SCHEDULE 14A
(RULE 14a-101)
INFORMATION REQUIRED IN PROXY STATEMENT
SCHEDULE 14A INFORMATION
PROXY STATEMENT PURSUANT TO SECTION 14(a) OF THE
SECURITIES EXCHANGE ACT OF 1934 (AMENDMENT NO. )
Filed by the registrant [X]
Filed by a party other than the registrant [ ]
Check the appropriate box:
[ ] Preliminary proxy statement
[X] Definitive proxy statement
[ ] Definitive additional materials
[ ] Soliciting material pursuant to Rule 14a-11(c) or Rule 14a-12
[ ] Confidential, for Use of the Commission Only (as permitted by Rule
14a-6(e)(2))
RIMAGE 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
[ ] Fee computed on table below per Exchange Act Rules 14a-6(i)(4) and 0-11.
(1) Title of each class of securities to which transaction applies:
(2) Aggregate number of securities to which transactions applies:
(3) Per unit price or other underlying value of transaction computed
pursuant to Exchange Act Rule 0-11. (Set forth the amount on which the
filing fee is calculated and state how it was determined.)
(4) Proposed maximum aggregate value of transaction:
(5) Total fee paid:
[ ] Fee paid previously with preliminary materials.
[ ] Check box if any part of the fee is offset as provided by Exchange Act Rule
0-11(a)(2) and identify the filing for which the offsetting fee was paid
previously. Identify the previous filing by registration statement number,
or the Form or Schedule and the date of its filing.
(1) Amount previously paid:
(2) Form, Schedule or Registration Statement No.:
(3) Filing party:
(4) Date filed:
RIMAGE CORPORATION
7725 Washington Avenue South
Minneapolis, Minnesota 55439
(612) 944-8144
--------------------
NOTICE OF ANNUAL MEETING OF SHAREHOLDERS
TO BE HELD MAY 10, 2000
--------------------
TO THE SHAREHOLDERS OF
RIMAGE CORPORATION:
NOTICE IS HEREBY GIVEN that the Annual Meeting of Shareholders of
Rimage Corporation, a Minnesota corporation, will be held on Wednesday, May 10,
2000, at 3:30 p.m. (Minneapolis time), at the Minneapolis Marriott Southwest,
5801 Opus Parkway, Minnetonka, Minnesota, for the following purposes:
1. To elect six directors of the Company for the coming year.
2. To amend the Rimage 1992 Stock Option Plan (i) to increase the
number of shares reserved for issuance thereunder by 375,000,
(ii) to extend the termination of the Plan to May 10, 2010,
and (iii) to place limitations on the number of shares granted
under the plan to any person in any fiscal year designed to
comply with Section 162(m) of the Internal Revenue Code of
1986, as amended.
3. To ratify the appointment of KPMG LLP as independent auditors
for the fiscal year ending December 31, 2000.
4. To transact such other business as may properly come before
the meeting or any adjournment thereof.
Only holders of record of Rimage Corporation's Common Stock at the
close of business on April 7, 2000, are entitled to notice of and to vote at the
Annual Meeting or any adjournment thereof.
Each of you is invited to attend the Annual Meeting in person if
possible. Whether or not you plan to attend in person, please mark, date and
sign the enclosed proxy, and mail it promptly. A return envelope is enclosed for
your convenience.
By Order of the Board of Directors
Bernard P. Aldrich
PRESIDENT AND CHIEF EXECUTIVE OFFICER
April 17, 2000
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WHETHER OR NOT YOU EXPECT TO ATTEND THE ANNUAL MEETING,
PLEASE SIGN THE PROXY AND RETURN IT IN THE ENCLOSED ENVELOPE.
- --------------------------------------------------------------------------------
RIMAGE CORPORATION
7725 Washington Avenue South
Minneapolis, Minnesota 55439
(612) 944-8144
--------------------
PROXY STATEMENT
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SOLICITATION OF PROXIES
The accompanying Proxy is solicited on behalf of the Board of Directors
of Rimage Corporation (the "Company" or "Rimage") for use at the Annual Meeting
of Shareholders to be held on May 10, 2000, at 3:30 p.m. at the Minneapolis
Marriott Southwest, 5801 Opus Parkway, Minnetonka, Minnesota, and at any
adjournments thereof. The cost of solicitation, including the cost of preparing
and mailing the Notice of Annual Shareholders' Meeting and this Proxy Statement,
will be paid by the Company. Representatives of the Company may, without cost to
the Company, solicit proxies for the management of the Company by means of mail,
telephone or personal calls.
