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 ss. 240.14a-11(c) or ss. 240.14a-12
CONSOLIDATED GRAPHICS, INC.
- --------------------------------------------------------------------------------
(Name of Registrant as Specified in its Charter)
N/A
- --------------------------------------------------------------------------------
(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:__________________________________
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 of Schedule and the date of its filing.
1. Amount Previously Paid:______________________________________________
2. Form, Schedule or Registration Statement No.:________________________
3. Filing Party:________________________________________________________
4. Date Filed:__________________________________________________________
CONSOLIDATED GRAPHICS
June 29, 2000
Dear Shareholder:
You are cordially invited to attend the annual meeting of shareholders to
be held in the Greenbriar Ballroom at the Sheraton Suites Houston, 2400 West
Loop South, Houston, Texas 77027, on Wednesday, July 26, 2000 at 5:00 p.m.,
Central Daylight Time. For those of you who cannot be present at this annual
meeting, we urge that you participate by indicating your choices on the enclosed
proxy and completing and returning it at your earliest convenience. If you sign
and return your proxy card without specifying your choices, it will be
understood you wish to have your shares voted in accordance with the Board of
Directors" recommendations.
This booklet includes the Notice of Annual Meeting of Shareholders and the
Proxy Statement, which contains details of the business to be conducted at the
annual meeting. The Company's Annual Report to Shareholders, which is not part
of the Proxy Statement, is also enclosed and provides additional information
regarding the financial results of the Company for the fiscal year ended March
31, 2000.
It is important that your shares are represented at the meeting, whether or
not you are able to attend personally. Accordingly, please sign, date and mail
promptly the enclosed proxy in the envelope provided.
On behalf of the Board of Directors, thank you for your cooperation and
continued support.
/s/ JOE R. DAVIS
Joe R. Davis
CHAIRMAN
AND CHIEF EXECUTIVE OFFICER
CONSOLIDATED GRAPHICS, INC.
5858 WESTHEIMER, SUITE 200
HOUSTON, TEXAS 77057
(713) 787-0977
TABLE OF CONTENTS
PAGE
----
NOTICE OF ANNUAL MEETING OF SHAREHOLDERS
PROXY STATEMENT
INTRODUCTION...................................................... 1
ACTION TO BE TAKEN UNDER PROXY.................................... 1
RECORD DATE AND VOTING SECURITIES................................. 1
SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT.... 2
COMPLIANCE WITH SECTION 16(a) OF THE EXCHANGE ACT................. 3
ELECTION OF CLASS I DIRECTORS..................................... 3
BOARD OF DIRECTOR COMMITTEES AND MEETINGS......................... 5
EXECUTIVE COMPENSATION............................................ 6
INCENTIVE PLAN.................................................... 6
DIRECTOR COMPENSATION............................................. 7
COMPENSATION COMMITTEE INTERLOCKS AND INSIDER PARTICIPATION....... 7
REPORT OF COMPENSATION COMMITTEE.................................. 7
STOCK PRICE PERFORMANCE GRAPH..................................... 9
CERTAIN TRANSACTIONS.............................................. 9
INDEPENDENT PUBLIC ACCOUNTANTS.................................... 9
SHAREHOLDER PROPOSALS............................................. 10
GENERAL........................................................... 10
OTHER INFORMATION................................................. 10
VOTING THE PROXY CARD
Please complete, sign, date and return the accompanying proxy card promptly
in the enclosed addressed envelope. Postage need not be affixed to the envelope
if mailed in the United States.
The immediate return of your proxy will be of great assistance in preparing
for the annual meeting and is therefore urgently requested, even if you plan to
attend the annual meeting. If you attend the annual meeting and make
arrangements to vote in person, your proxy card will not be used.
IF YOU PLAN TO ATTEND THE ANNUAL MEETING IN PERSON
The annual meeting will be held at 5:00 p.m. Central Daylight Time on
Wednesday, July 26, 2000 in the Greenbriar Ballroom at the Sheraton Suites
Houston, 2400 West Loop South, Houston, Texas 77027. Signs will direct you to
the conference room where the annual meeting will be held.
IF YOUR SHARES ARE NOT REGISTERED IN YOUR OWN NAME AND YOU PLAN TO ATTEND
THE ANNUAL MEETING AND VOTE YOUR SHARES IN PERSON, YOU SHOULD CONTACT YOUR
BROKER OR AGENT IN WHOSE NAME YOUR SHARES ARE REGISTERED TO OBTAIN A BROKER'S
PROXY AND BRING IT TO THE ANNUAL MEETING IN ORDER TO VOTE.
CONSOLIDATED GRAPHICS, INC.
