SCHEDULE 14A INFORMATION
Proxy Statement Pursuant to Section 14(a) of the Securities Exchange Act of 1934
(Amendment No.___)
Filed by 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 (S)E240.14a-11(c) or (S)E240.14a-12
WAVE TECHNOLOGIES INTERNATIONAL, INC.
- --------------------------------------------------------------------------------
(Name of Registrant as Specified In Its Charter)
(Name of Person(s) Filing Proxy Statement if other than the Registrant)
Payment of Filing Fee (Check the appropriate box):
[X] No fee required.
[ ] Fee computed on table below per Exchange Act Rules 14a-6(i)(4) and 0-11.
1) Title of each class of securities to which transaction applies:
__________________________________________________________
2) Aggregate number of securities to which transaction applies:
__________________________________________________________
3) Per unit price or other underlying value of transaction computed
pursuant to Exchange Act Rule 0-11 (Set forth the amount on which the
filing fee is calculated and state how it was determined):
__________________________________________________________
4) Proposed maximum aggregate value of transaction:
__________________________________________________________
5) Total fee paid:
__________________________________________________________
[ ] Fee paid previously with preliminary materials.
[ ] Check box if any part of the fee is offset as provided by Exchange Act Rule
0-11(a)(2) and identify the filing for which the offsetting fee was paid
previously. Identify the previous filing by registration statement number,
or the Form or Schedule and the date of its filing.
1) Amount Previously Paid:
____________________________________
2) Form, Schedule or Registration No.:
____________________________________
3) Filing Party:
____________________________________
4) Date Filed:
____________________________________
WAVE TECHNOLOGIES INTERNATIONAL, INC.
Notice of Annual Meeting of Shareholders
September 8, 1999
To the Shareholders of
Wave Technologies International, Inc.:
NOTICE IS HEREBY GIVEN that the Annual Meeting of Shareholders of Wave
Technologies International, Inc. (the "Company") will be held at 10845 Olive
Boulevard, St. Louis, Missouri 63141 on Wednesday, September 8, 1999, at 9:30
a.m., central daylight time, for the following purposes:
1. To elect one director to serve until the Annual Meeting of
Shareholders in 2002.
2. To consider and act upon a proposal to ratify the appointment of
Deloitte & Touche, LLP, as independent auditors of the Company for the
fiscal year ending April 30, 2000.
3. To transact such other business as may properly come before the
meeting or any adjournment thereof.
Only shareholders of record on the books of the Company at the close of
business on August 4, 1999, will be entitled to notice of, and to vote at, the
meeting.
Shareholders are cordially invited to attend the meeting in person. Every
shareholder (whether you own one or more shares and whether or not you intend to
attend the meeting in person) is urged to sign, date and return promptly the
enclosed Proxy. A return envelope requiring no postage if mailed in the United
States is enclosed for your convenience in replying.
By Order of the Board of Directors
Kenneth W. Kousky
Chairman of the Board,
President and Chief
Executive Officer
St. Louis, Missouri
August 9, 1999
WAVE TECHNOLOGIES INTERNATIONAL, INC.
Proxy Statement
Annual Meeting of Shareholders
To Be Held on September 8, 1999
This statement is furnished to shareholders of Wave Technologies
International, Inc. (the "Company"), a Missouri corporation, in connection with
the solicitation of proxies by the Board of Directors of the Company to be voted
at the Annual Meeting of Shareholders. That meeting will be held at the
Company's St. Louis training center, located at 10845 Olive Boulevard, St.
Louis, Missouri 63141 on September 8, 1999, at 9:30 a.m., central daylight time.
Shareholders of record at the close of business on August 4, 1999, will be
entitled to notice of and to vote at such meeting and at all adjournments
thereof.
The complete mailing address of the Company's principal executive offices
is:
10845 Olive Boulevard
Suite 250
St. Louis, Missouri 63141
The approximate date on which this Proxy Statement and the form of Proxy
were first sent or given to the shareholders of the Company was August 9, 1999.
The Company's Annual Report on Form 10-K for the fiscal year ended April 30,
1999, including audited financial statements, is included with this Proxy
Statement.
VOTING RIGHTS, SOLICITATION AND REVOCABILITY OF PROXIES
On August 4, 1999, there were outstanding and entitled to vote 4,158,311
shares of common stock. Shareholders are entitled to one vote, exercisable in
person or by proxy, for each share of common stock held on the record date of
August 4, 1999. The holders of a majority of the outstanding shares of common
stock entitled to vote at the meeting constitute a quorum.
The presence of a shareholder at the Annual Meeting will not automatically
revoke such shareholder's proxy. However, shareholders who execute proxies may
revoke them at any time before they are voted by giving written notice of such
revocation to the Secretary of the Company at 10845 Olive Boulevard, Suite 250,
St. Louis, Missouri 63141. When a proxy is received, properly executed, prior
to the meeting, the shares represented thereby will be voted at the meeting in
accordance with the terms of that proxy. If the enclosed form of proxy is
executed but unmarked, it will be voted FOR the election of the nominee for the
Board of Directors and FOR the appointment of Deloitte & Touche, LLP, as the
Company's independent auditors for the 2000 fiscal year.