Shares of the Company's common stock, $.01 par value (the "Common
Stock"), represented by proxies in the form solicited, will be voted in the
manner directed by a shareholder. If no direction is made, the proxy will be
voted for the election of the nominees for director named in this Proxy
Statement and any other matters properly brought before the meeting. Shares
voted as a "withhold vote for" one or more directors will be counted as shares
that are present and entitled to vote for purposes of determining the presence
of a quorum at the meeting and as unvoted, although present and entitled to
vote, for purposes of the election of the directors with respect to which the
shareholder has abstained. If a broker submits a proxy that indicates the broker
does not have discretionary authority to vote certain shares, those shares will
be counted as shares that are present and entitled to vote for purposes of
determining the presence of a quorum at the meeting, but will not be considered
as present and entitled to vote with respect to the matters voted on at the
meeting.
Proxies may be revoked at any time before being exercised by delivery
to the Secretary of the Company of a written notice of termination of the
proxies' authority or a duly executed proxy bearing a later date.
Only holders of record of Common Stock at the close of business on
April 7, 2000, will be entitled to receive notice of and to vote at the meeting.
On April 7, 2000, the Company had 8,510,601 shares of Common Stock outstanding.
Each outstanding share is entitled to one vote on all matters presented at the
meeting.
So far as the management of the Company is aware, no matters other than
those described in this Proxy Statement will be acted upon at the Annual
Meeting. In the event that any other matters properly come before the Annual
Meeting calling for a vote of shareholders, the persons named as proxies in the
enclosed form of proxy will vote in accordance with their best judgment on such
other matters.
A copy of the Company's Annual Report on Form 10-K for the year ended
December 31, 1999, is being furnished to each shareholder with this Proxy
Statement. This Proxy Statement is being mailed to shareholders on or about
April 17, 2000.
PROPOSAL 1: ELECTION OF DIRECTORS
Six persons have been nominated for election at the annual meeting:
Bernard P. Aldrich, Ronald R. Fletcher, George E. Kline, Richard F. McNamara,
James L. Reissner and David J. Suden. Each nominee is currently a director of
the Company. All nominees elected at the Annual Meeting will serve until the
next Annual Meeting or until their earlier death, resignation, removal, or
disqualification. The persons named in the accompanying Proxy intend to vote the
Proxies held by them in favor of the nominees named below as directors, unless
otherwise directed. The affirmative vote of a majority of the voting shares
represented at the meeting is required for the election of each director. Should
any nominee for director become unavailable for any reason, the Proxies will be
voted in accordance with the best judgment of the persons named therein. The
Board of Directors has no reason to believe that any candidate will be
unavailable.
The following information is furnished with respect to each nominee as
of April 6, 2000:
PRINCIPAL OCCUPATION AND
NAME AND AGE BUSINESS EXPERIENCE FOR PAST FIVE YEARS DIRECTOR SINCE
------------ --------------------------------------- --------------
Bernard P. Aldrich Director, Chief Executive Officer and 1996
Age 50 President of Rimage since December 1996.
President from January 1995 to December
1996 of several manufacturing companies
controlled by Activar, Inc., including
Eiler Spring, Comfort Ride and Bending
Technologies; President from December 1992
to December 1994 of the Color
Merchandising Group of Colwell Industries;
Various management positions with Advance
Machine Company, including Chief Financial
Officer and General Manager, from 1973 to
1991.
Ronald R. Fletcher Owner and President of Aurora Service 1987
Age 59 Corporation, a savings and loan holding
company, since 1982; Chairman of the
Company from November 1992 to February
1998 and Chief Executive Officer of the
Company from September 1995 to November
1996.
George E. Kline President of Venture Management, Inc., a 1992
Age 63 financial management services company,
since 1966; General Partner of Brightstone
Capital Ltd., a venture capital firm,
since 1985. Director of Stockwalk.com,
Inc. and Associated Bank Minnesota.
Richard F. McNamara Chairman of the Board of the Company since 1987
Age 67 February 1998; Owner of Activar, Inc., a
company that provides management services
to corporations related to Activar, for
more than five years; Owner of or partner
in numerous private companies. Director of
Venturian Corporation.
James L. Reissner President of Activar, Inc., since January 1998
Age 60 1996 and Chief Financial Officer of
Activar from 1992 until becoming
President. Acted in various management and
financial management capacities during the
past twenty years, including Managing
Director of the Minnesota Region of First
Bank Systems, Inc. until 1990. Director of
Intek, Inc.
David J. Suden Chief Technology Officer of Rimage since 1995
Age 53 December 1996 and a director since
September 1995; President of Rimage from
October 1994 through November 1996; Vice
President - Development and Operations of
Rimage from February 1991 to October 1994.
