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
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 materials
[ ] Definitive additional materials
[ ] Soliciting material pursuant to Rule 14a-12
DAVOX CORPORATION
-----------------
(Name of Registrant as Specified in Its Charter)
(Name of Person(s) Filing Proxy Statement, if other than Registrant)
PAYMENT OF FILING FEE (CHECK THE APPROPRIATE BOX):
[X] No fee required
[ ] Fee computed on table below per Exchange Act Rules 14a-6(i)(1) 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
filing fee is calculated and state how it was determined):
(4) Proposed maximum aggregate value of transaction:
(5) Total fee paid:
[ ] Fee paid previously with preliminary materials.
[ ] Check box if any part of the fee is offset as provided by Exchange Act Rule
0-11(a)(2) and identify the filing for which the offsetting fee was paid
previously. Identify the previous filing by registration statement number,
or the form or schedule and the date of its filing.
(1) Amount Previously Paid:
(2) Form, Schedule or Registration Statement No.:
(3) Filing Party:
(4) Date Filed:
DAVOX CORPORATION
6 Technology Park Drive
Westford, Massachusetts 01886
________________
NOTICE OF ANNUAL MEETING OF STOCKHOLDERS
TO BE HELD MAY 2, 2001
To The Stockholders of Davox Corporation:
Notice is Hereby Given that the Annual Meeting of Stockholders of Davox
Corporation, a Delaware corporation (the "Company"), will be held at 10:00 a.m.,
Boston time, on May 2, 2001, at the offices of the Company, 6 Technology Park
Drive, Westford, Massachusetts to consider and vote upon proposals:
1. To fix the number of directors constituting the Board of
Directors at five (5) and to elect a Board of Directors for the ensuing
year.
2. To ratify the selection of the firm of Arthur Andersen LLP as
auditors for the Company for the fiscal year ending December 31, 2001.
3. To transact such other business as may properly come before the
meeting or any postponements or adjournments thereof.
Only stockholders of record at the close of business on March 23, 2001 are
entitled to notice of and to vote at the meeting and any adjournment thereof.
All stockholders are cordially invited to attend the meeting in person. To
ensure your representation at the meeting, however, you are urged to sign and
return the enclosed proxy card as promptly as possible in the enclosed postage-
prepaid envelope. You may revoke your proxy in the manner described in the
accompanying Proxy Statement at any time before it has been voted at the Annual
Meeting. Any stockholder attending the Annual Meeting may vote in person even
if he or she has returned a proxy.
By Order of the Board of Directors,
Paul R. Lucchese
Secretary
Westford, Massachusetts
March 30, 2001
DAVOX CORPORATION
6 Technology Park Drive
Westford, Massachusetts 01886
_______________________________
PROXY STATEMENT
_______________________________
MARCH 30, 2001
Proxies in the form enclosed with this proxy statement are solicited by the
Board of Directors of Davox Corporation (the "Company" or "Davox") for use at
the Annual Meeting of Stockholders to be held on May 2, 2001 at 10:00 a.m. local
time at the offices of the Company, 6 Technology Park Drive, Westford,
Massachusetts 01886.
Only stockholders of record as of March 23, 2001 (the "Record Date") will
be entitled to vote at the meeting and any adjournments thereof. As of that
date, 12,798,505 shares of Common Stock, $.10 par value, of the Company were
issued and outstanding. Each share of Common Stock outstanding as of the Record
Date will be entitled to one vote and stockholders may vote in person or by
proxy. Execution of a proxy will not in any way affect a stockholder's right to
attend the meeting and vote in person. Any stockholder giving a proxy has the
right to revoke it by written notice to the Secretary of the Company at any time
before it is exercised or by delivering a later executed proxy to the Secretary
of the Company at any time before the original proxy is exercised.
An Annual Report to Stockholders, containing financial statements for the
fiscal year ended December 31, 2000, is being mailed together with this proxy
statement to all stockholders entitled to vote. This proxy statement and the
form of proxy were first mailed to stockholders on or about March 30, 2001.
The persons named as attorneys in the proxy card are directors and/or
officers of the Company. All properly executed proxies returned in time to be
counted at the meeting will be voted as stated below under "Election of
Directors." Any stockholder giving a proxy has the right to withhold authority
to vote for any individual nominee to the Board of Directors by writing that
nominee's name in the space provided on the proxy. In addition to the election
of directors, the stockholders will consider and vote upon a proposal to ratify
the selection of auditors, as further described in this proxy statement. Where a
choice has been specified on the proxy with respect to the foregoing matters,
the shares represented by the proxy will be voted in accordance with the
specifications and will be voted FOR if no specification is indicated.