The nominee for director who receives the highest number of votes cast will
be elected as a director. Approval of the auditors requires the affirmative
vote of a majority of the total number of shares represented and entitled to
vote at the meeting. Therefore, an abstention with respect to approval of the
auditors is in effect a vote against the proposal. Shares represented by
proxies which are marked "withhold authority" with respect to the election of
the nominee as director will be considered to be represented at the meeting, but
will not be included in determining the number of votes cast. In instances
where brokers are prohibited from exercising discretionary authority for
beneficial owners who have not returned proxies to the brokers, those shares
will not be included in the vote totals, and, therefore, will have no effect on
the vote.
The cost of soliciting proxies will be borne by the Company. In addition to
the use of mails, proxies may be solicited personally or by telephone or telefax
by directors, officers and employees of the Company.
SECURITY OWNERSHIP OF MANAGEMENT
The following table sets forth, as of June 30, 1999, the number of shares
of common stock beneficially owned by each shareholder known by the Company to
own beneficially more than 5% of the outstanding common stock, each director of
the Company, each nominee for director, each executive officer and by all
directors and executive officers of the Company as a group. Except as otherwise
indicated, all shares are owned directly.
Name and Address of Beneficial Owner Number Percent
- ------------------------------------ ------ -------
Kenneth W. Kousky 392,264 (1) 9.4%
10845 Olive Boulevard, Suite 250
St. Louis, MO 63141
Maxine K. Clark 2,000 (2) *
1964 Innerbelt Business Center Dr.
St. Louis, MO 63114
Raymond J. Kalinowski 3,500 (3) *
10401 Clayton Road
St. Louis, MO 63131
David W. Kemper 192,500 (4) 4.6%
8000 Forsyth
St. Louis, MO 63105
Robert E. Lefton, Ph.D 3,000 (3) *
8112 Maryland Avenue
St. Louis, MO 63105
Walter N. Torous 5,500 (3) *
Anderson School of Graduate Management
University of California, Los Angeles
Los Angeles, CA 90024
J. Michael Bowles 13,000 (2) *
10845 Olive Boulevard, Suite 250
St. Louis, MO 63141
John A. Kirkham 151,600 (5) 3.6%
Thames Link House
1 Church Road, Richmond
Surrey TW92QR England
2
Harvey L. Leemon -- --
10845 Olive Boulevard, Suite 250
St. Louis, MO, 63141
Wellington Management Company 408,300 (6) 9.8%
75 State Street
Boston, MA 02109
Wellington Trust Company, NA 308,300 (7) 7.4%
75 State Street
Boston, MA 02109
Ryback Management Corporation 262,500 (8) 6.3%
7711 Carondelet Avenue
Box 16900
St. Louis, MO 63105
All directors and executive officers as a
group (9 individuals) 763,364 (9) 18.0%
* Less than 1%
- --------------------
(1) Includes options to purchase 1,500 shares of common stock and 9,300 shares
held in a charitable foundation over which Mr. Kousky exercises voting and
dispositive control.
(2) Represents options to purchase shares of common stock.
(3) Includes options to purchase 2,500 shares of common stock.
(4) Includes options to purchase 2,500 shares of common stock, 20,000 shares
held in a trust of which Mr. Kemper is a co-trustee, and 170,000 shares
owned by Commerce Bancshares, Inc., of which Mr. Kemper is Chairman and
Chief Executive Officer.
(5) Includes options to purchase 55,500 shares of common stock.
(6) Based on information as of December 31, 1998, furnished to the Company in a
Schedule 13G filed February 10, 1999. Includes 308,300 shares as to which
reporting person holds shared voting power, and 408,300 shares as to which
reporting person holds shared dispositive power.
(7) Based on information as of December 31, 1998, furnished to the Company in a
Schedule 13G filed February 11, 1999. Reporting person holds shared voting
and dispositive powers as to such shares.
(8) Based on information furnished to the Company in a Schedule 13G filed
January 23, 1998. Ryback Management did not file a Schedule 13G in 1999.
(9) Includes options to purchase an aggregate of 82,000 shares of common stock.
The shares of common stock are traded on the Nasdaq Stock Market. The last
sale price on August 4, 1999, as reported by Nasdaq, was $3.00.
3
PROPOSAL NO. 1:
ELECTION OF DIRECTOR
Vacancies
Following the Annual Meeting, the Company's Board of Directors will have
two vacancies, one in each of Class Two and Class Three. The Board of Directors
expects to consider filling one or both positions or reducing the size of the
Board from seven to five members.
One director is to be elected at the Annual Meeting to hold office until
the annual meeting in 2002 and until his successor is qualified. The nominee
recommended by the Board of Directors is Raymond J. Kalinowski. Should he become
unable to serve or otherwise be unavailable for election, it is intended that
the persons named in the Proxy will vote for the election of such person as the
Board of Directors may recommend in place of such nominee. The Board of
Directors knows of no reason why the nominee might be unable to serve or
otherwise be unavailable for election.
