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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 [ ] Confidential, for Use of the
Commission Only (as permitted by
Rule 14a-6(e)(2))
[X] Definitive proxy statement
[ ] Definitive additional materials
[ ] Soliciting material pursuant to Rule 14a-11(c) or Rule 14a-12
VALASSIS COMMUNICATIONS, INC.
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(Name of Registrant as Specified in Its Charter)
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(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:
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(2) Aggregate number of securities to which transaction applies:
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(3) Per unit price or other underlying value of transaction computed
pursuant to Exchange Act Rule 0-11 (Set forth the amount on which the filing fee
is calculated and state how it was determined):
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(4) Proposed maximum aggregate value of transaction:
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(5) Total fee paid:
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[ ] Fee paid previously with preliminary materials.
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[ ] Check box if any part of the fee is offset as provided by Exchange
Act Rule 0-11(a)(2) and identify the filing for which the offsetting fee was
paid previously. Identify the previous filing by registration statement number,
or the form or schedule and the date of its filing.
(1) Amount previously paid:
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(2) Form, schedule or registration statement no.:
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(3) Filing party:
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(4) Date filed:
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VALASSIS COMMUNICATIONS, INC.
19975 VICTOR PARKWAY
LIVONIA, MI 48152
NOTICE OF ANNUAL MEETING OF STOCKHOLDERS
TO BE HELD MAY 19, 1998
The Annual Meeting of Stockholders of Valassis Communications, Inc.
("Valassis" or the "Company") will be held at The Plaza Hotel, Fifth Avenue at
Central Park South, New York City, New York 10019 on the 19th day of May, 1998,
at 9:00 a.m. (Eastern Daylight Time), for the following purposes:
(1) to elect eight directors to the Company's Board of Directors
to hold office until the next Annual Meeting of Stockholders
or until their respective successors shall have been duly
elected and qualified;
(2) consider and act upon a proposal to approve Amendment No. 4 to
the Company's 1992 Long-Term Incentive Plan ("1992 LTIP") to
increase the number of shares reserved for issuance
thereunder;
(3) to ratify the selection of Deloitte & Touche LLP, independent
public accountants, as the auditors of the Company for the
1998 fiscal year; and
(4) to transact such other business as may properly come before
the meeting or any adjournment or adjournments thereof.
The Board of Directors has fixed the close of business on April 1, 1998
as the record date for the determination of the stockholders of the Company
entitled to notice of and to vote at the Annual Meeting of Stockholders. Each
share of the Company's Common Stock is entitled to one vote on all matters
presented at the Annual Meeting.
ALL HOLDERS OF THE COMPANY'S COMMON STOCK (WHETHER THEY EXPECT TO
ATTEND THE ANNUAL MEETING OR NOT) ARE REQUESTED TO COMPLETE, SIGN, DATE AND
RETURN PROMPTLY THE PROXY CARD ENCLOSED WITH THIS NOTICE.
By Order of the Board of Directors
BARRY P. HOFFMAN
Secretary
April 10, 1998
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VALASSIS COMMUNICATIONS, INC.
PROXY STATEMENT
ANNUAL MEETING OF STOCKHOLDERS
TO BE HELD MAY 19, 1998
INTRODUCTION
This Proxy Statement is being furnished to stockholders of record of
Valassis Communications, Inc. ("Valassis" or the "Company") as of April 1, 1998
("Record Date"), in connection with the solicitation by the Board of Directors
of Valassis of proxies for the 1998 Annual Meeting of Stockholders ("Annual
Meeting") to be held at The Plaza Hotel, Fifth Avenue at Central Park South, New
York City, New York 10019 on May 19, 1998 at 9:00 a.m. (Eastern Daylight Time),
or at any and all adjournments thereof, for the purposes stated in the Notice of
Annual Meeting. The approximate date of mailing of this Proxy Statement,
enclosed form of proxy and the Company's Annual Report to Stockholders is April
10, 1998.
OUTSTANDING STOCK AND VOTING RIGHTS
The Board of Directors has fixed the close of business on April 1, 1998
as the Record Date for the determination of stockholders entitled to notice of
this Annual Meeting, and only holders of record of the Common Stock, par value
$.01 per share ("Common Stock"), of the Company on that date will be entitled to
notice of and to vote at the Annual Meeting. As of the Record Date, the Company
had 39,292,912 shares of Common Stock outstanding. Each share of Common Stock is
entitled to one vote on all matters presented at the Annual Meeting.
The presence in person or by proxy of the holders of a majority of the
shares of Common Stock issued and outstanding and entitled to vote at the Annual
Meeting is necessary to constitute a quorum at the meeting. Abstentions and
broker non-votes will be counted to determine whether a quorum is present.
Abstentions and broker non-votes are not counted in the election of directors.
For all other items to be considered at the Annual Meeting, shares represented
by proxies which are marked "abstain" will be counted as part of the total
number of votes cast on such proposals, whereas broker non-votes will not be
counted as part of the total number of votes cast on such proposals. Thus,
abstentions will have the same effect as votes against any given proposal,
whereas broker non-votes will have no effect in determining whether any given
proposal has been approved by the stockholders.
If the enclosed proxy is signed and returned, it may, nevertheless, be
revoked at any time prior to the voting thereof at the pleasure of the
stockholder signing it, either by delivering written notice of revocation to the
Secretary of the Company, or by voting the shares covered thereby in person or
by another proxy dated subsequent to the date thereof.
Shares represented by duly executed proxies in the accompanying form
will be voted in accordance with the instructions indicated on such proxies,
and, if no such instructions are indicated thereon, will be voted in favor of
the nominees for election as directors named below and for the other proposals
referred to below.
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To the Company's knowledge, as of February 17, 1998, the only persons
(including "groups" as that term is used in Section 13(d)(3) of the Securities
Exchange Act of 1934, as amended) who beneficially own more than 5% of the
Company's Common Stock are the following:
Title of Name and Address Beneficial Percent
Class of Beneficial Owner Ownership(1) of Class
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Common Stock The Goldman Sachs Group, L.P.(1) 4,589,556 11.6%
85 Broad Street
New York, New York 10004
Common Stock Franklin Resources Inc.(2) 2,010,130 5.1%
77 Mariners Island Boulevard
San Mateo, California 94404
==================================================================================================
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(1) According to information contained in a Schedule 13G/A filing with the
Securities and Exchange Commission ("SEC") on February 17, 1998,
Goldman Sachs Group L.P. ("GSLP") and Goldman Sachs & Co. ("GS") have
shared voting power with respect to 3,316,856 shares of Common Stock
and shared dispositive power with respect to 4,589,556 shares of Common
Stock; neither GSLP or GS has sole voting or sole dispositive power
over any of the 4,589,556 shares of Common Stock. In addition,
according to such filing, GSLP and GS disclaim beneficial ownership of
the Common Stock beneficially owned by managed accounts and certain
investment limited partnerships, to the extent that partnership
interests in such partnerships are held by persons other than GSLP, GS
or their affiliates.
(2) According to information contained in a 13G filing ("13G") with the
SEC, the 2,010,130 shares of Common Stock are beneficially owned by one
or more open or closed end investment companies advised by the adviser
subsidiaries (including Franklin Mutual Advisers, Inc. ("FMA"),
Franklin Advisers, Inc. ("FA") and Franklin Management, Inc. ("FM")
collectively, "Adviser Subs") of Franklin Resources, Inc. ("FRI").
Pursuant to advisory contracts, Adviser Subs have all investment and/or
voting power and securities owned by advisory clients. Charles B.
Johnson ("CBS") and Rupert H. Johnson, Jr. ("RHJ") each own in excess
of ten (10) percent of the outstanding common stock and are the
principal shareholders of FRI. The Adviser Subs, FRI, CBJ and RHJ
disclaim beneficial ownership of any securities covered by the 13G.
According to the 13G, none of FRI, CBJ, RHJ have sole or shared voting
or sole or shared dispositive power over any of the shares reported on
the 13G; FA has sole voting power and sole dispositive power with
respect to 1,006,600 shares. Lastly, according to the 13G, FMA has sole
voting and sole dispositive power with respect to 1,000,000 shares and
FM has sole dispositive power with respect to 3,530 shares.
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DIRECTORS AND EXECUTIVE OFFICERS
The Board of Directors presently is comprised of eight directors. All
directors elected at the 1998 Annual Meeting will serve until the next Annual
Meeting or until their respective successors are duly elected and qualified.
1. ELECTION OF DIRECTORS (PROPOSAL 1)
Set forth below is certain information with respect to each of the
nominees for the office of director and each other executive officer of the
Company.
Shares represented by proxies returned duly executed will be voted,
unless otherwise specified, in favor of the following eight nominees: David A.
Brandon, Mark C. Davis, Ambassador Jon M. Huntsman, Jr., Larry L. Johnson, Brian
M. Powers, Robert L. Recchia, Alan F. Schultz and Ambassador Faith Whittlesey.
Each nominee for director has consented to serve on the Board of Directors and
will be elected by a plurality of the votes cast at the Annual Meeting. If any
(or all) such persons should be unavailable or unable to serve, the persons
named in the enclosed proxy will vote the shares covered thereby for such
substitute nominee (or nominees) as the Board of Directors may select.
Stockholders may withhold authority to vote for any nominee by marking the
"Exceptions" box on the proxy card and by entering the name of such nominee in
the space provided for such purpose on the proxy card.
