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SCHEDULE 14C
(Rule 14c-101)
Information Statement Pursuant to Section 14(c)
of the Securities Exchange Act of 1934
Check the appropriate box:
/ / Preliminary Information Statement / / Confidential, for Use of the
Commission Only (as permitted
by Rule 14c-5(d)(2))
/X/ Definitive Information Statement
Market America, Inc.
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(Name of Registrant as Specified in Charter)
Payment of Filing Fee (Check the appropriate box):
/X/ No fee required.
/ / Fee computed on table below per Exchange Act Rules 14c-5(g) and 0-11.
(1) Title of each class of securities to which transaction applies:
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(2) Aggregate number of securities to which transaction applies:
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(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):
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(4) Proposed maximum aggregate value of transaction:
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(5) Total fee paid:
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/ / 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:
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(2) Form, Schedule or Registration Statement No:
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(3) Filing Party:
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(4) Date Filed: August 25, 2000
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NOTICE OF ANNUAL MEETING OF SHAREHOLDERS OF
- MARKET AMERICA, INC. -
To the Shareholders of Market America, Inc.:
Notice is hereby given that the annual meeting of the shareholders of
Market America, Inc. will be held at the Company's headquarters located at 1302
Pleasant Ridge Road, Greensboro, North Carolina, on September 13, 2000, at 10:00
a.m., for the following purposes:
(1) To re-elect existing directors; and
(2) To transact such other business as may properly come
before the meeting.
The determination of shareholders entitled to notice of and to vote at
the meeting was made as of the close of business on July 13, 2000, which is the
record date fixed by the Board of Directors for such purpose.
By order of the Board of Directors,
/s/ Loren Ashley Ridinger
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Loren Ashley Ridinger
Secretary
Dated: August 25, 2000
1
MARKET AMERICA, INC.
1302 Pleasant Ridge Road
Greensboro, NC 27409
August 25, 2000
INFORMATION STATEMENT
FOR ANNUAL MEETING OF SHAREHOLDERS
TO BE HELD ON SEPTEMBER 13, 2000
WE ARE NOT ASKING YOU FOR A PROXY
AND YOU ARE REQUESTED NOT TO SEND US A PROXY
This Information Statement is being furnished by the management of
Market America, Inc. (the "Company") in connection with the annual meeting of
shareholders of the Company to be held on September 13, 2000, at 10:00 a.m., at
the Company's headquarters located at 1302 Pleasant Ridge Road, Greensboro,
North Carolina. The meeting is being held for the purposes of electing directors
and transacting such other business as may lawfully come before the meeting.
As of July 13, 2000, the record date for determining the shareholders
entitled to notice of and to vote at the meeting, there were 19,450,000 shares
of the Company's Common Stock outstanding and entitled to be voted. A majority
of such shares will constitute a quorum for the transaction of business at the
meeting. Abstentions by shareholders represented at the meeting will be counted
as present for determining the presence of a quorum.
Each share will have one vote at the annual meeting. Those persons who
receive the highest numbers of votes will be elected as directors. Except as
otherwise required by law, all other matters will be approved if the votes cast
favoring the action exceed the votes cast opposing the action. Abstentions will
be excluded entirely from the vote, and will have no effect on the outcome.
Since the Company's management is not soliciting proxies for the meeting, there
will be no returns of proxies from brokers holding shares in street name without
instructions for voting. Therefore, such "broker non-votes" will have no effect
on any shareholder vote.
Annual Report and Form 10-K
A copy of the Annual Report to Shareholders of the Company for the
fiscal year ended April 30, 2000 is being sent with this Information Statement
to all shareholders of record on the record date for the annual meeting.
Additional copies are available from the Company on request. A copy of the most
recent annual report of the Company filed with the U.S. Securities and Exchange
Commission on Form 10-K may be obtained from the Company by any shareholder on
written request. Direct your request to: Corporate Secretary, Market America,
Inc., 1302 Pleasant Ridge Road, Greensboro, NC 27409.
2
Election of Directors
The members of the Company's Board of Directors elected at the annual
meeting will serve until the next annual meeting or until their successors are
elected and qualified. Listed below are the persons nominated for election to
the Board of Directors by management.
