SCHEDULE 14A INFORMATION
Proxy Statement Pursuant to Section 14(a) of
the Securities Exchange Act of 1934 (Amendment No. )
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14a-6(e)(2))
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/ / Definitive Additional Materials
/ / Soliciting Material Pursuant to Section240.14a-11(c) or
Section240.14a-12
INFORMATION HOLDINGS INC.
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(Name of Registrant as Specified In Its Charter)
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INFORMATION HOLDINGS INC.
------------------------
NOTICE OF ANNUAL MEETING OF STOCKHOLDERS
APRIL 27, 1999
------------------------
The Annual Meeting of Stockholders of Information Holdings Inc., a Delaware
corporation (the "Company"), will be held at the New York Marriott East Side
Hotel, 525 Lexington Avenue (at 49(th) Street), New York, New York, on Tuesday,
April 27, 1999, at 2:00 p.m., Eastern Standard Time, for the purpose of
considering and acting upon the following matters, which are described more
fully in the accompanying Proxy Statement:
(a) To elect five directors to serve until the 2000 annual meeting of
stockholders or until their respective successors are duly elected and
qualified;
(b) To ratify the appointment by the Board of Directors of Ernst & Young LLP
as the Company's independent accountants for the fiscal year ending
December 31, 1999; and
(c) To transact such other business as may properly come before the meeting
or any adjournment or postponement thereof.
Holders of Common Stock of record at the close of business on March 22, 1999
(the "Record Date") are entitled to vote at the Annual Meeting and any
adjournment thereof. A list of stockholders of the Company as of the Record Date
will be available for inspection during business hours through April 26, 1999,
at the Company's offices, 2777 Summer Street, Suite 209, Stamford, CT, and will
also be available for inspection at the Annual Meeting.
STOCKHOLDERS ARE REQUESTED TO COMPLETE, DATE AND SIGN THE ENCLOSED PROXY
CARD AND RETURN IT PROMPTLY IN THE ENCLOSED ENVELOPE WHICH HAS BEEN PROVIDED FOR
YOUR CONVENIENCE AND WHICH REQUIRES NO POSTAGE IF MAILED IN THE UNITED STATES.
THE PROMPT RETURN OF PROXY CARDS WILL ENSURE A QUORUM. ANY STOCKHOLDER PRESENT
AT THE ANNUAL MEETING MAY REVOKE HIS OR HER PROXY AND VOTE PERSONALLY ON ALL
MATTERS BROUGHT BEFORE THE ANNUAL MEETING.
By Order of the Board of Directors,
[LOGO]
VINCENT A. CHIPPARI
SECRETARY
MARCH 29, 1999
INFORMATION HOLDINGS INC.
2777 SUMMER STREET, SUITE 209
STAMFORD, CT 06905
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PROXY STATEMENT
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ANNUAL MEETING OF STOCKHOLDERS
This Proxy Statement is furnished in connection with the solicitation of
proxies by the Board of Directors of Information Holdings Inc., a Delaware
corporation (the "Company"), for use at the Annual Meeting of Stockholders of
the Company (the "Annual Meeting") to be held on Tuesday April 27, 1999, at 2:00
p.m., Eastern Standard Time, at the New York Marriott East Side Hotel, 525
Lexington Avenue (at 49(th) Street), New York, New York, 10017, or at any
adjournment or postponement thereof, for the purposes set forth in the
accompanying Notice of Annual Meeting of Stockholders. It is expected that the
Notice of Annual Meeting of Stockholders, this Proxy Statement and the enclosed
proxy card, together with the Company's Annual Report to stockholders for the
fiscal year ended December 31, 1998, will be mailed to stockholders entitled to
vote at the Annual Meeting commencing on or about April 1, 1999.
Any stockholder or stockholder's representative who, because of a
disability, may need special assistance or accommodation to allow him or her to
participate at the Annual Meeting may request reasonable assistance or
accommodation from the Company by contacting Information Holdings Inc., 2777
Summer Street, Suite 209, Stamford, CT, 06905. To provide the Company sufficient
time to arrange for reasonable assistance, please submit all requests by April
14, 1999.
RECORD DATE AND VOTING SECURITIES
Stockholders can ensure that their shares are voted at the Annual Meeting by
signing and returning the enclosed proxy card in the envelope provided. The
submission of a signed proxy will not affect a stockholder's right to attend the
Annual Meeting and vote in person. Stockholders who execute proxies retain the
right to revoke them at any time before they are voted by filing with the
Secretary of the Company a written revocation or a proxy bearing a later date.
The presence at the Annual Meeting of a stockholder who has signed a proxy does
not itself revoke that proxy unless the stockholder attending the Annual Meeting
files written notice of revocation of the proxy with the Secretary of the
Company at any time prior to the voting of the proxy.
Proxies will be voted as specified by the stockholders. Where specific
choices are not indicated, proxies will be voted FOR the proposals submitted for
approval. The proxy card provides space for a stockholder to withhold voting for
any or all nominees to the Board of Directors or to abstain from voting for any
proposal if the stockholder chooses to do so.
Under Delaware law and the Company's Bylaws, the presence of a quorum is
required to transact business at the Annual Meeting. A quorum is defined as the
presence, either in person or by proxy, of a majority of the shares entitled to
vote. Proxies marked "abstain" will be included in determining a quorum. On
routine matters, brokers who hold customer shares in "street name" but have not
timely received voting instructions from such customers have discretion to vote
such shares. Since all of the matters to be voted upon at the Annual Meeting are
routine, the presence of such shares will be included in determining a quorum.
