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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 Section 240.14a-11(c) or
Section 240.14a-12
HARTE-HANKS 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 Registrant)
Payment of filing fee (Check the appropriate box):
/x/ $125 per Exchange Act Rules 0-11(c)(1)(ii), 14a-6(i)(1), or 14a-6(j)(2)
or Item 22(a)(2) of Schedule 14A.
/ / $500 per each party to the controversy pursuant to Exchange Act
Rule 14a-6(i)(3).
/ / 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 transactions applies:
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(3) Per unit price or other underlying value of transaction computed
pursuant to Exchange Act Rules 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.
/ / 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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HARTE-HANKS COMMUNICATIONS, INC.
200 CONCORD PLAZA DRIVE, SUITE 800
SAN ANTONIO, TEXAS 78216
NOTICE OF ANNUAL MEETING OF STOCKHOLDERS
TO BE HELD MAY 19, 1995
As a stockholder of Harte-Hanks Communications, Inc., you are hereby given
notice of and invited to attend in person or by proxy the Annual Meeting of
Stockholders of the Company to be held at the offices of the Company, 200
Concord Plaza Drive, Suite 800, San Antonio, Texas, on Friday, May 19, 1995, at
10:00 a.m. local time, for the following purposes:
1. To elect three Class II directors, each for a three-year term; and
2. To transact such other business as may properly come before the
meeting and any adjournment thereof.
The Board of Directors has fixed the close of business on March 22, 1995 as
the record date for the determination of stockholders entitled to notice of and
to vote at such meeting and any adjournment thereof.
YOU ARE CORDIALLY INVITED TO ATTEND THE MEETING. HOWEVER, WHETHER OR NOT
YOU EXPECT TO ATTEND THE MEETING, TO ASSURE YOUR SHARES ARE REPRESENTED AT THE
MEETING, PLEASE DATE, EXECUTE AND MAIL PROMPTLY THE ENCLOSED PROXY IN THE
ENCLOSED STAMPED ENVELOPE FOR WHICH NO ADDITIONAL POSTAGE IS REQUIRED IF MAILED
IN THE UNITED STATES.
By Order of the Board of Directors,
DONALD R. CREWS
Senior Vice President, Legal and
Secretary
San Antonio, Texas
March 30, 1995
YOUR VOTE IS IMPORTANT.
PLEASE EXECUTE AND RETURN PROMPTLY THE
ENCLOSED PROXY CARD IN THE ENVELOPE PROVIDED.
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HARTE-HANKS COMMUNICATIONS, INC.
200 CONCORD PLAZA DRIVE, SUITE 800
SAN ANTONIO, TEXAS 78216
---------------------
PROXY STATEMENT
---------------------
FOR THE ANNUAL MEETING OF STOCKHOLDERS
TO BE HELD MAY 19, 1995
---------------------
This Proxy Statement is furnished to stockholders of Harte-Hanks
Communications, Inc. for use at the 1995 Annual Meeting of Stockholders to be
held at the date, time and place and for the purposes set forth in the
accompanying Notice of Annual Meeting of Stockholders, or at any adjournment
thereof. The enclosed proxy is solicited on behalf of the Board of Directors of
the Company. A stockholder executing the accompanying proxy has the right to
revoke it at any time prior to the voting thereof by notifying the Secretary of
the Company in writing, executing a subsequent proxy or attending the meeting
and voting in person. Unless a contrary choice is so indicated, all duly
executed proxies received by the Company will be voted in accordance with the
instructions set forth on the proxy card. The record date for stockholders
entitled to vote at the Annual Meeting is the close of business on March 22,
1995. The approximate date on which this Proxy Statement and the enclosed proxy
are first being sent or given to stockholders is March 30, 1995.
VOTING PROCEDURES
The accompanying proxy card is designed to permit each stockholder of
record at the close of business on the record date, March 22, 1995, to vote in
the election of Class II directors and on the proposals described in this Proxy
Statement. The proxy card provides space for a stockholder (i) to vote in favor
of or to withhold voting for the nominees for the Class II Directors, (ii) to
vote for or against any proposal to be considered at the Annual Meeting or (iii)
to abstain from voting on any proposal other than election of Class II directors
if the stockholder chooses to do so. The election of Class II directors will be
decided by a plurality of the votes cast. All other matters will be determined
by a majority of the votes cast.