2
The Company knows of no arrangements or understandings between a
director or nominee and any other person pursuant to which he has been selected
as a director or nominee. There is no family relationship between any of the
nominees, directors or executive officers of the Company.
BOARD COMMITTEES AND ACTIONS
During calendar year 1999, the Board of Directors met five times. The
Board of Directors has a Compensation Committee and an Audit Committee. During
1999, the Compensation Committee met three times and the Audit Committee met
twice. The Compensation Committee reviews and makes recommendations to the Board
of Directors regarding salaries, compensation and benefits of executive officers
and senior management of the Company. The Compensation Committee also
administers the Company's 1992 Stock Option Plan. The current members of the
Compensation Committee are Mr. Kline, Mr. Reissner and Mr. McNamara. The Audit
Committee reviews the internal and external financial reporting of the Company,
and reviews the scope of the independent audit. The members of the Audit
Committee are Mr. Kline and Mr. Reissner. The Board of Directors does not have a
nominating committee. Each nominee for director attended at least 75% of the
meetings of the Board and committees on which he served during 1999.
Directors currently receive a fee of $2,500 for each meeting of the
Board of Directors which they attend. The Company has also granted directors
nonqualified stock options under its 1992 stock option plan to purchase 15,000
shares in each of the past few years. The following chart shows the options
granted to directors during 1999. Each option has an exercise price of $10.00
and vests as to one-third of the shares on the date of grant, one-third of the
shares on December 31, 1999 and one-third of the shares on December 31, 2000.
DIRECTOR NUMBER OF SHARES
-------- ----------------
Bernard P. Aldrich 15,000
George E. Kline 15,000
Richard F. McNamara 15,000
James L. Reissner 15,000
David J. Suden 15,000
The Company pays consulting fees to James Reissner, a director of the
Company, for financial consulting services he provides to the Company. During
the year ended December 31, 1999, the Company paid Mr. Reissner $75,000 under
such arrangement.
THE BOARD OF DIRECTORS RECOMMENDS THAT THE SHAREHOLDERS VOTE FOR THE
ELECTION OF THE NOMINEES FOR THE BOARD OF DIRECTORS AS SET FORTH IN PROPOSAL 1.
EXECUTIVE OFFICERS WHO ARE NOT DIRECTORS
Current executive officers of the Company who are not also directors
include the following:
Kenneth J. Klinck, 53, started with the Company in June 1997 and has
been Vice President, Sales and Marketing of the Company since September 1997.
For the thirty-one years prior to joining the Company, Mr. Klinck was with
Advance Machine Company, as Vice President of International Operations since
October 1992, and prior to that time as President of Advance Machine's European
Operations.
3
Robert Wolf, 31, started with the Company in September 1997 and has
been Treasurer of the Company since January 2000. From March 1995 until joining
the Company, Mr. Wolf was a CPA and audit manager with Deloitte & Touche LLP.
From December 1991 until March 1995, Mr. Wolf was a CPA with House, Nezerka &
Froelich PA.
PROPOSAL II -- APPROVAL OF THE AMENDMENT TO THE
COMPANY'S STOCK OPTION PLAN
INTRODUCTION
On April 14, 2000, the Company's Board of Directors approved, subject
to shareholder approval, amendments to the Company's 1992 Stock Option Plan (the
"Plan") that will (i) increase the number of shares reserved for issuance under
the plan by 375,000 shares, (ii) extend the termination date of the Plan to May
10, 2010, and (iii) limit to 100,000 the aggregate number of options that may be
granted to any single participant under the plan in a manner designed to comply
with exemptions under Section 162(m) of the Internal Revenue Code of 1986, as
amended (the "Code"). The Plan is intended to promote the growth and
profitability of the Company by providing its employees and directors with an
incentive to achieve long-term corporate objectives, to attract and retain
employees and directors of outstanding competence, and to provide such employees
and directors with an equity interest in the Company.
Although the current reservation under the Plan for issuance under
options is 1,500,000 shares, at March 31, 2000 there remained only 61,483 shares
available for future grant. Stock options are a primary ingredient in the
compensation packages for both executive and technical personnel. Without the
ability to grant additional options, the Board of Directors of the Company does
not believe that it would have the appropriate tools to attract and retain these
personnel. The Board of Directors is recommending the amendment to the Plan to
provide enough authorization to cover anticipated option grants for the next
several years.
