1
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 Section 240.14a-11(c) or Section
240.14a-12
- --------------------------------------------------------------------------------
GENICOM CORPORATION
(Name of Registrant as Specified In Its Charter)
- --------------------------------------------------------------------------------
Payment of Filing Fee (Check the appropriate box):
[X] No fee required
[ ] $125 per Exchange Act Rules 0-11(c)(1)(ii), 14a-6(i)(1), 14a-6(i)(2) or
Item 22(a)(2) of Schedule 14A
[ ] 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 by written preliminary materials.
[ ] Check box if any part of the fee is offset as provided by Exchange Act
Rule 0-11 (a)(2) and identify the filing for which the offsetting fee was paid
previously. Identify the previous filing by registration statement number, or
the Form or Schedule and the date of its filing.
1) Amount Previously Paid:
-------------------------------------------------------------------------
2) Form, Schedule or Registration Statement No.:
-------------------------------------------------------------------------
3) Filing Party:
-------------------------------------------------------------------------
4) Date Filed:
-------------------------------------------------------------------------
2
GENICOM CORPORATION
14800 CONFERENCE CENTER DRIVE, SUITE 400, WESTFIELDS
CHANTILLY, VIRGINIA 20151
NOTICE OF ANNUAL MEETING OF STOCKHOLDERS
TO BE HELD WEDNESDAY, MAY 19, 1999
TO THE HOLDERS OF GENICOM CORPORATION COMMON STOCK:
The annual meeting of stockholders of GENICOM Corporation (the "Company") will
be held at the Company's headquarters, 14800 Conference Center Drive, Suite
400, Westfields, Chantilly, Virginia 20151 on May 19, 1999 at 2:00 P.M. Eastern
Daylight Time, for the following purposes:
1. To elect four directors for a one-year term;
2. To consider and vote upon an amendment to the Company's 1997 Stock Option
Plan to increase the number of shares of Common Stock issuable under the
Plan by 600,000 shares;
3. To ratify the selection of PricewaterhouseCoopers L.L.P. as the Company's
independent certified public accountants for fiscal year 1999; and
4. To transact such other business as may properly come before the meeting
and any adjournments thereof.
Only stockholders of record at the close of business on March 29, 1999 are
entitled to notice of, and to vote at, the meeting and any adjournments
thereof.
Whether or not you expect to attend the meeting, please sign, date and return
promptly the enclosed proxy. The proxy is revocable and you may vote your
shares in person if you attend the meeting and wish to do so.
Your attention is directed to the accompanying proxy statement.
You are cordially invited to attend the meeting,
By Order of the Board of Directors
/s/ Robert L. Burrus
April 9, 1999 Robert L. Burrus, Jr., Secretary
3
GENICOM CORPORATION
14800 CONFERENCE CENTER DRIVE, SUITE 400, WESTFIELDS
CHANTILLY, VIRGINIA 20151
PROXY STATEMENT
GENERAL INFORMATION
This Proxy Statement is furnished in connection with the solicitation of
proxies by the Board of Directors of GENICOM Corporation, a Delaware
corporation (the "Company"), from the holders of the Company's common stock for
use at the annual meeting of stockholders to be held on May 19, 1999, and at
any adjournments thereof (the "Annual Meeting"). This Proxy Statement and the
accompanying form of proxy are being sent or given to stockholders on or about
April 9, 1999. A copy of the Company's Form 10-K as filed with the Securities
and Exchange Commission for the fiscal year ended January 3, 1999, is being
mailed with this Proxy Statement.
In addition to the solicitation of proxies by mail, the Company's officers and
regular employees, without compensation other than their regular compensation,
may solicit proxies by telephone, facsimile, telegraph and personal interview.
The Company will bear the cost of all solicitation.
On March 29, 1999, the date for determining stockholders entitled to vote at
the meeting, there were 11,609,083 shares of the Company's common stock (the
"Common Stock") outstanding and entitled to vote. Each such share of Common
Stock entitles the holder thereof to one vote at the Annual Meeting.
The presence of holders of the majority of the issued and outstanding stock of
the Company, in person or by properly executed proxies, is required to
constitute a quorum to transact business at the Annual Meeting. Abstentions,
votes withheld in the election of directors and broker non-votes are counted as
present for purposes of determining a quorum.
The directors shall be elected by a plurality of the votes cast by the holders
of Common Stock entitled to vote at the Annual Meeting, if a quorum is present.
With regard to the election of directors, stockholders may vote in favor of all
nominees, withhold their votes as to all nominees or withhold their votes as to
specific nominees. Votes withheld and broker non-votes will have no effect on
the outcome of the election of directors. Approval of the other proposals shall
be decided by majority vote of the shares of Common Stock entitled to vote held
by stockholders present in person or by proxy. With respect to the proposals
to increase the number of shares of Common Stock issuable under the 1997 Stock
Option Plan by 600,000 shares, and to ratify the selection of
PricewaterhouseCoopers L.L.P. as the Company's independent accountants for the
current year, stockholders may vote in favor of or against these proposals, or
may abstain from voting. Abstentions will be counted as votes against in
tabulations of the votes cast on these proposals, whereas broker non-votes will
not be counted for purposes of determining whether a proposal has been
approved.