The holders of a majority of all of the shares of stock entitled to vote at
the Annual Meeting, present in person or by proxy, will constitute a quorum for
the transaction of business at the Annual Meeting. If a quorum should not be
present, the Annual Meeting may be adjourned from time to time until a quorum is
obtained. Shares as to which authority to vote has been withheld with respect to
the election of any nominee for director will not be counted as a vote for such
nominee. Abstentions and broker nonvotes are counted for purposes of determining
the presence or absence of a quorum for the transaction of business. Abstentions
are counted in tabulations of the votes cast on proposals presented to
stockholders to determine the total number of votes cast. Abstentions are not
counted as votes for or against any such proposals. Broker nonvotes are not
counted as votes cast for purposes of determining whether a proposal has been
approved.
Stockholders are urged to sign the enclosed proxy and return it promptly.
When a signed card is returned with choices specified with respect to voting
matters, the shares represented are voted by the proxies designated on the proxy
card in accordance with the stockholder's instructions. The proxies for the
stockholders are Larry Franklin, Houston H. Harte and Andrew B. Shelton.
If a signed proxy card is returned and the stockholder has made no
specifications with respect to voting matters, the shares will be voted for the
election of the three nominees for Class II director and, at the discretion of
the proxies, on any other matter that may properly come before the Annual
Meeting or any adjournment.
The total outstanding capital stock of the Company as of March 22, 1995
consisted of 18,373,767 shares of Common Stock. Each share of Common Stock is
entitled to one vote.
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MATTERS TO BE BROUGHT BEFORE THE MEETING
PROPOSAL ONE -- ELECTION OF CLASS II DIRECTORS
The current number of members of the Board of Directors is seven. The Board
of Directors is divided into three classes, each of which serves for a
three-year term. One class of directors is elected each year. The term of the
Company's Class II directors will expire at the Annual Meeting. The Class II
directors elected in 1995 will serve for a term of three years which expires at
the Annual Meeting of Stockholders in 1998 or when their successors are elected
and qualified. The election of directors will be decided by a plurality vote of
the votes cast in writing.
The nominees for the Class II directors are Larry Franklin, Edward H. Harte
and James L. Johnson. All nominees are members of the present Board of
Directors. The Board believes that all nominees will be available and able to
serve as directors. If any nominee is unable to serve, the shares represented by
all valid proxies will be voted for the election of such substitute as the Board
may recommend, the Board may reduce the number of directors to eliminate the
vacancy consistent with the requirement to maintain nearly equal classes, or the
Board may fill the vacancy at a later date after selecting an appropriate
nominee. Information with respect to the nominees is set forth in the section of
this Proxy Statement entitled "Management -- Directors and Executive Officers."
THE BOARD OF DIRECTORS URGES STOCKHOLDERS TO VOTE "FOR"
EACH OF THE NOMINEES FOR DIRECTOR SET FORTH ABOVE.
SECURITY OWNERSHIP OF MANAGEMENT
AND PRINCIPAL STOCKHOLDERS
The following table sets forth, as of March 22, 1995, the beneficial
ownership of each current director, each nominee for director, each executive
officer included in the Summary Compensation Table, the directors and executive
officers as a group, and each stockholder known to management to own
beneficially more than 5% of the Company's Common Stock. Except as noted below,
each named person has sole voting power and investment power with respect to the
shares shown.
NAME AND ADDRESS NUMBER OF SHARES PERCENT OF
OF BENEFICIAL OWNER(1) OF COMMON STOCK CLASS
------------------------------------------------------------------ ---------------- ----------
Houston H. Harte(2)............................................... 4,359,534 23.7%
Andrew B. Shelton................................................. 3,063,332 16.7
Ariel Capital Management, Inc.(3)................................. 2,326,065 12.7
Edward H. Harte................................................... 2,097,332 11.4
The Goldman Sachs Group, L.P.(4).................................. 1,794,671 9.1
Train, Smith Counsel(5)........................................... 1,545,850 8.4
David L. Sinak(6)................................................. 1,250,002 6.8
Larry Franklin(7)................................................. 1,160,100 6.3
Christopher M. Harte(8)........................................... 279,778 1.5
Donald R. Crews(9)................................................ 203,000 1.1
Richard M. Hochhauser(10)......................................... 157,000 *
Harry J. Buckel(11)............................................... 82,600 *
Richard L. Ritchie(12)............................................ 68,000 *
Dr. Peter T. Flawn................................................ 5,000 *
James L. Johnson.................................................. 1,000 *
All Executive Officers and Directors as a Group (13
persons)(13).................................................... 11,374,626 61.0
---------------
* Less than 1%.
(1) The address of Ariel Capital Management, Inc. is 307 North Michigan Avenue,
Chicago, Illinois 60601. The address of The Goldman Sachs Group, L.P. is
c/o Goldman, Sachs & Co., 85 Broad Street, New York, New York 10004. The
address of Train, Smith Counsel is 667 Madison Avenue, New York, New York
10021. The address of David L. Sinak is c/o Hughes & Luce, L.L.P., 1717
Main Street, Suite 2800, Dallas, Texas 75201. The address of each other
beneficial owner is c/o Harte-Hanks Communications, Inc., 200 Concord Plaza
Drive, Suite 800, San Antonio, Texas 78216.