The Plan currently provides that the ability of the Company to grant
additional options under the Plan expires on September 24, 2002. The Company
intends to continue to grant options for the foreseeable future. Accordingly,
the Board has proposed, and is recommending to shareholders, that the term of
the plan be extended to May 10, 2010 -- ten years after the shareholders'
meeting.
The proposed amendments would also limit 100,000, the number of options
that may be granted to any single individual during a fiscal year. This
amendment is proposed to cause the Plan to qualify for an exemption under
Section 162(m) of the Code. If the Plan qualifies for such an exemption, income
created by options granted to executive officers under the Plan would not be
included in income paid to the executive for purposes of determining whether the
Company is entitled to a deduction for the executive's income from the Company
that exceeds $1,000,000. If an executive's income from the Company exceeds such
amount and an exemption is not available under Section 162(m), the Company would
not be entitled to a deduction for compensation in excess of such amount paid to
the executive. Although the Company does not have any present intentions of
granting fixed or cash compensation to an executive that would cause annual
income attributable to the Company to exceed $1,000,000, certain stock related
benefits, such as stock options, could create income that would normally be
deductible by the Company but would be excluded from deduction if an exemption
from Section 162(m) does not apply. Accordingly, the Board of Directors believes
that an amendment designed to qualify the Plan for an exemption under Section
162(m) is in the best interests of the Company.
SUMMARY OF THE PLAN
The Plan is administered by the Compensation Committee of the Board
(the "Committee"). The Committee has the authority to select the individuals to
whom awards are granted, to determine the types of awards to be granted and the
number of shares of Common Stock covered by such awards, to set the terms and
conditions of such awards, to determine whether the payment of any amounts
received under any award shall or may be deferred, and to establish rules for
the administration of the Plan.
4
The Plan permits the granting of incentive stock options meeting the
requirements of Section 422 of the Code, and stock options that do not meet such
requirements (non-qualified stock options). No option under the plan may have a
term of more than ten years. The exercise price per share under any incentive
stock option may not be less than 100% of the fair market value of the Common
Stock on the date of the grant of such option or other award. Any person who
holds more than 10% of the Company's Common Stock may not receive an incentive
option that has a term longer than five years of an exercise price of less than
110% of the fair market value on the date of grant. Determinations of fair
market value under the Plan are made in accordance with methods and procedures
established by the Committee.
Any employee, officer, director, consultant or independent contractor
of the Company and its affiliates selected by the Committee is eligible to
receive an option under the Plan. No option granted under the Plan may be
assigned, transferred, pledged or otherwise encumbered by the individual to whom
it is granted, otherwise than by will or the laws of descent and distribution,
except that the Committee may permit the designation of a beneficiary. Each
option is exercisable, during such individual's lifetime, only by such
individual or, if permissible under applicable law, by such individual's
guardian or legal representative.
The Board of Directors may amend, alter or discontinue the Plan at any
time, provided that shareholder approval must be obtained for any such action
that would (a) increase the number of shares available for issuance or sale
pursuant to the plan, (b) change the classification of persons eligible to
participate in the Plan, or (c) materially increase the benefits accruing to
participants under the Plan. The Committee may correct any defect, supply any
omission, or reconcile any inconsistency in the Plan or any option agreement in
the manner and to the extent it shall deem desirable to carry the Plan into
effect. The Committee may waive any condition of, or rights of the Company under
any outstanding award, prospectively or retroactively, but the Committee may not
amend or terminate any outstanding award, prospectively or retroactively,
without the consent of the holder or beneficiary of the award.
The grant of an option is not expected to result in any taxable income
to the recipient. The holder of an incentive stock option generally will have no
taxable income upon exercising the incentive stock option (except that a
liability may arise pursuant to the alternative minimum tax), and the Company
will not be entitled to a tax deduction when an incentive stock option is
exercised. Upon exercising a non-qualified stock option, the optionee must
recognize ordinary income equal to the excess of the fair market value of the
shares of Common Stock acquired on the date of exercise over the exercise price,
and the Company will be entitled at that time to a tax deduction in the same
amount. Generally, there will be no tax consequence to the Company in connection
with disposition of shares acquired under an option, except that the Company may
be entitled to a tax deduction in the case of a disposition of shares acquired
under an incentive stock option before the applicable incentive stock option
holding periods set forth in the Code have been satisfied.
THE AFFIRMATIVE VOTE OF THE HOLDERS OF A MAJORITY OF THE SHARES OF THE
COMMON STOCK REPRESENTED AT THE ANNUAL MEETING AND ENTITLED TO VOTE IS NECESSARY
FOR APPROVAL OF THE AMENDMENTS TO THE OPTION PLAN DESCRIBED ABOVE. PROXIES WILL
BE VOTED IN FAVOR OF SUCH PROPOSAL UNLESS OTHERWISE INDICATED. THE BOARD
RECOMMENDS THAT THE COMPANY'S SHAREHOLDERS VOTE FOR THE PROPOSAL TO AMEND THE
OPTION PLAN AS DESCRIBED ABOVE.