5858 WESTHEIMER, SUITE 200
HOUSTON, TEXAS 77057
------------------------
NOTICE OF ANNUAL MEETING OF SHAREHOLDERS
WEDNESDAY, JULY 26, 2000
5:00 P.M. CENTRAL DAYLIGHT TIME
To the Shareholders:
The annual meeting of shareholders of Consolidated Graphics, Inc. (the
"Company") will be held in the Greenbriar Ballroom at the Sheraton Suites
Houston, 2400 West Loop South, Houston, Texas 77027, on Wednesday, July 26, 2000
at 5:00 p.m., Central Daylight Time, for the following purposes:
1. To elect two Class I directors to serve on the Company's Board of
Directors for terms of three years or until their successors are elected
and qualified.
2. To transact such other business as may properly come before the
meeting or any adjournments thereof.
Only shareholders of record as of the close of business on June 1, 2000 are
entitled to receive notice of, and to vote at, the meeting and any adjournments
thereof. A list of such shareholders shall be open to the examination of any
shareholder of record during ordinary business hours, for a period of ten days
prior to the meeting, at the principal executive offices of the Company, 5858
Westheimer, Suite 200, Houston, Texas 77057, and shall also be open to
examination at the annual meeting and any adjournments thereof.
By Order of the Board of Directors
/s/ G. CHRISTOPHER COLVILLE
G. Christopher Colville
SECRETARY
Houston, Texas
June 29, 2000
IT IS IMPORTANT THAT YOUR STOCK BE REPRESENTED AT THE MEETING REGARDLESS OF THE
NUMBER OF SHARES YOU HOLD. PLEASE COMPLETE, SIGN AND MAIL THE ENCLOSED PROXY IN
THE ACCOMPANYING ENVELOPE EVEN IF YOU INTEND TO BE PRESENT AT THE MEETING.
RETURNING THE PROXY WILL NOT LIMIT YOUR RIGHT TO VOTE IN PERSON OR TO ATTEND THE
ANNUAL MEETING, BUT WILL ENSURE YOUR REPRESENTATION IF YOU CANNOT ATTEND. IF YOU
HAVE SHARES IN MORE THAN ONE NAME, OR IF YOUR STOCK IS REGISTERED IN MORE THAN
ONE WAY, YOU MAY RECEIVE MORE THAN ONE COPY OF THE PROXY MATERIAL. IF SO, SIGN
AND RETURN EACH OF THE PROXY CARDS YOU RECEIVE SO THAT ALL OF YOUR SHARES MAY BE
VOTED. YOU MAY REVOKE YOUR PROXY AT ANY TIME PRIOR TO ITS USE.
CONSOLIDATED GRAPHICS, INC.
5858 WESTHEIMER, SUITE 200
HOUSTON, TEXAS 77057
------------------------
PROXY STATEMENT
------------------------
INTRODUCTION
The accompanying proxy is solicited by and on behalf of the Board of
Directors of Consolidated Graphics, Inc., a Texas corporation (the "Company"),
for use only at the annual meeting of shareholders (the "Annual Meeting") to be
held in the Greenbriar Ballroom at the Sheraton Suites Houston, 2400 West Loop
South, Houston, Texas 77027, on Wednesday, July 26, 2000 at 5:00 p.m., Central
Daylight Time, and at any adjournments thereof. The approximate date on which
this Proxy Statement and accompanying proxy will first be given or sent to
shareholders is June 29, 2000.
Each proxy executed and returned by a shareholder may be revoked at any
time before it is voted at the Annual Meeting by filing a written instrument
revoking such proxy with the Secretary at the Company's executive offices, by
execution and return of a later-dated proxy, or by appearing at the Annual
Meeting and revoking such proxy in person. The executive offices of the Company
are located at 5858 Westheimer, Suite 200, Houston, Texas 77057.
ACTION TO BE TAKEN UNDER PROXY
Proxies in the accompanying form will be voted in accordance with the
specifications made thereon and, where no specifications are given, such proxies
will be voted FOR the election of the two nominees named herein to serve as
Class I directors and if either one or both of such nominees should become
unavailable for election for any reason, then FOR the election of any substitute
nominee that the Board of Directors of the Company may propose.
In the discretion of the proxy holders, the proxies will also be voted FOR
or AGAINST such other matters as may properly come before the Annual Meeting.
Management of the Company did not receive any shareholder proposal for inclusion
in this proxy or for presentation at the Annual Meeting by the dates prescribed
for such inclusion or presentation and is not aware of any other matters to be
presented for action at the Annual Meeting.
RECORD DATE AND VOTING SECURITIES
The Board of Directors has fixed the close of business on June 1, 2000 as
the record date for the determination of shareholders entitled to receive notice
of, and to vote at, the Annual Meeting and any adjournments thereof. The issued
and outstanding stock of the Company on June 1, 2000 consisted of 13,734,346
shares of the Company's Common Stock (the "Common Stock"), each of which is
entitled to one vote. Under the Company's Restated By-Laws, as amended to date,
as well as the Texas Business Corporation Act, the holders of a majority of the
total issued and outstanding shares of Common Stock, present in person or
represented by proxy, will constitute a quorum for the transaction of business
at the Annual Meeting.
