SCHEDULE 14A INFORMATION
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IN FOCUS SYSTEMS, INC.
27700B S.W. PARKWAY AVENUE
WILSONVILLE, OREGON 97070
March 13, 1997
Dear Shareholders:
Our Annual Meeting of Shareholders will be held on Thursday, April 17, 1997, at
1:00 p.m., Pacific Daylight Savings Time, at the Oregon Convention Center, 777
N.E. Martin Luther King Jr. Blvd., Portland, Oregon 97212. You are invited to
attend this meeting to give us an opportunity to meet you personally, to allow
us to introduce to you the key management of your Company and its directors, and
to answer any questions you may have.
The formal Notice of Meeting, the Proxy Statement, the proxy card and a copy
of the Annual Report to Shareholders describing the Company's operations for
the year ended December 31, 1996 are enclosed.
I hope that you will be able to attend the meeting in person. Whether or not
you plan to attend the meeting, please sign and return the enclosed proxy card
promptly. A prepaid return envelope is provided for this purpose. Your shares
will be voted at the meeting in accordance with your proxy.
If you have shares in more than one name, or if your stock is registered in more
than one way, you may receive multiple copies of the proxy materials. If so,
please sign and return each proxy card you receive so that all of your shares
may be voted. I look forward to meeting you at the Annual Meeting.
Very truly yours,
IN FOCUS SYSTEMS, INC.
/s/ John V. Harker
JOHN V. HARKER
CHAIRMAN OF THE BOARD, PRESIDENT
AND CHIEF EXECUTIVE OFFICER
IN FOCUS SYSTEMS, INC.
27700B S.W. PARKWAY AVENUE
WILSONVILLE, OREGON 97070
NOTICE OF ANNUAL MEETING OF SHAREHOLDERS
TO BE HELD ON APRIL 17, 1997
To the Shareholders of In Focus Systems, Inc.:
NOTICE IS HEREBY GIVEN that the Annual Meeting of Shareholders of IN FOCUS
SYSTEMS, INC. (the Company), an Oregon corporation, will be held at the Oregon
Convention Center, 777 N.E. Martin Luther King Jr. Blvd., Portland, Oregon
97212, on Thursday, April 17, 1997, at 1:00 p.m., Pacific Daylight Savings
Time. The purposes of the Annual Meeting will be:
1. To elect the Board of Directors to serve until the next Annual Meeting
of Shareholders (Proposal No. 1);
2. To ratify the appointment of Arthur Andersen LLP as the Company's
independent accountants for the year ending December 31, 1997
(Proposal No. 2); and
3 To consider and act upon any other matter which may properly come
before the meeting or any adjournment thereof.
The Board of Directors has fixed the close of business on February 28, 1997, as
the record date for determining shareholders entitled to notice of and to vote
at the meeting or any adjournment thereof. Only holders of record of Common
Stock of the Company at the close of business on the record date will be
entitled to notice of and to vote at the meeting and any adjournment thereof.
All shareholders are cordially invited to attend the Annual Meeting. A review
of the Company's operations for the year ended December 31, 1996 will be
presented. WHETHER OR NOT YOU PLAN TO ATTEND THE MEETING, PLEASE SIGN AND
PROMPTLY RETURN THE ENCLOSED PROXY CARD, WHICH YOU MAY REVOKE AT ANY TIME PRIOR
TO ITS USE. A prepaid, self-addressed envelope is enclosed for your
convenience. Your shares will be voted at the meeting in accordance with your
proxy. If you attend the meeting, you may revoke your proxy and vote in person.
By Order of the Board of Directors,
/s/ Michael D. Yonker
MICHAEL D. YONKER
VICE PRESIDENT, INFORMATION SERVICES,
CHIEF FINANCIAL OFFICER AND SECRETARY
Wilsonville, Oregon
March 13, 1997
IN FOCUS SYSTEMS, INC.
27700B S.W. PARKWAY AVENUE
WILSONVILLE, OREGON 97070
--------------------------
PROXY STATEMENT
ANNUAL MEETING OF SHAREHOLDERS
TO BE HELD ON APRIL 17, 1997
--------------------------
SOLICITATION AND REVOCATION OF PROXIES
This Proxy Statement and the accompanying Annual Report to Shareholders, the
Notice of Annual Meeting and the proxy card are being furnished to the
shareholders of In Focus Systems, Inc., and Oregon corporation (the "Company"),
in connection with the solicitation of proxies by the Company's Board of
Directors for use at the Company's 1997 Annual Meeting of Shareholders (the
"Annual Meeting") to be held at the Oregon Convention Center, 777 N.E. Martin
Luther King Jr. Blvd., Portland, Oregon 97212, on Thursday, April 17, 1997, at
1:00 p.m. Pacific Daylight Savings Time and any adjournment thereof. The
solicitation of proxies by mail may be followed by personal solicitation of
certain shareholders, by officers or regular employees of the Company. All
expenses of the Company associated with this solicitation will be borne by the
Company.
The two persons named as proxies on the enclosed proxy card, John V. Harker and
Michael D. Yonker, were designated by the Board of Directors. All properly
executed proxies will be voted (except to the extent that authority to vote has
been withheld) and where a choice has been specified by the shareholder as
provided in the proxy card, it will be voted in accordance with the
specification so made. Proxies submitted without specification will be voted
FOR Proposal No. 1 to elect the nominees for directors proposed by the Board of
Directors and FOR Proposal No. 2 to ratify the appointment of Arthur Anderson
LLP as independent accountants for the Company.
A proxy may be revoked by a shareholder prior to its exercise by written notice
to the Secretary of the Company, by submission of another proxy bearing a later
date or by voting in person at the Annual Meeting. Such notice or later proxy
will not affect a vote on any matter taken prior to the receipt thereof by the
Company.
These proxy materials and the Company's 1996 Annual Report to Shareholders are
being mailed on or about March 13, 1997 to shareholders of record on February
28, 1997 of the Company's Common Stock. The principal executive office and
mailing address of the Company is 27700B S.W. Parkway Avenue, Wilsonville,
Oregon 97070.
