA"), which beneficially own 1,518,494 and 1,263,181 shares,
respectively (which include 46,634 and 39,334 shares, respectively,
which may be acquired upon the conversion of presently convertible
debentures).
(9) Mr. Cogan is a General Partner of WPGVP. Mr. Cogan disclaims
beneficial ownership of such shares, except to the extent of his
interest in WPGVP.
(10) Includes 14,999 shares that may be acquired upon the exercise of
presently exercisable options. Also Includes 7,586,298 shares
beneficially owned by CDA, CDAO, PEA, and PEPO . Mr. Lang is a
General Partner of PEA and PEPO. Mr. Lang disclaims beneficial
ownership of such shares (other than the options), except to the
extent of his interests in such entities.
(11) Shares are directly owned by Paris Investments Limited, an entity of
which Michael I. Wellesley-Wesley is the sole beneficiary.
(12) Mr. Diker directly owns 450,127 shares of Common Stock and is the
president of a Foundation which owns 40,000 shares of Common Stock.
Also includes 39,999 shares that may be acquired upon the exercise of
presently exercisable options and 15,815 shares that may be acquired
upon the conversion of presently convertible debentures.
(13) Includes 14,999 shares that may be acquired upon the exercise of
presently exercisable options and 15,408 shares that may be acquired
upon the conversion of presently convertible debentures.
(14) Includes 83,333 shares that may be acquired upon the exercise of
presently exercisable options and 12,165 shares that may be acquired
upon the conversion of presently convertible debentures. Also
includes 28,463 restricted shares granted as part of Mr. Grebow's
1998 fiscal year bonus in lieu of cash, pursuant to the terms of the
grant, such shares may not be sold for a period of one year from the
date of grant.
(15) Includes 1,158 shares as to which Mr. Henderson disclaims beneficial
ownership. Also includes 1,550 restricted shares granted as part of
Mr. Henderson's 1998 fiscal year bonus in lieu of cash, pursuant to
the terms of the grant, such shares may not be sold for a period of
one year from the date of grant.
(16) Includes 14,999 shares that may be acquired upon the exercise of
presently exercisable options and 8,110 shares that may be acquired
upon the conversion of presently convertible debentures.
(17) Includes 12,500 shares that may be acquired upon the exercise of
presently exercisable options.
(18) Includes 11,666 shares that may be acquired upon the exercise of
presently exercisable options.
INDEMNIFICATION OF DIRECTORS AND OFFICERS
The Company has entered into indemnity agreements with each of its directors
and executive officers. The indemnity agreements provide that directors and
executive officers (the "Indemnities") will be indemnified and held harmless
to the fullest possible extent permitted by law including against all
expenses (including attorney's fees), judgments, fines, penalties and
settlement amounts paid or incurred by them in any action, suit or
proceeding on account of their services as director, officer, employee,
agent or fiduciary of the Company or as directors, officers, employees or
agents of any other company or entity at the request of the Company. The
Company will not, however, be obligated pursuant to the agreements to
indemnify or advance expenses to an indemnified party with respect to any
action (1) in which a judgment adverse to the Indemnitee establishes (a)
that the Indemnitee's acts were committed in bad faith or were the result
of active and deliberate dishonesty and, in either case, were material, or
(b) that the Indemnitee personally gained in fact a financial profit or
other advantage to which he or she was not legally entitled, or (2) which
the Indemnitee initiated, prior to a change in control of the company,
against the Company or any director or officer of the Company unless the
Company consented to the initiation of such claim. The indemnity agreements
require a Indemnitee to reimburse the Company for expenses advanced only to
the extent that it is ultimately determined that the director or executive
officer is not entitled, under Section 723(a) of the New York Business
Corporation Law and the indemnity agreement, to indemnification for such
expenses.
SHAREHOLDER PROPOSALS
A shareholder of the Company who wishes to present a proposal for action at
the Company's 2000 Annual Meeting of Shareholders must submit such proposal
to the Company, in accordance with Rule 14-8 under the Securities Exchange
Act of 1934. To be eligible for inclusion such proposal must be received by
the Company, no later than December 8, 1999.
COST OF SOLICITATION OF PROXIES
The solicitation of proxies pursuant to this Proxy Statement is made by and
on behalf of the Company's Board of Directors. The cost of such
solicitation will be paid by the Company. Such cost includes the
preparation, printing and mailing of the Notice of Annual Meeting, Proxy
Statement, Annual Report and form of proxy. The solicitation will be
conducted principally by mail, although directors, officers and employees
of the Company (at no additional compensation) may solicit proxies
personally or by telephone or telegram. Arrangements will be made with
brokerage houses and other custodians, nominees and fiduciaries for the
forwarding of proxy material to the beneficial owners of shares held of
record by such fiduciaries, and the Company may reimburse such persons for
their reasonable expenses in so doing.
INDEPENDENT PUBLIC ACCOUNTANTS
Representatives of PricewaterhouseCoopers LLP, which audited the Company's
1996, 1997 and 1998 financial statements, are expected to be present at the
Annual Meeting. They will have the opportunity to make a statement if they
so desire, and they are expected to be available to respond to appropriate
questions.
SECTION 16(a) REPORTING DELINQUENCIES
Section 16(a) of the Securities and Exchange Act of 1934 requires the
Company's directors and executive officers, and persons who beneficially own
more than ten percent (10%) of a registered class of the Company's equity
securities, to file with the SEC and The New York Stock Exchange reports of
ownership and changes in ownership of Common Stock and other equity
securities of the Company. Executive officers, directors and greater than
ten percent (10%) beneficial owners are required by SEC regulation to
furnish the Company with copies of all Section 16(a) reports that they file.
Based solely upon a review of the copies of such reports furnished to the
Company or written representations that no other reports were required,
the Company believes that, during fiscal year 1998, all filing requirements
applicable to its executive officers, directors, and greater than ten
percent (10%) beneficial owners were met except that Mr. Weber was late in
filing one Form 4.
ANNUAL REPORT ON FORM 10-K
The Company will provide without charge to each person whose proxy is
solicited, upon the written request of any such person, a copy of the
Company's Annual Report on Form 10-K for the period January 1, 1998 through
December 31, 1998, filed with the SEC, including the financial statements
and the schedules thereto. The Company does not undertake to furnish
without charge copies of all exhibits to its Form 10-K, but will furnish any
exhibit upon the payment of Twenty Cents ($0.20) per page or a minimum
charge of Five Dollars ($5.00). Such written requests should be directed
to Ms. Judy Lane, Chyron Corporation, 5 Hub Drive, Melville, New York
11747. Each such request must set forth a good faith representation that,
as of March 24, 1999, the person making the request was a beneficial owner
of securities entitled to vote at the Annual Meeting. The Company
incorporates herein the Annual Report by reference.
By Order of the Board of Directors,
/s/Daniel I. DeWolf
Daniel I. DeWolf
Secretary
Melville, New York
April 7, 1999