Stockholders should specify their choices on the enclosed form of proxy card.
If no specific instructions are given with respect to the matters to be acted
upon, the shares represented by a properly signed proxy card will be voted FOR
the election of all nominees for the office of director, FOR the amendment to
increase the number of shares of Common Stock issuable under the Company's 1997
Stock Option Plan, and FOR ratification of the appointment of
PricewaterhouseCoopers L.L.P. as the Company's independent accountants.
A stockholder who has returned a proxy may revoke it at any time before it is
voted at the Annual Meeting. Proxies may be revoked by filing with the
Secretary of the Company written notice of revocation bearing a later date than
the proxy, by duly executing a later dated proxy relating to the same shares of
Common Stock or by attending the Annual Meeting and voting in person (although
attendance at the annual meeting will not in and of itself constitute
revocation of a proxy). Any written notice revoking a proxy should be sent to
Secretary, GENICOM Corporation, c/o McGuire Woods Battle & Boothe LLP, One
James Center, 901 East Cary Street, Richmond, Virginia 23219-4030, Attention:
Robert L. Burrus, Jr., Esquire.
4
PRINCIPAL STOCKHOLDERS OF THE COMPANY
The following table sets forth information as of February 26, 1999, with
respect to the ownership of shares of Common Stock by all persons known by the
Company to be beneficial owners of more than 5% of the Company's outstanding
Common Stock, each director of the Company, the named executive officers, and
directors and executive officers of the Company as a group.
NAME AND ADDRESS OF BENEFICIAL OWNER STOCK BENEFICIALLY OWNED (1) PERCENTAGE OF CLASS
- ------------------------------------ ---------------------------- -------------------
Piedmont Capital Management Corporation 1,634,800 12.9%
One James Center, Suite 1500
Richmond, Virginia 23219
Kenneth B. Funsten (2) 8 48,500 6.7%
121 Outrigger Mall
Marina del Rey, CA 90292
GE Fund 773,640 6.1%
3135 Easton Turnpike
Fairfield, Connecticut 06431
Dimensional Fund Advisors Inc. (3) 739,600 5.8%
1299 Ocean Avenue, 11th Floor
Santa Monica, California 90401
Skyline Asset Management, L.P. 718,200 5.7%
311 South Wacker Drive, Suite 4500
Chicago, IL 60606
Don E. Ackerman (5) 300,386 2.4%
John G. Hill (6) 12,000 *
Paul T. Winn (7) 553,000 4.4%
James C. Gale (8) 93,241 *
Michel P. Du Rang (11) 8,373 *
Harold L. McIlroy (9) 42,182 *
B. Garrett Buttner (10) 59,318 *
All directors and officers as a group (12) 1,207,241 9.5%
[10 persons]
* Indicates beneficial ownership less than 1.0%
(1) Unless otherwise noted, each beneficial owner has sole voting power and
sole investment power with respect to the securities beneficially owned.
3
5
(2) Based solely on our review of his Form 13G, Kenneth B. Funsten, in his
capacity as an investment advisor and/or general partner for a number of
private investment vehicles, including 520,000 shares held by FamCO Value
Income Partners, L.P. is deemed to have beneficial ownership of 848,500
shares of GENICOM Corporation stock as of January 3, 1999. Mr. Funsten
disclaims beneficial ownership of any shares held by him indirectly
through such investment vehicle.
(3) Based solely on our review of their Form 13G, Dimensional Fund Advisors,
Inc. ("Dimensional"), a registered investment advisor, is deemed to have
beneficial ownership of 739,600 shares of GENICOM Corporation stock as of
January 3, 1999, all of which shares are held in portfolios of DFA
Investment Dimensions Group, Inc., a registered open-end investment
company, or in series of the DFA Investment Trust Company, a Delaware
business trust, or the DFA Group Trust and DFA Participation Group Trust,
investment vehicles for qualified employee benefit plans, all of which
Dimensional serves as investment manager. Dimensional disclaims
beneficial ownership of all such shares.
(4) Based solely on our review of their Form 13G, Skyline Asset Management,
L.P. ("Skyline"), a registered investment advisor, is deemed to have
beneficial ownership of 718,200 shares of GENICOM Corporation stock as of
January 3, 1999. Skyline disclaims beneficial ownership of all such
shares.
(5) Stock beneficially owned by Mr. Ackerman includes 4,000 options
exercisable within 60 days.
(6) Stock beneficially owned by Mr. Hill includes 2,000 options exercisable
within 60 days.
(7) Stock beneficially owned by Mr. Winn includes 497,000 options exercisable
within 60 days.
(8) Stock beneficially owned by Mr. Gale includes 83,241 options exercisable
within 60 days.
(9) Stock beneficially owned by Mr. McIlroy includes 42,182 options
exercisable within 60 days.
(10) Stock beneficially owned by Mr. Buttner includes 54,318 options
exercisable within 60 days.
(11) Stock beneficially owned by Mr. Du Rang consists solely of options
exercisable within 60 days.
(12) Stock beneficially owned includes 813,155 options exercisable within 60
days.