1
VOTING AT THE MEETING
The shares of Common Stock constitute the only class of securities entitled to
notice of and to vote at the meeting. In accordance with the Company's Bylaws,
the stock transfer records were compiled on February 28, 1997, the record date
set by the Board of Directors for determining the shareholders entitled to
notice of, and to vote at, this meeting and any adjournment thereof. On that
date, there were 10,771,806 shares of Common Stock outstanding and entitled to
vote and the closing price of the Company's Common Stock was $20.625.
Each share of Common Stock outstanding on the record date is entitled to one
vote per share at the Annual Meeting. If a quorum is present at the Annual
Meeting: (i) the four nominees for election as directors who receive the
greatest number of votes cast for the election of directors by the shares of
Common Stock present in person or represented by proxy at the meeting and
entitled to vote shall be elected directors and (ii) Proposal No. 2 to ratify
the appointment of Arthur Andersen LLP as independent accountants for the
Company will be approved if the number of votes cast in favor of the proposal
exceeds the number of votes cast against it.
With respect to the election of Directors, Directors are elected by a plurality
of the votes cast and only votes cast in favor of a nominee will have an effect
on the outcome. Therefore, abstention from voting or nonvoting by brokers will
have no effect thereon. With respect to voting on Proposal No. 2, abstention
from voting or nonvoting by brokers will have no effect thereon.
2
ELECTION OF DIRECTORS
(PROPOSAL NO. 1)
In accordance with the Company's Bylaws, the Board of Directors shall consist of
no less than three and no more than seven directors, the specific number to be
determined by resolution adopted by the Board of Directors. During the past
year, the Board has consisted of five Directors. John R. Dougery, who has
served as a Director since 1988, recently advised the Company that he would not
be a candidate for reelection at the 1997 Annual Meeting. Therefore, by
resolution adopted on February 25, 1997, the Board of Directors set the number
of Directors at four, and four Directors are to be elected at the 1997 Annual
Meeting of Shareholders. The Board of Directors is presently searching for one
additional qualified candidate for the Board of Directors. The Board of
Directors intends to increase the number of Directors from four to five upon
locating a qualified candidate and to thereafter, in accordance with the
Company's Bylaws, appoint such candidate to fill the vacancy resulting from the
increase in the number of Directors.
NOMINEES FOR DIRECTOR
The names and certain information concerning the persons to be nominated by the
Board of Directors at the Annual Meeting are set forth below. THE BOARD OF
DIRECTORS RECOMMENDS THAT SHAREHOLDERS VOTE FOR THE ELECTION OF EACH OF THE
NOMINEES NAMED BELOW. Shares represented by proxies will be voted for the
election to the Board of Directors of the persons named below unless authority
to vote for a particular director or directors has been withheld in the proxy.
All nominees have consented to serve as directors for the ensuing year. The
Board of Directors has no reason to believe that any of the nominees will be
unable to serve as a director. In the event of the death or unavailability of
any nominee or nominees, the proxy holders will have discretionary authority
under the proxy to vote for a suitable substitute nominee as the Board of
Directors may recommend. Proxies may not be voted for more than four (4)
nominees. The Board of Directors has nominated the persons named in the
following table to be elected as directors:
NAME AGE HAS BEEN A DIRECTOR SINCE
- ---- --- -------------------------
Peter D. Behrendt 58 1995
Michael R. Hallman 51 1992
John V. Harker 62 1992
Jack D. Kuehler 64 1996
Peter D. Behrendt is a director of the Company. He is the Chairman of Exabyte
Corp., a publicly traded company that is the world's largest independent
manufacturer focused exclusively on tape storage products, tape libraries and
recording media. Prior to working at Exabyte Corp., Mr. Behrendt spent 26 years
in numerous executive positions at International Business Machines, Inc.
("IBM"), including worldwide responsibility for business and product planning
for IBM's tape and disk drives and general management of IBM's worldwide
electronic typewriter business. Mr. Behrendt is on the Board of Directors of
Western Digital Corp., Wild Oats corp. and Exabyte Corp.
3
Michael R. Hallman is a director of the Company and is currently serving as
President of The Hallman Group, a management consulting company focusing on
marketing, sales, business development and strategic planning for the
information systems industry. Mr. Hallman served as President and Chief
Operating Officer of Microsoft Corporation from February 1990 until March 1992.
From 1987 to 1990, he was Vice President of the Boeing Company and President of
Boeing Computer Services. From 1967 to 1987, Mr. Hallman worked for IBM in
various sales and marketing executive positions, with his final position being
Vice President of Field Operations, responsible for one-half of IBM's domestic
sales revenue. Mr. Hallman holds a B.B.A. and an M.B.A. from the University of
Michigan. Mr. Hallman is a member of the Board of Directors of Keytronics,
Inc., Intuit, Inc., Timeline, Inc., Amdahl, Inc. and Network Appliance, Inc.
John V. Harker is a director of the Company, and has served as President and
Chief Executive Officer of the Company since April 1992. Mr. Harker was elected
as Chairman of the Board in October 1994. Mr. Harker served as Executive Vice
President of Genicom Corporation, a manufacturer of printers, from 1984 to
January 1992, and as a member of the Board of Directors of Genicom Corporation,
form 1986 to January 1992. Mr. Harker served as Senior Vice President of
Marketing and Corporate Development of Data Products, Inc. from 1982 to 1984, as
Vice President and partner of Booz, Allen & Hamilton, Inc. from 1979 to 1982,
and in various managerial and executive positions at IBM Corporation from 1963
to 1979. He holds a B.S. degree in Marketing from the University of Colorado.
Jack D. Kuehler is a director of the Company. Mr. Kuehler is the former
President and top technologist of IBM. Mr. Kuehler spent a total of 35 years at
IBM, during which time he played a significant management role in many of the
corporation's advanced technologies, having worldwide responsibility for product
development and manufacturing. He was member of the IBM Board of Directors, the
Executive Committee, the Corporate Management Board and the Management
Committee. Mr. Kuehler also serves on the Board of Directors of Olin
Corporation, Aetna Life and Casualty Company and Parsons.
MEETINGS AND COMMITTEES OF THE BOARD OF DIRECTORS
The Board of Directors held eight (8) regular meetings and took action pursuant
to two (2) unanimous written consents during the year ended December 31, 1996.