The representation in person or by proxy of at least a majority of all
shares of Common Stock issued, outstanding and entitled to vote at the meeting
is necessary to constitute a quorum for the transaction of business. Votes
withheld from any nominee for election as director, as well as abstentions and
broker "non-votes" with respect to all other matters being submitted to
stockholders, are counted as present or represented for purposes of determining
the presence or absence of a quorum for the meeting. A "non-vote" occurs when a
nominee holding shares for a beneficial owner votes on one proposal, but does
not vote on another proposal because, in respect of such other proposal, the
nominee does not have discretionary voting power and has not received
instructions from the beneficial owner.
The election of directors by the stockholders shall be determined by a
plurality of the votes cast by stockholders entitled to vote. On all other
matters being submitted to stockholders, an affirmative vote of a majority of
the shares present in person or by proxy and entitled to vote on each such
matter is required for approval; therefore, abstentions will have the practical
effect of voting against each such matter since they are included in the number
of shares present and voting on each such matter. However, broker "non-votes"
are not considered shares entitled to vote and therefore will have no impact on
the outcome of the vote.
The Board of Directors of the Company knows of no other matters to be
presented at the meeting. If any other matter should be presented at the meeting
upon which a vote properly may be taken, shares represented by all proxies
received by the Board of Directors will be voted with respect thereto in
accordance with the judgment of the persons named as attorneys in the proxies.
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MANAGEMENT AND PRINCIPAL STOCKHOLDERS OF DAVOX
The following table sets forth, as of March 23, 2001 (except as noted
below), certain information regarding the ownership of shares of the Company's
Common Stock by (i) each person who, to the knowledge of the Company, owned
beneficially more than 5% of the shares of Common Stock of the Company
outstanding at such date, (ii) each Director and nominee of the Company, (iii)
each Named Officer (as defined below) and (iv) all Directors, nominees and
Executive Officers as a group:
Name and Address of Amount and Nature of
Beneficial Owner Beneficial Ownership (1) Percent of Class
---------------------------------------- ----------------------------------- ------------------
Entities and an individual 1,318,759(2) 10.30%
associated with Kopp Investment
Advisors, Inc.
7701 France Avenue South
Suite 500
Edina, MN 55435
Individuals associated with Sterling 774,650(3) 6.05%
Capital Management LLC and
Sterling MGT, Inc.
301 S. College Street, Suite 3200
Charlotte, NC 28202
Entities associated with 1,375,125(4) 10.74%
Neuberger Berman, Inc.
605 Third Ave.
New York, NY 10158-3698
Entities associated with 939,250(5) 7.34%
Putnam Investments, LLC.
One Post Office Square
Boston, MA 02109
Alphonse M. Lucchese 760,206(6) 5.61%
David M. Sample 50,000(7) *
R. Scott Asen 565,691(8) 4.41%
Michael D. Kaufman 343,707(9) 2.68%
Peter Gyenes 10,000(10) *
Jeffrey E. Anderholm 34,425(11) *
Mark Zabroske 22,500(12) *
Douglas W. Smith 58,921 *
Mark Donovan 98,625(13) *
All Directors, Nominees and Executive 2,030,722(14) 14.62%
Officers as a group (13 Persons)
______________________________
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* Less than 1.0%.
(1) Except as otherwise noted, each person or entity named in the table has
sole voting and investment power with respect to the shares. Includes all
shares which the named person has the right to acquire within 60 days
following March 23, 2001.
(2) This information is as of December 31, 2000 and is based on a Schedule 13G
dated February 2, 2001 filed by Kopp Investment Advisors, Inc.
(3) This information is as of December 31, 2000 and is based on a 13G dated
February 7, 2001 filed by Sterling Capital Management LLC and Sterling MGT,
Inc.
(4) This information is as of December 31, 2000 and is based on a Schedule 13G
dated February 1, 2001 filed by Neuberger Berman, Inc.
(5) This information is as of December 31, 2000 and is based on a Schedule 13G
dated February 15, 2001 filed by Putnam Investments, LLC.
(6) Includes 760,206 shares subject to options held by Mr. Lucchese that are
exercisable within 60 days of March 23, 2001.
(7) Includes 50,000 shares subject to options held by Mr. Sample that are
exercisable within 60 days of March 23, 2001.
(8) Includes (i) 17,000 shares held by a company to which Mr. Asen, a Director
of the Company, provides certain advisory services, (ii) 3,000 shares held
by an individual to which Mr. Asen provides certain advisory services,
(iii) 6,500 shares held by the IRA of an individual to whom Mr. Asen
provides certain advisory services and (iv) 23,100 shares held by a company
to which Mr. Asen provides certain advisory services, all of such shares as
to which Mr. Asen disclaims beneficial ownership. Also includes 487,341
shares individually owned by Mr. Asen and 28,750 shares subject to options
held by Mr. Asen that are exercisable within 60 days of March 23, 2001.