EXECUTIVE COMPENSATION
REPORT OF THE COMPENSATION COMMITTEE
The Compensation Committee (the "Committee") is currently comprised of
Mr. Kline, Mr. Reissner and Mr. McNamara. The Committee reviews and makes
recommendations to the Board of Directors regarding the salaries, compensation
and benefits of executive officers and senior management of the Company.
The Company's policy with respect to the compensation of executive
officers is based upon the following principals: (1) executive base compensation
levels should be established by comparison of job responsibility to similar
positions in comparable companies and be adequate to retain highly-qualified
personnel and (2) variable compensation
5
should be established to provide incentive to improve performance and
shareholder value. In determining executive officers' annual compensation, the
Committee considers the overall performance of the Company, as well as the
particular executive officer's position at the Company and the executive
officer's performance on behalf of the Company. Rather than applying a formulaic
approach to determining annual compensation, the Committee uses various surveys
of executive compensation for companies of a similar size in comparable
industries as a basis for determining competitive levels of cash compensation.
During 1999, salaries of executive officers, including the Company's
Chief Executive Officer, were set at levels that recognized increased salary
rates in the industry. The Company believes that such salaries approximate the
salaries of similarly situated individuals at comparable companies.
Executive officers are also eligible for discretionary bonuses, which
the Board of Directors awards based upon the Company's overall performance and
the contribution to such performance made by the executive officers' areas of
responsibility. For 1999, the Compensation Committee established performance
goals upon which cash bonuses would be established. Based upon realization of
such goals, the Compensation Committee and the Board granted Mr. Aldrich a
$100,000 bonus for 1999. The Compensation Committee is establishing specific
performance goals for 2000 upon which cash bonuses will be established.
The Company provides long-term incentive to its executives, and ties a
portion of executive compensation to Company performance, through grants of
stock options under the Company's 1992 Stock Option Plan. During 1999, the
Company granted Mr. Aldrich an option to purchase 15,000 shares. The
Compensation Committee, and the Board of Directors as a whole, believed that it
was important to provide Mr. Aldrich a significant incentive to improve the
performance of the Company and the performance of its common stock in the
market.
The Compensation Committee believes that the objectives of the
Company's compensation policy in providing fixed compensation to management
adequate to avoid attrition and providing variable compensation in amounts and
forms that encourage generation of value for shareholders were achieved during
1999.
By the Compensation Committee:
Richard F. McNamara
George E. Kline
James L. Reissner
6
SUMMARY COMPENSATION TABLE
The following table sets forth the cash and noncash compensation for
each of the past three fiscal years earned by the Chief Executive Officer and by
the other executive officers of the Company whose salary and bonus earned for
1999 exceeded $100,000.
SUMMARY COMPENSATION TABLE
LONG TERM COMPENSATION
-------------------------------------------
ANNUAL COMPENSATION AWARDS PAYOUTS
------------------------------------------------------------- --------------------
OTHER
ANNUAL RESTRICTED ALL OTHER
NAME AND PRINCIPAL COMPEN- STOCK OPTIONS LTIP COMPEN-
POSITION YEAR SALARY BONUS SATION(1) AWARDS (4) PAYOUTS SATION(2)
- ------------------------ ---- -------- -------- --------- ---------- ------- ------- ----------
Bernard P. Aldrich 1999 $206,000 $100,700 $ 12,500 -- 15,000 -- $ 5,000
Chief Executive Officer 1998 182,478 75,613 6,000 -- 28,125 -- 5,000
and President 1997 162,231 25,525 4,000 -- 225,000 -- --
David J. Suden 1999 186,000 100,630 12,500 -- 15,000 -- 4,750
Chief Technology 1998 166,375 70,578 6,000 -- 28,125 -- 4,298
Officer 1997 151,625 12,990 4,000 -- 37,125 -- 4,076
Kenneth J. Klinck 1999 165,020 35,574 -- -- 7,500 -- 3,773
Vice President-- Sales 1998 152,458 25,525 -- -- 22,500 -- 2,312
and Marketing 1997 79,500 11,146 -- -- 56,250 -- --
- --------------------
(1) Represents directors' fees.
(2) Represents the Company's matching contributions under its 401(k) retirement
savings plan.