Under Delaware law and the Company's Bylaws, proposals must be approved by
the affirmative vote of a majority, or, in the case of the election of
directors, a plurality, of the shares present, either in person or by proxy, at
the Annual Meeting and entitled to vote. Accordingly, abstentions have the same
effect as
1
votes "against" a proposal, whereas instructions to withhold voting on the
election of any nominee for director have no effect on the outcome of the vote.
The Board of Directors has fixed the close of business on March 22, 1999 as
the record date (the "Record Date") for the determination of the stockholders of
the Company who are entitled to receive notice of and to vote at the Annual
Meeting. At the close of business on the Record Date, the Company had
outstanding 16,943,189 shares of common stock, par value $0.01 per share (the
"Common Stock"), excluding treasury shares. The holders of Common Stock are
entitled to one vote for each share held on the Record Date.
PROPOSAL NUMBER ONE
ELECTION OF DIRECTORS
All directors of the Company serve annual terms which expire on the date of
the Annual Meeting. At the Annual Meeting, the stockholders will elect five
directors to hold office, subject to the provisions of the Company's Bylaws,
until the Annual Meeting of Stockholders in 2000 and until their respective
successors shall have been duly elected and qualified.
The Company has agreed to nominate and use its best efforts to elect and
cause to remain as directors (i) Mason P. Slaine, for so long as he beneficially
owns (within the meaning of Rule 13d-3 under the Securities Exchange Act of
1934, as amended) at least 5% of the outstanding shares of Common Stock, unless
his employment is terminated by the Company for "Just Cause" (as defined in his
employment agreement) and (ii) at least one or two nominees of Warburg, Pincus
Ventures, L.P. ("Warburg Pincus"), for so long as Warburg Pincus owns at least
10% or 20%, respectively, of the outstanding shares of Common Stock.
Unless contrary instructions are given, the persons named in the enclosed
proxy or their substitutes will vote FOR the election of the five director
nominees named below. The Board of Directors believes that all of the nominees
are willing to serve as directors. However, if any nominee at the time of
election is unable to serve or is otherwise unavailable for election, and as a
result other nominees are designated by the Board of Directors, the persons
named in the enclosed proxy or their substitutes intend to vote for the election
of such designated nominees.
The nominees for election as directors to serve until the Annual Meeting of
Stockholders in 2000, together with certain information about them, are set
forth below:
MICHAEL E. DANZIGER.......... Michael E. Danziger, 40, has served as a director of the
Chairman of Thomson Financial Company since July 1998. Since 1991, Mr. Danziger has served
Services Database Group, a as Chairman of Thomson Financial Services Database Group,
division of The Thomson which provides financial information products and services.
Corporation. Since 1993, he has also been an executive officer of Rand
Publishing Company Inc. ("Rand"), a private holding company
that has made investments in the publishing industry.
DAVID R. HAAS................ David R. Haas, 57, has served as a director of the Company
Financial Consultant since July 1998. Since 1995, Mr. Haas has been a financial
consultant in the entertainment and communications
industries. From 1990 until 1994, he was Senior Vice
President and Controller of Time Warner, a leading media and
entertainment company. He is currently a director of TODD-AO
Corporation and GRB Entertainment, Inc.
2
SIDNEY LAPIDUS............... Sidney Lapidus, 60, has served as a director of the Company
General Partner of Warburg, since December 1996. Mr. Lapidus has been a General Partner
Pincus & Co. ("WP") and a of WP and a Member and Managing Director of EMW LLC or its
Member and Managing predecessors since January 1982, where he has been employed
Director of E.M. Warburg, since 1967. He is currently a director of Caribiner
Pincus & Co., LLC ("EMW International, Inc., Grubb and Ellis Company, Journal
LLC"). Register Company, Knoll Inc., Lennar Corporation and several
privately held companies.
DAVID E. LIBOWITZ............ David E. Libowitz, 36, has served as a director of the
General Partner of WP and a Company since December 1996. Mr. Libowitz is a General
Member and Managing Partner at WP and a Member and Managing Director of EMW LLC,
Director of EMW LLC. where he has been employed since July 1991. He is currently
a director of Caribiner International, Inc.
MASON P. SLAINE.............. Mason P. Slaine, 46, has served as a director of the Company
President and Chief Executive since December 1996. Mr. Slaine has been President and Chief
Officer of the Company. Executive Officer since December 1996. Since 1993, Mr.
Slaine has been Chairman of Rand. From 1995 until 1998, Mr.
Slaine was Chairman of Progressive Grocer Associates LLC, a
publisher of magazines serving the retail industry. From
1994 to 1996, Mr. Slaine served as President of Thomson
Financial, a division of the Thomson Corporation that
provides financial information, research, analysis and
software products worldwide. From 1993 to 1994, he served as
President of Thomson Financial Publishing, a division of
Thomson Financial.
VOTE REQUIRED
The affirmative vote of a plurality of the shares of Common Stock present,
either in person or by proxy, at the Annual Meeting and entitled to vote is
required for the election of the directors.