(2) Includes 750,000 shares in the aggregate owned by three trusts for which
Mr. Harte serves as co-trustee with David L. Sinak and 250,000 shares owned
by a trust for which Mr. Harte serves as a co-trustee with David L. Sinak
and
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Christopher M. Harte and as to which Mr. Harte holds shared voting and
dispositive power. Mr. Harte has no pecuniary interest in the trusts.
(3) Includes 1,631,565 shares as to which Ariel Capital Management, Inc. holds
sole voting power and 136,050 shares as to which it holds shared voting
power. Information with respect to Ariel Capital Management, Inc. is based
on a Schedule 13G filing dated February 8, 1995.
(4) Includes 1,428,571 shares that The Goldman Sachs Group, L.P., and certain
limited partnerships of which affiliates of The Goldman Sachs Group, L.P.
are the general partner or the managing general partner, have the right to
acquire upon conversion of the Company's outstanding 6 1/4% Convertible
Notes due 2002, which shares for purposes of rules of the Securities and
Exchange Commission may be considered to be beneficially owned by The
Goldman Sachs Group, L.P. The Goldman Sachs Group, L.P. holds shared voting
and dispositive power with respect to all shares. Information with respect
to The Goldman Sachs Group, L.P. is based on a Schedule 13G filing dated
February 10, 1995.
(5) Train, Smith Counsel has shared voting power with respect to 1,067,850
shares and shared dispositive power with respect to 960,050 shares and has
sole voting power or sole dispositive power with respect to no shares.
Information with respect to Train, Smith Counsel is based on a Schedule 13G
filing dated March 8, 1995.
(6) Represents 1,250,002 shares owned by 13 trusts for which Mr. Sinak serves
as co-trustee and holds shared voting and dispositive power. Mr. Sinak has
no pecuniary interest in the trusts.
(7) Includes 20,000 shares that may be acquired upon the exercise of options
exercisable within the next 60 days, 240,000 shares owned by four trusts
for which Mr. Franklin serves as co-trustee and holds shared voting and
dispositive power, and 40,000 shares held in trust for his children. Mr.
Franklin has no pecuniary interest in the trusts.
(8) Includes 1,000 shares held in trust for his child, 250,000 shares owned by
a trust for which Mr. Harte serves as co-trustee with David L. Sinak and
Houston H. Harte and 27,778 shares owned by a trust for which Mr. Harte
serves as a co-trustee with David L. Sinak and as to which Mr. Harte holds
shared voting and dispositive power. Mr. Harte has no pecuniary interest in
the trusts.
(9) Includes 59,000 shares that may be acquired upon the exercise of options
exercisable within the next 60 days.
(10) Includes 56,000 shares that may be acquired upon the exercise of options
exercisable within the next 60 days.
(11) Includes 51,000 shares that may be acquired upon the exercise of options
exercisable within the next 60 days.
(12) Includes 48,000 shares that may be acquired upon the exercise of options
exercisable within the next 60 days.
(13) Includes 306,750 shares that may be acquired upon the exercise of options
exercisable within the next 60 days and 1,308,778 shares owned by various
trusts for which officers or directors serve as trustee but have no
pecuniary interest.
MANAGEMENT
DIRECTORS AND EXECUTIVE OFFICERS
The following table sets forth certain information about the current
directors and executive officers of the Company. Each of the executive officers
has held his position with the Company, or a similar position with the Company,
for at least the past five years.
NAME AGE POSITION WITH COMPANY
------------------------- --- ------------------------------------------------------
Dr. Peter T. Flawn 69 Director (Class I)
Larry Franklin 52 Director (Class II), President and Chief Executive
Officer
Christopher M. Harte 47 Director (Class I)
Edward H. Harte 72 Director (Class II)
Houston H. Harte 68 Chairman, Board of Directors (Class III)
James L. Johnson 67 Director (Class II)
Andrew B. Shelton 80 Director (Class III)
Harry J. Buckel 51 Senior Vice President; President, Harte-Hanks Shoppers
Michael J. Conly 43 Senior Vice President; President, Harte-Hanks
Television
Donald R. Crews 51 Senior Vice President, Legal; Secretary
Richard M. Hochhauser 50 Senior Vice President; President, Harte-Hanks Direct
Marketing
Richard L. Ritchie 48 Senior Vice President, Finance; Chief Financial and
Accounting Officer
Stephen W. Sullivan 48 Senior Vice President; President, Harte-Hanks
Newspapers
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Class II directors are to be elected at the Annual Meeting. The term of
Class I directors expires at the 1997 Annual Meeting of Stockholders and the
term of Class III directors expires at the 1996 Annual Meeting of Stockholders.