THE BOARD OF DIRECTORS RECOMMENDS THAT THE ACCOMPANYING PROXY BE VOTED FOR
THE NOMINEE LISTED BELOW.
Nominee for Election
Raymond J. Kalinowski has served as a director of the Company since
November 1994. He was Vice Chairman of A.G. Edwards & Sons, Incorporated for
forty years. Since 1990, he has been an independent consultant. Mr. Kalinowski
serves as trustee of a number of mutual funds affiliated with the Centennial,
Panorama and Oppenheimer Group Funds. Mr. Kalinowski currently serves on the
Board of Directors for Isto Technologies, Inc, and Catholic Charities--St.
Louis.
Directors Serving Until the Annual Meeting of Shareholders in 2000
Kenneth W. Kousky is a founder of the Company and has served as Chairman of
the Board of Directors since 1988. In 1991, he became the Company's President
and Chief Executive Officer. Between 1988 and 1990, Mr. Kousky headed the
Washington University Center for Communications and Network Management and its
graduate program in telecommunications.
David W. Kemper has served as a director of the Company since November
1994. He is Chief Executive Officer of Commerce Bancshares, Inc. and Commerce
Bank of St. Louis. He has held this position since July 1978. Mr. Kemper serves
as a director of Seafield Capital Corporation, Tower Properties Company and
Ralcorp Holdings, Inc.
Walter N. Torous has served as a director of the Company since May 1994. He
has been a professor of finance at the Anderson Graduate School of Management of
the University of California, Los Angeles since 1985.
Director Serving Until the Annual Meeting of Shareholders in 2001
Robert E. Lefton has served as a director of the Company since September
1995. He has been President and Chief Executive Officer of Psychological
Associates, Inc., a management and organizational consulting firm, since 1958.
He serves as a director of Stifel Financial Corp. and Allied Health Care
Products.
4
Director Not Standing For Re-Election
Maxine K. Clark has served as a director of the Company since February
1997. She is Chief Executive Officer of Build-A-Bear Workshop, LLC, a St. Louis-
based retail store chain and has been President and Chief Executive Officer of
Smart Stuff, Inc., a St. Louis retail and business consulting firm, since 1996.
Additional Information
The Board of Directors of the Company had a total of seven meetings during
the fiscal year ended April 30, 1999. Each of the directors attended at least
75% of the total number of meetings of the Board of Directors and the total
number of meetings held by all committees of the Board of Directors on which
they served, except for Dr. Lefton, who attended four of seven board meetings
and all of the Compensation Committee meetings.
The Audit Committee currently consists of three members, Raymond
Kalinowski, David Kemper and Walter Torous. The Audit Committee reviews the
preparation of the Company's accounts and considers the engagement of
independent public accountants for the ensuing year and the terms of such
engagement. In addition, the Audit Committee reviews the scope of the audit
proposed by such accountants and receives and reviews the audit reports. The
Audit Committee had a total of three meetings during the fiscal year ended April
30, 1999.
The Compensation Committee consists of three members, Robert Lefton, Maxine
Clark and Walter Torous. The Compensation Committee administers and makes awards
under the Company's stock option plans and also studies and recommends the
implementation of all compensation programs for directors and officers of the
Company. The Compensation Committee of the Company had a total of three meetings
during the fiscal year ended April 30, 1999.
DIRECTORS AND EXECUTIVE OFFICERS
The following table sets forth certain information with respect to the
Company's directors and executive officers and the nominee for director:
Name Age Position
- ---- --- --------
Kenneth W. Kousky 45 Chairman of the Board, President
and Chief Executive Officer
Maxine K. Clark 50 Director
Raymond J. Kalinowski 70 Director
David W. Kemper 48 Director
Robert E. Lefton 67 Director
Walter N. Torous 47 Director
J. Michael Bowles 55 Chief Financial Officer
John A. Kirkham 55 Executive Vice President-International
Sales and Operations
Harvey L. Leemon 54 Vice President of Development
J. Michael Bowles joined the Company as Chief Financial Officer in August
1995. Prior to that time, he was associated with Unibased Systems Architecture,
Inc. in St. Louis, Missouri, a software development company where he was Chief
Financial Officer from 1994 to 1995 and Director of Professional Services from
1992 to 1994.
5
John A. Kirkham has served as the Executive Vice President-International
Operations for the Company since August 1994. Prior to that time, he served as
the Vice President of International Operations for NETG, a technology training
company, in London, from 1987 through 1994. Mr. Kirkham serves as a director for
West London T.E.C. and Performance Support International (UK) Ltd.
Harvey L. Leemon joined the Company as Vice President of Development in
November of 1998. Prior to that time, he was with Software Engineering & Data
Center Operations, HCIA Inc., in Ann Arbor, Michigan where he was Associate Vice
President from 1986 through 1998.