If there are insufficient shares present in person or represented by proxy
at the Annual Meeting to constitute a quorum, the Annual Meeting may be
adjourned until such time and place as determined by a vote of the holders of a
majority of the shares present in person or represented by proxy at the Annual
Meeting to permit further solicitation of proxies by the Company. Proxies given
pursuant to this solicitation and not revoked will be voted at any postponement
or adjournment of the Annual Meeting in the manner set forth above.
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The affirmative vote of a majority of the shares represented in person or
by proxy at such meeting at which a quorum is present is required for the
election of directors. Abstentions and "broker nonvotes" (i.e., shares held by a
broker or nominee as to which instructions have not been received from the
beneficial owners or persons entitled to vote) will be treated as shares that
are present and entitled to vote for purposes of determining the presence of a
quorum. In determining the results of voting on the election of directors,
abstentions and broker nonvotes will have the same effect as a vote against the
nominated director since approval of that director requires the affirmative vote
of a majority of the shares represented in person or by proxy at such meeting at
which a quorum is present.
SECURITY OWNERSHIP OF CERTAIN
BENEFICIAL OWNERS AND MANAGEMENT
To the Company's knowledge, the following table sets forth as of June 1,
2000 information with respect to beneficial ownership of shares of Common Stock
by (i) the executive officers of the Company, (ii) each of the directors and
nominees, (iii) all persons known to the Company to be the beneficial owners of
5% or more thereof and (iv) all directors and executive officers as a group. All
persons listed have sole voting and investment power with respect to their
shares unless otherwise indicated.
AMOUNT OF
BENEFICIAL OWNERSHIP(1)
--------------------------
NUMBER OF PERCENTAGE OF
NAME OF BENEFICIAL OWNER SHARES(2) CLASS(3)
------------------------ --------- -------------
T. Rowe Price Associates, Inc.(4 )... 1,350,350 9.8%
Joe R. Davis(5)...................... 1,329,500 9.7%
Ardsley Advisory Partners(6)......... 950,000 6.9%
Hugh N. West......................... 170,000 1.2%
James H. Limmer...................... 107,500 *
Brady F. Carruth..................... 53,405 *
Gary L. Forbes....................... 52,548 *
G. Christopher Colville.............. 46,228 *
Clarence C. Comer.................... 36,100 *
Larry J. Alexander................... 10,000 *
All directors and executive officers
as a group......................... 1,805,281 13.1%
- ------------
* Less than 1%.
(1) In accordance with Securities and Exchange Commission ("SEC") regulations,
shares are deemed to be "beneficially owned" by a person if such person
directly or indirectly has or shares the power to vote or dispose of the
shares, regardless of whether such person has any economic interest in the
shares. In addition, a person is deemed to own beneficially any shares of
which such person has the right to acquire beneficial ownership within 60
days, including upon exercise of a stock option or conversion of a
convertible security.
(2) Shares shown do not include shares held through the Company's 401(k) plan.
The shares beneficially owned include options to purchase shares of Common
Stock exercisable within 60 days of June 1, 2000, as follows: Mr. Davis,
25,000 shares; Mr. Forbes, 28,000 shares; Mr. Colville, 16,000 shares; and
Mr. Alexander, 8,000 shares.
(3) The percentage of Common Stock owned by each person has been calculated
using the 13,734,346 shares outstanding at June 1, 2000, plus any shares
issuable upon exercise of options owned by such person exercisable within 60
days and deemed to be outstanding pursuant to Rule 13d-3(d)(1) of the
Securities Exchange Act of 1934, as amended (the "Exchange Act").
(4) Based on a Schedule 13F for the quarter ended March 31, 2000, filed with the
SEC on May 15, 2000. The Schedule 13F indicates that T. Rowe Price
Associates, Inc. had sole voting power with respect to 169,300 shares of
Common Stock and no voting power with respect to 1,181,050 shares of Common
Stock. The address of T. Rowe Price Associates, Inc. is 100 E. Pratt Street,
Baltimore, Maryland 21202.
(5) The address of Mr. Davis is 5858 Westheimer, Suite 200, Houston, Texas
77057.
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(6) Based on a Schedule 13F for the quarter ended March 31, 2000, filed with the
SEC on May 12, 2000. The Schedule 13F indicates that Ardsley Advisory
Partners ("Ardsley") had sole voting power with respect to 950,000 shares of
Common Stock. The address of Ardsley is 646 Steamboat Road, Greenwich,
Connecticut 06830.
COMPLIANCE WITH SECTION 16(A) OF THE EXCHANGE ACT
Section 16(a) of the Exchange Act requires the Company's directors and
executive officers and persons who own more than 10% of a registered class of
the Company's equity securities to file with the SEC and The New York Stock
Exchange initial reports of ownership and reports of changes in ownership of
Common Stock. Officers, directors and greater than 10% shareholders are required
by SEC regulations to furnish the Company with copies of all such forms they
file. Based solely on a review of the copies of such reports furnished to the
Company and written representations that no other reports were required, the
Company believes that all of its directors and executive officers during fiscal
2000 complied on a timely basis with all applicable filing requirements under
Section 16(a) of the Exchange Act.