THE BOARD OF DIRECTORS RECOMMENDS A VOTE "FOR" THE ELECTION OF ALL OF
THE NOMINEES NAMED HEREIN.
DIRECTORS
David A. Brandon, 45, is Chief Executive Officer, President and
Chairman of the Board of Directors of Valassis. Mr. Brandon was elected
President and a director of Valassis in October 1991 and has served as a
director since that time. He was appointed Chairman of the Board of Directors of
Valassis in July, 1997. He served as Executive Vice President and Chief
Operating Officer of Valassis Inserts, Inc. ("Inserts") from 1986 through July
1989, and President and Chief Executive Officer of Inserts from July 1989 until
its merger with Valassis.
Mark C. Davis, 38, was elected a director of Valassis in June 1992. He
has been a Managing Director and Head of Global Mergers and Acquisitions of
Chase Bank since March 1996. Mr. Davis was a Managing Director in Investment
Banking at Salomon Brothers Inc. from January 1993 until March 1996. Prior to
that, he was a Director of Investment Banking at Salomon Brothers Inc. from
January 1990, after serving as a Vice President from April 1989. Prior to that,
he was a Vice President of Investment Banking at Kidder, Peabody & Co. Inc.,
since 1986.
Ambassador Jon M. Huntsman, Jr. 38, has served as a director of
Valassis since August 1993. Ambassador Huntsman is Vice-Chairman of Huntsman
Corporation where he was previously Senior Vice President and General Manager of
the International Division. From August 1992 through June 1993, he served as
United States Ambassador to the Republic of Singapore. From February 1989
through August 1991, Ambassador Huntsman served as Deputy Assistant Secretary of
Commerce in the International Trade Administration, and later as Deputy
Assistant Secretary of Commerce for East Asian and Pacific Affairs. He currently
serves as a director of Owens-Corning Company, Huntsman Specialty Chemicals
Corporation, Huntsman Corporation, Huntsman Packaging Corporation, as well as
other affiliated Huntsman entities and various other entities.
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Larry L. Johnson, 45, has served as a director of Valassis since
September 1997. Mr. Johnson has been self employed, since 1991, at Lightning
Ridge Enterprises, Inc., a real estate investment holding company. In addition,
Mr. Johnson served as the President and Chief Operating Officer of Valassis from
1984 until 1989.
Brian M. Powers, 48, has served as a director of Valassis since
February 1993 and served as Chairman of the Board of Valassis from February 1993
until July 1997. Since March 1993, Mr. Powers has served as Chief Executive
Officer of Consolidated Press Holdings Ltd., a diversified holdings concern. Mr.
Powers served as Managing Director of Publishing and Broadcasting Limited since
November 1994 and in March 1996, Mr. Powers was appointed Chairman of the board
of directors of such company. Publishing and Broadcasting Limited is a major
Australian media company with interests in television, magazines, newspapers and
movies. From March 1991 to March 1993, he was a general partner in Hellman &
Friedman, a San Francisco-based investment firm. In addition, he was a partner
in James D. Wolfenson Incorporated, a New York merchant bank from March 1989
through March 1991. Prior to that, he was, until December 1988, the Managing
Director of the Jardine Matheson Group of companies in Hong Kong.
Robert L. Recchia, 41, has been Chief Financial Officer, Treasurer and
a director of Valassis since October 1991, and was Chief Financial Officer and
Treasurer of Inserts from December 1986 until its merger with Valassis.
Alan F. Schultz, 39, has served as a director of Valassis since
December 14, 1995 and as Executive Vice President and Chief Operating Officer
since January 1, 1996. Prior to that, he served as Executive Vice President of
Sales and Marketing of Valassis since 1992, and served as Group Vice President
of the Sales Operations Division at Inserts from 1986 through 1992. Mr. Schultz
has held positions as Director of Insert Operations and Vice President of the
Central Sales Division at Inserts, since joining Inserts in 1984 until its
merger with Valassis.
Ambassador Faith Whittlesey, 59, was elected a director of Valassis in
January 1992. She has had a long career in government, law and politics at
local, state and national levels. She has served as President of the American
Swiss Foundation, headquartered in New York, since 1989. She served as U.S.
Ambassador to Switzerland from 1981 to 1983, and from 1985 to 1988. From 1983 to
1985, Ambassador Whittlesey was a member of the Senior White House Staff.
Ambassador Whittlesey serves as a member of the Board of Directors of the
Sunbeam Corporation and of the Advisory Board of Nestle USA, Inc.
ADDITIONAL EXECUTIVE OFFICERS
In addition to the executive officers who are listed as being directors
of Valassis, Valassis has the following executive officers:
Barry P. Hoffman, 56, has served as Vice President, General Counsel and
Secretary of Valassis since July 1991, and was a director from October 1991
through January 1992. Mr. Hoffman was Group Vice President, General Counsel and
Secretary of Inserts from December 1986 until its merger with Valassis, and
served as a director of Inserts from October 1991 until January 1992.
Richard N. Anderson, 53, has served as Executive Vice President of
Manufacturing and Media of Valassis since 1992 and served as Group Vice
President of Inserts from 1986 through 1992. Until its merger with Valassis, Mr.
Anderson held various management positions with Inserts, including Division Vice
President and Vice President of Manufacturing, since joining Inserts in 1982.
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The following table sets forth certain information concerning beneficial
ownership of the Company's Common Stock by the directors, the five executive
officers named under the heading "SUMMARY COMPENSATION TABLE," and all directors
and executive officers as a group, as of February 11, 1998. The address of Brian
M. Powers is Consolidated Press Holdings Limited, 54-58 Park Street, Sidney,
N.S.W., Australia 2000. The address of Mark C. Davis is Chase Bank, 270 Park
Avenue, New York, NY 10017. The address of Faith Whittlesey is Mountain Lake, PO
Box 3651, Lake Wales, FL 33859. The address of Jon M. Huntsman, Jr. is 200 Eagle
Gate Tower, Salt Lake City, UT 84111. The address of Larry L. Johnson is 3129
Interlaken, West Bloomfield, MI 48323. The address of all other persons listed
below is 19975 Victor Parkway, Livonia, MI 48152.
Shares Beneficially
Name Owned(1) Percent
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Richard N. Anderson 23,179(2) *
David A. Brandon 279,732(3) *
Mark C. Davis 3,380(4) *
Barry P. Hoffman 14,300(5) *
Jon M. Huntsman, Jr. 3,130(6) *
Larry L. Johnson 324(7) *
Brian M. Powers 502(8) *
Robert L. Recchia 56,666(9) *
Alan F. Schultz 93,857(10) *
Faith Whittlesey 3,880(11) *
All executive officers and 495,350(12) 1.2%
directors as a group
(10 persons)
- ------------------------
* Less than 1.0%
(1) Unless otherwise noted, each director and executive officer has sole
voting and investment power with respect to the shares shown as
beneficially owned by him or her.
(2) Does not include options to purchase 75,000 shares of Common Stock
granted to Mr. Anderson as of December 2, 1997, which options are
subject to stockholder approval of Amendment No. 4 to the 1992 LTIP for
additional options at the 1998 Annual Meeting.
(3) Includes the right to acquire 211,324 shares of Common Stock within 60
days upon the exercise of outstanding options. Does not include options
to purchase 150,000 shares of Common Stock granted to Mr. Brandon as of
December 2, 1997, which options are subject to stockholder approval of
Amendment No. 4 to the 1992 LTIP for additional options at the 1998
Annual Meeting.
(4) Does not include options to purchase 2,000 shares of Common Stock
granted to independent directors, including Mr. Davis, as of December
2, 1997, which options are subject to stockholder approval of Amendment
No. 4 to the 1992 LTIP at the 1998 Annual Meeting. See "Director
Compensation."
(5) Does not include options to purchase 20,000 shares of Common Stock
granted to Mr. Hoffman as of December 2, 1997, which options are
subject to stockholder approval of Amendment No. 4 to the 1992 LTIP for
additional options at the 1998 Annual Meeting.
(6) Does not include options to purchase 2,000 shares of Common Stock
granted to independent directors, including Mr. Huntsman, Jr., as of
December 2, 1997, which options are subject to stockholder approval of
Amendment No. 4 to the 1992 LTIP at the 1998 Annual Meeting. See
"Director Compensation."
(7) Does not include options to purchase 2,000 shares of Common Stock
granted to certain independent directors, including Mr. Johnson, as of
December 2, 1997, which options are subject to stockholder approval of
Amendment No. 4 to the 1992 LTIP at the 1998 Annual Meeting. See
"Director Compensation."
(8) Does not include options to purchase 2,000 shares of Common Stock
granted to independent directors, including Mr. Powers, as of December
2, 1997, which options are subject to stockholder approval of Amendment
No. 4 to the 1992 LTIP at the 1998 Annual Meeting. See "Director
Compensation."
(9) Includes the right to acquire 46,956 shares of Common Stock within 60
days upon the exercise of outstanding options. Does not include options
to acquire 50,000 shares of Common Stock granted to Mr. Recchia as of
December 2, 1997, which options are subject to stockholder approval of
Amendment No. 4 to the 1992 LTIP for additional options at the 1998
Annual Meeting.
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(10) Includes the right to acquire 63,357 shares of Common Stock within 60
days upon the exercise of outstanding options. Does not include options
to acquire 125,000 shares of Common Stock granted to Mr. Schultz as of
December 2, 1997, which options are subject to stockholder approval of
Amendment No. 4 to the 1992 LTIP for additional options at the 1998
Annual Meeting.