Certain Relationships and Related Transactions
In August of 1995, the Company entered into a loan agreement with Commerce
Bank-St. Louis (the "Bank"), with a current line of credit of $3,500,000. The
borrowings bear interest at the prime rate, and are collateralized by accounts
receivable and property and equipment of the Company. David Kemper, a member of
the Company's Board of Directors, is the president of the Bank and its parent
holding company.
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 directors and officers, and persons who own more than 10% of a
registered class of securities to file with the SEC the initial reports of
ownership and reports of changes in ownership of common stock and other equity
securities of the Company. Officers, directors and greater-than 10% shareholders
are required by SEC regulations to furnish the Company with copies of all
Section 16(a) forms they file.
To the Company's knowledge, based solely on a review of the copies of such
reports furnished to the Company and representations that no other reports were
required, its officers, directors and greater-than 10% beneficial owners
complied with all Section 16(a) filing requirements applicable to them during
the fiscal year ended April 30, 1999, except for the following instances. Each
of the five outside directors (Messrs. Kalinowski, Kemper, Lefton and Torous,
and Ms. Clark) reported the 1998 annual stock option grant of 500 shares two
months late, due to an internal miscommunication at the Company. Mr. Lefton also
filed a Form 4 reporting a 1996 purchase of 500 shares three years late. Mr.
Torous filed a Form 4 reporting the purchase of 2,000 shares four months late.
Thomas Hagerty, former chief operating officer, filed his initial report on Form
3 three weeks late.
EXECUTIVE COMPENSATION
REPORT OF THE COMPENSATION COMMITTEE
ON EXECUTIVE COMPENSATION
Introduction
The Compensation Committee (the "Committee") of Wave's board of directors
is composed of three (3) non-employee directors. The Committee oversees Wave's
executive compensation program and is specifically responsible for evaluating
and approving compensation plans, payments, and awards for Wave's executive
officers. In discharging its responsibilities in the fiscal year ended April 30,
1999, the Committee used the services of a compensation consultant (the
"Consultant") as a resource in setting the base and long-term compensation of
the chief executive officer and in an ongoing evaluation of the compensation of
Wave's other executive officers. During the fiscal year ended April 30, 1999,
the Committee met three times.
6
Executive Compensation Program
The Committee is in the process of developing an executive compensation
program for the Company's executive officers and other key employees. The
Committee believes that the program should:
. provide competitive compensation opportunities that attract and retain
top performers;
. motivate executives to grow the Company through a balanced commitment
to top line and bottom-line results;
. create a clear link between corporate function and individual
performance and rewards; and
. encourage behaviors that are aligned with Wave's corporate strategy
and values.
While the Committee has not formally adopted these four criteria, it has
begun including them in its consideration of compensation issues. It has done so
in the context of the three existing elements of the Company's approach to
compensating executives and other key employees. Base salary, short-term cash
incentives, and long-term incentives in the form of stock options.
Base salary provides the foundation for executive pay; its purpose is to
compensate the executive for performing his or her basic duties. Short-term cash
incentives are intended to provide rewards for favorable short-term performance.
The purpose of the long-term incentives is to provide incentives and rewards for
long-term performance and to motivate long-term thinking.
Base Salary. Based upon a February 1999 study by the Consultant (the
"Study"), Wave's base salaries for executive officers are generally below the
median base salaries for similar level officers in a comparison group of
thirteen public technology training companies. Wave has recently used base
salaries closer to the median to recruit qualified officers, but historically
Wave executive officers have had to look to performance-based bonuses to
increase their cash compensation. The Committee is evaluating Wave's base
compensation structure but has not adopted any modifications of it.
Short Term Cash Incentives. Short term cash incentives are performance-
based cash bonuses. For the fiscal year ended April 30, 1999, and in previous
years, the Company's Chief Executive Officer and the Committee developed
performance goals for each executive officer. Bonus plans for executives with
primary responsibility for sales focused on revenue generation, while plans for
administrative officers often gave the most weight to net income of the Company.
Bonus plans for officers also included other specific job and financial
performance targets for each individual.
The Study indicated that on average the total cash compensation (both base
and bonus) received by Company executives was below the median for the peer
group. The Consultant suggested the Committee consider a bonus program in which
each officer has a target annual bonus. The officer would receive between 0% and
200% of the target bonus depending upon the Company's success in attaining or
surpassing revenue and earnings per share goals. The Committee is considering
the proposal but has taken no action on it.
Long-Term Incentives. The Company uses stock options as its form of long-
term incentive for executives. In recent years, the Company has used options
principally to recruit key employees and, to a lesser extent, to retain others.
There has been no program of annual grants to executive officers as a group. The
Consultant recommended that the Committee initiate a program of annual grants to
provide compensation
7
opportunities that are competitive with the Company's peer group. The Committee
has not acted upon the Consultant's recommendation.
Chief Executive Officer Compensation. Mr. Kousky founded the Company in
1988 and has served as President and Chief Executive Officer since then. For the
fiscal year ended April 30, 1999, his base compensation was $234,000, compared
to $225,000 in the prior fiscal year. The Study indicated that his base salary
in both years was substantially below the median for presidents and chief
executive officers of the peer group. Mr. Kousky received no bonus in the year
ended April 30, 1999. As a result, his total cash compensation was well below
that of his counterparts in the peer group.