ELECTION OF CLASS I DIRECTORS
Unless contrary instructions are set forth in the proxy card, it is
intended that the persons named in the proxy will vote all shares of Common
Stock represented by the proxy for the election of the persons listed below as
nominees as the two Class I directors, each of whom is presently a member of the
Board of Directors of the Company. The two directors elected at the Annual
Meeting will each serve for a term expiring on the date of the annual meeting in
2003 or until his successor has been elected and qualified or his earlier
resignation or removal. Pursuant to the Company's Restated Articles of
Incorporation, as amended to date, and the Company's Restated By-Laws, as
amended to date, the Board of Directors of the Company is comprised of seven
directors. The Board of Directors currently consists of Larry J. Alexander,
Brady F. Carruth, Clarence C. Comer, Gary L. Forbes, James H. Limmer, Hugh N.
West and Joe R. Davis, and is divided into three classes with Messrs. Alexander
and Carruth constituting the Class I directors, Messrs. Comer and Forbes
constituting the Class II directors and Messrs. Limmer, Davis and Dr. West
constituting the Class III directors. One class of directors is elected at each
annual meeting of the Company's shareholders for a term of three years. The term
of the Class I directors expires at the Annual Meeting. The terms of the other
two classes of directors expire at the 2001 annual meeting (Class II directors)
and the 2002 annual meeting (Class III directors). The Restated Articles of
Incorporation of the Company, as amended to date, do not permit cumulative
voting. A majority of the holders of the outstanding shares of Common Stock,
present in person or represented by proxy, at a meeting at which a quorum is
present is required to elect directors.
The Board of Directors has appointed a Nominating Committee to evaluate
candidates and recommend nominees for election to the Company's Board of
Directors at each annual meeting. The Nominating Committee determined that the
election of Messrs. Alexander and Carruth as the Class I directors of the
Company is in the best interest of the Company and its shareholders, and the
Board of Directors adopted the recommendation of the Nominating Committee. THE
BOARD OF DIRECTORS THEREFORE RECOMMENDS A VOTE FOR ALL OF THE NOMINEES AND IT IS
INTENDED THAT THE PROXIES NOT MARKED TO THE CONTRARY WILL BE SO VOTED. Should
the candidacy of Messrs. Alexander or Carruth for any reason be withdrawn or any
such nominee become unavailable for election, the Board of Directors of the
Company may designate another nominee, in which case the persons acting under
the duly executed proxies will vote for the election of the replacement nominee.
Management is currently unaware of any circumstances likely to render any
nominee unavailable for election. A shareholder may, in the manner set forth in
the enclosed proxy card, instruct the proxy holder not to vote that
shareholder's shares for one or more of the named nominees.
The following sets forth information concerning each of the nominees for
election to the Board of Directors and each continuing member of the Board of
Directors including the name, age, principal occupation or employment during at
least the past five years and the period during which such person has served as
a director of the Company.
3
NOMINEES FOR ELECTION AS CLASS I DIRECTORS
The following information is furnished regarding the nominees for election
as the Class I directors by the holders of Common Stock.
LARRY J. ALEXANDER retired from the San Antonio Spurs Professional
Basketball Team in May 1996, where he had been the Vice
President -- Administration and Communications since August 1994. Prior to
joining the Spurs, he spent 27 years with SBC Communications Inc. in various
positions, most recently as Senior Vice President -- External Affairs from July
1993 to July 1994. Mr. Alexander has been a director of the Company since May
1995 and is 58 years of age.
BRADY F. CARRUTH has been President of Gulf Coast Capital Corporation, a
commercial landscaping business, since 1987. He also serves on the board of
directors of American General Corporation, a diversified insurance company.
Mr. Carruth has been a director of the Company since 1985 and serves on the
Audit Committee and the Nominating Committee. Mr. Carruth is 42 years of age.
The Board of Directors recommends a vote FOR the reelection of Messrs.
Alexander and Carruth as the Class I directors of the Company.
CONTINUING CLASS II DIRECTORS
The following information is furnished regarding the Class II directors
(who will continue to serve on the Board of Directors until the 2001 annual
meeting of shareholders or until their respective successors are elected and
qualified).
CLARENCE C. COMER has served as President and Chief Executive Officer of
Southdown, Inc., a cement and ready-mix concrete producer, since February 1987.
He is also a director of Southdown, Inc. Mr. Comer has been a director of the
Company since 1993 and serves on the Audit Committee. Mr. Comer is 52 years of
age.