ELECTION OF DIRECTORS
The terms of Messrs. Don E. Ackerman, John G. Hill, Abraham Ostrovsky, and Paul
T. Winn as directors of the Company will expire at the time of the 1999 Annual
Meeting. The Company proposes the re-election of Messrs. Ackerman, Winn,
Ostrovsky, and Hill for a term ending at the 2000 Annual Meeting.
Although all of the nominees have indicated their willingness to serve if
elected, if at the time of the meeting any nominee is unable or unwilling to
serve, shares represented by properly executed proxies will be voted at the
discretion of the persons named therein for such other person as the Board of
Directors may designate.
DON E. ACKERMAN, 65, Chairman of the Board of Directors and a director since
the Company was founded in 1983, is currently the President of Chandelle
Ventures, Inc., a private investment company. Mr. Ackerman serves as a
director of Schlumberger Ltd.
JOHN G. HILL, 58, a director of the Company since his appointment by the Board
in January 1998, has been a general partner of Hill Carman Ventures since it
was founded in 1981. Hill Carman Ventures is a venture capital investment
firm. Mr. Hill serves as a director of SCC Communication, Inc.
4
6
ABRAHAM OSTROVSKY, 56, a director of the Company since his appointment by the
Board on March 31, 1999, is Chairman of JetForm Corporation. Mr. Ostrovsky
joined JetForm in 1991 as Chief Operating Officer and became Chief Executive
Officer in 1992. He resigned as CEO in December 1995. Since that time Mr.
Ostrovsky joined Compressent as Chairman and CEO in March 1996. He resigned
both positions with Compressent in December 1997.
PAUL T. WINN, 54, President and Chief Executive Officer of the Company since
his employment with Genicom in April 1990, has been a director since May 1990.
Mr. Winn resigned as a director of Indigo NV in 1998.
CERTAIN INFORMATION CONCERNING THE
BOARD OF DIRECTORS AND ITS COMMITTEES
The Board of Directors held 8 meetings during the fiscal year ended January 3,
1999. All of the members of the Board of Directors who were directors during
the 1998 fiscal year attended 100% of the Board of Directors meetings plus
meetings of committees of which they were members. In addition, the Board of
Directors took action by unanimous consent on numerous occasions during the
fiscal year ended January 3, 1999.
The Board of Directors has an Audit Committee which is responsible for
reviewing the adequacy of the Company's internal accounting controls, as well
as the independent auditors' proposed audit scope, conducting a post-audit
review of the audit findings and the Company's financial statements and
performing other oversight functions as requested by the Board of Directors.
During the 1998 fiscal year, the Audit Committee, which was composed of Messrs.
Ackerman and Hill, held 1 meeting.
During the 1998 fiscal year, the Board of Directors did not have a nominating
committee or a compensation committee. Matters normally considered by such
committees were handled by the full Board of Directors.
For the 1998 fiscal year, the Chairman of the Board of Directors received
annual compensation of $65,000. For the 1999 fiscal year, the Chairman will
not receive annual compensation. For the 1998 fiscal year, directors who were
not employees of the Company received annual compensation of $20,000. For the
1999 fiscal year, directors who are not employees of the Company will receive
annual compensation of $20,000. Non-employee directors have also received
stock option grants from time to time consistent with the Non-Employee
Directors Stock Option Plan. Mr. Hill was granted an option to purchase 10,000
shares at the time of his appointment to the Board and another option for
10,000 shares in December 1998. Mr. Ackerman also received an option grant of
10,000 shares in December. Mr. Ostrovsky received a option grant for 10,000
shares at the time of his appointment to the Board. The exercise price of all
options granted to non-employee members of the Board has been the fair market
value of the Common Stock at the date of the grant of the option. Options
granted to directors generally vest over three to five years, although vesting
may be accelerated by the Board in the event of a change in the control of the
Company.
EXECUTIVE COMPENSATION
SUMMARY COMPENSATION TABLE
The Summary Compensation Table on page 6 reports the compensation for the past
three years of the Company's Chief Executive Officer ("CEO"), and the Company's
four most highly compensated executives other than the Chief Executive Officer
("named executive officers"), who were serving as executives at the end of the
l998 fiscal year.