With the exception of options for 1,500 shares, until March 22, 1999, Mr.
Kousky had not received any option grants since the Company's initial public
offering. After evaluating the Study, including information about options held
by presidents and chief executive officers of the peer group, the Committee
adopted the recommendation of the Consultant and effective March 23, 1999,
granted Mr. Kousky options for 110,000 shares exercisable at $3.875, the then-
current market price, and, effective June 2, 1999, options to purchase 40,000
shares at the higher of the market price on June 2, 1999 or the closing price on
March 22, 1999. Options for 50,000 shares vest in equal annual installments over
four years beginning in March 2000. Options for another 50,000 shares vest in
four equal annual installments beginning in March 2005, but these options may
vest earlier in four equal annual installments beginning on the date when the
closing price of the Company's common stock for 20 consecutive trading days is
$8.00 or greater. Options for the final 50,000 shares vest on a similar
schedule, but the closing price target for early vesting is $11.00 per share.
All of Mr. Kousky's options granted in March 1999 will be cancelled if the
Company is acquired prior to September 18, 1999. In that case, Mr. Kousky would
receive a cash incentive equal to $1,000 for each $.01 per share by which the
acquisition price exceeds $8.00 per share.
The Committee believes that Mr. Kousky's 1999 option grant made his total
compensation more competitive with his counterparts in the peer group. At the
same time, they provide an incentive for improving the Company's performance and
shareholder value.
During the Company's current fiscal year, the Committee will continue its
evaluation of the Study and the Company's compensation of executive officers.
The Committee's intention is to develop a compensation program that ties total
compensation to corporate and individual performance in a way that benefits
shareholder value.
Respectfully submitted,
Robert E. Lefton, Chairman
Maxine K. Clark
Walter N. Torous
This Report and the following "Performance Graph" are not "soliciting
material," are not deemed filed with the SEC and are not to be incorporated by
reference in any filing of the Company under the 1933 Act or the 1934 Act,
whether made before or after the date hereof and irrespective of any general
incorporation language in any such filing.
Performance Graph
In accordance with Securities and Exchange Commission regulations, the
following performance graph compares the cumulative total shareholder return on
the Company's Common Stock to the cumulative total return on the Russell 2000
index and the weighted average return of a peer group (described below) since
the
8
Company's initial public offering in July of 1994, through Wave's fiscal year
ended April 30, 1999, assuming an initial investment of $100 and the
reinvestment of all dividends.
The peer group consists of companies with technology training operations.
Although the businesses of some of these companies include other operations, or
serve markets different than those of Wave, the Company believes the selection
of these companies for comparison purposes is reasonable.
ITC Learning Corporation and TRO Learning, Inc. are included in the peer
group for the entire period of comparison. The other companies in the peer
group, included for less than the full period shown, were added in the Company's
fiscal year during which their stock became publicly traded: CBT Group PLC was
added in the fiscal year ended April 30, 1995 and Computer Learning Centers,
Inc., Learning Tree International, Inc. and Prosoft I-Net Solutions, Inc. were
added in the fiscal year ended April 30, 1996.
COMPARISON OF 56 MONTH CUMULATIVE TOTAL RETURN*
AMONG WAVE TECHNOLOGIES INTERNATIONAL, INC.,
THE RUSSELL 2000 INDEX AND A PEER GROUP
[PERFORMANCE GRAPH APPEARS HERE]
Cumulative Total Return
-------------------------------------------------
8/10/94 4/95 4/96 4/97 4/98 4/99
WAVE TECHNOLOGIES INTERNATIONAL, INC. 100 157 75 82 96 66
PEER GROUP 100 103 261 392 552 186
RUSSELL 2000 100 111 147 147 210 190
*$100 INVESTED ON 8/10/94 IN STOCK OR ON 7/31/94 IN INDEX - INCLUDING
REINVESTMENT OF DIVIDENDS. FISCAL YEAR ENDING APRIL 30.