GARY L. FORBES has been a Vice President of Equus II Incorporated, a public
investment company, since 1991. Mr. Forbes currently serves on the board of
directors of NCI Building Systems, Inc., a manufacturer of prefabricated metal
buildings, Drypers Corporation, a manufacturer of disposable diapers and
Advanced Technical Products, Inc., a manufacturer of high-performance composite
parts for the aerospace industry. Mr. Forbes is a certified public accountant
and has been a director of the Company since 1993. He serves on the Audit
Committee, the Compensation Committee and the Executive Committee and is 56
years of age.
CONTINUING CLASS III DIRECTORS
The following information is furnished regarding the Class III directors
(who will continue to serve on the Board of Directors until the 2002 annual
meeting of shareholders or until their respective successors are elected and
qualified).
JOE R. DAVIS has been the President, Chief Executive Officer and Chairman
of the Board of the Company since he founded it in 1985. Prior to forming the
Company, Mr. Davis was Vice President of Finance and Administration for a
division of International Paper Company. Prior thereto, he served as a partner
with the public accounting firm of Arthur Andersen LLP. Mr. Davis serves on the
Executive Committee and the Nominating Committee and is 57 years of age.
JAMES H. LIMMER has been a partner with the law firm of Tekell, Book,
Matthews & Limmer, L.L.P., in Houston, Texas, which specializes in all phases of
insurance defense, since July 1973. Mr. Limmer has been a director of the
Company since 1985 and serves on the Compensation Committee and the Nominating
Committee. Mr. Limmer is 58 years of age.
HUGH N. WEST, M.D., was in private practice in Houston, Texas in the field
of diagnostic radiology until his retirement in 1996. Dr. West has been a
director of the Company since 1985 and serves on the Compensation Committee. Dr.
West is 54 years of age.
4
BOARD OF DIRECTOR COMMITTEES AND MEETINGS
During the fiscal year ended March 31, 2000, the Board of Directors held
meetings and/or acted by unanimous consent thirteen times. Each of the directors
attended at least 75% of the meetings of the Board of Directors and of each
committee on which he served, except as noted below.
The Board has established an Executive Committee, an Audit Committee, a
Compensation Committee and a Nominating Committee. The Executive Committee
reviews and develops strategies and policies of the Company and recommends
changes thereto and approves certain transactions of the Company pursuant to
authority delegated by the Board of Directors. The Executive Committee consists
of Messrs. Davis and Forbes. During the fiscal year ended March 31, 2000, the
Executive Committee held meetings and/or acted by unanimous consent thirteen
times.
The Audit Committee's functions include recommending to the Board of
Directors the engagement of the Company's independent public accountants,
reviewing with such accountants the plans for and the scope and results of their
auditing engagement and certain other matters, including the independence of
such accountants. The Audit Committee consists of Messrs. Carruth, Comer and
Forbes, each of whom is an independent director. During the fiscal year ended
March 31, 2000, the Audit Committee held meetings and/or acted by unanimous
consent four times.
The Compensation Committee determines the compensation of directors,
executive officers and key employees and is composed solely of independent
directors. The Compensation Committee consists of Messrs. Forbes and Limmer and
Dr. West. It also administers the Company's Long-Term Incentive Plan (as
amended, the "Incentive Plan"). During the fiscal year ended March 31, 2000, the
Compensation Committee held meetings and/or acted by unanimous consent three
times. Mr. Limmer attended one of the Compensation Committee's two meetings.
Mr. Forbes attended one of the two meetings and his predecessor on the
Compensation Committee attended the other meeting.
The Nominating Committee evaluates candidates and recommends nominees for
election to the Company's Board of Directors at each annual meeting. The
Nominating Committee consists of Messrs. Davis, Limmer and Carruth. The
Nominating Committee held one meeting attended by Messrs. Davis and Limmer to
discuss and designate the nominees for the Annual Meeting. The Nominating
Committee will give appropriate consideration to qualified persons recommended
by shareholders for nomination to the Board of Directors in future years
provided that each such recommendation is timely made and is accompanied by
information sufficient to enable the Nominating Committee to evaluate the
qualifications of the nominee.
5
EXECUTIVE COMPENSATION
SUMMARY COMPENSATION TABLE. The following table sets forth certain
information regarding the compensation earned by or awarded to the Chief
Executive Officer ("CEO") and the other executive officer of the Company for
each of the three fiscal years ended March 31, 2000, 1999 and 1998.
SUMMARY COMPENSATION TABLE
LONG-TERM COMPENSATION
AWARDS
ANNUAL COMPENSATION -----------------------
NAME AND ---------------------------- SHARES UNDERLYING
PRINCIPAL POSITION YEAR SALARY BONUS OPTIONS
------------------ ---- -------- -------- -----------------------
Joe R. Davis......................... 2000 $232,000 $ -- --
President and Chief 1999 228,000 -- 250,000
Executive Officer 1998 228,000 -- --
G. Christopher Colville.............. 2000 250,000 -- --
Executive Vice President -- Mergers and 1999 150,000 100,000 100,000
Acquisitions, Chief Financial and 1998 101,250 100,000 15,000
Accounting Officer and
Secretary(1)
- ------------
(1) Mr. Colville has held various executive positions with the Company since
September 1994.