5
7
SUMMARY COMPENSATION TABLE
LONG TERM COMPENSATION
------------------------------------------
ANNUAL COMPENSATION AWARDS PAYOUTS
----------------------------------------------------------------------------------------
Other
Name Annual Restricted All Other
And Compen- Stock LTIP Compen-
Principal sation Award(s) Options/ Payouts sation
Position Year Salary ($) Bonus ($)(a) ($)(b) ($) SARs(#) ($) ($)(c)
- ------------------------------------------------------------------------------------------------------------------------------------
P. T. WINN 1998 398,154 359,000 16,522 60,000 502,148
President and 1997 340,000 329,000 16,196 120,000 45,120
CEO 1996 333,269 0 16,426 20,000 88,705
J. C. GALE 1998 210,061 38,300 17,241 40,000 12,150
Sr. V-Pres 1997 191,500 113,300 11,606 15,000 12,150
Finance and CFO 1996 188,808 0 17,537 13,160 9,646
M. D. DU RANG (d)(e) 1998 190,944 0 1,969 18,715 6,562
V-Pres and Gen Mgr. 1997 182,524 14,509 1,860 8,000 3,327
Intl. Subsidiaries 1996 51,447 0 6,417 10,000 15,158
B. G. BUTTNER 1998 130,000 42,949 16,513 8,863 5,710
V-Pres and Gen Mgr. 1997 130,000 29,500 17,316 5,000 5,119
Annuities 1996 130,000 0 16,826 3,000 5,119
H. L. MCILROY 1998 141,538 16,250 17,049 28,863 2,948
COO - Document 1997 130,000 16,250 11,192 10,000 6,390
Solutions company 1996 127,450 14,010 10,337 13,160 109,151
(a) Bonus amounts include: Mr. Winn: 1998 - $119,000 management award earned
in 1997 and paid in 1998 and $240,000 special award earned in 1997 and
paid in 1998; 1997 - $119,000 1997 incentive compensation and $210,000
1997 special award; Mr. Gale: 1998 - $38,300 management award earned in
1997 and paid in 1998; 1997 - $38,300 1997 incentive compensation and
$75,000 1997 special award; Mr. Du Rang: 1997 - $14,509 1997 performance
bonus; Mr. Buttner: 1998 - $26,500 performance bonus earned in 1997 and
paid in 1998 and $16,449 1998 performance bonus; 1997 - $19,500 1997
performance bonus and $10,000 1997 special award; Mr. McIlroy: 1998 -
$16,250 management award earned in 1997 and paid in 1998; 1997 - $16,250
1997 incentive compensation; 1996 - $14,010 incentive compensation earned
in 1995 and paid in 1996.
(b) Includes for Mr. Winn: $9,228 for auto allowance in 1998 and 1997 and
$7,294 and $5,799 for other travel in 1998 and 1997, respectively.
Includes for Mr. Gale: $9,228 for auto allowance in 1998 and 1997 and
$8,013 for other travel in 1998. Includes for Mr. Du Rang: $1,969 and
$1,860 for auto allowance in 1998 and 1997, respectively. Includes for Mr.
Buttner: $9,228 for auto allowance in 1998 and 1997 and $7,285 and $5,799
for other travel in 1998 and 1997, respectively. Includes for Mr. McIlroy:
$9,228 for auto allowance in 1998 and 1997 and $7,821 and $1,964 for other
travel in 1998 and 1997, respectively.
(c) Includes for Mr. Winn: $37,751, $35,724 and $79,059 for temporary living
expenses in 1998, 1997 and 1996, respectively, $4,896 for life insurance
premiums in 1998, 1997 and 1996, respectively, $4,500, $4,500, and $4,750
for 401(k) matching contributions in 1998, 1997 and 1996, respectively,
and $455,000 which was accrued for Mr. Winn's supplemental retirement plan
in 1998. Includes for Mr. Gale: $7,649, $7,650 and $4,896 for life
insurance premiums in 1998, 1997 and 1996, respectively and $4,500, $4,500
and $4,750 for 401(k) matching contributions in 1998, 1997 and 1996,
respectively. Includes for Mr. Du Rang: $6,562, $3,327 and $15,158 for
insurance premiums in 1998, 1997 and 1996, respectively. Includes for Mr.
Buttner: $1,210, $731 and $731 for life insurance premiums in 1998, 1997
and 1996 and $4,500, $4,388 and $4,388 for 401(k) matching contributions
in 1998, 1997 and 1996, respectively.
6
8
Includes for Mr. McIlroy: $102,485 for relocation expenses in 1996,
$2,948, $1,890 and $1,916 for life insurance premiums in 1998, 1997 and
1996 and $4,388, $4,500 and $4,750 for 401(k) matching contributions in
1998, 1997 and 1996, respectively.
(d) Mr. Du Rang joined Genicom in October 1996.
(e) In translating 1998 compensation for Mr. Du Rang an average exchange rate
of .027583 per Belgian Franc was used. In translating 1997 compensation
for Mr. Du Rang from local currency to US dollars, the following average
exchange rates were used: Belgian Franc: .02797, Italian Lira: .000587,
British Pound: 1.6452. The following exchange rate was used to compute
Mr. Du Rang's 1996 compensation: Belgian Franc: .0317.
OPTION/SAR GRANTS TABLE
The Company has in effect the 1997 Stock Option Plan pursuant to which options
to purchase Common Stock of the Company may be granted to officers and other
key employees of the Company and its subsidiaries. The table below shows stock
option grants during the 1998 fiscal year to the CEO and the named executive
officers. Unless otherwise noted, all of the stock option grants were
non-statutory.