Dr. Peter T. Flawn, a director of the Company since 1985, is President
Emeritus of the University of Texas at Austin. Dr. Flawn is Chairman of the
Audit Committee of the Board of Directors and also serves as a director of
Global Marine, Inc., Input/Output, Inc. and Tenneco, Inc.
Larry Franklin has served as President and Chief Executive Officer of the
Company since 1991 and as a director of the Company since 1974. Mr. Franklin has
held numerous positions since joining the Company in 1971, including Chief
Financial Officer and President, Harte-Hanks Newspapers, and also serves as a
director of John Wiley & Sons, Inc.
Christopher M. Harte has served as a director of the Company since May
1993. He is a private investor and served as president of the Portland Press
Herald and Maine Sunday Telegram for approximately two years beginning June
1992. Prior to becoming president of the Portland newspapers, Mr. Harte spent
nine years with Knight-Ridder Newspapers, during which time he served as
president and publisher of two newspapers and in other positions. Mr. Harte is
the son of Edward H. Harte and the grandson of the late Houston Harte, co-
founder of the Company.
Edward H. Harte has served as a director of the Company since 1952. Prior
to his retirement in 1987, he served as Publisher of the Corpus Christi
Caller-Times since 1962. Mr. Harte is the son of the late Houston Harte.
Houston H. Harte has served as a director of the Company since 1952 and as
Chairman of the Board of Directors since 1972. Mr. Harte is also the son of the
late Houston Harte.
James L. Johnson, a director of the Company since January 1994, is Chairman
Emeritus of GTE Corporation. Mr. Johnson serves as a director of British
Columbia Telephone Co., CellStar Corporation, Compania Anonima Nacional
Telefonos de Venezuela, Contel Cellular Inc., GFC Financial Corp., GTE
Corporation, Mutual of New York and Valero Energy Corporation.
Andrew B. Shelton has served as director of the Company since 1948. He has
served as Chairman of the Board of the Abilene Reporter-News since 1994, prior
to which time he served as Publisher of the Abilene Reporter-News since 1964.
MEETING ATTENDANCE AND COMMITTEES OF THE BOARD
The Board of Directors held six meetings during 1994, and each member of
the Board participated in at least 75% of all Board and committee meetings held
during the period that he served as a director and/or committee member. The
Board of Directors has established an audit committee and a compensation
committee. The functions of these committees and their current members are
described below.
Audit Committee. The Audit Committee currently consists of Dr. Peter T.
Flawn (Chairman) and James L. Johnson. The Audit Committee, which met three
times during 1994, is responsible for monitoring the Company's internal audit
function and its internal accounting controls, recommending to the Board of
Directors the selection of independent auditors, considering the range of audit
and non-audit fees and monitoring and reviewing the activities of the
independent auditors.
Compensation Committee. The Compensation Committee currently consists of
James L. Johnson (Chairman) and Dr. Peter T. Flawn, both of whom are
disinterested in accordance with Rule 16b-3 of the Securities Exchange Act of
1934. The Compensation Committee, which met three times during 1994, recommends
salary amounts for the Company's chief executive officer and other executive
officers and makes the final determination regarding bonus arrangements and
awards of stock options to such persons.
The Board of Directors does not have a standing nominating committee or any
other committee performing a similar function. The function customarily
attributable to a nominating committee is performed by the Board of Directors as
a whole.
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EXECUTIVE COMPENSATION AND OTHER INFORMATION
SUMMARY COMPENSATION TABLE
The following table sets forth certain information regarding compensation
paid during each of the last three years to the Chief Executive Officer and each
of the Company's four other most highly compensated executive officers (based on
total annual salary and bonus for 1994).