(9) Includes (i) 150,000 shares held by MK Global Ventures, (ii) 5,000 shares
held by MK GVS Fund, (iii) 6,456 shares held by MK Global Management and
(iv) 4,694 shares held by MK GVS Management. Mr. Kaufman, a Director of the
Company, is the sole general partner of the sole general partner of each of
MK Global Ventures, MK GVS Fund, MK Global Management and MK GVS
Management. Mr. Kaufman disclaims beneficial ownership of all shares held
by MK Global Ventures, MK GVS Fund, MK Global Management and MK GVS
Management. Also includes 162,557 shares individually owned by Mr. Kaufman
and 15,000 shares subject to options held by Mr. Kaufman that are
exercisable within 60 days of March 23, 2001.
(10) Includes 10,000 shares subject to options held by Mr. Gyenes that are
exercisable within 60 days of March 23, 2001.
(11) Includes 30,625 shares subject to options held by Mr. Anderholm exercisable
within 60 days of March 23, 2001.
(12) Includes 21,750 shares subject to options held by Mr. Zabroske exercisable
within 60 days of March 23, 2001.
-4-
(13) Includes 93,125 shares subject to options held by Mr. Donovan exercisable
within 60 days of March 23, 2001.
(14) Includes 1,091,257 shares subject to options held by officers and Directors
which are exercisable within 60 days of March 23, 2001. Also includes
shares held by entities associated with Messrs. Asen and Kaufman as
described in footnotes 8 and 9 respectively.
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PROPOSAL I
Election of Directors
The directors of Davox are elected annually and hold office until the next
annual meeting of stockholders and until their successors shall have been
elected and shall have qualified. Shares represented by all proxies received by
the Board of Directors and not so marked as to withhold authority to vote for
any individual director or for all directors will be voted (unless one or more
nominees are unable to serve) for fixing the number of directors for the ensuing
year at five (5) and for the election of the nominees named below. The Board of
Directors knows of no reason why any such nominee should be unable or unwilling
to serve, but if such should be the case, proxies will be voted for the election
of some other person or for fixing the number of directors at a lesser number.
BOARD OF DIRECTORS MEETINGS AND COMMITTEES
The Board of Directors met six times, and took actions by written consent
eleven times, during the year ended December 31, 2000. Mr. Peter Gyenes was
appointed to the Board of Directors, Audit Committee and Compensation Committee
on May 4, 2000 and Mr. David M. Sample was appointed to the Board of Directors
on November 7, 2000. The Audit Committee of the Board of Directors, of which R.
Scott Asen, Peter Gyenes and Michael D. Kaufman are members, oversees the
financial reporting, accounting and tax functions of the Company, including
matters relating to the appointment and activities of Davox's independent
auditors. The Audit Committee met four times during the year ended December 31,
2000. The Compensation Committee of the Board of Directors, of which R. Scott
Asen, Peter Gyenes and Michael D. Kaufman are members, reviews and makes
recommendations concerning executive compensation. The Compensation Committee
met three times, and took action by written consent seven times, during the year
ended December 31, 2000. The Davox Board does not currently have a standing
nominating committee. Each of the directors attended at least 75% of the
aggregate of the total number of meetings of the Board of Directors and of all
Committees on which he serves.
OCCUPATIONS OF DIRECTORS
The following table sets forth the nominees for Director, their ages as of
the Record Date and their present positions with Davox.
Name Age Position
------------------------------------ ------------------- ---------------------------------------
Alphonse M. Lucchese 65 Chairman of the Board of Directors and
Board Advisor
David M. Sample 52 President, Chief Executive Officer
and Director
Peter Gyenes (1)(2) 55 Director
Michael D. Kaufman (1)(2) 59 Director
R. Scott Asen (1)(2) 56 Director
___________________
(1) Member of Compensation Committee
(2) Member of Audit Committee
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The By-Laws of the Company provide that the Board of Directors shall be
elected annually. Officers are elected by, and serve at the discretion of, the
Board of Directors.
Mr. Lucchese served as President of the Company from May 4, 1999 until
November 7, 2000, Chief Executive Officer of the Company from July 1, 1994 until
November 7, 2000 and has served as a Director and Chairman of the Board of
Directors since August 9, 1994. In addition, Mr. Lucchese served as President
of the Company from July 1, 1994 until January 12, 1998. On November 7, 2000
Mr. Lucchese retired from the positions of President and Chief Executive
Officer. Prior to his employment with the Company, Mr. Lucchese was President
and Chief Executive Officer of Iris Graphics, Inc., a manufacturer of high
quality color printers, from 1987 until 1994.