During 1996, the Audit Committee was composed of Mr. Dougery, Mr. Hallman and
Mr. Behrendt, outside directors who are not, and have not been at any time in
the past, officers of the Company. The Audit Committee reviews, with the
Company's independent public accountants and representatives of management, the
scope and results of audits, the appropriateness of accounting principles used
in financial reporting, and the adequacy of financial and operating controls.
The Audit Committee held two (2) meetings in 1996 and all members of the Audit
Committee attended those meetings.
The Compensation Committee and the Administrative Committee of the 1988
Combination Stock Option Plan were composed of Messrs. Dougery, Hallman,
Behrendt and Kuehler during 1996. The Compensation Committee approves all of
the policies under which compensation is paid or awarded to the Company's
executive officers. The Compensation Committee is responsible for establishing
compensation of executive officers who also serve on the Board of Directors.
The entire Board of Directors is responsible for reviewing
4
and providing feedback on non-director executive officer compensation with goals
and dollar amounts established by the Chief Executive Officer in accordance with
policies approved by the Board. During 1996, the Administrative Committee of
the 1988 Combination Stock Option Plan was responsible for approving option
grants under such plan. The Compensation Committee held one (1) regular meeting
during 1996, with all members in attendance. The Administrative Committee of
the 1988 Combination Stock Option Plan held seven (7) regular meetings during
the year ended December 31, 1996. All members were in attendance at each
meeting. The Board of Directors does not have a Nominating Committee.
SELECTION OF INDEPENDENT ACCOUNTANTS
(PROPOSAL NO. 2)
The Board of Directors has appointed Arthur Andersen LLP, independent
accountants, as auditors of the Company for the year ending December 31, 1997,
subject to ratification by the shareholders. In the absence of contrary
specifications, the shares represented by the proxies will be voted FOR the
following resolution ratifying the appointment of Arthur Andersen LLP as the
Company's independent accountants for the year ending December 31, 1997:
RESOLVED, that the shareholders of In Focus Systems, Inc., hereby ratify
the appointment of Arthur Andersen LLP as the independent accountants of
the Company for the year ending December 31, 1997.
A representative of Arthur Andersen LLP is expected to be present at the Annual
Meeting. The representative will be given the opportunity to make a statement
on behalf of his firm if such representative so desires, and will be available
to respond to appropriate shareholder questions. Arthur Andersen LLP was the
Company's independent accountant for the year ended December 31, 1996.
THE BOARD OF DIRECTORS RECOMMENDS A VOTE FOR THE RATIFICATION OF
THE APPOINTMENT OF ARTHUR ANDERSEN LLP AS INDEPENDENT ACCOUNTANTS
OF THE COMPANY FOR THE YEAR ENDING DECEMBER 31, 1997.
5
SECURITY OWNERSHIP OF CERTAIN
BENEFICIAL OWNERS AND MANAGEMENT
The following table sets forth, as of January 31, 1997, certain information
furnished to the Company with respect to ownership of the Company's Common Stock
of (i) each Director, (ii) the Chief Executive Officer, (iii) the "named
executive officers" (as defined under "Executive Compensation") other than the
Chief Executive Officer, (iv) all persons known by the Company to be beneficial
owners of more than 5 percent of its Common Stock, and (v) all executive
officers and Directors as a group.
COMMON STOCK (A)
-----------------------------
NUMBER OF PERCENT OF SHARES
SHAREHOLDER SHARES OUTSTANDING
- --------------------------------------------- -----------------------------
J. & W. Seligman & Co. Incorporated (M) 703,000 6.56%
100 Park Avenue
New York, New York 10017
John V. Harker (B)(C) 123,353 1.14%
Michael D. Yonker (B)(D) 62,220 *
Mark E. Reed (B)(E) 33,555 *
David L. Stallard (B)(F) 29,688 *
Lyle W. Jordan (B)(G) 28,936 *
John R. Dougery (H) 26,449 *
155 Bovet Road, Suite 350
San Mateo, CA 94402
Michael R. Hallman (B)(I) 21,196 *
Jack D. Kuehler (B)(J) 13,788 *
Peter D. Behrendt (B)(K) 11,788 *
Allen H. Alley (B) 8,053 *
All executive officers and directors as a
group (11 persons) (L) 396,859 2.83%
- ---------------
*Less than one percent
6
(A) Applicable percentage of ownership is based on 10,772,936 shares of Common
Stock outstanding as of January 31, 1997 together with applicable options
for such shareholders. Beneficial ownership is determined in accordance
with the rules of the Securities and Exchange Commission, and includes
voting and investment power with respect to shares. Shares of Common Stock
subject to options or warrants currently exercisable or exercisable within
60 days after January 31, 1997 are deemed outstanding for computing the
percentage ownership of the person holding such options or warrants, but
are not deemed outstanding for computing the percentage of any other
person.
(B) The address for such person is 27700B SW Parkway Avenue, Wilsonville,
Oregon 97070.
(C) Includes 91,353 shares subject to options granted pursuant to the Company's
1988 Combination Stock Option Plan, as amended, and exercisable as of April
1, 1997.
(D) Includes 58,920 shares subject to options granted pursuant to the Company's
1988 Combination Stock Option Plan, as amended, and exercisable as of April
1, 1997.
(E) Includes 32,555 shares subject to options granted pursuant to the Company's
1988 Combination Stock Option Plan, as amended, and exercisable as of April
1, 1997.
(F) Includes 29,688 shares subject to options granted pursuant to the Company's
1988 Combination Stock Option Plan, as amended, and exercisable as of April
1, 1997.
(G) Includes 28,936 shares subject to options granted pursuant to the Company's
1988 Combination Stock Option Plan, as amended, and exercisable as of April
1, 1997.
(H) Includes 21,196 shares subject to options granted pursuant to the Company's
Directors' Stock Option Plan, as amended, and exercisable as of April 1,
1997. Mr. Dougery is a Director of the Company.
(I) Includes 21,196 shares subject to options granted pursuant to the Company's
Directors' Stock Option Plan, as amended, and exercisable as of April 1,
1997.
(J) Includes 11,788 shares subject to options granted pursuant to the Company's
Directors' Stock Option Plan, as amended, and exercisable as of April 1,
1997.
(K) Includes 11,788 shares subject to options granted pursuant to the Company's
Directors' Stock Option Plan, as amended, and exercisable as of April 1,
1997.