Nominees for Membership on Board of Directors
James H. Ridinger, 50, is Chairman of the Board of Directors and CEO of the
Company. He founded the Company in 1992 and has been a Director and Chief
Executive Officer of the Company since that time.
On May 4, 1999, Mr. Ridinger entered into a settlement with the Securities and
Exchange Commission in which he consented to the entry of an order enjoining him
from violating certain antifraud and other provisions of the federal securities
laws. In connection with the settlement, Mr. Ridinger agreed to pay a fine of
$100,000 and disgorgement and prejudgment interest of $304,695. Mr. Ridinger
neither admitted nor denied the allegations made in the proceeding. The
proceeding involved the way in which Market America was taken public in 1992 and
1993, the failure to disclose the use of proceeds of the initial public
offering, and Mr. Ridinger's sharing in those proceeds.
Loren A. Ridinger, 31, is a Director and Senior Vice President and Secretary of
the Company. She has been a Director of the Company since 1993 and has held a
number of executive positions with the Company since its founding in 1992. Mrs.
Ridinger is the wife of James H. Ridinger, the Chairman of the Board of
Directors and CEO of the Company.
Dennis J. Franks, 46, has been a Director of the Company since 1994 and has
served as Executive Vice President of the Company since 1993. He is a former
professional football player and marketing professional for a number of
companies.
Martin L. Weissman, 56, has been a Director of the Company since 1993 and has
served as Executive Vice President of the Company since 1994. Mr. Weissman was a
founder, owner and Executive Vice President of Howard Carpet Mills of
Chatsworth, Georgia.
Executive Officers
In addition to the executive officers who are nominated for election as
directors, the following individuals are also executive officers of the Company:
Marc Ashley, 30, is currently the Vice President of Administrative for the
Company. Mr. Ashley has been an employee of the Company since 1992. Mr. Ashley
is a brother of Loren A. Ridinger, Senior Vice President and Secretary of the
Company.
Joseph V. Bolyard, 30, is currently the Vice President of Operations for the
Company. Mr. Bolyard has been an employee of the Company since 1992.
3
During the fiscal year ended April 30, 2000, the Board of Directors
held four meetings. No director attended fewer than 75% of the meetings. The
Board has no standing audit, nominating or compensation committees or committees
performing similar functions. Board members receive no additional compensation
for their service on the Board.
Executive Compensation
The following table summarizes the compensation awarded to, earned by
or paid to the CEO and the four other most highly compensated executive officers
of the Company for services to the Company in the fiscal year ended April 30,
2000:
Annual Compensation
--------------------
Other
Name and Fiscal Annual
Principal Position Year Ended Salary($) Bonus($) Compensation(1)
- -------------------------- ---------- --------- -------- ---------------
James H. Ridinger, Chairman 4-30-00 365,000 641,961 0
of the Board and Chief 4-30-99 365,000 636,392 0
Executive Officer 4-30-98 365,000 418,312 0
Loren A. Ridinger, Senior 4-30-00 184,894 818,112 0
Vice President and 4-30-99 184,894 87,560 0
Secretary 4-30-98 184,894 10,000 0
Dennis J. Franks, Executive 4-30-00 122,492 105,000 0
Vice President 4-30-99 120,000 60,000 0
4-30-98 120,000 0 0
Martin L. Weissman, Executive 4-30-00 135,139 45,000 0
Vice President 4-30-99 132,142 0 0
4-30-98 146,345 0 0
Marc Ashley, Vice President 4-30-00 155,800 113,597 0
4-30-99 95,975 66,551 0
4-30-98 74,510 37,778 0
(1) Does not include the value of any perquisites or other personal benefits not
reflected in the above table because the aggregate amount of any such
compensation does not exceed the lesser of $50,000 or 10% of the total annual
salary and bonus shown. Also does not include commissions on "business volume"
(a measure of sales) of the Company, which each of the named executive officers
receives as an independent distributor of the Company. See "Certain
Transactions."
4
None of the executive officers of the Company currently has a written
employment agreement. Mr. Ridinger negotiates the base salaries and other
compensation of all of the executive officers named in the table above other
than himself.
Board Compensation Report
The Company's compensation policy is set by the Board of Directors.