THE BOARD OF DIRECTORS RECOMMENDS A VOTE "FOR" ELECTION OF THE NOMINEES
LISTED ABOVE.
PROPOSAL NUMBER TWO
RATIFICATION OF INDEPENDENT ACCOUNTANTS
Subject to stockholder ratification, the Board of Directors, upon
recommendation of the Audit Committee, has appointed the firm of Ernst & Young
LLP as the independent accountants of the Company for the fiscal year ending
December 31, 1999. This firm has examined the accounts of the Company since
inception. If the stockholders do not ratify this appointment, the Board will
consider other independent accountants. One or more members of Ernst & Young LLP
is expected to be present at the Annual Meeting and will have the opportunity to
make a statement if they so desire and will be available to respond to
questions.
VOTE REQUIRED
The affirmative vote of a majority of the shares of Common Stock present,
either in person or by proxy, at the Annual Meeting and entitled to vote is
required for the ratification of the independent accountants.
THE BOARD OF DIRECTORS RECOMMENDS A VOTE "FOR" RATIFICATION OF THE
APPOINTMENT OF ERNST & YOUNG LLP AS INDEPENDENT ACCOUNTANTS.
3
THE BOARD OF DIRECTORS AND ITS COMMITTEES
The Board of Directors is responsible for the management and direction of
the Company and for establishing broad corporate policies. The Board of
Directors held two meetings between August 12, 1998, the date of consummation of
the initial public offering of the Common Stock (the "Effective Date"), and
December 31, 1998, the Company's fiscal year end. All directors were present in
person at both meetings.
COMMITTEES OF THE BOARD OF DIRECTORS
The Board of Directors has two standing committees: the Audit Committee and
the Compensation Committee. The Company does not have a standing committee on
nominations. The principal responsibilities of each committee are described in
the following paragraphs.
AUDIT COMMITTEE. In 1998, the Audit Committee was comprised of Michael
Danziger and David Haas. The Audit Committee is responsible for meeting with the
Company's independent accountants regarding, among other issues, audits and
adequacy of the Company's accounting and control systems. The Audit Committee
also recommends a firm of certified independent accountants to serve as the
Company's independent accountants, authorizes all audit fees and other
professional services rendered by the accountants and periodically reviews the
independence of the accountants. It held one meeting in 1998.
COMPENSATION COMMITTEE. In 1998, the Compensation Committee was comprised
of Sidney Lapidus and David Libowitz. The Compensation Committee has the
authority to determine all matters relating to the compensation of the Company's
employees. It held no meetings during 1998.
COMPENSATION OF DIRECTORS
Each director who is not an employee of the Company or its affiliates (each,
an "Independent Director"), receives a fee of $1,000 for each meeting of the
Board of Directors attended in person and $500 for each telephonic meeting of
the Board of Directors attended. The Chairman of each committee of the Board
will also receive an annual fee of $1,000. On the Effective Date each
Independent Director received a grant of options to purchase 1,500 shares of
common stock at the initial public offering price of $12 per share. Subsequent
to 1998, each Independent Director will receive an annual grant of a number of
options equal to $15,000 divided by the fair market value of one share of common
stock on the date of grant, which options will be exercisable at a price per
share equal to the fair market value of the common stock on such date. All
options granted to Independent Directors will vest immediately. Directors who
are not Independent Directors will not receive fees for serving on the Board of
Directors or any committee thereof. In 1998, there were two Independent
Directors of the Company and three directors employed by the Company or its
affiliates. All directors are reimbursed for reasonable out-of-pocket expenses
incurred in attending meetings of the Board of Directors and any committee
thereof.
COMPENSATION COMMITTEE INTERLOCKS AND INSIDER PARTICIPATION
The Securities and Exchange Commission requires issuers to disclose the
existence of any other company in which both (i) an executive officer of the
Company serves on the board of directors and/or compensation committee and (ii)
a director of the Company serves as an executive officer. There are no
relationships that are required to be disclosed hereunder.
LITIGATION
Michael E. Danziger, one of the Company's directors, is a shareholder,
officer and director of Rand and has been named as a defendant in a lawsuit (the
"Rand Litigation") brought by certain of the other investors in Rand. Mr.
Danziger denies the allegations set forth in the Rand Litigation and has
informed the Company that he is vigorously contesting them.
4
EXECUTIVE OFFICERS
Executive officers are elected by the Board of Directors and hold office
until their successors have been duly elected and qualified or until their
earlier resignation or removal from office. A brief biography of each executive
officer of the Company as of February 15, 1999 is provided below (other than Mr.
Slaine, whose biography is set forth above).
Vincent A. Chippari, 38, has served as Executive Vice President and Chief
Financial Officer of the Company since January 1998. From 1990 to 1996, Mr.
Chippari was Chief Financial Officer of Thomson Business Information, which
serves the global scientific, medical, intellectual property, technical and
general reference markets. From 1996 to 1997, he was Executive Vice President,
Operations, of Thomson Intellectual Property/Automotive Group, as well as
General Manager of its Derwent Information North America unit, a patent and
scientific information business.
Dennis Buda, 50, has served as President of the Company's CRC Press unit
since January 1997. From 1992 until then, Mr. Buda was owner and President of
St. Lucie Press, Inc., a publisher of managerial, technical, and analytical
business books.