(L) Includes 343,753 shares subject to options granted pursuant to the
Company's 1988 Combination Stock Option Plan, as amended, and the Company's
Directors' Stock Option Plan, as amended and exercisable as of April 1,
1997.
(M) The Company has been advised in Schedule 13g filings and otherwise as
follows: these securities are deemed to be beneficially owned by J. & W.
Seligman & Co. Incorporated ("J. & W.") as a result of its capacity as
investment adviser. Such securities are owned of record by clients of J. &
W. J. & W. has sole voting and dispositive power with regard to all such
shares. J. & W. is an Investment Adviser registered under Section 203 of
the Investment Advisers Act of 1940. One client of J. & W., Seligman
Communications and Information Fund, Inc., an investment company registered
under the Investment Company Act, directly owns greater than five percent
of the class of securities referred to herein.
7
EXECUTIVE OFFICERS
The following table identifies the current executive officers of the Company,
the positions which they hold, and the year in which they began serving in their
respective capacities. Officers of the Company are elected by the Board of
Directors at the Annual Meeting to hold office until their successors are
elected and qualified.
POSITION HELD
NAME AGE CURRENT POSITION(S) WITH COMPANY SINCE
- --------------------------------------------------------------------------------
John V. Harker 62 Chairman of the Board, President and 1994
Chief Executive Officer
Mark E. Reed 46 Senior Vice President, Sales, 1996
Marketing and Service
David L. Stallard 54 Vice President, Engineering 1995
Susan L. Thompson 39 Vice President, Human Resources 1994
Michael D. Yonker 39 Vice President, Information Services, 1996
Chief Financial Officer, Treasurer and
Secretary
For information on the business background of Mr. Harker see "Nominees For
Director" above.
Mark E. Reed joined the Company in May 1993 as Vice President, Sales, Marketing
and Service. In September 1996, Mr. Reed was promoted to Senior Vice President,
Sales, Marketing and Service. Mr. Reed served as the Director of North American
Sales for Tektronix, Inc. from 1991 to May 1993. Mr. Reed's duties in this
position included sales, channels marketing, telemarketing, and systems
engineering. The division generated in excess of $100 million in revenue
annually. From 1989 to 1991 he served as Vice President of Sales and Marketing
at Genicom Corporation, a manufacturer of printers. Mr. Reed holds a B.S.
degree in Business Administration from the University of Wisconsin and has
completed several post-graduate programs in marketing and strategic planning.
David L. Stallard joined the Company in August 1995 as Vice President,
Engineering. Mr. Stallard has spent a number of years in the research and
development of electronic products. Form 1991 to August 1995, Mr. Stallard was
the Senior Director of Engineering for Apple Imaging Products ("Apple"). In his
position, he was responsible for the development of Apple's printers, displays,
input scanners and digital cameras. Annual revenues in the imaging department
were greater than $1 billion at that time. From 1983 to 1991, Mr. Stallard held
various positions at Hewlett-Packard, with his final position being Group
Research & Development Manager: Hewlett-Packard Ink Jet Products, which he held
from 1990 to 1991. He holds a B.S. degree in Behavioral Psychology from the
University of California, Los Angeles, a B.S. degree in Electrical Engineering
and Computer Science from the University of California, Berkeley and a M.S.
degree in Electrical Engineering Management from Stanford University.
8
Susan L. Thompson joined the Company in May 1990 as Manager, Human Resources and
in January 1994, was promoted to Vice President, Human Resources. From May 1989
to May 1990, Ms. Thompson was a training consultant with Richard Chang
Associates, a large human resources consulting firm. From October 1987 to May
1989 Ms. Thompson held senior management positions in human resources at Emerald
Systems, a computer peripherals manufacturer with annual revenues at the time of
approximately $50 million. Prior to this time, she held various positions
within human resources at Archive Corporation and Fluor Engineers and
Constructors. Ms. Thompson studied human resource management at the University
of California at Irvine.
Michael D. Yonker, C.P.A., joined the Company in July 1993 as Vice President,
Information Services, Chief Financial Officer, Treasurer and Assistant
Secretary. During 1996, Mr. Yonker was named Secretary of the Company. Prior
to joining the Company, Mr. Yonker was the Partner in Charge of Northwest
Manufacturing Industry at Arthur Andersen LLP specializing in process
improvement, total quality and performance measurement systems for the
manufacturing industry. Mr. Yonker was the audit partner for the Company in
1992 and was with Arthur Andersen from February 1980 until July 1993. He
graduated from Linfield College in 1980 with a B.S. degree in Accounting and
Finance.
9
EXECUTIVE COMPENSATION
SUMMARY OF CASH AND CERTAIN OTHER COMPENSATION
The following table provides certain summary information concerning compensation
awarded to, earned by or paid to the Company's Chief Executive Officer and each
of the four other most highly compensated executive officers of the Company
determined as of the end of the last fiscal year and any ex-officers for whom
disclosure would have been provided except for the fact that the individual was
not serving as an executive officer at the end of the fiscal year (hereafter
referred to as the "named executive officers") for the fiscal years ended
December 31, 1996, 1995 and 1994.
SUMMARY COMPENSATION TABLE
Long Term
Compensation
Annual Compensation Awards
--------------------------------------------------- ------------
Securities All Other
Other Annual Underlying Compensation
Name and Principal Position Year Salary($)(A) Bonus($)(A) Compensation($)(B) Options (#) ($)(C)
- ------------------------------- ---- ------------ ----------- ------------------ ----------- ------------
John V. Harker (D) 1996 307,493 12,964 625 160,000 1,047
Chairman of the Board, 1995 298,750 154,384 1,440 35,000 5,325
President and Chief 1994 281,970 135,436 30,965 25,000 2,120
Executive Officer
David L. Stallard (E) 1996 180,077 9,098 -- 20,000 1,419
Vice President, 1995 68,308 18,779 -- 75,000 741
Engineering 1994 -- -- -- -- --
Mark E. Reed 1996 172,502 8,870 -- 42,100 571
Vice President, Sales 1995 158,438 54,576 -- 8,500 662
Marketing and Service 1994 141,428 50,337 175 20,000 699
Michael D. Yonker 1996 169,255 8,735 250 27,100 209
Vice President, Infor- 1995 158,635 53,317 1,160 8,500 526
mation Services, Chief 1994 148,042 52,350 1,725 20,000 495
Financial Officer,
Treasurer and Secretary
Lyle W. Jordan (F) 1996 154,193 8,294 -- 26,450 334
Ex-Vice President, 1995 127,308 46,146 50,517 75,000 999
Operations 1994 -- -- -- -- --
Allen H. Alley (G) 1996 179,631 6,796 -- 6,410 5,187
Ex-Vice President, 1995 151,525 49,895 -- 8,050 652
Corporate Development 1994 152,361 51,730 -- -- 630
(A) Amounts shown include cash compensation earned in each respective year.