(11) Does not include options to purchase 2,000 shares of Common Stock
granted to all independent directors, including Ms. Whittlesey, as of
December 2, 1997, which options are subject to stockholder approval of
Amendment No. 4 to the 1992 LTIP at the 1998 Annual Meeting. See
"Director Compensation."
(12) This number includes currently exercisable options to purchase 321,637
shares of Common Stock pursuant to the Company's 1992 LTIP as amended.
In accordance with Rule 13d-3(d)(1) under the Securities Exchange Act
of 1934, as amended, the 321,637 shares of Common Stock for which the
Company's directors and executive officers as a group hold currently
exercisable options have been added to the total number of issued and
outstanding shares of Common Stock solely for the purpose of
calculating the percentage of such total number of issued and
outstanding shares of Common Stock beneficially owned by such directors
and executive officers as a group.
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OPERATION OF THE BOARD OF DIRECTORS
During the fiscal year ended December 31, 1997, the Board of Directors
of the Company held four regularly scheduled meetings and two special meetings
(respecting the Offerings, as described more fully herein). Each director
attended at least 75% of the meetings held by the Board of Directors during the
period in which such director served, including the meetings held by the
committees on which such director served.
COMMITTEES OF THE BOARD
The standing committees of the Board of Directors include the Executive
Committee, the Audit Committee and the Compensation/Stock Option Committee
(each, a "Board Committee," collectively, the "Board Committees"). Each member
of each Board Committee was nominated and appointed (or reappointed, as the case
may be) at the September 23, 1997 meeting of the Board of Directors of the
Company.
The Executive Committee, whose members are David A. Brandon, Mark C.
Davis, Larry L. Johnson and Alan F. Schultz, is generally authorized to exercise
the powers of the Board of Directors in the management of the Company; provided,
however, that the Executive Committee does not have the authority to declare
dividends, amend the certificate of incorporation of the Company, adopt an
agreement of merger or consolidation, recommend the disposition of all or
substantially all the Company's assets or recommend the dissolution of the
Company. The Executive Committee did not meet during the fiscal year ended
December 31, 1997.
The Audit Committee, whose members are Mark C. Davis, Jon M. Huntsman,
Jr. and Larry L. Johnson recommends the selection of independent auditors,
discusses and reviews the scope and the fees of the prospective annual audit and
reviews the results thereof with the independent auditors, reviews compliance
with existing major accounting and financial policies of the Company, reviews
the adequacy of the financial organization of the Company and reviews
management's procedures and policies relevant to the adequacy of the Company's
internal accounting controls and compliance with Federal and state laws relating
to accounting practices. The Audit Committee met twice in the fiscal year ended
December 31, 1997.
The Compensation/Stock Option Committee, whose members are Mark C.
Davis, Brian M. Powers and Ambassador Faith Whittlesey, administers the 1992
LTIP, the Senior Executives Annual Bonus Plan, the Executive Restricted Stock
Award Plan and the Employee and Director Restricted Stock Award Plan, and
reviews and approves the annual salary, bonus and other benefits, direct or
indirect, of the members of senior management of the Company. The
Compensation/Stock Option Committee is composed of non-employee directors as
such term is defined under Rule 16b-3 of the Securities Exchange Act of 1934, as
amended. During the fiscal year ended December 31, 1997, the Compensation/Stock
Option Committee met twice.
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DIRECTOR COMPENSATION
Currently, directors who are not employees of the Company or its
affiliates ("each, an Independent Director") each receive an annual fee of
$40,000, plus expenses, for serving as directors of the Company. During 1997,
fifty percent (50%) of such annual fee of the non-employee directors was paid in
the form of restricted stock pursuant to the Company's Employee and Director
Restricted Stock Award Plan.
Pursuant to the recommendation of the Compensation/Stock Option
Committee, the Board of Directors, at its meeting of December 2, 1997, approved
changes in the plan of compensation for independent directors ("1998 Independent
Director Compensation Plan").
In accordance with the 1998 Independent Director Compensation Plan,
each Independent Director will receive the following in 1998: (i) a fee of
$34,000, comprised of $14,000 in cash plus an annual grant of restricted stock,
pursuant to the Company's Employee and Director Restricted Stock Award Plan,
having an aggregate fair market value equal to $20,000, granted on a pro-rated
quarterly basis ("Independent Director Fee"); (ii) a Board of Director meeting
fee, in addition to the Independent Director Fee, of $2,000 per meeting
attended, $1,000 per telephonic meeting attended; (iii) a committee meeting fee,
in addition to the Independent Director Fee, of $1,000 per meeting attended,
$500 per telephonic meeting attended, payable only if such committee meeting is
not scheduled in conjunction with (just before or after) a Board of Directors
meeting (telephonic meeting fees will be paid on a pro-rated basis if an
Independent Director does not participate via telephone for the entire meeting);
and (iv) 2,000 stock options, granted on December 2, 1997, and on an annual
basis thereafter, with a one year vesting requirement (beginning and effective
January 1, 1998 and on the 1st of January each year thereafter). The annual
grant of 2,000 stock options for each Independent Director is subject to
stockholder approval of Amendment No. 4 of the 1992 LTIP at the Annual Meeting.
Directors who are employees of the Company or its affiliates do not
receive any cash compensation for their services as a director. Accordingly,
Messrs. Brandon, Recchia and Schultz are not compensated as such for their
services as directors.
COMPLIANCE WITH SECTION 16(a) OF THE
SECURITIES EXCHANGE ACT OF 1934
Section 16(a) of the Securities Exchange Act of 1934, as amended,
requires the Company's executive officers and directors, and persons who own
more than ten percent of a registered class of the Company's equity securities,
to file reports of ownership and changes in ownership with the Securities and
Exchange Commission (the "SEC") and the New York Stock Exchange ("NYSE").
Executive officers, directors and greater than ten percent shareholders are
required by SEC regulation to furnish the Company with copies of all Section
16(a) forms they file.
Based solely on review of the copies of such forms furnished to the
Company, or written representations that no Forms 5 were required, the Company
believes that during the fiscal year ended December 31, 1997, all Section 16(a)
filing requirements applicable to its officers, directors and greater than ten
percent beneficial owners were complied, except for a Form 3 required to be
filed by Larry L. Johnson upon his appointment to the Board of Directors of the
Company, which was subsequently filed with the SEC and NYSE on October 25, 1997.
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EXECUTIVE COMPENSATION
SUMMARY COMPENSATION TABLE
The following Summary Compensation Table sets forth the compensation of
David A. Brandon, the Chief Executive Officer and President of the Company and
the other four most highly compensated executive officers of the Company (the
"Named Executive Officers") for the Company's last three (3) completed fiscal
years.
SUMMARY COMPENSATION TABLE
Annual Compensation Long-Term
------------------ Compensation
------------
Awards
------
Securities
Underlying Profit
Name and Restricted Stock Sharing Other
Principal Stock Award Stock Award Options Compensation Compensation
Position Fiscal Year Salary($)(1) Bonus(4)(2) ($)(3) (#)(4) ($)(5) $(6)
--------------------------------------------------------------------------------------------------------------------------
David A. December 31, 1997 $1,000,012 $1,000,012 $630,000 150,000 $15,552 $3,512,568
Brandon December 31, 1996 1,000,012 1,000,012 -- -- 12,000 __
Chief December 31, 1995 1,000,000 804,000 -- -- 11,250 __
Executive
Officer,
President
and
Director
Alan F. December 31, 1997 400,010 400,010 157,500 125,000 15,552 2,000,000
Schultz December 31, 1996 400,010 400,010 131,250 -- 12,000 __
Executive December 31, 1995 325,000 261,200 -- -- 11,250 __
Vice
President
and Chief
Operating
Officer
and
Director
Richard N. December 31, 1997 320,008 320,008 63,000 75,000 15,552 450,008
Anderson December 31, 1996 320,008 320,008 87,500 -- 12,000 __
Executive December 31, 1995 300,014 241,200 -- -- 11,250 __
Vice
President
Barry P. December 31, 1997 287,508 287,508 63,000 20,000 15,552 400,000
Hoffman December 31, 1996 287,508 287,508 61,250 -- 12,000 __
Vice December 31, 1995 287,508 231,150 -- -- 11,250 __
President
General
Counsel
and
Secretary
Robert L. December 31, 1997 287,508 287,508 63,000 50,000 15,552 700,000
Recchia December 31, 1996 287,508 287,508 61,250 -- 12,000 --
Chief December 31, 1995 287,508 231,150 -- -- 11,250 --
Financial
Officer,
Treasurer
and
Director
(1) Salary includes all before-tax contributions by the executive to the
Company's Employees' 401(k)Retirement Savings Plan.
(2) The figures reported in the bonus column represent amounts earned and
accrued for each year and do not include amounts paid in each year
which were earned and accrued in the prior year.
(3) Consists of the value of restricted stock granted under the Company's
Employee and Director Restricted Stock Award Plan. All such shares of
restricted stock will vest over a three-year period with the
restrictions lapsing during that three-year period at 33% for each of
the first two years, and 34% during the last year. A recipient of
restricted stock under the Employee and Director Restricted Stock Award
Plan has the right to receive dividends, if any, during such restricted
period. The 7,500 shares of restricted stock with a value of $131,250
in 1996 and $157,000 in 1997 were granted to Mr. Schultz pursuant to
his employment agreement. The 30,000 shares of restricted stock with a
value of $630,000 were granted to Mr. Brandon pursuant to his
employment agreement. See "Employment Agreements." The dollar value set
forth for the 1996 and 1997 restricted stock awards represent the
market value of the shares on the first business day after the date of
the grant ($17.50 on January 2, 1996 and $21.00 on January 2, 1997).