Summary Compensation Table
The following table sets forth information concerning the annual
compensation during each of the past three fiscal years for services in all
capacities to the Company of the chief executive officer and each other
executive officer of the Company whose annual compensation in fiscal 1999
exceeded $100,000 (the "Named Executive Officers"):
SUMMARY COMPENSATION TABLE
Annual Compensation Long-Term Compensation Awards
- -------------------------------------------------------------- -------------------------------------------------------------
(g)
(e) Securities (i)
(a) (b) (c) (d) Other Annual Underlying All Other
Name and Salary Compensation Options/ Compensation
Principal Position Year ($) Bonus ($) ($) SARs(#) ($)(2)
- -------------------- ---- ------- --------- -------------- ---------- -------------
Kenneth W. Kousky, 1999 233,654 --- --- 110,000 3,075
President and CEO 1998 225,000 --- --- --- 1,385
1997 197,308 10,000 --- --- ---
Richard Baun 1999 73,404 54,373 10,000(1) --- 2,193
Former Executive 1998 78,923 102,040 46,047(1) --- 3,230
Vice President 1997 80,000 --- 126,447(1) 15,000 3,526
Sales and Field
Operations
J. Michael Bowles 1999 115,000 20,000 --- --- 2,500
Chief Financial 1998 101,200 10,000 --- --- 2,500
Officer 1997 100,139 10,000 --- --- ---
David C. Forman 1999 125,000 --- --- --- 2,019
Former Executive 1998 125,000 --- --- --- ---
Vice President 1997 127,030 --- --- --- ---
Training and
Development
John A. Kirkham, 1999 164,920 95,380 56,289(3) --- ---
Executive Vice 1998 164,458 2,143 57,701(3) --- ---
President-International 1997 164,852 32,010 56,021(3) 10,000 ---
Operations
(1) Commissions.
(2) Company matching 401-k contribution.
(3) Car allowance of $14,474 in 1999, $14,837 in 1998 and $14,405 in 1997, and
Company pension contributions of $41,815 in 1999, $42,864 in 1998 and
$41,616 in 1997.
10
Option/Stock Option Grants
The following table provides information concerning stock options granted
to the Names Executive Officers during the fiscal year ended April 30, 1999.
None of the Names Officers has beenj granted stock appreciation rights,
("SARs"), or holds shares of restricted stock which are subject to performance-
based conditions on vesting.
Options/SAR Grants in Fiscal 1999
Potential Realizable
Value at Assumed
Annual Rates of
Stock Price
Appreciation for
Individual Grants Option Term (2)
- -------------------------------------------------------------------------------------------------- ------------------
(a) (b) (c) (d) (e) (g) (h)
Number of
Securities
Underlying Percent of Total
Options Options Granted Exercise or
Granted to Employees in Base Price Expiration
Name (#) Fiscal Year ($/Share) Date 5%($) 10%($)
- ------- ------------ ---------------- ------------ ---------- ----- ------
Kenneth W. Kousky 110,000(1) 48% $3.875 3/22/09 $267,850 $679,250
-------
Totals for Named
Executives 110,000(1)
(1) 12,500 shares vest annually on March 22 of 2000, 2001, 2002 and 2003. An
additional 12,500 shares vest annually on the earlier of (a) March 22 of 2005,
2006, 2007 and 2008, or (b) the date (and the next three anniversary dates
thereof) upon which for twenty consecutive trading days (including any day upon
which the common stock did not trade) the closing price for the common stock on
Nasdaq (or any registered securities exchange on which the common stock is
listed) was $8.00 per share or higher. An additional 12,500 shares vest annually
on the earlier of (a) March 22 of 2005, 2006, 2007, and 2008 or (b) the date
(and the next three anniversary dates thereof) upon which for twenty consecutive
trading days (including any day upon which the common stock did not trade) the
closing price for the common stock on Nasdaq (or any registered securities
exchange on which the common stock is listed) was $11.00 per share or higher.
(2) No gain to the optionees is possible without appreciation in stock price
which will benefit all shareholders commensurately. The dollar amounts under
these columns are the result of calculations at the 5% and 10% assumed rates of
appreciation over ten years (the full term of the options) set by the SEC and
therefore are not intended to forecast possible future appreciation of Wave's
stock price or establish any present value of the options.
Stock Option Exercises in Last Fiscal Year and Fiscal Year End Stock Option
Values
No stock options were exercised by any Named Executive Officer during
fiscal 1999. The following tables provides information concerning unexercised
options held as of the end of fiscal 1999 by the Named Executive Officers.
Aggregated Option/SAR Exercises in Fiscal 1999 and
Fiscal Year-End Option/SAR Values
(a) (b) (c) (d) (e)
Number of Securities Value of Unexercised
Underlying Unexercised In-the-Money Options/SARs
Shares Acquired or Option/SARs at Fiscal at Fiscal Year-End($)
Exercised Value Realized Year-End(#) Exercisable/ Exercisable/
Name (#) ($) Unexercisable Unexercisable
- ------------------- ------------------------- ------------------ ------------------------ -------------------------
Kenneth W. Kousky N/A N/A 1,500/110,000 0*/$82,500
J. Michael Bowles N/A N/A 13,000/--- 0*/N/A
John A. Kirkham N/A N/A 55,500/--- 0*/N/A
*The exercise price was higher than the last sale price of the common stock at
fiscal year-end and thus none of these options were "in-the-money" as of that
date.
Director Compensation
Each director of the Company who is not an employee receives an annual fee
of $10,000 for serving on the Board. All directors receive reimbursement of out-
of-pocket expenses incurred to attend board meetings. Outside directors also
receive annual option grants pursuant to the Outside Directors Stock Option
Plan. Under that Plan, the Company may grant non-qualified options for an
aggregate of up to 40,000 shares of common stock to outside directors. Outside
directors are members of the Board who are not employees or holders of 10% or
more of any class of the Company's stock, or employees or equity holders of any
10% shareholder.