OPTIONS GRANTED IN FISCAL 2000. The Company did not grant stock options to
the executive officers named in the Summary Compensation Table during fiscal
2000.
STOCK OPTION EXERCISES AND YEAR-END VALUES TABLE. The following table
shows, as to the executive officers named in the Summary Compensation Table,
information with respect to stock options exercised during the fiscal year ended
March 31, 2000 and the unexercised options to purchase Common Stock granted
under the Incentive Plan and held as of March 31, 2000.
OPTION EXERCISES IN FISCAL 2000
AND VALUE OF OPTIONS AT MARCH 31, 2000
NUMBER OF SECURITIES
UNDERLYING UNEXERCISED VALUE OF UNEXERCISED
OPTIONS HELD AT IN-THE-MONEY OPTIONS
SHARES MARCH 31, 2000 AT MARCH 31, 2000(1)
ACQUIRED VALUE ---------------------------- ----------------------------
NAME ON EXERCISE REALIZED EXERCISABLE UNEXERCISABLE EXERCISABLE UNEXERCISABLE
---- ----------- -------- ----------- ------------- ----------- -------------
Joe R. Davis.......................... 200 $ 2,675 12,500 237,500 $ -- $--
G. Christopher Colville............... 9,000 156,938 8,000 110,000 -- 1,875
- ------------
(1) Options are "in-the-money" if the closing market price of the Common Stock
exceeds the exercise price of the options. The value of unexercised options
represents the difference between the exercise price of such options and the
closing market price of the Company's Common Stock on March 31, 2000
($12.8125).
INCENTIVE PLAN
In March 1994, the Board of Directors and the shareholders of the Company
approved the adoption of the Incentive Plan. Pursuant to the Incentive Plan, as
subsequently amended, employees of the Company and directors who are not serving
on the Compensation Committee are eligible to receive awards consisting of stock
options, stock appreciation rights ("SARS"), restricted or nonrestricted stock,
cash or any combination of the foregoing. Stock options granted pursuant to the
Incentive Plan may either be incentive stock options within the meaning of
Section 422 of the Internal Revenue Code of 1986, as amended (the "Code"), or
nonqualified stock options. To date, long-term incentive compensation has been
awarded only in the form of stock options. An aggregate of 2,651,082 shares of
Common Stock are reserved for issuance
6
pursuant to the Incentive Plan, of which 1,458,072 shares were available for
future stock option awards pursuant to the Incentive Plan as of June 1, 2000.
The Incentive Plan is administered by the Compensation Committee of the
Board of Directors. Subject to the provisions of the Incentive Plan, the
Compensation Committee is authorized by the Board of Directors to determine the
type or types of awards made to each participant and the terms, conditions and
limitations applicable to each award. In addition, the Compensation Committee
has the exclusive power to interpret the Incentive Plan, to grant waivers of
restrictions thereunder and to adopt such rules and regulations as it may deem
necessary or appropriate in keeping with the objectives of the Incentive Plan.
DIRECTOR COMPENSATION
Each director who is not an employee of the Company is paid $250 for each
meeting of the Board of Directors or committees thereof attended and is
reimbursed for expenses incurred in attending such meetings. Directors who are
not members of the Compensation Committee are eligible to receive grants under
the Incentive Plan.
COMPENSATION COMMITTEE INTERLOCKS AND INSIDER PARTICIPATION
During fiscal 2000, no member of the Compensation Committee was or formerly
had been an officer or employee of the Company or any of its subsidiaries. Also,
during the year, no executive officer of the Company served as a member of the
compensation committee or board of directors of another entity, one of whose
executive officers served on the Board of Directors.
REPORT OF COMPENSATION COMMITTEE
The Compensation Committee of the Board of Directors reviews compensation
of directors and executive officers and also administers the Incentive Plan. The
Compensation Committee consists entirely of non-employee directors.
At current compensation levels, the Compensation Committee does not expect
Internal Revenue Service regulations regarding maximum deductibility of
executive compensation to have any application to the Company.
COMPENSATION PHILOSOPHY AND COMPONENTS. The Company's executive
compensation philosophy is to employ, retain and reward executives capable of
leading the Company in creating and preserving strong financial performance,
increasing the assets of the Company through acquisitions, positioning the
Company's assets and business operations for long-term growth opportunities, and
enhancing shareholder value. The executive compensation program is intended to
provide an overall level of compensation that the Compensation Committee
believes, based on its own judgment and experience, is competitive with levels
of compensation provided by companies deemed by the Compensation Committee to be
comparable for compensation purposes. The companies used for comparisons of
compensation levels are not necessarily the same companies included within the
S&P Specialty Printing -- Super Index reflected in the Stock Price Performance
Graph because certain of those companies are not comparable with the Company or
its subsidiaries for compensation purposes due to their size and operating
philosophy. The companies which the Company considers to be comparable for
compensation purposes are generally publicly traded companies of similar size
and growth strategy. The primary components of the Company's executive
compensation program are annual cash compensation (salary and bonuses) and
long-term incentive compensation (stock options).