(4) Consists of nonqualified stock options granted on December 2, 1997 in
respect of the Company's Common Stock pursuant to the Company's 1992
LTIP. Such options are subject to stockholder approval of Amendment No.
4 to the LTIP at the 1998 Annual Meeting.
(5) Amounts disclosed in this column consist of contributions by the
Company on behalf of the executive to the Company's Employees' Profit
Sharing Plan.
(6) Represents a special cash bonus paid to each Named Executive Officer by
the Selling Stockholder (as defined herein) in connection with the
Offerings (as defined herein) in July, 1997. The total amount paid by
the Selling Stockholder (including the amounts listed in this table) to
certain Valassis executives was $7,300,000. See "Agreements with
Affiliates."
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OPTION GRANTS IN LAST FISCAL YEAR TO NAMED EXECUTIVE OFFICERS
Individual Grants
-----------------
Potential realizable
value at assumed
annual rate of stock
Number of Percent of price appreciation
securities total options for option term
underlying granted to Exercise or ---------------
options granted employees in base price Expiration
Name (#) fiscal year ($/sh) Date 5%($) 10%($)
(a) (b) (c) (d) (e) (f) (g)
- ---------------------------------------------------------------------------------------------------
David A. Brandon 150,000 20% $30.4375 1/1/08 $2,871,297 $7,276,430
Alan F. Schultz 125,000 16% 30.4375 1/1/08 2,392,748 6,063,692
Richard N. Anderson 75,000 10% 30.4375 1/1/08 1,435,649 3,638,245
Robert L. Recchia 50,000 7% 30.4375 1/1/08 957,099 2,425,477
Barry P. Hoffman 20,000 3% 30.4375 1/1/08 382,840 970,191
- ------------------------------
* All options listed herein were granted on December 2, 1997, subject to stockholder approval of Amendment
No. 4 to the 1992 LTIP at the 1998 Annual Meeting. See "Approval of Amendment No. 4 to the 1992 LTIP
(Proposal 2)."
AGGREGATED OPTION EXERCISES IN LAST FISCAL YEAR
AND FISCAL YEAR-END OPTION VALUES TO NAMED EXECUTIVE OFFICERS
Number of Securities Value of Unexercised
Underlying Unexercised In-the-Money Options
Name Options at FY-End (#) FY-End ($) *
Shares Acquired
on Exercise (#) Value Realized($) Exercisable/Unexercisable Exercisable/Unexercisable
- ------------------------------------------------------------ ----------------------------------------------------
David A. Brandon 455,744 $6,018,385.82 911,624/- $18,232,480/-
Alan F. Schultz 63,169 $835,655.22 126,357/20,000 $2,527,140/400,000
Richard N. Anderson 155,060 $2,037,822.98 19,466/10,000 $389,320/200,000
Robert L. Recchia 53,170 $702,185.80 106,356/- $2,127,120/-
Barry P. Hoffman 120,060 $1,531,586.34 39,466/- $789,320/-
- -----------------------------------
* Based on the New York Stock Exchange Composite closing price for the
last business day of the 1997 fiscal year ($37.00). All of the stock
options granted to the Named Executive Officers have exercise prices of
$17.00 per share.
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STOCK PRICE PERFORMANCE GRAPH
The following performance graph shows the Company's annual cumulative
total shareholder return on its Common Stock for the five full years ending
December 31, 1993, 1994, 1995, 1996, and 1997 respectively, based on an assumed
investment of $100. The Company's initial public offering of its Common Stock
occurred on March 18, 1992 at a price of $17.00 per share. The graph compares
the Company's performance with that of the Standard & Poor's S&P 500 Stock Index
and a peer group consisting of Advo Inc., Catalina Marketing, R.R. Donnelley &
Sons, Interpublic Group of Companies, and Times Mirror.
SHAREHOLDER RETURNS (DIVIDENDS REINVESTED)
Indexed Returns Years Ending
[GRAPH]
Base
Period Dec. Dec. Dec.
3/92 1993 1994 1995 1996 1997
VCI 100 59.72 66.97 78.13 94.32 165.19
Peer
Group** 100 101.15 99.61 143.52 158.48 206.19
S&P 500
Index 100 110.08 111.53 153.45 188.68 251.63
- ------------------------------------------
** Heritage Media Corporation, included in the peer group in previous
proxy statements of the Company, has been deleted from the peer group
due to its 1997 merger into another public corporation.
This stock price performance graph shall not be deemed to be
incorporated by reference by any general statement incorporating by reference
this Proxy Statement into any filing under the Securities Act of 1933 or the
Securities Exchange Act of 1934 and shall not otherwise be deemed filed under
such Acts.
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COMPENSATION/STOCK OPTION COMMITTEE REPORT ON EXECUTIVE COMPENSATION
The Compensation/Stock Option Committee of the Board of Directors of
the Company has furnished the following report on executive compensation:
PHILOSOPHY
The compensation philosophy of the Company is to develop and implement
policies that will encourage and reward outstanding financial performance, seek
to increase the profitability of the Company, and thereby increase stockholder
value. Maintaining competitive compensation levels in order to attract, retain
and reward executives who bring valuable experience and skills to the Company is
also an important consideration. The Company's executive compensation programs
are designed to attract and retain talented individuals and motivate them to
achieve the Company's business objectives and performance targets, including
increasing long-term stockholder value.
The Compensation/Stock Option Committee of the Board of Directors is
composed of the three directors listed below. Working with the Company, the
Compensation/Stock Option Committee develops and implements compensation plans
for the Company's executive officers.
COMPENSATION STRUCTURE
The Compensation/Stock Option Committee believes that it is in the best
interests of the Company and its stockholders that its executive officers be
compensated in a manner that provides such officers with a strong incentive to
advance both the short-term and long-term interests of the Company. The
Compensation/Stock Option Committee, working with management, has instituted a
compensation structure which is designed to ensure that a high proportion of
compensation is tied in some manner to both short-term and long-term corporate
performance. Accordingly, the Company's compensation structure includes both
cash-based and equity-based compensation.
The annual cash compensation of the executive officers, including the
chief executive officer, for the year ended December 31, 1997, consisted of
annual salary and cash bonuses. The cash bonuses were paid two times a year and
were contingent upon the attainment by the Company of meeting semi-annual
earnings per share targets that were set by the Committee for the six month
period ending June 30, 1997 and for the six-month period ending December 31,
1997. The Committee believes that a target based upon earnings per share
emphasizes the Company's commitment to reach and maintain a competitive rate of
return on equity and achieve long-term growth in earnings - critical factors for
assuring creation of value for its stockholders. Additionally, the Committee
believes that by providing for bonuses twice a year instead of annually, a
greater sense of urgency will motivate executive officers to meet targets. The
specific targets for the Company's fiscal year ended December 31, 1997 which
were selected by the Committee are not disclosed herein because the Committee
has determined that it is confidential business information, the disclosure of
which would have an adverse effect on the Company.
Non-cash compensation of executive officers for the year ended December
31, 1997, consisted of options granted under the Company's 1992 Long-Term
Incentive Plan and restricted stock granted pursuant to the Employee and
Director Restricted Stock Award Plan or the Executive Restricted Stock Plan, as
the case may be.
The stock options produce value for executives only if the Company's
stock price increases over the option exercise price, which for all options
granted to such executives during 1997 is the fair market value of Valassis
Common Stock on the date of grant. Although there are no particular targets with
respect to executive officers' holdings of stock options, in general, the higher
the level of an executive's responsibility, the larger this stock-based
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component of his or her compensation will be. In order to assure the retention
of high-level executives and to tie compensation of those executives to the
creation of long-term value for stockholders, the Compensation/Stock Option
Committee provides that these stock options generally vest in equal portions
over a five-year period.
The Committee believes that grants of restricted stock further a sense
of stock ownership by executive officers and give the Company a significant
advantage in retaining key executives. Moreover, the Committee believes that
restricted stock is a particularly appropriate vehicle for executives whose
salaries are more fully developed and thus are used by the Company, in some
cases, in lieu of salary increases. In order to assure the retention of
high-level executives and to the compensation of those executives to the
creation of long-term value for stockholders, the Compensation/Stock Option
Committee provides that the restricted stock granted to executives in lieu of
salary increase vests in approximately equal portions over a three-year period.
All other compensation of executive officers consists of participation
in the Valassis Employees Profit Sharing Plan and its 401(k) Plan. In addition,
all employees are eligible to participate in the Company's Employee Stock
Purchase Plan. In order to further the objective of incentivizing the executive
officers to increase their Valassis stock ownership, during 1997 the Committee
increased the Company's match of Valassis stock purchased by employees under the
Plan from 15% of such purchases to 25% of such purchases.
The compensation of each executive officer is based on an annual review
of such officer's performance by the chief executive officer and his
recommendations to the Compensation/Stock Option Committee. In establishing and
administering the variable elements in the compensation of the Company's
executive officers, the Compensation/ Stock Option Committee tries to recognize
individual contributions, as well as overall business results. Compensation
levels are also determined based upon the executive's responsibilities, the
efficiency and effectiveness with which he or she marshals resources and
oversees the matters under his or her supervision, and the degree to which he or
she has contributed to the accomplishments of major tasks that advance the
Company's goals. The Company's financial performance is a key factor that
affects the overall level of compensation for executive officers.