OPTION/SAR GRANTS IN LAST FISCAL YEAR
Potential Realizable Value
at Assumed Annual Rates of
Stock Price Appreciation
Individual Grants for Option Term ($)
---------------------------------------------------------------------------------------------
Number of
Securities % of Total
Underlying Options/SARs
Options/ Granted to Exercise or Market
SARs Employees Base Price Price Expiration
Name Granted(a) in Fiscal Year ($/Sh) ($/Sh) Date 0% 5% 10%
- -------------------------------------------------------------------------------------------------------------
P. T. WINN 60,000 8.18% 2.281 2.281 12-14-2008 0 86,070 218,119
J. C. GALE 9,227 1.26% 7.875 7.875 1-26-2008 0 45,697 115,805
J. C. GALE 10,773 1.47% 8.625 8.625 5-19-2008 0 58,435 148,086
J. C. GALE 20,000 2.72% 2.281 2.281 12-14-2008 0 28,690 72,706
M.P. DU RANG 5,866 .80% 7.875 7.875 1-26-2008 0 29,051 73,622
M.P. DU RANG 6,849 .93% 8.625 8.625 5-19-2008 0 37,150 94,146
M.P. DU RANG 6,000 .82% 2.281 2.281 12-14-2008 0 8,607 21,812
B.G. BUTTNER 4,089 .55% 7.875 7.875 1-26-2008 0 20,251 51,320
B.G. BUTTNER 4,774 .65% 8.625 8.625 5-19-2008 0 25,895 65,623
H.L. MCILROY 4,089 .55% 7.875 7.875 1-26-2008 0 20,251 51,320
H.L. MCILROY 4,774 .65% 8.625 8.625 5-19-2008 0 25,895 65,623
H.L. MCILROY 20,000 02.72% 2.281 2.281 12-14-2008 0 28,690 72,706
(a) The options vest at a 20% annual rate beginning one year after the grant
date.
7
9
AGGREGATED OPTION/SAR EXERCISES AND FISCAL YEAR-END OPTION/SAR VALUE TABLE
The table below shows information concerning the fiscal year-end value of
unexercised options held by the named executive officers.
AGGREGATED OPTION/SAR EXERCISES IN LAST FY AND FY-END OPTION/SAR VALUES
Number of
Securities Value of
Underlying Unexercised
Unexercised In-The-Money
Options/SARs at Options/SARs at
FY-End (#) FY-End ($)(a)
Shares Acquired Exercisable/ Exercisable/
Name on Exercise (#) Value Realized ($) Unexercisable Unexercisable
- ---------------------------------------------------------------------------------------------------------
P. T. WINN 0 0 452,000/198,000 497,000/198,000
J. C. GALE 0 0 72,264/66,896 83,241/3,283
M. P. DU RANG 0 0 3,600/33,226 8,373/0
B. G. BUTTNER 0 0 46,100/22,263 54,318/6,564
H. L. MCILROY 0 0 31,932/51,359 42,182/5,345
(a) Based on fair market value of $2.219 per share at fiscal year end.
EMPLOYMENT CONTRACTS AND CHANGE IN CONTROL ARRANGEMENTS
The Company has an employment agreement with Mr. Winn, the President and CEO.
Upon termination without cause, the Company will pay Mr. Winn the then existing
base salary and benefits until the earlier of twenty-four months or the date of
his employment with another entity. In the event Mr. Winn becomes employed
prior to the end of the twenty-four month severance period, the Company will
pay 25% of the remaining unpaid monthly payments in final settlement and
benefits would cease. In 1998, a Supplemental Retirement Plan was approved for
Mr. Winn by the Board of Directors. Benefits are payable when Mr. Winn becomes
55, if there is a change in control of the Company or on a basis comparable to
his employment contract should he be terminated.
The named executive officers have been granted options under the Company's
stock option plans. These plans include a provision accelerating
exercisability of the options in the event the Company terminates the officer's
employment within 13 months following a change of control in the Company. The
same provision applies if the officer leaves the Company during this time
period following a reduction in compensation or responsibilities.
8
10
COMPENSATION REPORT OF THE BOARD OF DIRECTORS
The Board of Directors (the "Board") is currently responsible for setting
overall policies that govern the Company's compensation programs, administering
the Company's stock option plans and incentive compensation plans, and
establishing the cash compensation and special benefits of executive officers.
The Board's philosophy regarding executive compensation seeks to align
executive compensation with the Company objectives, business strategy,
management initiatives, business financial performance and the competitive
market for executive talent in the Company's industry. To implement this
philosophy, the focus is on the following goals and objectives:
- - To attract and retain key executives critical to the long-term success of
the Company and each of its business units.
- - To reward executives for long-term strategic management and the enhancement
of stockholder value.
- - To integrate compensation programs with both the Company's annual and
long-term strategic planning processes.
- - To provide a performance-oriented environment that rewards performance,
not only with respect to Company goals, but also Company performance as
compared to industry performance.
ANNUAL COMPENSATION
The annual executive compensation program consists of salary, management
awards, incentive awards and officer perquisites. The Board determines salary
ranges for executive officers based on surveys of salary data regarding similar
positions held by executives in similar-sized companies in the information
technology industry (although some of those companies may not be included in
the Computers, Subsystems and Peripherals Industry Group referred to in the
Performance Graph). The Board intends for salaries to remain at or near the
industry median. Actual salary changes are primarily based upon individual
performance, Company financial performance and the survey of salary data.
Adjusting for market changes, some executive salaries were raised in fiscal
year 1998.
The Board has authorized the CEO to pay special management awards to, among
others, executive officers to reward notable achievements that contribute to
significant improvements in quality, productivity, customer service, cost
control, or the work environment. During 1998, a total of $480,937 in such
awards were paid to 198 employees.