ANNUAL
COMPENSATION ALL
NAME AND PRINCIPAL --------------------- OPTIONS OTHER
POSITION YEAR SALARY BONUS GRANTED COMPENSATION(1)
------------------------- ----- -------- -------- ------- ---------------
Larry Franklin 1994 $650,000 $455,000 45,000 $14,300
President and Chief 1993 650,000 91,000 50,000 14,300
Executive Officer 1992 650,000 341,250 40,000 14,083
Richard M. Hochhauser 1994 297,000 207,900 4,000 1,800
Senior Vice President; 1993 285,000 107,000 55,000 1,799
President, Harte-Hanks 1992 262,000 162,702 23,000 1,746
Direct Marketing
Harry J. Buckel 1994 285,000 177,840 2,500 1,800
Senior Vice President; 1993 285,000 39,330 41,000 1,746
President, Harte-Hanks 1992 275,000 71,225 19,000 1,746
Shoppers
Donald R. Crews 1994 270,000 189,000 2,500 1,800
Senior Vice President, 1993 270,000 48,600 37,000 1,350
Legal and Secretary 1992 277,500 145,950 15,500 1,395
Richard L. Ritchie 1994 253,000 177,100 2,500 1,800
Senior Vice President, 1993 245,000 43,414 40,000 1,592
Finance and Chief 1992 228,000 119,700 15,500 --
Financial and
Accounting Officer
---------------
(1) Consisted of matching contributions made by the Company on behalf of the
respective individual under the Company's 401(k) plan and $13,000 in
premiums paid annually by the Company on a split-dollar policy insuring the
life of Larry Franklin.
OPTION GRANTS DURING 1994
The following table sets forth certain information concerning options to
purchase Common Stock granted in 1994 to the five individuals named in the
Summary Compensation Table.
% OF TOTAL POTENTIAL
OPTIONS STOCK
GRANTED TO MARKET APPRECIATION
OPTIONS EMPLOYEES EXERCISE PRICE AT EXPIRATION -------------------------------
NAME GRANTED IN 1994 PRICE GRANT DATE 0% 63%(1) 159%(1)
---------------------------- ---------- ------------ -------- -------- ------------- -------- -------- ---------
Larry Franklin.............. 25,000(2) 13.3% $20.125 $20.125 January, 2004 $ -- $316,413 $ 801,852
20,000(3) 10.6 1.00 20.125 January, 2004 382,500 635,630 1,023,981
Richard M. Hochhauser....... 4,000(3) 2.1 1.00 20.125 January, 2004 76,500 127,126 204,796
Harry J. Buckel............. 2,500(3) 1.3 1.00 20.125 January, 2004 47,813 79,454 127,998
Donald R. Crews............. 2,500(3) 1.3 1.00 20.125 January, 2004 47,813 79,454 127,998
Richard L. Ritchie.......... 2,500(3) 1.3 1.00 20.125 January, 2004 47,813 79,454 127,998
---------------
(1) Assumed annual compounded rates of stock price appreciation of 5% (63%) and
10% (159%) over the term of the grant applied to market price at grant of
$20.125 per share.
(2) Options are exercisable only after the fifth, and prior to the tenth,
anniversary of the date of grant.
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(3) Performance options have been granted at exercise prices of $1.00 per share.
The performance options are exercisable only after the third, and prior to
the tenth, anniversary of the date of grant. The extent to which the options
become exercisable depends upon the extent to which the Company achieves
certain goals that are established at the time the options are granted.
AGGREGATED OPTION EXERCISES IN 1994 AND YEAR-END OPTION VALUES
The following table sets forth certain information concerning option
exercises during 1994 and unexercised options held at December 31, 1994 by the
five individuals named in the Summary Compensation Table.
VALUE OF
NUMBER OF UNEXERCISED
UNEXERCISED IN-THE-MONEY
OPTIONS AT OPTIONS AT
DECEMBER 31, 1994 DECEMBER 31, 1994(1)
SHARES ACQUIRED --------------------------- ---------------------------
NAME ON EXERCISE VALUE REALIZED EXERCISABLE UNEXERCISABLE EXERCISABLE UNEXERCISABLE
-------------------------------- --------------- -------------- ----------- ------------- ----------- -------------
Larry Franklin.................. -- $ -- 20,000 175,000 $ 215,000 $ 1,830,000
Richard M. Hochhauser........... 10,000 138,750 36,000 128,000 479,500 1,432,000
Harry J. Buckel................. 10,000 143,750 32,000 118,500 436,500 1,310,000
Donald R. Crews................. 20,000 290,000 45,500 87,000 607,250 988,500
Richard L. Ritchie.............. -- -- 34,500 96,000 466,500 1,074,000
---------------
(1) The value is the amount by which the market value of the underlying stock at
December 31, 1994 ($19.50) exceeds the aggregate exercise prices of the
options.
RETIREMENT BENEFIT PLAN
In addition to a defined benefit pension plan which is qualified under
Section 401 of the Code, the Company has established for certain individuals an
unfunded, non-qualified pension restoration plan. The annual pension benefit
under the plans, taken together, is largely determined by the number of years of
employment multiplied by a percentage of the participant's final average
earnings (earnings during the highest five consecutive years). The Code places
certain limitations on the amount of pension benefits that may be paid under
qualified plans. Any benefits in excess of those limitations payable to
participants in the pension restoration plan will be paid under that plan.