In setting Mr. Ridinger's compensation, the Board of Directors
considered numerous factors, including Mr. Ridinger's unique role as the
preeminent personality in the selling of the Company's products, the motivation
of the Company's sales organization and the formulation of sales promotional
programs. The Board fixed Mr. Ridinger's base compensation several years ago and
it has not changed since that time. The Board considers Mr. Ridinger's bonus on
an annual basis. His bonus is based upon the Company's overall performance and
his individual contribution to the success of the Company.
Salaries of the Executive Officers are set by the Board of Directors
based on Mr. Ridinger's recommendations. Mr. Ridinger takes into consideration
industry comparables as well as individual job performance and the overall
performance of the Company. Bonuses for executive officers, other than Mr.
Ridinger, are based on a combination of performance criteria and Mr. Ridinger's
discretion.
Shareholder Return Performance Graph
Set forth below is a graph comparing the yearly percentage change in
total shareholder return on the Company's common stock with the Total Return
Index for the NASDAQ Stock Market (US Companies) and the total shareholder
return on a designated Peer Group of stocks. The total shareholder return
calculation is for the period commencing April 28, 1995 and includes the
reinvestment of dividends (on securities on which dividends were paid).
Comparison of Shareholder Returns Among the Company,
NASDAQ Total Return Index and Peer Group Companies*
Edgar representation of data points used in printed graphic
4/28/95 4/30/96 4/30/97 4/30/98 4/30/99 4/28/00
------- ------- ------- ------- ------- -------
Market America, Inc. $100.0 $642.9 $242.9 $300.0 $232.1 $228.6
NASDAQ Stock Market $100.0 $142.6 $150.9 $225.6 $309.4 $469.1
(U.S. Companies)
Peer Group $100.0 $126.6 $154.4 $170.5 $194.4 $160.2
* Assumes $100.00 invested at the closing price on April 28, 1995 in the stock
of Market America, Inc., the NASDAQ Total Return Index (U.S. Companies) and Peer
Group companies (weighted by market capitalization). Graph prepared for Market
America, Inc. by the Center for Research in Security Prices, Graduate School of
Business, The University of Chicago.
5
The Peer Group of stocks represented in the above graph is made up of
stocks of publicly traded companies possessing the following characteristics
similar to those of the Company:
o Size, as measured by net sales;
o Similarity in selling methodology;
o Comparative products, including companies engaged in the
distribution of health and nutritional supplements, and skin,
hair, or other personal products;
o Relatively high insider ownership; and /or
o Particular emphasis on the talents and visibility of the chief
executive officer.
Companies included in the Peer Group are: Aloette Cosmetics, Inc.,
Amway Asia Pacific Ltd., Amway Japan Ltd., Avon Products, Inc., Beauticontrol
Cosmetics, Inc., Enesco Group, Inc. (formerly Stanhome, Inc.), Herbalife, Inc.,
Nature's Sunshine Products, Inc., Tupperware Corp. and Usana, Inc. The Company
added Usana, Inc. to the Peer Group in 1998 because Usana, Inc. is a publicly
traded company with characteristics very similar to those of the Company.
Without Usana, Inc., the Peer Group performance would have been:
04/28/95--$100.0, 04/30/96--$126.6, 04/30/97--$155.3, 04/30/98--$170.6, 4/30/99
- --$195.7 and 4/30/00--$161.3.
Beneficial Ownership of Shares
The following table sets forth certain information on the beneficial
ownership of shares of the Company's common stock by its directors and executive
officers, by its directors and executive officers as a group, and by any other
person known by the Company to be the beneficial owner of more than five percent
of the outstanding shares of the stock as of July 13, 2000, the record date for
the annual meeting of shareholders. Unless otherwise indicated in the footnotes,
all shares are owned directly, and the person or entity identified as the
beneficial owner has sole voting and investment power.
No. of Shares Percentage of
Beneficially Outstanding
Name of Beneficial Owner Owned Shares/1
- ------------------------ ------------- --------------
James H. Ridinger 15,040,200/2 77.33%
Loren A. Ridinger 101,450/3 0.52%
Martin L. Weissman 532,000 2.74%
Dennis J. Franks 150,000 0.77%
Marc Ashley 50,000 0.26%
All Directors and
Executive Officers
as a Group
(six persons) 15,893,650 81.72%
6
1 Based on 19,450,000 shares issued and outstanding on July 13, 2000, the
record date for the Company's annual meeting of shareholders.