Each outside director then serving is automatically granted, immediately
following each annual meeting of shareholders throughout the term of the
Director Plan, an option to purchase 500 shares of common stock. Each option is
exercisable in whole or in part with respect to all of the shares covered by the
option six months after the grant date. Each option terminates upon the tenth
anniversary of the grant date of such option. The exercise price for shares
subject to options is the fair market value of the common stock on the date the
option is granted.
Compensation Committee Interlocks and Insider Participation
The members of the Compensation Committee during the fiscal year 1999 were
Messrs. Lefton and Torous and Ms. Clark. No member of the Compensation Committee
is an employee or executive officer of the Company. None of the Company's
directors or executive officers is a director or executive officer of any other
company that has a director or executive officer who is also a director of Wave.
Employment Agreements
The Company has entered into an Employment Agreement with John A. Kirkham,
the Company's Executive Vice President-International Operations. Mr. Kirkham
receives a salary set by the Board of Directors (subject to a (Pounds)100,000
minimum), a pension equal to 25% of salary, a monthly car allowance of
(Pounds)750 and such bonuses as the Compensation Committee may determine. Mr.
Kirkham also agrees not to engage in competition with the Company for a period
of twelve months after his employment terminates.
12
The Company also has entered into an Employment Agreement with J. Michael
Bowles, the Company's Chief Financial Officer. Mr. Bowles receives an annual
salary of at least $101,200 and any salary increases or bonuses which the
Compensation Committee of the Board of Directors may determine. If Mr. Bowles'
employment is terminated (as defined in his employment agreement) within a year
following a change of control of the Company, for reasons other than his own
wrongful conduct, he will be entitled to a lump-sum payment equal to eighteen
months of his salary and continued participation in employee benefits for a one
year period. Mr. Bowles has also agreed not to engage in competition with the
Company during and for a period of twelve months following his employment with
the Company.
Stock Option Plans
In 1993, the Company's shareholders adopted a stock option plan for
employees. As amended in 1994, non-qualified options to purchase up to 390,000
shares may be granted under the plan (the "1993 Plan"). As of April 30, 1999,
options for 203,266 shares had been issued and remained outstanding under the
1993 Plan. The 1993 Plan will expire on, and no options may be granted after,
the tenth anniversary of the initial adoption of the 1993 Plan.
The Board of Directors of the Company adopted the Company's 1995 Stock
Option Plan (the "1995 Plan"), and shareholders approved the 1995 Plan at their
1995 Annual Meeting. Pursuant to the 1995 Plan, the Company may grant options
with respect to an aggregate of up to 200,000 shares of common stock. The
maximum number of shares for which options may be granted to a single optionee
under the 1995 Plan is 25,000. Options granted pursuant to the 1995 Plan may be
either incentive stock options or non-qualified stock options. As of April 30,
1999, options for 164,709 shares had been issued and remain outstanding under
the 1995 Plan.
In 1997, the Company's shareholders adopted the Company's 1997 Stock Option
Plan (the "1997 Plan"). Pursuant to the 1997 Plan, the Company may grant options
with respect to an aggregate of up to 400,000 shares of common stock. The
maximum number of shares for which options may be granted to a single optionee
under the 1997 Plan in any calendar year is 50,000. Options granted pursuant to
the 1997 Plan may be either incentive stock options or non-qualified stock
options. As of April 30, 1999, options for 50,000 shares had been issued and
remained outstanding under the 1997 Plan.
PROPOSAL NO. 2:
APPOINTMENT OF AUDITORS
The Company has engaged Deloitte & Touche, LLP, as independent certified
public accountants to audit the Company's financial statements for the fiscal
years 1994 through 1999, and the Board of Directors has appointed Deloitte &
Touche, LLP as independent auditors for fiscal 2000. This appointment was
recommended to the Board by its Audit Committee. The submission of this matter
to shareholders is not required by law or by the Company's Bylaws. The Board of
Directors is, nevertheless, submitting it to the shareholders to ascertain their
views. If this appointment is not ratified at the Annual Meeting, the Board of
Directors intends to reconsider its appointment of Deloitte & Touche, LLP as
independent auditors.
It is expected that a representative of Deloitte & Touche, LLP, will be
present at the Annual Meeting with the opportunity to make a statement if he
desires to do so and will be available to respond to appropriate questions.
13
THE BOARD OF DIRECTORS RECOMMENDS THAT THE ACCOMPANYING PROXY BE VOTED IN
FAVOR OF SUCH APPOINTMENT. A favorable vote of a majority of the shares present
at the meeting in person or by proxy is required for approval.
VOTING PROCEDURES
A list of the Company's shareholders as of the record date for the meeting
will be available for examination by any shareholder, for purposes germane to
the meeting, during ordinary business hours, for ten days prior to the date of
the meeting at the offices of the Company.