EXECUTIVE OFFICER COMPENSATION
Each of the Company's executive officers is currently employed pursuant
to a multi-year employment agreement, the purpose of which is to retain the
services of such officer for an extended period and to protect the Company with
the establishment of no compete/no raid obligations for former executives. The
length of time employment agreements are extended into the future is a result of
a variety of factors, including the staggering of expiration dates of other
executive employment agreements, the roles and responsibilities of the executive
and a risk assessment of the executive being hired by a competitor of Valassis.
The minimum compensation to which each executive officer was entitled for 1997
is specified in the employment agreement, and the bonuses, which are a major
part of an executive's cash compensation, were based on the achievement by the
Company of certain earnings per share targets. No bonus is earned unless a
percentage of the earnings per share target with respect to each semi-annual
period determined by the Committee has been met by the Company. No aggregate
bonus may exceed 100 percent of an executive's annual base salary. Based on the
Company's earnings per share performance for 1997, each executive received
approximately 100 percent of his potential bonus.
Stock options and restricted stock are awarded to the executives by the
Compensation/Stock Option Committee. In determining the size of option and
restricted stock awards for a particular executive officer, the
Compensation/Stock Option Committee considers the amount of stock options and
restricted stock previously awarded to other executive officers in a like
position in addition to the other compensation considerations discussed above.
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CHIEF EXECUTIVE OFFICER COMPENSATION
Mr. Brandon is employed under an employment agreement which expires on
December 31, 2000 and provides for a ten-year consulting period thereafter on
the terms and conditions described therein. The level of Mr. Brandon's salary
and the semi-annual bonus to which he may be entitled for the fiscal year ended
December 31, 1997 is set forth in his employment agreement. The amount of Mr.
Brandon's aggregate bonuses for the fiscal year ended December 31, 1997 was
based on the achievement by the Company of certain semi-annual earnings per
share targets set by the Compensation/Stock Option Committee. No bonus is earned
unless at least 70 percent of the earnings per share target has been met by the
Company. Based on the Company's earnings per share performance for 1997, Mr.
Brandon received approximately 100 percent of his potential bonus, or
$1,000,000. In addition, pursuant to his employment agreement, Mr. Brandon is
eligible to receive 30,000 shares of restricted stock under the Executive
Restricted Stock Award Plan each year commencing with 1996 and ending December
31, 2000 if the Compensation/Stock Option Committee determines that 70% or more
of the Company's performance targets have been met. Based upon the Company's
1997 earnings per share performance, Mr. Brandon received 30,000 shares of
restricted stock.
During the fiscal year ended December 31, 1997, Mr. Brandon was paid a
salary at a rate of $1 million per year under his employment agreement. The
Committee believes that Mr. Brandon's salary is reasonable in light of Mr.
Brandon's outstanding leadership through the years. The Committee believes that
Mr. Brandon's compensation level reflects the Committee's confidence in Mr.
Brandon and the Company's desire to retain Mr. Brandon's outstanding talents at
the head of the Company.
The Compensation/Stock Option Committee is confident that the payment
by the Company of Mr. Brandon's annual bonus for 1997, in addition to the 30,000
shares of restricted stock, as well as the payment of future annual bonuses and
future grants of restricted stock to Mr. Brandon, if any, will constitute
"qualified performance-based compensation," as described in Section 162(m) of
the Internal Revenue Code, as amended. Section 162(m), with certain exceptions,
prohibits the deductibility of any compensation paid to the chief executive
officer and the four other highest paid executives of the Company to the extent
that such executive's compensation exceeds $1 million. Qualified
performance-based compensation is not limited by Section 162(m), however, and
the Committee believes that any bonus paid to Mr. Brandon with respect to
subsequent fiscal years will be fully deductible by the Company.
The Compensation/Stock Option Committee believes that the Company's
most direct competitors for executive talent are not necessarily the same
companies with which the Company would be compared for stock performance
purposes. Many of the businesses with which the Company competes for executive
talent are substantially larger and have greater financial resources than the
Company. The Committee believes that one of the Company's most direct
competitors is a non-publicly traded company for which no information regarding
stock performance or executive compensation is available.
The Compensation/Stock Option Committee feels that actions taken
regarding executive compensation are appropriate in view of the individual and
corporate performance.
This report by the Compensation/Stock Option Committee shall not be
deemed to be incorporated by reference by any general statement incorporating by
reference this Proxy Statement into any filing under the Securities Act of 1933
or the Securities Exchange Act of 1934 and shall not otherwise be deemed filed
under such Acts.
COMPENSATION/STOCK OPTION COMMITTEE
Ambassador Faith Whittlesey
Mark C. Davis
Brian M. Powers
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COMPENSATION/STOCK OPTION COMMITTEE INTERLOCKS AND INSIDER PARTICIPATION
During the fiscal year ended December 31, 1997, Mark C. Davis, Brian M.
Powers and Ambassador Faith Whittlesey served on the Compensation/Stock Option
Committee. No committee member was involved in an interlocking relationship nor
insider participation with respect to the Compensation/Stock Option Committee.
EMPLOYMENT CONTRACTS
On January 20, 1992, Inserts (which was merged with Valassis in March
1993) and Consolidated Press Holdings Limited ("CPH") entered into an employment
agreement with Mr. David A. Brandon, and Valassis and Inserts entered into
employment agreements with Mr. Robert L. Recchia and Mr. Barry P. Hoffman, and
on February 11, 1992, the Boards of Directors of Valassis and Inserts approved
employment agreements for Mr. Richard N. Anderson and Mr. Alan F. Schultz (each,
as amended an "Employment Agreement," and collectively, such employment
agreements as amended, the "Employment Agreements"). The following summary of
certain provisions of the Employment Agreements does not purport to be complete
and is subject to and is qualified in its entirety by reference to the
Employment Agreements. Copies of the Employment Agreements are incorporated by
reference to the Company's Form 10-K and are available as described under
"Available Information."
Mr. Brandon's Employment Agreement is effective through December 31,
2000 (the "Employment Period") and provides for an annual base salary through
such date of not less than $1,000,000. The Board of Directors may increase such
salary as it deems to be necessary or desirable. Pursuant to the terms of his
Employment Agreement, Mr. Brandon may be entitled to a bonus of up to $500,000
for each six-month period if the Company achieves certain earnings per share
targets set by the Compensation/Stock Option Committee. In addition, Mr. Brandon
is eligible to receive 30,000 shares of restricted stock under the Executive
Restricted Stock Award Plan each year commencing with 1996 and ending December
31, 2000 if the Compensation/Stock Option Committee determines that 70% or more
of the Company's performance target for such year has been met. See
"Compensation/Stock Option Committee Report on Executive Compensation."
In addition, Mr. Brandon's Employment Agreement provides for a
consulting period whereby Mr. Brandon will serve as a consultant to the Company
for a period of ten years following the Expiration of the Employment Period (as
defined therein). In the event of an early termination of the Employment Period
under various circumstances, the Employment Agreement contains provisions which
either require, or give the Company the option to, retain Mr. Brandon as a
consultant for the balance of the Employment Period and for the consulting
period. Mr. Brandon's Employment Agreement provides that during the consulting
period, the Company will pay Mr. Brandon his annual base salary in effect at the
end of the Employment Period for the first three years of the consulting period
and will then pay Mr. Brandon one-half of such annual base salary for an
additional seven years thereafter. He is also entitled to participate in, and
continue during the consulting period to participate, in all of the fringe
benefits to which he was entitled at the time of his termination. In the event
of an early termination of the Employment Period, the Employment Agreement
contains provisions for Valassis to pay Mr. Brandon his full base salary for the
balance of the Employment Period and for an additional three years thereafter
and then pay to Mr. Brandon one-half of his annual base salary for an additional
seven years thereafter. If Mr. Brandon terminates his employment without Good
Reason (as defined in his Employment Agreement), the consulting period may be,
at the option of the Company, extended for increments of at least two years (but
no longer than an aggregate of ten years). During the Employment Period and any
consulting period, Mr. Brandon is prohibited from competing with the Company as
described below.
During the fiscal year ended December 31, 1997, the Company extended
Mr. Hoffman's Employment Agreement through June 30, 1999. The other Employment
Agreements for Mr. Schultz, Mr. Anderson and Mr.
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Recchia expire on December 31, 1999, June 30, 1999 and September 30, 1999,
respectively. Pursuant to their respective Employment Agreements, Mr. Hoffman
and Mr. Recchia are each entitled to an annual base salary equal to $287,500.
Mr. Anderson's Employment Agreement provides that he is entitled to an annual
base salary equal to $320,000. Mr. Schultz's Employment Agreement provides that
he is entitled to an annual base salary equal to $400,000. In addition, Mr.
Schultz's Employment Agreement provides that he is entitled to receive 7,500
shares of restricted stock for each year during the term of his Employment
Agreement pursuant to the Employee and Director Restricted Stock Award Plan.
Pursuant to the terms of their respective Employment Agreements, all of these
executives may be entitled to semi-annual bonuses of up to 50% of their annual
salary if the Company achieves certain performance targets set by the
Compensation/Stock Option Committee. See "Compensation/Stock Option Committee
Report on Executive Compensation."