Steven Wolfson, 54, has served as President of the Company's MicroPatent
unit since July 1997. From 1996 to 1997, Mr. Wolfson was Vice President and
Chief Financial Officer of MicroPatent's predecessor. From 1994 to 1996, he was
Vice President and Chief Financial Officer of American Banker, a financial
information publishing company. From 1993 to 1994, Mr. Wolfson was an
independent consultant in the financial and administrative fields.
COMPENSATION
The following Summary Compensation Table contains information concerning
annual and long-term compensation of the Chief Executive Officer and each of the
other executive officers of the Company who were serving as executive officers
at the end of Fiscal 1998 (the "Named Executive Officers") for services rendered
in all capacities during the fiscal years 1998 and 1997. The Company had no
operations prior to January 1997.
5
SUMMARY COMPENSATION TABLE
LONG TERM
COMPENSATION
AWARDS
-------------
ANNUAL COMPENSATION SECURITIES
NAME AND ----------------------------------- UNDERLYING
PRINCIPAL POSITION YEAR SALARY($) BONUS($) OTHER OPTIONS(#)
---------------------------- --------- ----------- ----------- --------- -------------
Mason Slaine..................................................... 1998 325,000 -- -- --
President and Chief Executive Officer 1997 300,000 -- $1,000,000(1) --
Vincent A. Chippari (2).......................................... 1998 192,000 100,000 -- 104,167
Executive Vice President 1997 -- -- -- --
and Chief Financial Officer
Dennis Buda...................................................... 1998 168,000 -- $1,050,000(3) 250,000
President--CRC Press LLC 1997 150,000 -- $ 660,000(4) --
Steven Wolfson (5)............................................... 1998 129,000 50,000 -- 10,417
President--MicroPatent LLC 1997 62,500 25,000 -- --
- ------------------------------
(1) Represents a one-time payment related to the formation of the Company and
its initial acquisitions.
(2) Mr. Chippari's employment commenced on January 19, 1998.
(3) Represents a one-time incentive payment related to a revision in the terms
of Mr. Buda's employment agreement. Of the total payment, $250,000 was paid
in shares of common stock based on the initial public offering price of $12
per share.
(4) Represents incentive payments made under Mr. Buda's initial employment
agreement entered into in connection with the Company's acquisition of St.
Lucie Press.
(5) Mr. Wolfson's compensation includes compensation from July 2, 1997, the date
of the Company's acquisition of MicroPatent.
The following table sets forth information concerning individual grants of
options to purchase Common Stock made to the Named Executive Officers during the
fiscal year ended December 31, 1998. No options were exercised by the Named
Executive Officers during the fiscal year ended December 31, 1998.
6
STOCK OPTION GRANTS IN 1998
POTENTIAL REALIZABLE
VALUE AT
ASSUMED ANNUAL RATES
OF
NUMBER OF PERCENT OF STOCK PRICE
SECURITIES TOTAL APPRECIATION FOR
UNDERLYING OPTIONS EXERCISE OR OPTION TERM (1)
OPTIONS GRANTED TO BASE PRICE EXPIRATION --------------------
NAME GRANTED (#) EMPLOYEES ($/SHARE) DATE 5%($) 10%($)
- ---------------------------------------------- ------------- --------------- ------------- ----------- --------- ---------
Vincent A. Chippari........................... 104,167(2) 19.5 12.00 8/12/08 786,117 1,992,183
Dennis Buda................................... 250,000(3) 46.8 12.00 8/12/03 828,845 1,831,530
Steven Wolfson................................ 10,417(4) 2.0 12.00 8/12/08 78,614 199,224
- ------------------------------
(1) Amounts reflect certain assumed rates of appreciation set forth in the
executive compensation disclosure rules of the Securities and Exchange
Commission (the "Commission"). Actual gains, if any, on stock option
exercises will depend on future performance of the Common Stock. No
assurance can be made that the amounts reflected in these columns will be
achieved. The values in these columns assume that the fair market value on
the date of grant of each option was equal to the exercise price thereof.
(2) Options were granted on August 12, 1998 and vest and become exercisable
one-third on August 12, 1999, one-third on August 12, 2000 and one-third on
January 19, 2001.
(3) Options were granted on August 12, 1998. 106,482 were vested and exercisable
as of December 31, 1998, 83,333 vest and become exercisable on December 31,
1999 and the remaining 60,185 vest and become exercisable in equal monthly
installments from January 1999 to January 2000.
(4) Options were granted on August 12, 1998 and vest and become exercisable in
four equal annual installments from the date of grant.
EMPLOYMENT AGREEMENTS
MASON P. SLAINE
The Company has an employment agreement, dated as of December 31, 1996, with
Mason P. Slaine which provides that Mr. Slaine will serve as President and Chief
Executive Officer of the Company until June 30, 2000, subject to automatic
two-year renewals unless either party provides notice of non-renewal. Mr.
Slaine's employment agreement provides for a base salary of $300,000 per year,
subject to increases at the discretion of the Board of Directors. In addition,
Mr. Slaine is eligible to receive an annual cash bonus, as determined by the
Board of Directors. He is also entitled to participate in health, insurance,
pension, automobile and other benefits provided to other senior executives of
the Company.