The Company also provides annual compensation to its employees through the
GENICOM Retirement Savings Plan ("Savings Plan"), which is qualified under
Section 401(k) of the Internal Revenue Code. The Company, at its option, may
contribute an amount approximating $.50 for each $1.00 contributed by
participants to the Savings Plan, up to 6% of the participant's annual salary
(or a maximum of $9,000).
INCENTIVE COMPENSATION
In fiscal year 1998, the Company adopted an Incentive Compensation Plan ("IC
Plan"). Similar plans have been used by the Company for many years. Under the
IC Plan, the Board reviews and approves the participation of executive officers
and key employees. Payments are contingent upon the Company's substantial
achievement of certain corporate performance criteria. If these objectives are
met, the payment is determined by the achievement of a combination of corporate
goals and specific functional objectives. Corporate goals are weighted at 70%
of the aforementioned combination, while functional objectives comprise 30%.
Corporate goals focus on the Company's sales, net income, working capital
investment
9
11
and debt levels, while the functional objectives vary depending on the
officer's position. The Board approves these criteria each year.
The IC Plan is funded from a pre-set portion of the Company's pre-tax net
income. The Board approves the IC Plan award value each year as a percentage
of base salary. Each participant, depending on position, could potentially
receive an award equal to a percentage of salary ranging from 15% all the way
up to 80%, in the case of the CEO. The Board has broad authority to alter the
manner in which payments are made in any given year, based on performance. The
Board did not authorize any payments relating to the Company's IC Plan during
1998.
LONG TERM INCENTIVE COMPENSATION
Under the 1997 Stock Option Plan, the Board grants stock options from time to
time with the objective of aligning executive officers' long-range interests
with those of the stockholders. Management makes recommendations to the Board
regarding the number of stock options awarded and to whom the stock options are
given. Management considers the amount and terms of the options already held
by the executive officer. Management's methodology in making recommendations
is not based on specific criteria. Instead, its goal is to achieve the
retention of key employees by providing them with the opportunity to, over
time, receive significant additional compensation if the value of the Company's
Common Stock increases. The Board believes that the 1997 Stock Option Plan
encourages superior performance that can result in significantly enhanced
stockholder value.
CHIEF EXECUTIVE OFFICER COMPENSATION
The Board determined the CEO's compensation for fiscal year 1998. The CEO's
salary was primarily based upon the Company's financial performance and, to a
lesser extent, salary surveys of CEOs employed by companies with comparable
sales and upon the Board of Directors' review of the CEO's performance. Due to
the Company's performance and competitive market changes in 1997, the Board
increased the CEO's salary in 1998.
The CEO was paid $359,000 in fiscal year 1998 for certain 1997 awards. This
payment related to a 1997 management award of $119,000 and a 1997 special award
of $240,000.
The Board grants stock options to the CEO from time to time under the Company's
1997 Stock Option Plan in order to promote long-term retention and to balance
the risk/reward element of the position. In determining the number of stock
options to be awarded in fiscal year 1998, the Board considered the amount
concurrently awarded to the Company's other officers and the performance of the
CEO. In addition, the Board considered the number and potential value of
unvested options held by the CEO and the extent to which these unvested options
provide an appropriate incentive to the CEO to remain in the Company's employ.
In December 1998, the Board granted the CEO an option to purchase 60,000 shares
of Common Stock.
10
12
DEDUCTIBILITY OF COMPENSATION
Section 162(m) of the Internal Revenue Code of 1986 places a $1 million per
person limitation on the tax deduction the Company may take for compensation
paid to its Chief Executive Officer and its four other highest paid employees
unless, in general, the compensation constitutes performance-based compensation
as defined by the Internal Revenue Code. To the extent that any future Company
compensation might exceed this limitation, it is expected that such case would
represent isolated, nonrecurring situations arising from special circumstances.
The Board expects to take actions in the future that may be necessary to
preserve the deductibility of executive compensation to the extent possible.
BOARD OF DIRECTORS
Don E. Ackerman, Chairman
John G. Hill
Abraham Ostrovsky
Paul T. Winn
PERFORMANCE GRAPH
Set forth on page 12 is a line graph comparing the cumulative total stockholder
return on the Company's Common Stock, based on the market price of the Common
Stock and assuming reinvestment of dividends, with the cumulative total return
of companies on the National Association of Securities Dealers Automated
Quotations ("NASDAQ") Stock Index and the Computers, Subsystems and Peripherals
Industry Group created by Media General Financial Services, Inc.
11
13
Comparison of Five-Year Cumulative Return
Among GENICOM Corporation,
NASDAQ Stock Index and the
Computers, Subsystems and Peripherals Industry Group
Measurement Period Computers, Subsystems
------------------ and Peripherals
(Fiscal Year Covered) GENICOM Corporation NASDAQ Stock Index Industry Group
--------------------- ------------------- ------------------ --------------
Measurement Point 12/31/93 100 100 100
FYE 12/31/94 200.00 104.99 104.94
FYE 12/30/95 410.00 136.18 97.49
FYE 12/29/96 300.00 169.23 97.13
FYE 12/31/97 920.00 207.00 115.07
FYE 12/31/98 177.50 291.96 143.67
12
14
CERTAIN TRANSACTIONS
OFFICERS. On August 26, 1996, the Company extended Mr. Winn a loan in the
amount of $175,000. Under the terms of the promissory note, the principal
amount, plus interest accrued at a rate of 5.1875% per annum, was due on March
31, 1997. The due date was subsequently extended to May 15, 1997. On March
31, 1997, Mr. Winn paid in full the principal amount plus interest owed.