Under the terms of all five of the Employment Agreements for the Named
Executive Officers, if Valassis terminates any of the executives' employment
other than for Cause (as defined in the respective Employment Agreements), or if
the executive terminates his employment for Good Reason (as defined in the
respective Employment Agreements), then Valassis shall continue to pay such
executive a base salary for the duration of the term of his Employment
Agreement, a lump sum cash bonus in an amount equal to two times his maximum
semi-annual cash bonus for the current six-month period (whether or not earned),
the executive's pro rata share of his semi-annual bonus for the six-month period
in which his employment terminates (based on the achievement of certain
performance targets at the end of the six-month period), any deferred
compensation and any accrued vacation pay to the date of termination. In the
case of Mr. Brandon, Valassis shall also pay to him an amount equal to the fair
market value of the Company's Common Stock on the date of termination multiplied
by the product of the number of years in any severance period and 30,000. The
Employment Agreements provide that, under certain circumstances, Valassis shall
also maintain the executive's participation in all employee welfare and medical
benefit plans in which the executive was eligible to participate at the time of
his termination.
In the event of a termination by reason of death or disability of an
executive officer (as defined in the respective Employment Agreements), Valassis
shall pay to such executive or his estate in a lump sum his annual base salary
through the date of termination, an amount equal to the executive's pro rata
share of his semi-annual bonus for the six-month period in which his employment
terminates (based on the achievement of certain performance targets at the end
of the six-month period), any deferred compensation and any accrued vacation pay
to the date of termination. In addition, Mr. Brandon's Employment Agreement
provides that in the event that Mr. Brandon becomes disabled, Valassis will pay
to Mr. Brandon the difference between the amount payable to Mr. Brandon under
Valassis' long-term disability insurance policy then in effect and 60 percent of
Mr. Brandon's base salary then in effect until Mr. Brandon reaches the age of
65.
If Valassis terminates the employment of any of the foregoing executive
officers for Cause, or any such executive officer terminates his employment with
the Company without Good Reason, the Company shall pay such executive officer
any compensation earned through the date of termination and any previously
deferred compensation, and the Company shall then have no further obligations to
such executive officer under his Employment Agreement.
Under the terms of their Employment Agreements, the executive officers
are prohibited from competing with the Company during the periods of their
scheduled employment with the Company. In the case of Mr. Brandon, the
non-compete period extends during any consulting period, if any, with the
Company. In the case of Messrs. Anderson, Schultz, Hoffman and Recchia this
non-competition provision may continue for up to two years following the
scheduled termination of their respective employment, at the Company's option,
during which period the Company is required to pay such executives, as
applicable, their annual base salaries.
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While there are no specific change of control arrangements in the
Employment Agreements, a change of control of Valassis could result in one or
more of the executives being terminated other than for Cause, or one or more of
the executives terminating his employment for Good Reason. In either of such
events, the severance arrangements described above would apply.
2.APPROVAL OF AMENDMENT NO. 4 TO THE 1992 LTIP (PROPOSAL 2)
On December 2, 1997, the Compensation/Stock Option Committee
recommended and the Board of Directors approved Amendment No. 4 to the Valassis
Communications, Inc. 1992 LTIP to increase the number of shares of Common Stock
authorized for issuance under the 1992 LTIP from 3,028,947 shares to 3,778,947
shares (the "Amendment"). On December 2, 1997, in contemplation of the increase
in the number of shares proposed to be available for issuance by the Company,
the Company granted options to purchase 610,000 additional shares of Common
Stock to certain executives, independent directors and key employees of the
Company, subject to stockholder approval of Amendment No. 4 to the 1992 LTIP at
the 1998 Annual Meeting.
As of December 2, 1997, 30,993 shares were available for future grants
under the 1992 LTIP. The Board of Directors believes that it is in the best
interests of the Company and its stockholders to approve the Amendment to allow
the Company to continue to grant additional options under the 1992 LTIP in order
to help the Company secure and retain the services of key employees.
DESCRIPTION OF THE 1992 LTIP AND AMENDMENT NO. 4
The Company adopted the 1992 LTIP in order to motivate qualified
employees of Valassis and its affiliates, to assist Valassis and its affiliates
in attracting employees and to align the interests of such persons with those of
the stockholders of Valassis. As of April 1, 1998, 64 employees held options
under the 1992 LTIP and an additional 56 individuals, comprised of employees and
non-employee directors, were granted options subject to the approval by the
stockholders of this Amendment. As of such date, 130 employees and non-employee
directors were eligible to participate in the 1992 LTIP.
A full copy of the proposed Amendment is attached as Exhibit A to this
Proxy Statement. The major features of the plan are summarized below. The
description provided below is qualified in its entirety by reference to the
actual 1992 LTIP and its amendments which have been previously filed with the
Securities and Exchange Commission, copies of which are available as described
under "Available Information."
The 1992 LTIP provides for the grant of "incentive stock options"
("Incentive Stock Options") within the meaning of Section 422 of the Internal
Revenue Code of 1986, as amended (the "Code") and for the grant of nonqualified
stock options ("Nonqualified Options") to officers, key employees, independent
directors, consultants and independent contractors of Valassis and its
affiliates. The 1992 LTIP is administered by the Compensation/Stock Option
Committee.
The 1992 LTIP currently authorizes the issuance of options to purchase
a maximum of 3,028,947 shares of Common Stock which may be either newly issued
shares, treasury shares, reacquired shares, shares purchased in the open market
or any combination thereof, as adjusted for certain changes in the
capitalization of the Company. If any stock option under the 1992 LTIP
terminates, expires unexercised, or is cancelled, the shares of Common Stock
that would otherwise have been issuable pursuant thereto will be available for
issuance pursuant to the grant of new stock options.
17
20
All officers, key employees, independent directors, consultants and
independent contractors of Valassis and its affiliates are eligible to
participate in the 1992 LTIP. The Committee has exclusive discretion to select
the participants to whom stock options will be granted and to determine the
type, size, terms and conditions under which each stock option may be
exercisable, and the expiration date of each option. The Committee also has
exclusive discretion to make all other determinations which it deems necessary
or desirable in the interpretation and administration of the 1992 LTIP.
Stock options are not transferable during the participant's lifetime
and generally expire not later than ten years after the date on which they are
granted. The exercise price may not be less than 100% of the fair market value
of the shares of Common Stock outstanding on the date the option is granted,
except that, in the case of an Incentive Stock Option, the exercise price may be
not less than 110% of the fair market value of the Common Stock on the date the
stock option is granted in the case of any optionee who at the time of grant
owns, directly or by attribution, more than 10% of the combined voting power of
all classes of capital stock of the Company (a "ten percent owner optionee"). In
addition, the term of an Incentive Stock Option for a ten percent owner optionee
cannot exceed five years from the date of grant. The aggregate fair market value
(determined at the time the option is granted) of the Common Stock granted as
Incentive Stock Options to an optionee that may become exercisable for the first
time during any calendar year cannot exceed $100,000 (or such other limit as may
be imposed by the Code). Payment of the exercise price must be made in full at
the time of exercise in cash, by tendering to the Company shares of Common Stock
previously acquired by the optionee having a fair market value equal to the
exercise price, by a combination thereof, or in such other form as the Committee
may determine in its discretion.
No stock option may be exercised unless the holder has been, at all
times during the period from the date of grant through the date of exercise,
employed by or performing services for Valassis or one of its affiliates,
provided that the Committee may determine, in its discretion, that such exercise
may be made for certain periods following the date on which a participant ceases
to be employed by or performing services for Valassis or one of its affiliates
by reason of retirement, disability, death or otherwise.
The Committee may permit a participant to elect to pay taxes required
to be withheld with respect to a stock option in any appropriate manner
(including, without limitation, by the surrender to the Company of shares of
Common Stock owned by such person or that would otherwise be distributed, or
have been distributed, as the case may be, pursuant to the exercise of such
stock option).
The 1992 LTIP provides that upon the occurrence of a "change in
control," all outstanding stock options become fully exercisable. A "change of
control" is deemed to have occurred if (a) any person becomes a beneficial owner
of securities of the Company representing more than 50 percent of the voting
power; (b) during any period of two consecutive years, individuals who at the
beginning of such period constituted the Board of Directors (including any new
director whose election was approved by the majority vote of directors who were
the directors at the beginning of the period), cease for any reason to
constitute a majority; (c) the stockholders of the Company approve a merger or
consolidation of the Company pursuant to certain conditions; or (d) the
stockholders of the Company approve a plan of complete liquidation of the
Company or an agreement for the sale or disposition of substantially all of the
Company's assets. In addition, the Committee, in its discretion, may, at any
time, accelerate the exercisability of any stock option.
The Board of Directors may amend the 1992 LTIP at any time and from
time to time for any purpose consistent with the goals of the 1992 LTIP, but any
such amendment is subject to stockholder approval where the absence of such
stockholder approval would adversely affect the compliance of the 1992 LTIP with
Rule 16b-3 promulgated under the Exchange Act, or other applicable laws or
regulations.
The Amendment would increase the total number of shares which may be
subject to options granted under 1992 LTIP by 750,000 shares from 3,028,947 to
3,778,947.
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FEDERAL INCOME TAX CONSEQUENCES
A. Incentive Stock Options. The following general rules are
applicable to holders of Incentive Stock Options and to the
Company for Federal income tax purposes under existing law:
1. Generally, no taxable income results to the optionee upon
the grant of an Incentive Stock Option or upon the
issuance of shares to him or her upon exercise of the
Incentive Stock Option.