In the event that Mr. Slaine resigns without "Good Reason" or his employment
terminates for "Just Cause" (as such terms are defined in his employment
agreement), Mr. Slaine will be entitled to receive any accrued but unpaid based
salary, unused vacation or unreimbursed expenses. In the event that Mr. Slaine
terminates his employment for Good Reason, for a period of 12 months following
the date of such termination, in addition to the amounts specified in the
foregoing sentence, Mr. Slaine will continue to receive his base salary and
health and insurance benefits, offset by amounts paid to him in respect of other
employment or business activities during such period. Mr. Slaine's employment
agreement also contains a non-compete clause, which applies until the first
anniversary of the termination of Mr. Slaine's employment, and confidentiality
and non-solicitation provisions.
VINCENT A. CHIPPARI
The Company has an employment agreement, dated as of January 19, 1998, with
Vincent A. Chippari which provides that Mr. Chippari will serve as Executive
Vice President and Chief Financial Officer of the Company until January 19,
2001, subject to automatic one-year renewals unless either party provides notice
of non-renewal. Mr. Chippari's employment agreement provides for a base salary
of $200,000 per
7
year, increased annually to the extent of any net increase in the Consumer Price
Index. In addition, Mr. Chippari is eligible to receive an annual cash bonus in
an amount up to 50% of his base salary based upon the meeting of certain
objectives approved by the Board of Directors. Mr. Chippari is also entitled to
participate in health, insurance, pension and other benefits provided to other
senior executives of the Company.
In the event that Mr. Chippari resigns or his employment terminates for
"Cause" (as defined in his employment agreement), Mr. Chippari will be entitled
to receive any accrued but unpaid base salary, unused vacation or unreimbursed
expenses. In the event the Company terminates his employment without Cause, in
addition to the amounts specified in the foregoing sentence, Mr. Chippari will
continue to receive his base salary and health and insurance benefits for a
period of 12 months following the date of such termination. Mr. Chippari's
employment agreement also contains a non-compete clause, which applies until the
first anniversary of the termination of Mr. Chippari's employment, and
confidentiality and non-solicitation provisions.
DENNIS BUDA
The Company has an employment agreement, dated as of June 10, 1998, with
Dennis Buda which provides that Mr. Buda will serve as President of CRC Press
until January 13, 2000. Mr. Buda's employment agreement provides for a base
salary of $175,000 per year through December 31, 1998 and $200,000 per year
beginning January 1, 1999, subject to increases at the discretion of the Board
of Directors. In addition, Mr. Buda is entitled to receive a bonus equal to 50%
of his base salary if CRC Press meets its financial performance objectives for
the year ended December 31, 1999. Mr. Buda is also entitled to participate in
health, insurance, pension and other benefits provided to other senior
executives of the Company.
Mr. Buda's employment agreement provided for the grant of options, dated
August 12, 1998, to purchase 250,000 shares of Common Stock at the initial
public offering price of $12 per share. Pursuant to the employment agreement,
Mr. Buda's options are exercisable for a period of five years from the date of
grant. Approximately one-third of the shares became exercisable when issued,
one-third vest and become exercisable on December 31, 1999 and the balance
thereof vest and become exercisable in equal monthly installments through
January 13, 2000.
In the event that Mr. Buda's employment terminates for any reason, Mr. Buda
will be entitled to receive any accrued but unpaid base salary, unused vacation
or unreimbursed expenses. Mr. Buda's employment agreement also contains a
non-compete clause, which applies until January 13, 2002, and confidentiality
and non-solicitation provisions.
LITIGATION
Mason P. Slaine, the Company's President and Chief Executive Officer, is a
shareholder, officer and director of Rand and has been named as a defendant in
the Rand Litigation. Certain of the other investors in Rand are asserting claims
for damages and requesting a constructive trust be established for their benefit
consisting of Mr. Slaine's interest in the Company and other relief. These
investors allege that Mr. Slaine breached his fiduciary duty to them and usurped
corporate opportunities available to Rand by investing in the Company and by
participating in the acquisition by the Company of various businesses. Mr.
Slaine denies such allegations and has informed the Company that he is
vigorously contesting the action brought by these investors.
8
NOTWITHSTANDING ANYTHING TO THE CONTRARY SET FORTH IN ANY OF THE COMPANY'S
FILINGS UNDER THE SECURITIES ACT OF 1933, AS AMENDED (THE "SECURITIES ACT"), OR
THE SECURITIES EXCHANGE ACT OF 1934, AS AMENDED (THE "EXCHANGE ACT"), THAT MIGHT
INCORPORATE FILINGS BY REFERENCE, INCLUDING THIS PROXY STATEMENT, IN WHOLE OR IN
PART, THE FOLLOWING REPORT OF THE BOARD OF DIRECTORS AND COMPENSATION COMMITTEE
(THE "COMPENSATION COMMITTEE") ON EXECUTIVE COMPENSATION AND THE PERFORMANCE
GRAPH SHALL NOT BE INCORPORATED BY REFERENCE INTO ANY SUCH FILINGS.
REPORT OF THE BOARD OF DIRECTORS AND THE COMPENSATION COMMITTEE
ON EXECUTIVE COMPENSATION
The Compensation Committee's responsibilities include establishing the
Company's policies governing the compensation of officers and other key
executives of the Company. The Compensation Committee approves all elements of
compensation for executive officers. The Board of Directors is responsible for
the administration of the Company's 1998 Stock Option Plan.