2 Does not include shares owned directly by Loren A. Ridinger, Mr. Ridinger's
wife, which are reported on separately in this table. Includes shares
reported by Mr. Ridinger as being subject to the AAA Plus Trust, of which Mr.
Ridinger is the trustee.
3 Includes only shares owned directly by Mrs. Ridinger, and does not include
shares reported in this table as beneficially owned by James H. Ridinger, her
husband.
Section 16 (a) Beneficial Ownership Reporting Compliance
To the Company's knowledge, based solely on its review of reports
submitted to it, all SEC Section 16(a) filing requirements, which prescribe that
the Company's executive officers, directors, and 10% shareholders must file
initial reports of ownership and reports of changes in ownership of the
Company's Common Stock with the SEC, were complied with in fiscal year 2000.
Certain Transactions
All five executive officers of the Company, named in the compensation
table above, own and operate Business Development Centers as independent
contractors and distributors within the field sales organization of the Company.
In this capacity, they perform the typical and usual functions of field sales
representatives, in return for which their Business Development Centers earn
management commissions under the performance compensation plan applicable to all
the Company's distributors. For the year ended April 30, 2000, these individuals
earned distributor commissions as follows: James H. Ridinger $650,170.50; Loren
A. Ridinger $14,800.00; Dennis J. Franks $267,770.57; Martin L. Weissman
$153,918.00; and Marc Ashley $12,100.00.
During the year ended April 30, 1998, the Company entered into
agreements with two companies owned by Mr. and Mrs. Ridinger to lease real
estate in Miami, Florida and for the lease of a yacht on a per event basis. Both
lease agreements were cancelled in fiscal 2000. In December 1999, the Company
entered into an agreement with a company owned by Mr. and Mrs. Ridinger to lease
different real estate in Miami, Florida for direct sales training and education,
as well as other corporate functions. The monthly rental is $60,000, and the
lease has a 20-year term. The Company is committed to construct a training and
meeting facility on this leased property during the fiscal year ending April 30,
2001 for a cost of approximately $1,850,000 to provide additional space. The
Company has paid a $600,000 damage deposit as part of this lease, which is
included in other assets. The amount of rent expense under these agreements
aggregated $683,600 during the year ended April 30, 2000. The Ridinger companies
owed the Company on average $265,320 during the year ended April 30, 2000. As of
April 30, 2000, these companies owed the Company $6,978. During the year ended
April 30, 2000, the Company made a $292,000 advance to Mr. Ridinger. The advance
was repaid before the filing of this report with the Securities and Exchange
Commission.
7
During the year ended April 30, 1999, the Company entered into an
agreement with a company owned by Mr. and Mrs. Ridinger for a 33-year net ground
lease for the site on which the Company constructed its new headquarters and
warehouse facility in Greensboro, North Carolina. Required rental payments are
$10,666 per month, and the amount of rent expense under this agreement was
$127,988 for the year ended April 30, 2000. In June 1999, the Company paid
$500,000 to the Ridinger company for a Right of First Refusal on this site,
which provides the Company with the opportunity to purchase the land, should it
be offered for sale, before the land is offered for sale to other parties. The
amount paid is included in other assets and will be amortized on a straight-line
basis over the lease term. The unamortized balance will be applied to the
purchase price of the land in the event the Company buys it. On June 28, 1999,
the Company became guarantor of a $1.6 million bank loan to the Ridinger company
used for the purchase of the land. This loan and the Company's construction loan
are cross-collateralized by the land being leased from the Ridinger company and
by the building improvements constructed thereon by the Company. The guaranteed
loan is repayable over a five-year period following completion of the building
construction.
In connection with the lease of real estate in Miami, Florida from an
entity controlled by Mr. And Mrs. Ridinger, the Company has guaranteed a $5.3
million five-year loan to the Ridinger company for the purchase of the real
estate being leased. The Company has restricted cash of $2,637,635 at April 30,
2000 as collateral under the loan guarantee.
8