COMPLIANCE WITH SECTION 16(a) OF THE SECURITIES AND EXCHANGE ACT
Section 16(a) of the Securities and Exchange Act of 1934 requires the Company's
officers and directors, and persons who own more than 10 percent of a
registered class of the Company's equity securities, to file reports of
beneficial ownership and changes in beneficial ownership with the Securities
and Exchange Commission. Officers, directors and greater than 10 percent
stockholders are required by SEC regulation to furnish the Company with copies
of all Section 16(a) forms.
Based solely on its review of the copies of such forms received by the Company,
or written representations from certain reporting persons that no Form 5's were
required for them, the Company believes that during fiscal year 1998 all filing
requirements applicable to its officers, directors, and greater than 10 percent
beneficial owners were complied with.
PROPOSAL 1 - TO INCREASE THE NUMBER OF SHARES
OF COMMON STOCK ISSUABLE UNDER THE 1997 STOCK OPTION PLAN
INTRODUCTION
The Company's 1997 Stock Option Plan (the "Option Plan") provides for grants of
stock options to employees of the Company selected by the Board of Directors
(the "Board"). The Board believes that the Option Plan has been and continues
to be an important incentive in attracting, retaining and motivating key
employees who are and will be necessary to the successful conduct of the
business and affairs of the Company. It is also believed that stock options
granted to such employees under this Option Plan will strengthen their desire
to remain employed with the Company and will further the alignment of those
employees' interests with those of the Company's stockholders.
On March 31, 1999, the Board of Directors approved an amendment, subject to
stockholder approval, to increase the number of shares of Common Stock issuable
under the Option Plan by 600,000 shares. As of January 3, 1999 the Option Plan
and its predecessor, the Genicom Corporation Stock Option Plan, as amended and
restated effective February 7, 1991, and as subsequently amended, had a total
of 142 participants out of approximately 1,511 currently eligible employees.
As of January 3, 1999, options covering 831,745 shares were outstanding under
the Option Plan and no shares have been acquired upon exercise. Of the shares
previously approved by stockholders for issuance under the Option Plan, 223,452
shares remain available for future option grants. The increase in the number
of shares subject to the Option Plan will permit the Board to exercise needed
flexibility in the administration of the Option Plan and the granting of
options thereunder.
The Board of Directors believes that the addition of 600,000 shares to the
Option Plan reserve will be sufficient to meet the Company's needs for the near
term and has approved the addition of these shares subject to stockholder
approval. The Board believes that approval of the addition of these shares to
the
13
15
Option Plan reserve is in the best interest of the Company and its
stockholders. Because officers and directors who are employees of the Company
are eligible to receive option grants under the Option Plan, each officer and
director who is an employee of the Company has an interest in and may benefit
from the approval of Proposal 1.
ADMINISTRATION OF THE STOCK OPTION PLAN
The Board administers the Option Plan and determines the following: (i) the
Company's employees that shall be granted options; (ii) the number of shares
covered by each option; (iii) whether options are non-statutory stock options
or incentive stock options; (iv) the time or times that options are granted;
(v) the time or times that options become exercisable; and (vi) the form of
consideration that may be used to pay for shares upon exercise of an option.
The Board is also responsible for other questions involving the administration
and interpretation of the Option Plan.
GRANTING OF OPTIONS; EXERCISE
Stock options granted under the Option Plan may be non-statutory stock options
or incentive stock options, as described in Section 422 of the Internal Revenue
Code. The option price of shares of Common Stock covered by incentive stock
options granted under the Option Plan may not be less than 100% of the Common
Stock's fair market value on the option grant date (110% of fair market value
if the stock option is an incentive stock option that is granted to an employee
who is a 10% or greater stockholder of the Company). The Board of Directors
may grant non-statutory stock options under the Option Plan with an option
price not less than 85% of the Common Stock's fair market value on the grant
date. Options granted generally become exercisable at the rate of 20% per year
beginning on the first anniversary of the option grant date.
FEDERAL INCOME TAX CONSEQUENCES
Incentive stock options are intended to qualify for favorable Federal income
tax treatment, while non-statutory stock options are not. An optionee does not
incur Federal income tax when granted a non-statutory stock option or incentive
stock option. Upon exercise of a non-statutory stock option, an optionee
generally recognizes taxable income, which is subject to income tax withholding
by the Company, equal to the difference between the Common Stock's fair market
value on the exercise date and the option price. Upon exercising an incentive
stock option, an optionee generally does not recognize taxable income, unless
subject to the alternative minimum tax.
The Company usually is entitled to a business expense deduction at the time and
in the amount that the recipient of an option recognizes ordinary income in
connection with the option. This usually occurs upon the exercise of
non-statutory stock options. No deduction is allowed in connection with an
incentive stock option, unless the optionee disposes of Common Stock received
upon exercise in violation of the holding period requirements set forth in the
Internal Revenue Code.