Amounts under the Bonus column include an annual bonus in 1994 and
1995, 401(k) matching payments and quarterly profit sharing. See
"Annual Bonus Awards for 1996" below.
(B) Unless otherwise indicated, Other Annual Compensation includes the
cost of income tax advice provided by a third party.
(C) Unless otherwise indicated, amounts included in this column represent
life insurance premiums paid by the Company for the benefit of the
named executive.
(D) Other Annual Compensation in 1994 includes relocation benefits and a
tax reimbursement bonus for relocation benefits of $29,275.
(E) 1995 Salary includes amounts paid to Mr. Stallard from the date he
joined the Company in August 1995 through the fiscal year ended
December 31, 1995.
10
(F) 1995 Salary includes amounts paid to Mr. Jordan from the date he
joined the Company in January 1995 through the fiscal year ended December
31, 1995. Other Annual Compensation in 1995 includes relocation benefits
and a tax reimbursement bonus for relocation benefits of $50,517. Mr.
Jordan resigned from the Company effective January 31, 1997.
(G) 1996 Salary includes amounts paid to Mr. Alley during 1996 as an
officer of the Company until July 1996 and as a regular employee of
the Company through his termination of employment in December 1996.
Included in 1996 All Other Compensation for Mr. Alley is $242 for life
insurance premiums and $4,945 for the value of a computer included as
part of Mr. Alley's severance package.
STOCK OPTIONS
The following table contains information concerning the grant of stock
options under the Company's 1988 Combination Stock Option Plan, as
amended (the "Plan") to the named executive officers in 1996.
OPTION GRANTS IN LAST FISCAL YEAR
Potential
Realized Value
At Assumed Annual
Rates of Stock Price
Appreciation for
Individual Grants (A) Option Term (B)
- -------------------------------------------------------------------------------- -------------------------
Number of % of Total
Securities Options
Underlying Granted to
Options Employees in Exercise Expiration
NAME Granted Fiscal Year Price ($/Sh.) Date 5%($) 10%($)
- -------------------------------------------------------------------------------- -------------------------
John V. Harker (C) 50,000 4.75% 33.00 01/23/06 1,037,676 2,629,675
60,000 5.70% 50.00 09/04/96 -- --
50,000 4.75% 16.50 09/04/06 518,838 1,314,838
--------------------------- -------------------------
160,000 15.20% 1,556,514 3,944,513
David L. Stallard (D) 20,000 1.90% 16.50 09/04/06 207,535 525,935
Mark E. Reed (D) 7,100 0.67% 36.75 02/01/06 164,094 415,847
20,000 1.90% 16.50 09/04/06 207,535 525,935
15,000 1.43% 18.37 10/16/06 173,292 439,156
---------------------------- -------------------------
42,000 4.00% 544,921 1,380,938
Michael D. Yonker (D) 7,100 0.67% 36.75 02/01/06 164,094 415,847
20,000 1.90% 16.50 09/04/06 207,535 525,935
---------------------------- -------------------------
27,100 2.57% 371,629 941,782
Lyle W. Jordan (D) 6,450 0.61% 36.75 02/01/06 149,072 377,777
20,000 1.90% 16.50 09/04/06 207,535 525,935
---------------------------- -------------------------
26,450 2.51% 356,607 903,712
Allen H. Alley (E) 6,410 0.61% 36.75 12/13/96 -- --
(A) Options granted in 1996 vest as to 25 percent of the options granted
on each of the first through fourth anniversaries of the grant date, with
full vesting occurring on the fourth anniversary date. Under the terms of
the Plan, the Administrative Committee of the Board of Directors retains
discretion, subject to plan limits, to modify the terms of outstanding
options.
(B) These calculations are based on certain assumed annual rates of
appreciation as required by rules adopted by the Securities and
Exchange Commission requiring additional disclosure regarding executive
compensation. Under these rules, an assumption is made that the shares
underlying the stock options shown in this table could appreciate at
rates of 5% and 10% per
11
annum on a compound basis over the ten-year term of the stock options.
Actual gains, of any, on stock option exercises are dependent on the
future performance of the Company's Common Stock and overall stock market
conditions. There can be no assurance that amounts reflected in this
table will be achieved.
(C) As described in "Employment Contracts and Termination of Employment
and Change in Control Arrangements," in the event the Company is
acquired. Mr. Harker's unvested options will become fully vested. Mr.
Harker's option grant covering 60,000 shares of the Company's Common
Stock was a performance based option in which options covering 30,000
shares of the Company's Common Stock would become exercisable if, and
only if, the price of the Company's Common Stock reached $78 per share
and remained at or above $78 per share for a minimum period of 20
consecutive trading days prior to April 30, 1997. The additional 30,000
shares would become exercisable if, and only if, the price of the
Company's Common Stock reached $117 per share and remained at or above
$117 per share for a minimum period of 20 consecutive trading days prior
to April 30, 1998. Such option grant was cancelled on September 4, 1996.
(D) In the event that a Vice President of the Company is involuntarily
terminated, other than for cause, within one year from a change in
control of the Company, stock options held by the Vice President will
become immediately exercisable, regardless of whether such stock options
are then exercisable in accordance with their terms.
(E) Mr. Alley's options expired upon his termination of employment on
December 13, 1996.
OPTION EXERCISES AND HOLDINGS
The following table provides information concerning the exercise of
options during 1996 and unexercised options held as of the end of the
fiscal year, with respect to the named executive officers.