EXECUTIVE COMPENSATION. The Company's compensation program consists of base
salary, annual incentive payments, stock options and employee benefits. The goal
of the Company's compensation program is to motivate and reward its executive
officers and other key employees to improve long-term shareholder value and to
attract and retain the highest quality executive and key employee talent
available. The Company's executive compensation program is designed to align
executive compensation practices with increasing the value of the Common Stock
and to foster adherence to, and promotion of, the Company's business mission,
values, strategic goals and annual objectives.
The Compensation Committee has the authority to determine all matters
relating to compensation of the Company's employees. The Compensation Committee
will consider an executive's scope of responsibilities, level of experience,
individual performance and attainment of pre-established goals as well as the
Company's business plan and general economic factors. In making its decisions,
and to maintain the desired levels of competitiveness and congruity with the
Company's long-term performance goals, the Compensation Committee will receive
input from the Company's Chief Executive Officer and Chief Financial Officer.
BASE SALARY AND BONUS. The salary levels for executive officers are
determined by such officer's level of job responsibility and experience, job
performance and attainment of pre-established goals. Additional consideration is
given to salaries for a comparable position within the industry and the
Company's ability to pay. Bonus payouts to executive officers and other key
employees of the Company are based on the attainment of corporate earnings goals
and certain individual performance goals.
OPTIONS. The Board of Directors believes that stock options are important
to provide an inducement to obtain and retain the services of employees of the
Company and its subsidiaries and to increase their proprietary interest in the
Company's success. Long-term incentives in the form of stock options provide a
vehicle to reward executive officers only if there is an increase in shareholder
value. Stock options are granted on a discretionary basis within a guideline
range that takes into account the position responsibilities of executive
officers and key employees of the Company whose contributions and skills are
important to the long-term success of the Company.
In August 1998, September 1998 and December 1998, the Board of Directors
granted 528,213, 5,833 and 7,800 options, respectively, to purchase Common Stock
to officers or key employees of the Company or its subsidiaries. Such options
were granted at exercise prices equal to the respective market prices of the
Common Stock on the dates of grant.
CHIEF EXECUTIVE OFFICER. All aspects of Mr. Slaine's compensation are
governed by his Employment Agreement, pursuant to which he was appointed
President and Chief Executive Officer on December 31, 1996.
9
POLICY REGARDING QUALIFYING COMPENSATION. Section 162(m) of the Internal
Revenue Code imposes a $1,000,000 limitation on tax-deductible remuneration paid
to any one of the five most highly compensated executive officers of a
publicly-held corporation, unless the compensation is treated as performance
related or is otherwise exempt from the provisions of Section 162(m). The
Company intends to structure its compensation to executive officers in a manner
that complies with these performance requirements for the fiscal year ending
December 31, 1999. It is possible that part of the compensation paid to one
executive officer will exceed this limitation in the fiscal year ended December
31, 1998.
BOARD OF DIRECTORS COMPENSATION COMMITTEE
MICHAEL E. DANZIGER SIDNEY LAPIDUS
DAVID R. HAAS DAVID LIBOWITZ
SIDNEY LAPIDUS
DAVID E. LIBOWITZ
MASON P. SLAINE
10
SECURITY OWNERSHIP OF CERTAIN BENEFICIAL
OWNERS AND MANAGEMENT
The following table sets forth certain information, as of March 22, 1999
regarding the beneficial ownership of Common Stock by (i) each stockholder who
is known by the Company to own more than 5% of the outstanding shares of Common
Stock, (ii) each director, (iii) each executive officer named in the Summary
Compensation Table and (iv) all directors and executive officers as a group.
SHARES BENEFICIALLY
OWNED(1)
-------------------------
NAME AND ADDRESS OF BENEFICIAL OWNER NUMBER PERCENT
- ------------------------------------------------------------------------------------------- ------------ -----------
Warburg, Pincus Ventures, L.P. (2)......................................................... 9,802,074 57.4
466 Lexington Avenue
New York, New York 10017
Mason P. Slaine............................................................................ 2,379,563 13.9
2777 Summer Street, Suite 209
Stamford, Connecticut 06905
Vincent A. Chippari........................................................................ 18,363 *
Dennis Buda (3)............................................................................ 151,463 *
Steven Wolfson............................................................................. 1,000 *
Michael E. Danziger (4).................................................................... 91,106 *
David R. Haas (4).......................................................................... 5,980 *
Sidney Lapidus (5)......................................................................... 9,802,074 57.4
466 Lexington Avenue
New York, New York 10017
David E. Libowitz (5)...................................................................... 9,802,074 57.4
466 Lexington Avenue
New York, New York 10017
All directors and executive officers, as a group (eight persons)........................... 12,449,549 72.9
- ------------------------
* Less than 1%.
(1) Pursuant to the regulations of the Commission, shares are deemed to be
"beneficially owned" by a person if such person directly or indirectly has
or shares the power to vote or dispose of such shares, whether or not such
person has any pecuniary interest in such shares, or the right to acquire
the power to vote or dispose of such shares within 60 days, including any
right to acquire through the exercise of any option, warrant or right.
(2) The sole general partner of Warburg Pincus is Warburg, Pincus & Co., a New
York general partnership ("WP"). EMW LLC, a New York limited liability
company manages Warburg Pincus. The members of EMW LLC are substantially the
same as the partners of WP. Lionel I. Pincus is the Managing Partner of WP
and the Managing Member of EMW LLC. WP has a 15% interest in the profits of
Warburg Pincus as the general partner and also owns approximately 1.2% of
the limited partnership interests in Warburg Pincus.