7
STOCK OPTIONS
The Company maintains a 1992 Stock Option Plan (the "Plan"). The
Company may grant incentive stock options or nonqualified stock options to
executive officers, directors and other employees and consultants of the Company
under the Plan. The following table sets forth information with respect to
options granted to the named executive officers in 1999:
OPTION GRANTS IN 1999
POTENTIAL REALIZABLE VALUE AT
ASSUMED ANNUAL RATES OF STOCK
% OF TOTAL EXERCISE PRICE APPRECIATION FOR OPTION TERM
OPTIONS PRICE (1)
GRANTED TO PER -----------------------------------
OPTIONS EMPLOYEES ($/SH) EXPIRATION
NAME GRANTED (#)(2) IN 1998 DATE 5%($) 10%($)
- ---------------------------- ----------------- ------------- -------- ----------- ---------- ---------
Bernard P. Aldrich 15,000 9.7 % $ 10.00 3/02/09 94,334 239,061
David J. Suden 15,000 9.7 10.00 3/02/09 94,334 239,061
Kenneth J. Klinck 7,500 4.8 10.00 3/02/09 47,167 119,531
- ----------
(1) These amounts represent the realizable value of the subject options ten
years from the date of grant (the term of each option), without discounting
to present value, assuming appreciation in the market value of the
Company's common stock from the market price on the date of grant at the
rates indicated. Actual gains, if any, on stock option exercises are
dependent on the future performance of the Common Stock, and overall stock
market conditions. The amounts reflected in this table may not necessarily
be achieved.
The following table provides information with respect to stock options held at
December 31, 1999, by the named executive officers.
AGGREGATED OPTION EXERCISES IN LAST FISCAL
YEAR AND YEAR-END OPTION VALUES
VALUE OF UNEXERCISED IN-THE-
SHARES NUMBER OF UNEXERCISED MONEY OPTIONS AT YEAR-END
ACQUIRED VALUE OPTIONS AT YEAR-END (#) ($) (2)
NAME ON EXERCISE REALIZED(1) EXERCISABLE/UNEXERCISABLE EXERCISABLE/UNEXERCISABLE
- ------------------- ----------- ------------ ------------------------------- -----------------------------
Bernard P. Aldrich 22,500 $288,758 240,625 5,000 $ 2,121,667 $ 3,333
David J. Suden 45,000 344,981 128,125 5,000 1,071,667 3,333
Kenneth J. Klinck -- -- 83,750 2,500 713,520 6,250
- ------------------------------
(1) Represents the difference between the option exercise price and the
closing price of the Company's Common Stock as reported by Nasdaq on the
date of exercise.
(2) Based on the difference between the December 31, 1999 closing price of
$10.67 per share as reported on The Nasdaq Stock Market and the exercise
price of the options.
RETIREMENT SAVINGS PLAN
Rimage adopted a profit sharing and savings plan in 1991 under Section
401(k) of the Internal Revenue Code, which allows employees to contribute up to
16% of their pre-tax income to the plan. The 401(k) Plan includes a
8
discretionary matching contribution by the Company. These discretionary
contributions totaled $142,957, $123,621 and $137,150 in 1999, 1998 and 1997,
respectively.
CERTAIN TRANSACTIONS
Rimage leases approximately 43,000 square feet of office, manufacturing
and warehouse space from a corporation owned by Messrs. Fletcher and McNamara,
pursuant to a lease dated September, 1998. The lease expires on September 30,
2003. Rent is approximately $426,000 per year, including a pro rata share of
operating costs.
9
PERFORMANCE GRAPH
The Company's common stock is quoted on The Nasdaq National Market. The
following graph shows changes during the period from December 31, 1995 to
December 31, 1999, in the value of $100 invested in: (1) the Nasdaq National
Market Index (US); (2) Nasdaq Non-Financial Stocks Index and (3) the Company's
common stock. The values of each investment as of the dates indicated are based
on share prices plus any dividends paid in cash, with the dividends reinvested
on the date they were paid. The calculations exclude trading commissions and
taxes.
[LINE CHART]
---------------------------- -------- -------- -------- -------- --------
12/31/95 12/31/96 12/31/97 12/31/98 12/31/99
---------------------------- -------- -------- -------- -------- --------
Nasdaq National Market Index $100.00 $123.04 $150.76 $212.44 $383.80
---------------------------- -------- -------- -------- -------- --------
Nasdaq Non-Financial Stocks $100.00 $121.47 $142.25 $108.48 $401.67
---------------------------- -------- -------- -------- -------- --------
Rimage Corporation $100.00 $ 37.71 $ 88.12 $245.92 $314.77
---------------------------- -------- -------- -------- -------- --------
10
BENEFICIAL OWNERSHIP OF COMMON STOCK
The following table sets forth as of March 31, 2000, the number of shares
of Common Stock beneficially owned by (i) each person who is the beneficial
owner of more than five percent of the outstanding shares of the Company's
common stock, (ii) each executive officer of the Company named in the Summary
Compensation Table herein, (iii) each director, and (iv) all executive officers
and directors as a group.