The table below may be used to calculate the approximate annual benefits
payable at retirement at age 65 under the Company's defined benefit pension plan
and pension restoration plan to individuals in specified remuneration and
years-of-service classifications. The benefits are not subject to any reduction
for social security benefits or other offset amounts.
HIGHEST 5 YEAR YEARS OF CREDITED SERVICE
AVERAGE ------------------------------------------------------------
REMUNERATION 15 20 25 30 35
-------------- -------- -------- -------- -------- --------
$150,000 $ 34,598 $ 46,130 $ 57,663 $ 69,196 $ 80,728
250,000 59,348 79,130 98,913 118,696 138,478
350,000 84,098 112,130 140,163 168,196 196,228
450,000 108,848 145,130 181,413 217,696 253,978
550,000 133,598 178,130 222,663 267,196 311,728
650,000 158,348 211,130 263,913 316,696 369,478
750,000 183,098 244,130 305,163 366,196 427,228
850,000 207,848 277,130 346,413 415,696 484,978
950,000 232,598 310,130 387,663 465,196 542,728
The compensation included in the Summary Compensation Table under salary
and bonuses qualifies as remuneration for purposes of the Company's defined
benefit pension plan and pension restoration plan, except that there are limits
on the amounts of bonuses taken into consideration under the pension restoration
plan. For purposes of the plans, the officers named in the Summary Compensation
Table have the following years of service: Mr. Franklin: 23 years; Mr.
Hochhauser: 19 years; Mr. Buckel: 16 years; Mr. Crews: 12 years; and Mr.
Ritchie: 9 years.
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COMPENSATION OF DIRECTORS
Directors who are not employees or otherwise affiliates of the Company
receive annual director's fees of $47,000 and are reimbursed for certain out of
pocket expenses. Directors who are employees or are otherwise affiliates of the
Company do not receive director's fees. During 1994, Dr. Peter T. Flawn,
Christopher M. Harte and James L. Johnson each received director's fees of
$47,000.
SEVERANCE AGREEMENTS
In July 1993, the Company entered into a severance agreement with Larry
Franklin. If Mr. Franklin is terminated from his position as President and Chief
Executive Officer of the Company other than for "cause" (as defined) he will be
entitled to severance compensation in a lump sum cash amount equal to 200% of
the sum of (A) the annual base salary in effect just prior to termination, plus
(B) the average of the bonus or incentive compensation for the two fiscal years
preceding the termination. In addition to the cash compensation, upon Mr.
Franklin's termination, the Company will continue to provide certain benefits
for a two year period and all options previously granted to Mr. Franklin will
immediately vest and become fully exercisable.
In July 1993, the Company also entered into severance agreements with Harry
J. Buckel, Michael J. Conly, Donald R. Crews, Richard M. Hochhauser, Richard L.
Ritchie and Stephen W. Sullivan. If any of the above executives is terminated,
other than for "cause," after a "change in control" (as defined) of the Company,
the executive will be entitled to severance compensation in a lump sum cash
amount equal to 200% of the sum of (A) the annual base salary in effect
immediately prior to the change in control, plus (B) the average of the bonus or
incentive compensation for the two fiscal years preceding the change in control.
In addition, a terminated executive will receive a cash payment sufficient to
cover health insurance premiums for a period of 18 months. Upon a change in
control, all options previously granted to the executive will immediately vest
and become fully exercisable.
In no event will the Company be required to make to any of the foregoing
executives any payment under such agreements that would result, in the opinion
of tax counsel, in an "excess parachute payment" within the meaning of Section
280G of the Code and the imposition of an excise tax under Section 4999 of the
Code.
COMPENSATION COMMITTEE INTERLOCKS AND INSIDER PARTICIPATION
On January 24, 1994, the Board of Directors appointed James L. Johnson
(Chairman) and Dr. Peter T. Flawn to serve as the Compensation Committee of the
Board of Directors. Prior to that date, the Board of Directors was responsible
for determining executive compensation, and Larry Franklin, as a member of the
Board of Directors, participated in deliberations concerning the compensation of
all executive officers other than himself.
REPORT OF THE COMPENSATION COMMITTEE ON EXECUTIVE COMPENSATION
The Compensation Committee was established on January 24, 1994. The
Committee is responsible for recommending to the full Board of Directors salary
amounts for the Company's Chief Executive Officer and other executive officers
and making the final determination regarding bonus arrangements and awards of
stock options to such persons.