CHIEF EXECUTIVE OFFICER CASH COMPENSATION. The Compensation Committee
considered a number of factors in approving the CEO's cash compensation for
fiscal 2000. The factors considered by the Compensation Committee included, but
were not limited to, the Company's acquisition of thirteen companies during
fiscal 2000 as well as improving the Company's sales, net income, earnings per
share and operating cash flow and the level of compensation paid to other
executives of the Company. The CEO's
7
cash compensation was judged by the Compensation Committee to be fair and
appropriate for the CEO taking into account the factors considered.
OTHER EXECUTIVE OFFICER CASH COMPENSATION. The cash compensation of Mr.
Colville was based on the amount recommended to the Compensation Committee by
the CEO based on his subjective evaluation, including his perception of Mr.
Colville's performance. The CEO generally determines his recommendations
regarding the cash compensation of other executive officers by considering the
potential impact of the individual on the Company, the executive's performance
as a team member, the skills and experiences required by the position and the
overall performance of the Company. No one of the above factors is considered to
be more important than the others. Other executive officer cash compensation is
maintained at levels that the Compensation Committee believes, based upon its
own judgment and experience, are competitive in the marketplace.
LONG-TERM INCENTIVE COMPENSATION. Long-term incentives may be provided in
the form of stock options, stock appreciation rights, restricted or
nonrestricted stock, cash or any combination of the foregoing. To date,
long-term incentive compensation has been awarded only in the form of stock
options.
GRANTS OF STOCK OPTIONS ARE MADE BY THE COMPENSATION COMMITTEE. In
determining stock option grants, the Compensation Committee considers all
factors the members thereof deem relevant, including corporate and individual
performance, and recommendations by the CEO based on his subjective evaluation
and perception of the individual's performance. The CEO generally determines his
recommendations by considering such individual's contribution toward Company
performance and such individual's expected contribution toward meeting the
Company's long-term objectives and increasing value to shareholders. The value
received by grantees from option grants depends completely on increases in the
market price of the Common Stock over the option exercise price. Thus, this
component of compensation is aligned directly with increases in value to
shareholders.
Gary L. Forbes
James H. Limmer
Hugh N. West
8
STOCK PRICE PERFORMANCE GRAPH
Set forth below is a line graph comparing the yearly percentage change in
the Company's Common Stock against the cumulative total return (change in stock
price plus reinvested dividends) of (i) the S&P 500 Stock Index, (ii) the S&P
Small Cap 600 Index and (iii) the S&P Specialty Printing -- Super Index. The
Company is a component of both the S&P Small Cap 600 Index and the S&P Specialty
Printing -- Super Index, and management intends to use only such indices in
future proxy statements, absent changes in circumstances. It is the Company's
understanding that the MG Group Index referenced in the 1999 proxy statement of
the Company is no longer available. The historical performance of the Company's
Common Stock reflected below is not necessarily indicative of the Common Stock's
future performance.
COMPARISON OF CUMULATIVE TOTAL RETURN*
INDEXED RETURNS
YEARS ENDING
BASE PERIOD
---------------------------------------------------------------------------
COMPANY/INDEX MAR95 MAR96 MAR97 MAR98 MAR99 MAR00
---------- ---------- ---------- ---------- ---------- ----------
CONSOLIDATED GRAPHICS INC ............ 100 150.00 497.83 1006.52 1004.35 223.91
S&P 500 STOCK INDEX .................. 100 132.10 158.29 234.27 277.51 327.30
S&P SMALLCAP 600 INDEX ............... 100 131.19 142.19 209.99 169.81 221.94
S&P SPECIALTY PRINTING-SUPER INDEX ... 100 106.17 115.31 138.74 114.73 94.10
* Assumes an initial investment of $100.
CERTAIN TRANSACTIONS
In December 1999, the Company advanced $641,423 to Mr. Colville under a
one-year nonrecourse note (the "Note"), bearing interest at 5.74% per annum and
secured by the pledge of 30,228 shares of common stock of the Company (with a
market value at such time of $678,241). This transaction was approved by the
Company's Board of Directors.
INDEPENDENT PUBLIC ACCOUNTANTS
For the fiscal year ending March 31, 2000, Arthur Andersen LLP served as
the Company's independent public accountants and audited the Company's financial
statements. Representatives of Arthur Andersen LLP are expected to be present at
the Annual Meeting, with the opportunity to make a statement if they desire to
do so, and are expected to be available to respond to appropriate questions.
While the Audit Committee has not yet selected the Company's independent public
accountants for the fiscal year ending March 31, 2001, the Company anticipates
that Arthur Andersen LLP will again be selected for this purpose.