NUMBER OF SHARES PERCENT OF
NAME AND ADDRESS OF BENEFICIAL OWNER BENEFICIALLY OWNED (1) OUTSTANDING
- ------------------------------------ ---------------------- -----------
Ronald R. Fletcher(2) ......................... 458,437 5.3%
4125 Parkglen Court N.W.
Washington, D.C. 20007
Richard F. McNamara............................ 1,005,175 11.8%
7808 Creekridge Circle
Minneapolis, MN 55439
George E. Kline (3)............................ 789,625 9.4%
4750 IDS Center
Minneapolis, MN 55402
Bernard P. Aldrich (4)......................... 270,325 3.2%
7725 Washington Ave. So.
Minneapolis, MN 55439
David J. Suden ................................ 177,625 2.1%
7725 Washington Ave. So.
Minneapolis, MN 55439
James L. Reissner.............................. 194,350 2.3%
7808 Creekridge Circle
Minneapolis, MN 55439
Kenneth J. Klinck.............................. 84,800 1.0%
All executive officers and directors as a group
(8 persons) .............................. 2,998,557 32.2%
- --------------------
* Less than one percent
(1) Includes shares which could be purchased within 60 days upon the exercise
of the following stock options, Mr. Fletcher, 240,750 shares; Mr. McNamara,
133,750 shares; Mr. Kline, 77,500 shares; Mr. Aldrich, 218,125 shares; Mr.
Suden, 53,125 shares ; Mr. Reissner, 156,250; Mr. Klinck, 68,750 and all
directors and executive officers as a group, 961,700 shares.
(2) Includes 1,875 shares held as custodian for a minor child.
(3) Includes 247,500 shares which are owned by limited partnerships that are
managed by a limited liability company for which Mr. Kline is a Managing
Partner. Mr. Kline has no voting or investment power with respect to such
shares and disclaims beneficial ownership. Includes 285,750 shares which
are held by Venture Management, Inc. Profit Sharing Plan and Trust of which
Mr. Kline is trustee and sole beneficiary.
(4) Includes 450 shares held as custodian for minor children.
11
SECTION 16(a) BENEFICIAL OWNERSHIP REPORTING COMPLIANCE
Under federal securities laws, the Company's directors and officers,
and any beneficial owner of more than 10% of a class of equity securities of the
Company, are required to report their ownership of the Company's equity
securities and any changes in such ownership to the Securities and Exchange
Commission (the "Commission") and the securities exchange on which the equity
securities are registered. Specific due dates for these reports have been
established by the Commission, and the Company is required to disclose in this
Proxy Statement any delinquent filing of such reports and any failure to file
such reports during the fiscal year ended December 31, 1999.
Based upon information provided by officers and directors of the
Company, the Company believes that all officers, directors and 10% shareholders
filed all reports on a timely basis in the 1999 fiscal year.
PROPOSAL 3: RATIFICATION OF THE APPOINTMENT OF INDEPENDENT AUDITORS
The Board of Directors has appointed the firm of KPMG LLP as
independent auditors for the fiscal year ending December 31, 2000. The firm of
KPMG LLP has served as the Company's auditors since 1989. A representative of
KPMG LLP will be present at the Annual Meeting, will have an opportunity to make
a statement if he desires to do so and will be available to respond to
appropriate questions from shareholders.
All proxies received in response to this solicitation will be voted in
favor of the ratification of the appointment of the independent auditors, unless
other instructions are indicated thereon. Ratification of the appointment of the
independent auditors requires the affirmative vote of a majority of the shares
represented in person or by proxy at the Annual Meeting and voting on the
proposal.
THE BOARD OF DIRECTORS RECOMMENDS THAT THE SHAREHOLDERS VOTE FOR THE
RATIFICATION OF THE APPOINTMENT OF KPMG LLP AS INDEPENDENT AUDITORS AS SET FORTH
IN PROPOSAL 3.
SHAREHOLDER PROPOSALS FOR 2001 ANNUAL MEETING
Any shareholder wishing to include a proposal in the Company's proxy
solicitation materials for its next annual meeting of shareholders must submit
such proposal for consideration in writing to the Secretary of the Company at
its principal executive offices, Rimage Corporation, 7725 Washington Avenue
South, Minneapolis, MN 55439, no later than December 19, 2000.