AGGREGATED OPTION EXERCISES IN LAST FISCAL YEAR
AND FY-END OPTION VALUES
NUMBER OF
SECURITIES
UNDERLYING
UNEXERCISED VALUE OF UNEXERCISED
SHARES OPTIONS IN-THE-MONEY OPTIONS
ACQUIRED VALUE AT FY-END (#) AT FY-END (#)(B)
ON EXERCISE REALIZED EXERCISABLE/ EXERCISABLE/
NAME (#) ($)(A) UNEXERCISABLE UNEXERCISABLE
- ----------------- ------------ ---------- ----------------- -----------------------
John V. Harker 7,000 $188,270 82,434 119,053 $467,535 $338,307
David L. Stallard -- -- 25,000 70,000 -- $102,400
Mark E. Reed 15,999 $504,299 25,207 59,393 $210,930 $275,715
Michael D. Yonker 13,300 $443,551 51,573 47,727 $398,838 $248,205
Lyle W. Jordan 10,000 $255,600 27,243 64,207 $ 11,153 $119,197
Allen H. Alley 30,000 $540,000 59,400 -- $584,100 --
(A) Market value of the underlying securities at exercise date, minus
exercise price of the options.
(B) Market value of the underlying securities at December 31, 1996, $21.62
per share, minus exercise price of the unexercised options.
12
DIRECTOR COMPENSATION
During 1996, non-employee directors of the Company received quarterly stock
option grants as well as an annual grant pursuant to the In Focus Systems,
Inc, Directors' Stock Option Plan (the "Directors' Plan"). The non-employee
directors were also reimbursed for their expenses in attending meetings of
the Company's Board of Directors. The Directors' Plan, as amended, provides
that each "Eligible Director" shall be granted an option to purchase 10,000
shares of the Company's Common Stock upon becoming an Eligible Director. The
Directors' Plan further provides that each Eligible Director shall, so long
as he or she remains an Eligible Director, be granted an option to purchase
5,000 shares of the Company's Common Stock on each anniversary of becoming an
Eligible Director. The quarterly grants under the Directors' Plan are based on
a formula defined in the Plan. Messrs. Behrendt, Dougery and Hallman each
received options covering a total of 7,583 shares of the Company's Common
Stock during 1996. Mr. Kuehler received options covering 12,583 shares of the
Company's Common Stock during 1996. The options granted were at exercise
prices between $12.22 per share and $31.50 per share. The Company pays no
additional remuneration to employees of the Company who serve as directors.
EMPLOYMENT CONTRACTS AND TERMINATION OF EMPLOYMENT AND
CHANGE IN CONTROL ARRANGEMENTS
In connection with Mr. Harker's employment in April 1992 as President and
Chief Executive Officer, the Company entered into an agreement with Mr.
Harker which provides for certain relocation benefits. In addition, in the
event the Company terminates Mr. Harker's employment other than "for cause",
as defined in the agreement, Mr. Harker will be entitled to receive salary
and insurance benefits for an additional twelve-month period. Additionally, as
specified in the agreement, in the event the Company is acquired, Mr.
Harker's unvested options will become fully vested.
In October 1995, the Administrative Committee of the Board of Directors
approved an amendment to the stock option agreements held by each current and
future Vice President of the Company, to provide that, in the event that a
Vice President is involuntarily terminated, other than for cause, within one
year from a change in control of the Company, stock options held by the Vice
President will become immediately exercisable, regardless of whether such
stock options are then exercisable in accordance with their terms.
COMPENSATION COMMITTEE INTERLOCKS AND INSIDER PARTICIPATION
During 1996, the Compensation Committee was composed of Messrs. Dougery,
Hallman, Behrendt and Kuehler, all outside directors who are not and have
not been at any time in the past, officers of the Company. Although Mr.
Harker, Chairman of the Board, President and Chief Executive Officer, served
on the Company's Board of Directors in 1996 and participated is compensation
discussions, he did not participate in any deliberations or decisions
regarding his own compensation. Mr. Harker also serves on the Board of
Motif, Inc., the Company's 50 percent owned joint venture.
13
BOARD COMPENSATION COMMITTEE REPORT ON EXECUTIVE COMPENSATION
The Compensation Committee of the Board of Directors was composed of Messrs.
Dougery, Hallman, Behrendt and Kuehler during 1996. All members of the
Compensation Committee are non-employee, outside directors. The Compensation
Committee is responsible for establishing compensation of officers who also
serve on the Board of Directors. The entire Board is responsible for
reviewing and providing feedback on non-director executive officer
compensation with goals and dollar amounts established by the Chief Executive
Officer in accordance with policies approved by the Board.
Awards to executive officers under the Company's 1988 Combination Stock Option
Plan, as amended, are made solely by the Administrative Committee, which is
composed of the same non-employee, outside Directors as the Compensation
Committee.
COMPENSATION PHILOSOPHY AND POLICIES
The Company's philosophy is to structure executive officer compensation so
that it will attract, motivate and retain senior management by providing an
opportunity for competitive compensation based on performance. Executive
officer compensation includes competitive base salaries, annual bonus plans
based on Company financial and personal performance goals, and long-term
stock-based incentive opportunities in the form of options exercisable to
purchase the Company's Common Stock. It is also the policy of both the
Compensation Committee and the Administrative Committee that, to the extent
possible, compensation will be structured so that it meets the
"performance-based" criteria as defined by Section 162(m) of the Internal
Revenue Code of 1986, as amended and therefore is not subject to federal
income tax deduction limitations. Both the Compensation Committee and the
Administrative Committee have the right to waive pre-established performance
criteria in granting awards.
BASE SALARIES
In setting base salaries that are competitive with other high technology
companies, the Company participates in executive salary surveys including
those conducted by Radford Associates, the American Electronics Association
(AEA) and the Western Management Group (WMG). When selecting comparables, the
Company attempts to select companies that are similar in many respects,
including industry, annual revenue and profitability. Executive's salaries
paid in 1996 were targeted within the 50th to 75th percentile compared to the
range of salaries paid by companies in the salary surveys mentioned above.
Many of the companies included in the above mentioned surveys are also
included in the indices used in the Performance Graph.