All shares represented by the accompanying proxy given prior to the meeting
will be voted in the manner specified therein. Proxy cards returned without
specification will be voted in accordance with the recommendations of the Board
of Directors. The shares of shareholders who have properly withheld authority to
vote for the nominees proposed by the Board of Directors (including broker non-
votes) will not be counted toward achieving a majority. As to any matters which
may come before the meeting other than those specified above, the proxy holders
will be entitled to exercise discretionary authority. A majority of the shares
of the outstanding common stock present in person or represented by proxy will
constitute a quorum at the Annual Meeting.
Each shareholder has one vote for each share of stock entitled to vote
under the provisions of the Articles of Incorporation which is registered in the
shareholder's name on the books of the Company. In all elections of directors or
a class of directors of the Company, each share of stock entitled to vote shall
be entitled to one vote as to each director to be elected by the holders thereof
and no shareholder shall have the right to cumulate votes for the election of
any director. All elections for directors and all other matters shall be
determined by a majority of the votes cast, except as to matters where the law
or the Articles of Incorporation require a greater vote. Any shareholder who is
in attendance at a meeting of the shareholders either in person or by proxy, but
who abstains from voting on any matter, shall not be deemed present or
represented at such meeting for purposes of election of directors or any other
matter with respect to such vote, but shall be deemed present or represented for
all other purposes.
Shares standing in the names of two or more persons shall be voted or
represented in accordance with the vote or consent of a majority of the persons
in whose names the shares are registered. If only one such person is present in
person or by proxy, he or she may vote all of the shares, and all of the shares
standing in the names of such persons shall be deemed represented for purposes
of determining a quorum. The foregoing provisions shall also apply to shares
held by two or more personal representatives, trustees, or other fiduciaries
unless the instrument or order appointing them otherwise directs. With respect
to broker non-votes, the shares are not considered present at the meeting for
the particular matter as to which the broker withheld its vote. Consequently,
broker non-votes are not counted in respect to the matter, but they do have the
practical effect of reducing the number of affirmative votes required to achieve
a majority by reducing the total number of shares from which the majority is
calculated.
PROPOSALS OF SHAREHOLDERS
Proposals of shareholders intended to be presented at the next Annual
Meeting of Shareholders must be received by the Company no later than April 11,
2000, to be considered for inclusion in the Company's Proxy Statement relating
to that meeting. The Company's Bylaws provide that any nomination for director
or any other shareholder proposal for presentation at an annual meeting must be
made by proper notice, to be properly brought before the meeting. Proper notice
must include the information specified in the Bylaws and must be received by the
Secretary of the Company at the Company's principal office not less than 120
days and not more
14
than 180 days prior to the anniversary of the prior year's annual meeting of
shareholders. Any such proposal also must be made in accordance with applicable
laws and the rules of the Securities and Exchange Commission. Such proposals
should be addressed to Secretary, Wave Technologies International, Inc., 10845
Olive Boulevard, Suite 250, St. Louis, Missouri 63141.
OTHER MATTERS
The Board of Directors knows of no other matters that will be presented for
consideration at the Annual Meeting. If any other matters are properly brought
before the meeting, it is the intention of the persons named in the accompanying
proxy to vote on such matters in accordance with their best judgement.
A copy of the Company's Annual Report on Form 10-K for fiscal 1999 is
enclosed. Copies of exhibits to the Form 10-K will be furnished to stockholders
without charge, upon request directed to the Secretary of the Company, 10845
Olive Boulevard, Suite 250, St. Louis, Missouri 63141.
15
PROXY
THIS PROXY IS SOLICITED ON BEHALF OF THE BOARD OF DIRECTORS OF
WAVE TECHNOLOGIES INTERNATIONAL, INC.
Annual Meeting September 8, 1999
The undersigned shareholder of Wave Technologies International, Inc., a
Missouri corporation, appoints HARVEY L. LEEMON and STEVEN R. RYGELSKI or either
of them, with full power to act alone, the true and lawful attorneys-in-fact of
the undersigned, with full power of substitution and revocation, to vote all
shares of stock of said Corporation which the undersigned is entitled to vote at
the annual meeting of its shareholders to be held at 10845 Olive Boulevard, St.
Louis, Missouri 63141 on September 8, 1999, at 9:30 a.m., and at any adjournment
thereof, with all powers the undersigned would possess if personally present as
follows:
Please mark
your vote as [_]
indicated in
this example
The Board of Directors recommends a vote "FOR" Items 1 and 2
Item 1--ELECTION OF DIRECTOR FOR WITHHOLD
[_] [_]
Item 2--Appointment of Independent Auditors FOR AGAINST ABSTAIN
[_] [_] [_]
Nominees: Raymond J. Kalinowski
In their discretion, the proxies are authorized to vote upon such other
business as may properly come before the meeting, or any adjournment
thereof. If no instruction to the contrary is indicated, this proxy will
be voted "FOR" items 1 and 2. If any other business is presented at the
meeting, this proxy will be voted in accordance with the recommendation of
management.
Signature_________________________________________________Date__________________
Please sign name or names as appearing on this form. If signing as a
representative, please include capacity.