BOARD OF DIRECTORS' RECOMMENDATION
The Board of Directors recommends a vote "FOR" Proposal 1 to increase the
number of shares issuable under the 1997 Stock Option Plan.
14
16
PROPOSAL 2 - TO RATIFY SELECTION OF
INDEPENDENT CERTIFIED PUBLIC ACCOUNTANTS
The Board of Directors has selected PricewaterhouseCoopers L.L.P. to serve as
independent certified public accountants of the Company for the 1999 fiscal
year and has directed a vote of stockholders be taken to ascertain their
approval or disapproval of that selection. In the event the stockholders do
not ratify the appointment of PricewaterhouseCoopers L.L.P., the Board of
Directors will consider selection of other qualified independent certified
public accountants.
BOARD OF DIRECTORS' RECOMMENDATION
The Board of Directors recommends a vote "FOR" Proposal 2 to ratify the
selection of PricewaterhouseCoopers L.L.P. as the Company's independent
certified public accountants for the 1998 fiscal year.
Representatives of PricewaterhouseCoopers L.L.P. will be present at the Annual
Meeting. Such representatives will have the opportunity to make a statement if
they so desire, and will be available to respond to appropriate questions.
OTHER BUSINESS
If any other business properly comes before the meeting, your proxy may be
voted by the persons named in it in such manner as they deem proper. Presently
management does not know of any other business which will be presented at the
meeting.
PROPOSALS BY STOCKHOLDERS FOR PRESENTATION
AT 2000 MEETING
Proposals that any stockholder intends to present at the 2000 Annual Meeting of
Stockholders must be received by the Company no later than February 25, 2000,
for inclusion in the Company's proxy statement relating to that meeting.
By Order of the Board of Directors
/s/ Robert L. Burrus
April 9, 1999 Robert L. Burrus, Jr., Secretary
15
17
FRONT OF PROXY CARD:
- --------------------
P R O X Y GENICOM CORPORATION
PROXY SOLICITED BY THE BOARD OF DIRECTORS FOR
ANNUAL MEETING OF STOCKHOLDERS TO BE HELD MAY 19, 1999
The undersigned, having received the Annual Report to the Stockholders and
the accompanying Notice of Annual Meeting of Stockholders and Proxy Statement
dated April 9, 1999, hereby appoints Don E. Ackerman, John G. Hill, Abraham
Ostrovsky, and Paul T. Winn and each of them, proxies, with full power of
substitution, and hereby authorizes them to represent and vote the shares of
Common Stock of GENICOM Corporation (the "Company") which the undersigned would
be entitled to vote if personally present at the Annual Meeting of Stockholders
of the Company to be held on Wednesday, May 19, 1999 at 2:00 p.m., Eastern
Daylight Time, and any adjournment thereof, and especially to vote:
1. ELECTION OF DIRECTORS WITHHOLD AUTHORITY
FOR all nominees listed below X to vote for all nominees listed below X
DON E. ACKERMAN, JOHN G. HILL, ABRAHAM OSTROVSKY, PAUL T. WINN
TO WITHHOLD AUTHORITY TO VOTE FOR ANY INDIVIDUAL NOMINEE, WRITE THAT
NOMINEE'S NAME IN THE SPACE PROVIDED BELOW
- --------------------------------------------------------------------------------
2. PROPOSAL 1 - To consider and vote upon an amendment to the Company's
1997 Stock Option Plan to increase the number of shares of Common Stock
issuable under the Plan by 600,000 shares.
X FOR X AGAINST X ABSTAIN
3. PROPOSAL 2 - To ratify the selection of PricewaterhouseCoopers L.L.P. as
the Company's independent certified public accountants for fiscal year
1999.
X FOR X AGAINST X ABSTAIN
BACK OF PROXY CARD:
- -------------------
4. IN THEIR DISCRETION the proxies are authorized to vote upon such other
business as may properly come before the meeting.
IN THE BALLOT PROVIDED FOR THAT PURPOSE, IF YOU SPECIFY A CHOICE AS TO THE
ACTION TO BE TAKEN THIS PROXY WILL BE VOTED IN ACCORDANCE WITH SUCH CHOICE. IF
YOU DO NOT SPECIFY A CHOICE, IT WILL BE VOTED FOR THE ELECTION OF THE NOMINEES
NAMED IN THE PROXY STATEMENT AS DIRECTORS AND FOR PROPOSALS 1 AND 2 AS DESCRIBED
IN THE PROXY STATEMENT.
Any proxy or proxies previously given for the meeting are revoked.
Dated: , 1999
------------------------
----------------------------------
(Signature)
----------------------------------
(Signature if held jointly)
Please sign exactly as the name appears hereon. When shares are held by joint
tenants, both should sign. When signing as attorney, executor, administrator,
trustee or guardian, please give full title of each. If a corporation, please
sign in full corporate name by president or other authorized officer. If a
partnership, please sign in partnership name by authorized person.
PLEASE MARK, SIGN, DATE AND RETURN THE PROXY CARD PROMPTLY, USING THE ENCLOSED
ENVELOPE.