(3) Includes 120,371 shares issuable upon exercise of options that are vested
and exercisable, and 9,259 shares issuable upon exercise of options that
will vest and become exercisable on or before May 21, 1999.
(4) Includes 1,500 shares issuable upon exercise of options that are vested and
exercisable.
(5) All shares indicated as owned by Mr. Lapidus and Mr. Libowitz are owned by
Warburg Pincus and are included because of their affiliation with Warburg
Pincus. Both of them are Members and Managing
11
Directors of EMW LLC and General Partners of WP. Messrs. Lapidus and
Libowitz disclaim beneficial ownership of the shares owned by Warburg
Pincus.
CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS
Pursuant to an Exchange Agreement, dated as of June 10, 1998, immediately
prior to the consummation of the initial public offering of the Common Stock,
all of the equity holders of Information Ventures LLC ("IV") contributed to the
Company all of their direct and indirect interests in IV in exchange for an
aggregate of 12,200,000 shares of Common Stock. The exact number of shares
issued to such equity holders was 9,802,074, 2,379,563 and 18,363 shares of
Common Stock for Warburg Pincus, Mr. Slaine and Mr. Chippari, respectively.
References herein to the Company with respect to matters occurring prior to such
exchange shall be deemed to refer to IV.
The Company transacts business in the amount of approximately $250,000 per
year with a mail house owned by a brother-in-law of Mr. Buda. The rates charged
by such mail house are at or below the rates charged by other mail houses
serving the Company.
In September 1998, a subsidiary of the Company entered into a loan agreement
with Mr. Buda. Under the terms of the agreement, the subsidiary provided a loan
of $550,000 bearing interest at a rate of 5.5% per annum; payable on demand. The
loan was repaid in full in January 1999.
Warburg Pincus and Mr. Slaine (the "Initial Stockholders") are entitled to
certain registration rights with respect to their respective shares of Common
Stock. Pursuant to a registration rights agreement, the Initial Stockholders
have the right to request two registrations of their shares of Common Stock,
provided that the anticipated public offering price equals $15 million or more,
and unlimited registrations on Form S-3, provided that the anticipated aggregate
offering price exceeds $5 million. In addition, the Initial Stockholders are
entitled to have their shares included in an unlimited number of registrations
initiated by the Company, subject to certain customary restrictions. The rights
of the Initial Stockholders pursuant to the registration rights agreement had
been subject to a 180 day lock-up agreement which expired on February 12, 1999.
In general, all fees, costs and expenses of such registration (other than
underwriting discounts and selling commissions) will be borne by the Company.
The Company has agreed to indemnify the Initial Stockholders from any liability
arising out of or relating to any untrue statement of a material fact or any
omission of a material fact in any registration statement or prospectus filed by
the Company pursuant to the registration rights agreement, subject to certain
exceptions.
12
SHARE INVESTMENT PERFORMANCE
The following graph compares the cumulative total stockholder returns on the
Common Stock based on an investment of $100 after the close of the market on (i)
August 7, 1998, the effective date of the Company's initial public offering and
(ii) the close of the market on December 31, 1998 against the Russell 2000 Index
("Russell 2000") and an industry peer group consisting of McGraw-Hill Companies
Inc., Harcourt General, Inc. and John Wiley & Sons:
EDGAR REPRESENTATION OF DATA POINTS USED IN PRINTED GRAPHIC
PERFORMANCE CHART
VALUE OF $100
Information Holdings Russell 2000 Peer Group
08/07/1998 100 100 100
12/31/1998 130.57 101.48 127.46
AUGUST 7, 1998 DECEMBER 31, 1998
Information Holdings Inc. $100 $130.57
Russell 2000 $100 $101.48
Peer Group $100 $127.16
13
FILINGS UNDER SECTION 16(A) OF THE SECURITIES EXCHANGE ACT OF 1934
Section 16(a) of the Exchange Act requires the Company's executive officers,
directors and persons who beneficially own more than 10% of the Common Stock to
file initial reports of ownership and reports of changes in ownership with the
Commission and the New York Stock Exchange. Executive officers, directors and
greater than 10% beneficial owners are required by Commission regulations to
furnish the Company with copies of all Section 16(a) forms they file.
Based solely on the Company's review of the copies of such forms furnished
to the Company and written representations from the executive officers,
directors and greater than 10% beneficial owners, the Company believes that all
Section 16(a) filing requirements applicable to its executive officers,
directors and greater than 10% owners were complied with during Fiscal 1998.
STOCKHOLDER NOMINATIONS AND PROPOSALS FOR 2000
Any proposals intended to be presented by stockholders at the Company's 2000
Annual Meeting of Stockholders must be received by the Company for inclusion in
the proxy statement for such annual meeting by December 1, 1999. Such proposals
must also meet the requirements of Rule 14a-8 of the Commission relating to
stockholders' proposals. A stockholder proposal outside of the processes of Rule
14a-8 will be considered untimely if received by the Company after February 15,
2000.