ANNUAL BONUS AWARDS FOR 1996
The 1996 Officer Bonus Plan (the "Plan") provided for annual bonuses in two
components. First, the Plan provided for the payment of quarterly profit
sharing bonuses equal to a percentage of each officer's quarterly salary. This
percentage was determined by dividing the quarterly non-officer profit sharing
bonus pool (2 percent of pre-tax income) paid quarterly to non-officer
employees by total non-officer compensation for the quarter. These
percentages were approximately 6.24%, 0%, 1.84% and 4.11% based on the first,
second, third and fourth quarter of 1996 results, respectively. The fourth
quarter profit sharing was paid in the first quarter of 1997.
14
Second, the Plan provided for the payment of bonuses based 50 percent on the
Company meeting its 1996 profit before income tax objectives and 50 percent on
meeting individual goals and objectives which are both quantitative and
qualitative in nature, including such factors as market development, product
introduction and resource management. The targeted bonus was 50 percent of
annual salary for the Chairman and Chief Executive Officer and 30 percent for
other executive officers. The targeted bonus percentages would be achieved by
an officer receiving 100 percent ratings on both the Company and individual
goals. The maximum bonus component for individual performance is 130 percent
and there is no maximum for the actual profit before tax as compared to the
profit before tax objectives component. Both the Company and individual goals
must be met at least at the 75 percent level for an officer to receive a
bonus. There were no bonuses paid under this portion of the bonus plan for
1996.
STOCK OPTION AWARDS FOR 1996
The Company's 1988 Combination Stock Option Plan, as amended, provides for the
issuance of incentive stock options to officers and employees of the Company
to purchase shares of the Company's Common Stock at an exercise price equal to
the fair market value on the date of grant. See "Option Grants in Last Fiscal
Year" table for a summary of options granted to the named executive officers
during 1996.
CHIEF EXECUTIVE OFFICER COMPENSATION
Mr. Harker's 1996 base salary and annual bonus were determined in the same
manner as the other executives as described in "Base Salaries" and "Annual
Bonus Awards for 1996" above. The Compensation Committee approved
Mr. Harker's 1996 annual base salary of approximately $307,500 based on the
survey data mentioned above. The additional cash bonus received by Mr. Harker
related to 1996 results was $9,364 under part one of the plan and zero under
part two of the plan. Mr. Harker was granted options exercisable for 100,000
shares of the Company's Common Stock in 1996. Mr. Harker was also granted a
performance based stock option covering 60,000 shares of the Company's Common
Stock during 1996. Such option grant was also canceled during 1996 (see
footnote (C) to "Option Grants in Last Fiscal Year" above). The Compensation
Committee's objective in setting Mr. Harker's 1996 compensation was to be
competitive with other companies in the Company's industry and to allow for
potential compensation based on long-term performance criteria as defined in
"Annual Bonus Awards for 1996" and "Stock Option Awards for 1996" above.
SUBMITTED BY THE BOARD OF DIRECTORS:
Peter D. Behrendt*
John R. Dougery*
Michael R. Hallman*
John V. Harker
Jack D. Kuehler*
*Denotes member of the Compensation and Administrative Committees during 1996.
15
STOCK PERFORMANCE GRAPH
The SEC requires that registrants include in their proxy statement a
line-graph presentation comparing cumulative five-year shareholder returns on
an indexed basis, assuming a $100 initial investment and reinvestment of
dividends, of (a) the registrant, (b) a broad-based equity market index and
(c) an industry-specific index. The broad-based market index used is the
Nasdaq Stock Market Total Return Index and the industry-specific index used
is the Computer Hardware Sector Sub-Index of the Hambrecht & Quist Technology
Index.
IN FOCUS SYSTEMS
H&Q COMPUTER HARDWARE INDEX
NASDAQ STOCK MARKET -U.S. INDEX
[GRAPH]
HAMBRECHT & QUIST INDEX PRODUCTS AND SERVICES
1997 PROXY PERFORMANCE GRAPH DATA
MONTHLY DATA SERIES
SCALED PRICES: Stock and index prices scaled to 100 as 12/
NASDAQ STOCK H&Q COMPUTER
DATES IN FOCUS SYSTEMS MARKET-U.S. HARDWARE
- ------- ---------------- ------------ -------------
Dec-91 100 100 100
Jan-92 150.00 105.85 104.01
Feb-92 166.67 108.25 109.73
Mar-92 143.33 103.14 104.85
Apr-92 133.33 98.71 107.82
May-92 113.33 100.00 107.42
Jun-92 108.33 96.09 105.64
Jul-92 106.67 99.49 106.82
Aug-92 126.67 96.45 97.28
Sep-92 113.33 100.03 94.54
Oct-92 136.67 103.97 88.27
Nov-92 156.67 112.25 94.36
Dec-92 163.33 116.38 86.47
Jan-93 170.00 119.69 89.86
Feb-93 130.00 115.23 89.20
Mar-93 130.00 118.56 86.43
Apr-93 133.33 113.50 83.31
May-93 143.33 120.28 91.13
Jun-93 160.00 120.84 84.21
Jul-93 153.33 120.98 75.71
Aug-93 183.33 127.23 79.03
Sep-93 186.67 131.02 74.51
Oct-93 210.00 133.97 81.25
Nov-93 176.67 129.97 87.44
Dec-93 200.00 133.59 90.66
Jan-94 208.33 137.65 96.43
Feb-94 193.33 136.36 101.89
Mar-94 146.67 127.98 95.71
Apr-94 183.33 126.32 92.24
May-94 181.67 126.62 91.43
Jun-94 183.33 121.99 82.67
Jul-94 215.00 124.49 88.65
Page 3
HAMBRECHT & QUIST INDEX PRODUCTS AND SERVICES
1997 PROXY PERFORMANCE GRAPH DATA
MONTHLY DATA SERIES
SCALED PRICES: Stock and index prices scaled to 100 as 12/
NASDAQ STOCK H&Q COMPUTER
DATES IN FOCUS SYSTEMS MARKET-U.S. HARDWARE
- ------- ---------------- ------------ -------------
Aug-94 243.33 132.43 100.20
Sep-94 296.67 132.09 98.51
Oct-94 346.67 134.69 112.86
Nov-94 360.00 130.22 111.28
Dec-94 347.51 130.59 112.62
Jan-95 266.67 131.32 109.24
Feb-95 253.33 138.26 112.49
Mar-95 346.67 142.36 115.98
Apr-95 356.67 146.84 128.42
May-95 323.33 150.63 131.90
Jun-95 360.00 162.83 145.21
Jul-95 371.67 174.80 154.79
Aug-95 415.00 178.35 157.12
Sep-95 328.33 182.45 156.87
Oct-95 438.33 181.40 170.83
Nov-95 453.33 185.66 167.63
Dec-95 481.67 184.67 162.12
Jan-96 496.67 185.59 165.42
Feb-96 500.00 192.66 180.54
Mar-96 467.51 193.30 159.06
Apr-96 673.33 209.33 186.66
May-96 766.67 218.95 195.99
Jun-96 323.33 209.08 170.87
Jul-96 195.00 190.46 162.14
Aug-96 206.67 201.13 170.91
Sep-96 191.67 216.52 189.77
Oct-96 253.33 214.15 192.31
Nov-96 283.33 227.42 219.02
Dec-96 288.33 227.16 214.92
Page 4
SECTION 16(a) BENEFICIAL OWNERSHIP REPORTING COMPLIANCE
Section 16(a) of the 1934 Act requires the Company's directors and executive
officers and persons who own more than ten percent of the outstanding shares
of the Company's Common Stock ("ten percent shareholders"), to file with the
SEC initial reports of beneficial ownership and reports of changes in
beneficial ownership of shares of Common Stock and other equity securities of
the Company. To the Company's knowledge, based solely on review of the copies
of such reports furnished to the Company or otherwise in its files and on
written representations from its directors, executive officers and ten
percent shareholders that no other reports were required, during the fiscal
year ended December 31, 1996, the Company's officers, directors and ten
percent shareholders complied with all applicable Section 16(a) filing
requirements, except that John R. Dougery, a Director of the Company, filed
one late report on Form 4 (relating to one stock sale transaction).