2. No tax deduction is allowed to the Company upon either
grant or exercise of an Incentive Stock Option under 1992
LTIP.
3. If shares acquired upon exercise of an Incentive Stock
Option are not disposed of prior to the later of: (i) two
years following the date the Incentive Stock Option was
granted; or (ii) one year following the date the shares
are transferred to the optionee pursuant to the exercise
of the Incentive Stock Option ("Requisite Holding
Period"), the difference between the amount realized on
any subsequent disposition of the shares and the exercise
price will generally be treated as long-term capital gain
or loss to the optionee.
4. If shares acquired upon exercise of an Incentive Stock
Option are disposed of before the expiration of the
Requisite Holding Period, described in A(3) herein (a
"disqualifying disposition"), then in most cases the
lesser of (i) any excess of the fair market value of the
shares at the time of exercise of the Incentive Stock
Option over the exercise price; or (ii) the difference
between the disqualifying disposition sales price of the
shares and the exercise price, will be treated as
compensation to the optionee and will be taxed as ordinary
income in the year of such disposition.
5. In any year that an optionee recognizes compensation
income on a disqualifying disposition of shares acquired
by exercising an Incentive Stock Option, the Company will
generally be entitled to a corresponding deduction for
income tax purposes.
6. Any excess of the amount realized by the optionee as the
result of a disqualifying disposition over the sum of: (i)
the exercise price; and (ii) the amount of ordinary income
recognized under the above rules will be treated as either
a long-term or short-term capital gain, depending upon the
time elapsed between receipt and disposition of such
shares disposed of.
7. The bargain element at the time of exercise of an
Incentive Stock Option, i.e., the amount by which the fair
market value of the Common Stock acquired upon exercise of
the Incentive Stock Option exceeds the exercise price, may
be taxable to the optionee under the "alternative minimum
tax" provisions of the Code.
B. Nonqualified Options. The following general rules are applicable
to holders of Nonqualified Options and to the Company for Federal
income tax purposes under existing law:
1. The optionee does not realize any taxable income upon the
grant of a Nonqualified Option, and the Company is not
allowed a business expense deduction by reason of such
grant.
2. The optionee will recognize ordinary compensation income
at the time of exercise of a Nonqualified Option in an
amount equal to the excess, if any, of the fair market
value of the shares on the date of exercise over the
exercise price.
3. In general, the Company will be entitled to a tax
deduction when compensation is recognized by the optionee.
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OPTIONS OUTSTANDING UNDER THE 1992 LTIP
As of April 1, 1998, Nonqualified Options to acquire 846,831 shares of
Common Stock were outstanding under the 1992 LTIP (excluding the options granted
to certain employees and independent directors of the Company on December 2,
1997, subject to stockholder approval at the 1998 Annual Meeting). The Company
has not granted any Incentive Stock Options to date. Most of the Nonqualified
Options have an exercise price equal to the fair market value of Valassis Common
Stock on the date of grant. Of the total number of Nonqualified Options
outstanding (excluding the options granted to certain employees subject to
stockholder approval), 542,409 were vested as of April 1, 1998.
The following table sets forth information regarding the number of
shares subject to options granted under the 1992 LTIP (not including the options
granted to certain employees and independent directors of the Company) as of
February 24, 1998 to: (i) all executive officers named in the Summary
Compensation Table; (ii) all current executive officers as a group; and (iii)
all employees, including all current executives who are not executive officers,
as a group (excluding the options granted to certain employees and independent
directors on December 2, 1997 subject to stockholder approval at the Annual
Meeting).
Number of Shares
Name Position Subject to Options
- -----------------------------------------------------------------------------------------------------------------------------------
David A. Brandon President and Chief Executive Officer 211,324
Alan F. Schultz Executive Vice President and Chief Operating Officer 63,357
Richard N. Anderson Executive Vice President of Manufacturing and Media 0
Robert L. Recchia Chief Financial Officer and Treasurer 46,956
Barry P. Hoffman Vice President, General Counsel and Secretary 0
All current executive officers as a group (5 persons) 321,637
All other employees as a group (59 persons) 220,772
The number of shares which may be subject to options to be granted to
such persons in the future is entirely within the discretion of the Committee
and is therefore not determinable at this time.
The closing price for the Company's Common Stock on April 1, 1998, as
reported on the New York Stock Exchange, was $40.69 per share.
VOTE REQUIRED FOR APPROVAL OF THE AMENDMENT TO THE 1992 LTIP
Approval by the holders of a majority of the shares of Common Stock
represented in person or by proxy at the Annual Meeting is necessary for
stockholder approval of the Amendment.
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23
THE BOARD OF DIRECTORS RECOMMENDS A VOTE "FOR" THE APPROVAL OF AMENDMENT NO. 4
TO THE 1992 LTIP.
3. RATIFICATION OF APPOINTMENT OF AUDITORS (PROPOSAL 3)
On September 23, 1997, the Company engaged Deloitte & Touche LLP,
independent certified public accountants ("Deloitte & Touche"), as the principal
accountants to audit the Company's financial statements for the year ending
December 31, 1997. Such new accounting firm was engaged in replacement of Ernst
& Young LLP, independent auditors ("Ernst & Young"), who had previously been
engaged for the same purpose, and whose dismissal was effective the same date.
The decision to change the Company's accountants was approved by the Audit
Committee of the Company's Board of Directors, was ratified by the Company's
Board of Directors and was based on the Company's desire to appoint a new
independent auditor after its former majority stockholder, Conpress
International (Netherlands Antilles) N.V., (with whom Ernst & Young has had a
long-standing working relationship) sold all of its shares of common stock in
the Company in the Offerings (as defined below). Such sale took place in July,
1997. See "Agreements with Affiliates."
The reports of Ernst & Young on the Company's financial statements for
the two fiscal years ended December 31, 1996 did not contain an adverse opinion
or disclaimer of opinion, nor were they qualified or modified as to uncertainty,
audit scope or accounting principles. In addition, during the two years ended
December 31, 1996 and in the subsequent interim period ended September 23, 1997,
there were no disagreements with Ernst & Young on any matter of accounting
principles or practices, financial statement disclosure, or auditing scope of
procedure, which disagreements if not resolved to the satisfaction of Ernst &
Young, would have caused it to make reference to the subject matter of the
disagreements in connection with its reports.
The Board of Directors has appointed the firm of Deloitte & Touche as
the auditors of the Company for the 1998 fiscal year, subject to the
ratification of such appointment by the stockholders at the Annual Meeting.
If the foregoing appointment of Deloitte & Touche is not ratified by
the stockholders, the Board of Directors will appoint other independent
accountants whose appointment for any period subsequent to the next Annual
Meeting of Stockholders will be subject to the approval of stockholders at that
meeting. A representative of Deloitte & Touche is expected to be present at the
Annual Meeting and will have an opportunity to make a statement should he or she
so desire and to respond to appropriate questions.
Ratification of the selection of Deloitte & Touche as independent
public accountants will require the affirmative vote of holders of a majority of
the shares of the Common Stock present in person or represented by proxy at the
Annual Meeting.
THE BOARD OF DIRECTORS RECOMMENDS A VOTE "FOR" RATIFICATION OF DELOITTE AND
TOUCHE.
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AGREEMENTS WITH AFFILIATES
On April 3, 1996, the Board of Directors of the Company authorized the
repurchase of up to 5,000,000 shares (the "1996 Share Repurchase Program") of
the Company's Common Stock (approximately 11.5% of the then issued and
outstanding shares of Common Stock).
In connection with the Company's 1996 Share Repurchase Program, the
Company entered into an agreement with Conpress Cayman, LDC ("Conpress"), the
Company's then principal stockholder and the direct holder of 21,200,000 shares
of the Common Stock, and its parent, Consolidated Press International Limited,
pursuant to which the Company granted to Conpress a series of options (each, an
"Option") to sell to the Company on a monthly basis a number of shares of Common
Stock up to the number of shares purchased by the Company on the open market in
any given month during the period of time that the Company continued its
repurchase program (the "Option Agreement"). The Option Agreement was approved
by the stockholders at the Annual Meeting held on May 21, 1996. During 1997, the
Company repurchased 1,026,200 shares of Common Stock pursuant to repurchase
options under the Option Agreement at an average price of $20.83 per share. Due
to the fact that the Company has purchased all of the shares eligible to be
purchased under the 1996 Share Repurchase Program and due to the fact that the
Selling Stockholder (as defined below) has sold all of its shares in the
Company, the Option Agreement is no longer in effect.
On July 8, 1997, Conpress International (Netherlands Antilles) N.V.
(formerly known as Conpress), a Netherlands Antilles limited liability company,
indirectly owned by CPH, a private Austrian holding company indirectly owned by
Kerry B. Packer, (the "Selling Stockholder") sold its entire stock ownership
(20,173,800 shares of Common Stock) in the Company at $24 of per share through
both a United States Offering and an International Offering (collectively, the
"Offerings"). After the consummation of the Offerings, Graham A. Cubbin and
James D. Packer (both of whom were affiliated with the Selling Stockholder)
resigned from the Company's Board of Directors. In addition, David A. Brandon
was appointed Chairman of the Board of Directors.