9
SHAREHOLDER PROPOSALS
Shareholders may present proposals for inclusion in the Company's 2001
proxy statement provided they are received by the Company no later than
March 1, 2001. Any other proposal that a shareholder wishes to bring before the
Company's 2001 annual meeting must be received by the Company no later than
June 1, 2001 to be considered timely. All proposals must comply with applicable
SEC regulations and the Company's Restated By-Laws as amended to date, and must
be directed to the Secretary of the Company at 5858 Westheimer, Suite 200,
Houston, Texas 77057.
GENERAL
Management does not intend to bring any business before the meeting other
than the matter referred to in the accompanying notice. If, however, any other
matters properly come before the meeting, it is intended that the persons named
in the accompanying proxy will vote pursuant to the proxy in accordance with
their best judgment on such matters.
OTHER INFORMATION
The cost of solicitation of proxies will be borne by the Company. Proxy
cards and materials will also be distributed to beneficial owners of Common
Stock through brokers, custodians, nominees and other like parties, and the
Company expects to reimburse such parties for their charges and expenses.
Proxies may be solicited on our behalf by our directors, officers or employees
in person or by telephone, electronic transmission, and facsimile transmission
without additional compensation.
The Annual Report to Shareholders, containing the consolidated financial
statements of the Company for the fiscal year ended March 31, 2000, accompanies
this Proxy Statement.
A COPY OF THE COMPANY'S MOST RECENT ANNUAL REPORT ON FORM 10-K, INCLUDING
THE FINANCIAL STATEMENTS AND SCHEDULES THERETO, WITHOUT THE ACCOMPANYING
EXHIBITS, AS FILED WITH THE SEC WILL BE MADE AVAILABLE WITHOUT CHARGE UPON
WRITTEN REQUEST TO: CONSOLIDATED GRAPHICS, INC., ATTENTION: INVESTOR RELATIONS,
5858 WESTHEIMER, SUITE 200, HOUSTON, TEXAS 77057. A LIST OF EXHIBITS IS INCLUDED
IN THE FORM 10-K, AND SUCH EXHIBITS ARE AVAILABLE FROM THE COMPANY UPON THE
PAYMENT TO THE COMPANY OF THE REASONABLE COSTS OF FURNISHING THE SAME.
/s/ G. CHRISTOPHER COLVILLE
G. Christopher Colville
SECRETARY
10
CONSOLIDATED GRAPHICS, INC.
PROXY SOLICITED ON BEHALF OF BOARD OF DIRECTORS
ANNUAL MEETING OF SHAREHOLDERS TO BE HELD WEDNESDAY, JULY 26, 2000
The undersigned hereby appoints Joe R. Davis and G. Christopher Colville,
jointly and severally, proxies with full power of substitution and
resubstitution and with discretionary authority to represent and to vote, in
accordance with the instructions set forth on the reverse, all shares of Common
Stock which the undersigned is entitled to vote at the 2000 Annual Meeting of
Shareholders of Consolidated Graphics, Inc. and any adjournments thereof. Shares
represented by this proxy will be voted as directed by the shareholder. If no
such directions are indicated, the proxies will have authority to vote FOR Item
1 (the election of Class I directors other than any for whom authority to vote
is withheld on the reverse). In their discretion, the proxies are authorized to
vote upon such other business as may properly come before the meeting.
IMPORTANT: SIGNATURE REQUIRED ON REVERSE SIDE
A |X| Please mark your
votes as in this
example.
FOR all nominees
listed to right WITHHOLD AUTHORITY
except as marked to vote for all
to the contrary nominees listed to right
1. Election |_| |_| NOMINEES: Larry J. Alexander
of Class I Brady F. Carruth
Directors
listed to right
(INSTRUCTIONS: TO WITHHOLD AUTHORITY TO VOTE FOR ANY
INDIVIDUAL NOMINEE, STRIKE A LINE THROUGH THE NOMINEE'S
NAME AT RIGHT.)
THIS PROXY IS SOLICITED BY AND ON BEHALF OF THE BOARD OF DIRECTORS AND MAY BE
REVOKED PRIOR TO ITS EXERCISE. THE BOARD OF DIRECTORS RECOMMENDS A VOTE "FOR"
PROPOSAL 1. THIS PROXY WHEN PROPERLY EXECUTED WILL BE VOTED AS DIRECTED. IF NO
DIRECTION IS MADE IT WILL BE VOTED "FOR" PROPOSAL 1.
WHETHER OR NOT YOU PLAN TO ATTEND THIS MEETING, PLEASE MARK, SIGN, DATE AND
RETURN THIS PROXY CARD PROMPTLY IN THE ENCLOSED POSTAGE-PAID ENVELOPE.
SIGNATURE ____________________________________ _________________________________________________ Date:______________________, 2000
SIGNATURE IF HELD JOINTLY
NOTE: (If signing as Attorney, Administrator, Executor, Guardian, Trustee or Corporate Officer, please add your title as such.)