SHAREHOLDER PROPOSALS
Proposals by shareholders intended to be presented at the Company's 1998
Annual Meeting must be received by the Company at its principal executive
office no later than November 13, 1997 in order to be included in the
Company's 1998 Proxy Statement and proxy card.
TRANSACTION OF OTHER BUSINESS
As of the date of this Proxy Statement, the Board of Directors is not aware
of any other matters which may come before this meeting. It is the intention
of the persons named in the enclosed proxy to vote the proxy in accordance
with their best judgement if any other matters do properly come before the
meeting.
Please return your proxy as soon as possible. Unless a quorum consisting of a
majority of the outstanding shares entitled to vote is represented at the
meeting, no business can be transacted. Therefore, please be sure to date and
sign your proxy exactly as your name appears on your stock certificate and
return it in the enclosed postage prepaid return envelope. Please act
promptly to insure that you will be represented at this important meeting.
THE COMPANY WILL PROVIDE, WITHOUT CHARGE, ON THE WRITTEN REQUEST OF ANY
BENEFICIAL OWNER OF SHARES OF THE COMPANY'S COMMON STOCK ENTITLED TO VOTE AT
THE ANNUAL MEETING OF SHAREHOLDERS, A COPY OF THE COMPANY'S ANNUAL REPORT ON
FORM 10-K AS FILED WITH THE U.S. SECURITIES AND EXCHANGE COMMISSION FOR THE
COMPANY'S FISCAL YEAR ENDED DECEMBER 31, 1996. WRITTEN REQUESTS SHOULD BE
MAILED TO THE SECRETARY, IN FOCUS SYSTEMS, INC., 27700B S.W. PARKWAY AVENUE,
WILSONVILLE, OREGON 97070.
By Order of the Board of Directors:
/s/ Michael D. Yonker
MICHAEL D. YONKER
VICE PRESIDENT, INFORMATION SERVICES,
CHIEF FINANCIAL OFFICER AND SECRETARY
Dated: March 13, 1997
17
Please mark /X/
your votes as
indicated in
this example
FOR all WITHHOLD AUTHORITY
nominees to vote for all nominees
listed below listed below
1. PROPOSAL 1--Election of / / / /
Directors.
To withhold authority to vote for any individual nominee, strike a line through
nominee's name in the list below:
Peter D. Behrendt Michael R. Hallman John V. Harker Jack D. Kuehler
FOR AGAINST ABSTAIN
2. PROPOSAL 2--To ratify the / / / / / /
appointment of Arthur Andersen
LLP as the Company's Independent
accountants for the year ending
December 31, 1997.
3. Upon such other matters as may properly come before, or incident to the
conduct of the Annual Meeting, the Proxy holders shall vote in such manner
as they determine to be in the best interests of the Company. Management
is not presently aware of any such other matters to be presented for action
at the meeting.
THIS PROXY IS SOLICITED BY THE MANAGEMENT OF THE COMPANY. IF NO SPECIFIC
DIRECTION IS GIVEN AS TO ANY OF THE ABOVE ITEMS, THIS PROXY WILL BE VOTED FOR
EACH OF THE NOMINEES NAMED IN PROPOSAL 1 AND FOR PROPOSAL 2.
Dated
--------------------------------------------------------------------------
- --------------------------------------------------------------------------------
Shareholder (print name)
- --------------------------------------------------------------------------------
Shareholder (sign name)
I do ( ) do not ( ) plan to attend the meeting.
(Please check)
The shareholder signed above reserves the right to revoke this Proxy at any time
prior to its exercise by written notice delivered to the Company's corporate
offices at 27700B S.W. Parkway Avenue, Wilsonville, Oregon 97070, prior to the
Annual Meeting. The power of the Proxy holders shall also be suspended if the
shareholder signed above appears at the Annual Meeting and elects in writing to
vote in person.
IN FOCUS SYSTEMS, INC.
PROXY FOR ANNUAL MEETING OF SHAREHOLDERS TO BE HELD ON APRIL 17, 1997
The undersigned hereby names, constitutes and appoints John V. Harker and
Michael D. Yonker, or either of them acting in absence of the other, with full
power of substitution, my true and lawful attorneys and Proxies for me and in my
place and stead to attend the Annual Meeting of the Shareholders of In Focus
Systems, Inc. (the "Company") to be held at 1:00 p.m. on Thursday, April 17,
1997, and at any adjournment thereof, and to vote all the shares of Common Stock
held of record in the name of the undersigned on February 28, 1997, with all the
powers that the undersigned would possess if he were personally present.