OTHER BUSINESS
It is not anticipated that there will be presented to the Annual Meeting any
business other than the election of directors and the ratification of
accountants, and the Board of Directors was not aware, a reasonable time before
this proxy solicitation, of any other matters which might properly be presented
for action at the meeting. If any other business should come before the Annual
Meeting, the persons named on the enclosed proxy card will have discretionary
authority to vote all proxies in accordance with their best judgment.
Proxies in the form enclosed are solicited by or on behalf of the Board of
Directors. The cost of this solicitation will be borne by the Company. In
addition to the solicitation of the proxies by use of the mails, some of the
officers and regular employees of the Company, without extra remuneration, may
solicit proxies personally, or by telephone or otherwise. In addition,
arrangements will be made with brokerage houses and other custodian, nominees
and fiduciaries to forward proxies and proxy material to their principals, and
the Company will reimburse them for their expenses in forwarding soliciting
materials, which are not expected to exceed $5,000.
It is important the proxies be returned promptly. Therefore, stockholders
are urged to sign, date and return the enclosed proxy card in the accompanying
stamped and addressed envelope.
By Order of the Board of Directors
[LOGO]
Vincent A. Chippari
March 29, 1999
14
1811-PS99
[1811 -INFORMATION HOLDINGS INC.] [FILE:IHI98B.ELX] [VERSION - 4] [03/24/99]
IHI98B DETACH HERE
- --------------------------------------------------------------------------------
PROXY
INFORMATION HOLDINGS INC.
PROXY FOR THE ANNUAL MEETING OF STOCKHOLDERS TO BE HELD APRIL 27, 1999
THIS PROXY IS SOLICITED ON BEHALF OF THE BOARD OF DIRECTORS OF THE COMPANY
AND SHOULD BE RETURNED AS SOON AS POSSIBLE IN THE PRE-PAID ENVELOPE PROVIDED
FOR YOU MAILING CONVENIENCE.
The undersigned , having received notice of the meeting and proxy statement
therefor, and revoking all prior proxies, hereby appoint(s) Mason P. Slaine and
Vincent A. Chippari, and each of them, attorneys or attorney of the undersigned
(with full power of substitution in them and each of them) for and in the
name(s) of the undersigned to attend the Annual Meeting of Stockholders of
INFORMATION HOLDINGS INC. (the "Company") to be held at the New York Marriott
East Side 525 Lexington Avenue, New York, New York on Tuesday, April 27, 1999 at
2:00 p.m., Eastern Standard Time, and any adjourned sessions thereof, and there
to vote and act upon the following matters in respect of all shares of stock of
the Company which the undersigned will be entitled to vote or act upon, with all
the powers the undersigned would possess if personally present.
IN THEIR DISCRETION, THE PROXIES ARE AUTHORIZED TO VOTE UPON SUCH OTHER
MATTERS AS MAY PROPERLY COME BEFORE THE MEETING OR ANY ADJOURNMENT THEREOF.
THE PROXY WHEN PROPERLY EXECUTED WILL BE VOTED IN THE MANNER DESCRIBED
HEREIN BY THE UNDERSIGNED STOCKHOLDER. THE SHARES REPRESENTED BY THIS PROXY WILL
BE VOTED AS DIRECTED BY THE UNDERSIGNED. IF NO DIRECTION IS GIVEN WITH RESPECT
TO ANY PROPOSAL, THIS PROXY WILL BE VOTED FOR SUCH PROPOSAL. Attendance of the
undersigned at the meeting or at any adjournment thereof will not be deemed to
revoke this proxy unless the undersigned shall revoke this proxy in writing.
WHETHER OR NOT YOU PLAN TO ATTEND THE ANNUAL MEETING, YOU ARE URGED TO
COMPLETE, DATE, SIGN AND RETURN THIS PROXY IN THE ACCOMPANYING ENVELOPE.
- ----------- -----------
SEE REVERSE CONTINUED AND TO BE SIGNED ON REVERSE SIDE SEE REVERSE
SIDE SIDE
- ----------- -----------
INFORMATION HOLDINGS INC.
c/o EquiServe
P.O. Box 8040
Boston, MA 02266-8040
PLEASE MARK /X/
VOTES AS IN
THIS EXAMPLE
[1811 -INFORMATION HOLDINGS INC.] [FILE:IHI98A.ELX] [VERSION - 3] [ 03/22/99]
IHI98A DETACH HERE
- ------------------------------------------------------------------------------------------------------------------------------------
1. Election of Directors.
FOR AGAINST ABSTAIN
Nominees: Michael E. Danzinger, David R. Haas, Sidney 2. To ratify and approve the selection by / / / / / /
Lapidus, David E. Libowitz, Mason P. Slaine the Board of Directors of Ernst &
Young LLP as independent public
/ / FOR / / WITHHELD accountants for the Company for the
ALL FROM ALL current fiscal year ending December
NOMINEES NOMINEES 31, 1999.
3. To transact such other business as may properly come before
/ / the meeting or any adjournment thereof.
------------------------------------------
For all nominees except as noted above
MARK HERE IF YOU PLAN TO ATTEND THE MEETING / /
MARK HERE FOR ADDRESS CHANGE AND NOTE AT LEFT / /
Please sign exactly as your name appears hereon. When shares
are held by joint owners both should sign. When signing as
attorney, executor, administrator, trustee or guardian, please
give full title as such. 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.
Signature: Date: Signature: Date:
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