In connection with the Offerings, the Company and the Selling
Stockholder entered into a registration rights agreement ("Registration Rights
Agreement") providing the Selling Stockholder with certain demand and
`piggyback' registration rights with respect to its remaining shares of Common
Stock after the Offerings. Pursuant to the Registration Rights Agreement, the
Company agreed to file a registration statement with the Securities and Exchange
Commission and to use all best efforts to cause such registration statement to
be declared effective as soon as possible. In addition, the Registration Rights
Agreement provided for additional demand registrations for any remaining shares
of Common Stock owned by the Selling Stockholder and unlimited `piggyback'
registrations. Pursuant to the Registration Rights Agreement, the Selling
Stockholder agreed (subject to certain limited exceptions) to pay the expenses,
other than the fees and expenses of counsel to the Company, incident to any
demand registration thereunder, and the Company agreed to pay the expenses,
other than registration fees or underwriting discounts or commissions,
associated with any piggyback registration of shares of Common Stock owned by
the Selling Stockholder. The terms of the Registration Rights Agreement were
approved by a special committee of the Company's Board of Directors consisting
solely of disinterested directors. Pursuant to the Registration Rights
Agreement, the Company agreed to indemnify the Selling Stockholder against
certain liabilities, including liabilities under the Securities Act. Due to the
fact that, pursuant to the Offerings, the Selling Stockholder has sold the
entire stock ownership in the Company, the Selling Stockholder no longer holds
securities in the Company which are subject to the foregoing registration
rights.
22
25
GENERAL
OTHER MATTERS
The Board of Directors does not know of any matters that are to be
presented at the Annual Meeting other than those stated in the Notice of Annual
Meeting and referred to in this Proxy Statement. If any other matters should
properly come before the Annual Meeting, it is intended that the proxies in the
accompanying form will be voted as the persons named therein may determine in
their discretion.
The Company's Annual Report to Stockholders for the fiscal year ended
December 31, 1997 and the Company's Annual Report on Form 10-K for the fiscal
year ended December 31, 1997 are being mailed to stockholders together with this
Proxy Statement.
SOLICITATION OF PROXIES
The cost of solicitation of proxies in the accompanying form will be
borne by the Company, including expenses in connection with preparing and
mailing this Proxy Statement. In addition to solicitation of proxies by mail,
directors, officers and employees of the Company (who will receive no additional
compensation therefore) may solicit the return of proxies by telephone, telegram
or personal interview. Arrangements have also been made with brokerage houses
and other custodians, nominees and fiduciaries for the forwarding of
solicitation material to the beneficial owners of stock held of record by such
persons, and the Company will reimburse them for reasonable out-of-pocket
expenses incurred by them in connection therewith.
Each holder of the Company's Common Stock who does not expect to be
present at the Annual Meeting or who plans to attend but who does not wish to
vote in person is urged to fill in, date and sign the proxy and return it
promptly in the enclosed return envelope.
STOCKHOLDER PROPOSALS
If any stockholder of the Company intends to present a proposal for
consideration at the next Annual Meeting of Stockholders and desires to have
such proposal included in the proxy statement and form of proxy distributed by
the Board of Directors with respect to such meeting, such proposal must be
received at the Company's principal executive offices, 19975 Victor Parkway,
Livonia, Michigan 48152, Attention: Barry P.
Hoffman, not later than December 11, 1998.
AVAILABLE INFORMATION
All documents filed by the Company with the SEC pursuant to Section
13(a), 13(c), 14 or 15(d) of the Securities Exchange Act of 1934, as amended,
may be inspected and copied at the public reference facilities of the SEC at its
principal office at Judiciary Plaza, 450 Fifth Street, N.W., Room 1024,
Washington, D.C. 20549, and its regional offices at Northwestern Atrium Center,
500 West Madison Street, Suite 1400, Chicago, Illinois 60661, and Seven World
Trade Center, 13th Floor, New York, New York 10048. Copies of such documents may
be obtained at prescribed rates from the Public Reference Section of the SEC at
its principal office at Judiciary Plaza, 450 Fifth Street, N.W., Room 1024,
Washington, D.C. 20549. Reports, proxy statements and other information
concerning the Company can also be inspected at the offices of the New York
Stock Exchange, 20 Broad Street, New York, New York 10005.
By Order of the Board of Directors
BARRY P. HOFFMAN
Secretary
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26
EXHIBIT A
FOURTH AMENDMENT OF
THE VALASSIS COMMUNICATIONS, INC.
1992 LONG-TERM INCENTIVE PLAN
WHEREAS, Valassis Communications, Inc. (the "Company") has adopted the 1992
Long-Term Incentive Plan (the "1992 Plan");
WHEREAS, pursuant to Paragraph 12 of the 1992 Plan, the Company's Board of
Directors may amend the 1992 Plan, provided that such amendment shall be
effective only upon approval by the shareholders of the Company where the
failure to obtain such approval would adversely affect the compliance of the
1992 Plan with Rule 16b-3 under the Securities Exchange of 1934 and other
applicable law; and
WHEREAS, there are currently reserved for issuance under the 1992 Plan as
amended by Amendment 1, dated September 14, 1992, and Amendment 3, dated
December 14, 1995, 3,028,947 shares of Common Stock, $.01 par value ("Common
Stock"); and
WHEREAS, the Company's Board of Directors deems it in the best interest of
the Company to increase the total number of shares of Common Stock reserved for
the issuance under the 1992 Plan.
NOW THEREFORE, by resolution of the Company's Board of Directors, the 1992
Plan is hereby amended as follows, subject to approval by the Company's
shareholders:
1. The first sentence of Subparagraph (b) of Paragraph 4 is hereby amended to
read as follows:
"(b) Maximum Number of Shares that May Be Issued. There may be issued
under the Plan an aggregate of not more than 3,778,947 Common Shares, subject to
adjustment as provided in Paragraph 8."
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VALASSIS COMMUNICATIONS, INC.
P R O X Y
THIS PROXY IS SOLICITED ON BEHALF OF THE BOARD OF DIRECTORS
ANNUAL MEETING OF STOCKHOLDERS, TUESDAY, MAY 19, 1998
The undersigned stockholder of VALASSIS COMMUNICATIONS, INC., a Delaware corporation, hereby appoints David A. Brandon,
Robert L. Recchia and Barry P. Hoffman or any of them, voting singly in the absence of the others, attorney and proxies, with full
power of substitution and revocation, to vote, as designated on the reverse side, all shares of Common Stock of Valassis
Communications, Inc., that the undersigned is entitled to vote at the Annual Meeting of Stockholders of said Corporation to be held
at The Plaza Hotel, Fifth Avenue at Central Park South, New York City, New York 10019 on May 19, 1998, at 9:00 a.m. (local time) or
any adjournment or adjournments thereof, in accordance with the instructions on the reverse side.
This proxy, when properly executed, will be voted in the manner directed herein by the undersigned stockholder. IF NO
DIRECTION IS MADE, THE PROXY WILL BE VOTED "FOR" ALL NOMINEES IN PROPOSAL NO. 1, "FOR" PROPOSAL NO. 2, and "FOR" PROPOSAL NO. 3. The
proxies are authorized to vote as they may determine in their discretion upon such other business as may properly come before the
meeting.
VALASSIS COMMUNICATIONS, INC.
P.O. BOX 11062
NEW YORK, N.Y. 10203-0062
(Continued and to be dated and signed on the other side.)
THE BOARD OF DIRECTORS RECOMMENDS A VOTE "FOR" ALL NOMINEES IN PROPOSAL NO. 1, "FOR" PROPOSAL NO. 2, AND "FOR" PROPOSAL NO. 3.
1. ELECTION OF DIRECTORS FOR all nominees [ ] WITHHOLD AUTHORITY to vote [ ] EXCEPTIONS* [ ]
listed below for all nominees listed below
Nominees: David A. Brandon, Mark C. Davis, Jon M. Huntsman, Jr., Larry L. Johnson, Brian M. Powers, Robert L.
Recchia, Alan F. Schultz and Faith Whittlesey (INSTRUCTION: TO WITHHOLD AUTHORITY TO VOTE FOR ANY INDIVIDUAL NOMINEE,
MARK THE "EXCEPTIONS" BOX AND WRITE THAT NOMINEE'S NAME ON THE LINE PROVIDED BELOW.)
Exceptions_____________________________________________________________________________________________________________________
2. The approval of Amendment No. 4 to the Company's 1992 3. The ratification of the appointment of
Long-Term Incentive Plan to increase the number of Deloitte & Touche, LLP as auditors for
shares reserved for issuance thereunder. the fiscal year ending December 31, 1998.
FOR [ ] AGAINST [ ] ABSTAIN [ ] FOR [ ] AGAINST [ ] ABSTAIN [ ]
4. The proxies are authorized to vote as they may determine in
their discretion upon such other business as may properly
come before the meeting.
CHANGE OF ADDRESS AND [ ]
OR COMMENTS MARK HERE
Please sign exactly as name appears to the left.
When shares are held in the name of joint holders, each should sign.
When signing as attorney, executor, trustee, guardian, etc.,
please so indicate. If a corporation, please sign in full corporate name
by an authorized officer, if a partnership, please sign in partnership
name by an authorized person.
Dated_________________________________________________________, 1998
_________________________________________________________________________
Signature
_________________________________________________________________________
Signature, if held jointly
PLEASE MARK, DATE, SIGN AND MAIL YOUR PROXY Votes must be indicated [ ]
PROMPTLY IN THE ENVELOPE PROVIDED (x) in Black or Blue ink.