Compensation to executives is designed to attract and retain superior
talent, to motivate the performance of executives in support of the achievement
of the Company's strategic financial and operating performance objectives, and
to reward performance that meets this standard. The Company is engaged in highly
competitive businesses and must attract and retain qualified executives in order
to be successful. In 1994, executive compensation was comprised of the following
elements:
BASE SALARY. The base salary for the Chief Executive Officer and the
other executive officers of the Company was determined after review of
publicly available information concerning the base salaries of executives
with similar responsibilities in companies engaged in businesses similar to
the Company's core businesses (which may include, but are not necessarily
the same as, those included in the Peer Group Index) and the
responsibilities of each executive officer, particularly in view of the
fact that the
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decentralized management philosophy of the Company relies heavily on the
direct action of the Company's executives in pursuit of Company goals.
ANNUAL INCENTIVE COMPENSATION. Year-end cash bonuses are designed to
motivate the Chief Executive Officer and the other executive officers to
achieve specific annual financial and other goals based on the strategic
financial and operating performance objectives of the Company overall, as
well as each core business. In conjunction with the Committee's review of
the strategic and operating plans of the Company and each core business at
the beginning of 1994, the Committee established incremental target
performance levels for each executive officer based on the revenue and
operating profit growth goals of the Company and, if the executive was
responsible for a core business, the core business. Bonus amounts were paid
to the executive based on the target performance level reached.
STOCK OPTION PLAN. The 1991 Stock Option Plan forms the basis of the
Company's long-term incentive plan for executives. The Committee believes
that a significant portion of executive compensation should be dependent on
value created for the stockholders. Stock options are generally granted
annually. In 1994, certain options were granted at fair market value on the
date of grant and become exercisable five years from such date if the
option holder is still employed. Other options were granted below fair
market value but only become exercisable three years after their date of
grant and then only to a limited degree unless the Company has reached
specific financial performance levels established at the time of grant. In
selecting recipients for option grants and in determining the size of such
grants, the Committee considered various factors such as the overall
performance of the Company and the recipient.
Executives also receive benefits typically offered to executives by
companies engaged in businesses similar to the Company's core businesses and
various benefits generally available to employees of the Company (such as health
insurance).
It is the Company's policy to qualify compensation paid to executive
officers for deductibility under applicable provisions of the Internal Revenue
Code, including Section 162(m). However, the Company may determine from time to
time to pay compensation to its executive officers that may not be deductible.
In making its decisions, the Compensation Committee takes into account,
primarily on a subjective basis, factors relevant to the specific compensation
component being considered, including compensation paid by other companies of
comparable size in businesses similar to the Company's core businesses, the
generation of income and cash flow by the Company as a whole and the individual
core businesses, the attainment of annual individual and business objectives and
an assessment of business performance against companies of comparable size in
businesses similar to the Company's core businesses, the executive officer's
level of responsibility and the contributions the Company expects the executive
to make in support of the Company's strategies.
1994 COMPENSATION OF CHIEF EXECUTIVE OFFICER. The base salary of Mr.
Franklin for 1994 remained at the same level as in the three previous years,
despite the fact that in 1993 the Company had growth in both revenues and
operating income (excluding a goodwill write-down) in excess of 9%, successfully
completed its initial public offering of common stock and made significant
progress in a number of other strategic areas. Mr. Franklin's bonus potential in
each of the last four years has been targeted at 35% of base salary, with a
potential range of 0%-70% of base salary, the same as that of other executive
officers. Mr. Franklin's 1994 cash bonus, which was based on the degree of
attainment of financial goals established at the beginning of 1994, reflects the
fact that in 1994 the Company's revenues increased 11%, operating income
increased 23% and earnings per share increased 69%. In 1994 Mr. Franklin
received two option grants under the Company's 1991 Stock Option Plan, and in
making those grants the Committee took into consideration the factors described
above under "Stock Option Plan"
Compensation Committee
James L. Johnson, Chairman Dr. Peter T. Flawn
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COMPARISON OF SHAREHOLDER RETURN
The following graph compares the cumulative total return of the Company's
Common Stock during the period commencing November 4, 1993, the date public
trading of the Common Stock began following the Company's initial public equity
offering, to December 31, 1994 with the S&P 500 Index and a peer group selected
by the Company.
The S&P 500 Index includes 500 United States companies in the industrial,
transportation, utilities and financial sectors and is weighted by market
capitalization. The peer group selected by the Company, which also is weighted
by market capitalization, includes Acxiom Corporation, Catalina Marketing
Corporation, DiMark, Inc., R.R. Donnelley & Sons Company, Dow Jones & Company,
Inc., Gannett Co., Inc., Knight-Ridder, Inc., M/A/R/C Group, The New York Times
Company, The Times Mirror Company and Tribune Company.