Pursuant to the Company's Bylaws, in order for business to be properly
brought before the next annual meeting by a shareholder, or in order for a
nominee for director to be considered at such annual meeting, the shareholder
must give written notice of such shareholder's intent to bring a matter before
the annual meeting, or nominate the director, no later than December 19, 2000.
Each such notice must set forth certain information with respect to the
shareholder who intends to bring such matter before the meeting and the business
desired to be conducted, as set forth in greater detail in the Company's Bylaws.
Management will use discretionary authority to vote against any
shareholder proposal, or director nominee not made by management, presented at
the next annual meeting if: (i) such proposal or nominee has been properly
omitted from the Company's proxy materials under federal securities laws; (ii)
notice of such proposal or nominee was not submitted to the Secretary of the
Company at the address listed above by December 19, 2000; or (iii) the proponent
has not solicited proxies in compliance with federal securities laws from the
holders of at least the percentage of the Company's voting shares required to
carry the proposal or elect the nominee.
12
OTHER BUSINESS
At the date of this Proxy Statement, management knows of no other
business that may properly come before the Annual Meeting. However, if any other
matters properly come before the meeting, the persons named in the enclosed form
of proxy will vote the proxies received in response to this solicitation in
accordance with their best judgment on such makers.
By Order of the Board of Directors
Bernard P. Aldrich
PRESIDENT AND CHIEF EXECUTIVE OFFICER
Minneapolis, Minnesota
April 17, 2000
13
RIMAGE CORPORATION
ANNUAL MEETING OF SHAREHOLDERS
WEDNESDAY, MAY 10, 2000
3:30 P.M.
MINNEAPOLIS MARRIOTT SOUTHWEST
5801 OPUS PARKWAY
MINNETONKA, MN 55343
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RIMAGE CORPORATION
7725 WASHINGTON AVENUE SOUTH
MINNEAPOLIS, MINNESOTA 55439 PROXY
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THIS PROXY IS SOLICITED ON BEHALF OF THE BOARD OF DIRECTORS.
The undersigned hereby appoints Bernard P. Aldrich and David J. Suden and each
of them, with power to appoint a substitute, to vote all shares the undersigned
is entitled to vote at the Annual Meeting of Shareholders of Rimage Corporation,
to be held on May 10, 2000, and at all adjournments thereof, as specified below
on the matters referred to, and, in their discretion, upon any other matters
which may be brought before the meeting.
PLEASE MARK, SIGN, DATE AND RETURN THIS PROXY PROMPTLY.
SEE REVERSE FOR VOTING INSTRUCTIONS.
\/ PLEASE DETACH HERE \/
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THE BOARD OF DIRECTORS RECOMMENDS A VOTE FOR PROPOSALS 1, 2 AND 3.
1. Election of directors: 01 Bernard P. Aldrich 04 Richard F. McNamara [ ] Vote FOR [ ] Vote WITHHELD
02 Ronald R. Fletcher 05 James Reissner all nominees from all nominees
03 George E. Kline 06 David J. Suden (except as marked)
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(INSTRUCTIONS: TO WITHHOLD AUTHORITY TO VOTE FOR ANY INDICATED NOMINEE,
WRITE THE NUMBER(S) OF THE NOMINEE(S) IN THE BOX PROVIDED TO THE RIGHT.)
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2. Approval of Amendments to 1992 Stock Option Plan. [ ]For [ ] Against [ ] Abstain
3. Ratification of KPMG Peat Marwick LLP as Independent Auditors of Rimage
and its subsidiaries. [ ]For [ ] Against [ ] Abstain
4. To vote with discretionary authority on any other matter that may properly come before the meeting.
THIS PROXY, WHEN PROPERLY EXECUTED, WILL BE VOTED IN THE MANNER DIRECTED HEREIN BY THE UNDERSIGNED SHAREHOLDER. IF NO DIRECTION IS
MADE, THIS PROXY WILL BE VOTED FOR ALL OF THE DIRECTORS NAMED IN PROPOSAL 1 AND FOR PROPOSAL 2 AND PROPOSAL 3.
Address Change? Mark Box [ ] Indicate changes below:
Date _____________________________________
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Signature(s) in Box
When shares are held by joint tenants, both should
sign. When signing as attorney, executor,
administrator, trustee or guardian, please give full
title as such. If a corporation, please sign in full
corporate name by President or other authorized
officer. If a partnership, please sign in
partnership name by authorized person.
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