The graph depicts the results of investing $100 in the Company's Common
Stock, the S&P 500 Index and the peer group selected by the Company at closing
prices on November 4, 1993. It assumes that all dividends were reinvested with
respect to the S&P 500 Index and the peer group selected by the Company.
(GRAPH)
Harte-Hanks
Measurement Period Communica-
(Fiscal Year Covered) tions, Inc. Peer Group S&P 500
11/4/93 100.00 100.00 100.00
12/31/93 117.29 108.00 102.16
12/31/94 117.29 101.20 103.51
INDEPENDENT AUDITORS
KPMG Peat Marwick LLP, independent certified public accountants, has been
selected by the Board of Directors as the Company's independent auditor for the
year 1995. Representatives of KPMG Peat Marwick LLP, who were also the Company's
independent auditors for the year 1994, are expected to be present at the Annual
Meeting. They will have the opportunity to make a statement if they desire to do
so and will be available to respond to appropriate questions.
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OTHER MATTERS
The Board of Directors is not aware of any matter to be presented for
action at the meeting other than the matters set forth herein. Should any other
matter requiring a vote of stockholders arise, the proxies in the enclosed form
confer upon the person or persons entitled to vote the shares represented by
such proxies discretionary authority to vote the same in accordance with their
best judgment in the interest of the Company.
A proper proposal submitted by a stockholder in accordance with applicable
rules and regulations for presentation at the Company's next annual meeting that
is received at the Company's principal executive office by November 30, 1995
will be included in the Company's proxy statement and form of proxy for that
meeting.
The enclosed proxy is solicited on behalf of the Board of Directors of the
Company. The cost of soliciting proxies in the accompanying form will be paid by
the Company. Officers of the Company may solicit proxies by mail, telephone or
telegraph. Upon request, the Company will reimburse brokers, dealers, banks and
trustees, or their nominees, for reasonable expenses incurred by them in
forwarding proxy material to beneficial owners of shares of the Common Stock.
FINANCIAL STATEMENTS
A copy of the Company's 1994 Annual Report containing audited financial
statements accompanies this Proxy Statement. The Annual Report does not
constitute a part of the proxy solicitation material.
By Order of the Board of Directors,
DONALD R. CREWS
Senior Vice President, Legal and
Secretary
March 30, 1995
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P HARTE-HANKS COMMUNICATIONS, INC.
R BOARD OF DIRECTORS PROXY FOR THE ANNUAL MEETING
O OF STOCKHOLDERS AT 10:00 A.M., FRIDAY, MAY 19, 1995
X 200 CONCORD PLAZA DRIVE, SUITE 800
Y SAN ANTONIO, TEXAS 78216
The undersigned stockholder of Harte-Hanks Communications, Inc. (the
"Company") hereby appoints Larry Franklin, Houston H. Harte and Andrew B.
Shelton or any of them, as proxies, each with full powers of substitution, to
vote the shares of the undersigned at the above-stated Annual Meeting and at
any adjournment(s) thereof.
[X] PLEASE MARK VOTES AS IN THIS EXAMPLE.
THIS PROXY IS SOLICITED ON BEHALF OF THE BOARD OF DIRECTORS AND WILL BE VOTED
IN ACCORDANCE WITH THE SPECIFICATION MADE BELOW. IF A CHOICE IS NOT INDICATED
WITH RESPECT TO ITEM (1), THIS PROXY WILL BE VOTED "FOR" SUCH ITEM. THE
PROXIES WILL USE THEIR DISCRETION WITH RESPECT TO ANY MATTER REFERRED TO IN
ITEM (2). THIS PROXY IS REVOCABLE AT ANY TIME BEFORE IT IS EXERCISED.
1. ELECTION OF DIRECTORS
NOMINEES: Larry Franklin, Edward H. Harte, James L. Johnson
FOR WITHHELD
[ ] [ ]
[ ] __________________
INSTRUCTION: To withhold authority to vote for any individual
nominee(s), write that nominee's name on the space provided above)
2. On any other business that may properly come before the meeting,
hereby revoking any proxy or proxies heretofore given by the
undersigned.
Receipt herewith of the Company's Annual Report and Notice of Meeting
and Proxy Statement, dated March 30, 1995, is hereby acknowledged.
MARK HERE
FOR ADDRESS
CHANGE AND [ ]
NOTE AT LEFT
(Joint owners must EACH sign. Please sign EXACTLY as your name(s) appear(s) on
this card. When signing as attorney, trustee, executor, administrator,
guardian or corporate officer, please give your full title.)
PLEASE SIGN, DATE AND MAIL TODAY.
Signature: ________________________________________ Date ______________________
Signature: ________________________________________ Date ______________________