Mr. Sample serves as President, Chief Executive Officer and a Director. He
joined Davox in a part time role in October 2000 and assumed the role of
President and Chief Executive Officer on November 7, 2000. Prior to joining the
Company, Mr. Sample was President, Chief Operating Officer and a Director of ABT
Corporation from September 1998 through August 2000. In addition, he was
President, Chief Executive Officer and Chairman of the Board of Directors of
PSDI from March 1997 through May 1998. Mr. Sample was also Senior Vice
President at Hyperion Software from July 1986 until March 1997, and he held
various management positions at Control Data Corporation.
Mr. Kaufman has been a Director of the Company since 1982. Since 1987, Mr.
Kaufman has served as the managing general partner of MK Global Ventures and MK
GVS Fund, each of which is an investment company and a stockholder of the
Company, and MK Global Ventures II, also an investment company. Mr. Kaufman
currently serves as a director of DISC, Inc., Human Phermone Sciences, Inc.
(formerly Erox Corp.), Hypermedia Communications, Inc., Asante Technologies,
Inc. and Syntellect, Inc.
Mr. Asen has been a Director of the Company since April 1992. Mr. Asen has
been President of Asen & Co., Inc., an investment management firm, since 1983.
He is also a general partner of Pioneer Associates, L.P. and Pioneer IV, L.P.,
each a venture capital fund, a general partner of AB Associates, LP and a
manager-member of Pioneer III-A, LLP and Pioneer III-B, LLP, each an investment
management entity. Mr. Asen currently serves as a director of Barringer
Laboratories, Inc.
Mr. Gyenes has been a Director of the Company since May 2000. Mr. Gyenes
has been the Chief Executive Officer of Informix Corp. since July 2000. Prior to
joining Informix, Mr. Gyenes was the Chief Executive Officer of Ardent Software
(formerly Vmark Software) from 1997 until 2000 and Vice President of Sales for
Vmark Software from 1996 until 1997.
DIRECTOR COMPENSATION
All non-employee Directors are compensated at a rate of $1,200 per meeting
of the Board of Directors attended and $500 per meeting of the Audit or
Compensation Committees attended, plus normal travel expenses incurred in
connection with attendance at such meetings. All non-employee Directors are also
compensated on an annual basis at the rate of $8,000. Non-employee Directors are
also entitled to receive stock options pursuant to the 1988 Non-Employee
Director Stock Option Plan.
The Board of Directors recommends a vote FOR the proposal to approve the
election of the Board of Directors.
-7-
COMPENSATION AND OTHER INFORMATION
CONCERNING DIRECTORS AND OFFICERS
The following table shows compensation information with respect to
services rendered to the Company in all capacities during the years ended
December 31, 2000, 1999 and 1998 for (i) the two individuals who served as Chief
Executive Officer of the Company for the year ended December 31, 2000 and (ii)
the other four most highly compensated executive officers of the Company
(collectively with the two individuals who served as Chief Executive Officer,
the "Named Officers"):
SUMMARY COMPENSATION TABLE
Long Term
Annual Compensation (1) Compensation (2)
-------------------------------------- ----------------------
Awards
----------------------
Securities Underlying All Other
Options/ Compensation
Name and Principal Position Year Salary ($) Bonus ($)(3) SARs (#) ($)
------------------------------------- ------- ----------- ------------- ---------------------- -----------------
Alphonse M. Lucchese................. 2000(4) 400,008 154,075 0 0
Chairman of the Board 1999 354,168 205,957 100,000/0 0
1998 345,000 125,260 0 0
David M. Sample...................... 2000(5) 49,242 36,900 400,000/0 0
President & Chief Executive Officer 1999 - - - -
1998 - - - -
Douglas W. Smith..................... 2000 210,000 50,613 10,000/0 0
Senior Vice President - 1999 201,670 97,761 10,000/0 0
International Sales & Operations 1998 175,000 51,993 20,000/0 0
Mark Donovan......................... 2000 199,167 31,128 20,000/0 0
Senior Vice President - 1999 184,167 44,636 10,000/0 0
Customer Service and Operations 1998 166,250 21,795 60,000/0 0
Jeffrey E. Anderholm................. 2000 203,125 58,729 35,000/0 0
Executive Vice President 1999 145,833 47,532 60,000/0 0
1998 - - - -
Mark Zabroske........................ 2000 161,591(6) 55,252(6) 50,000/0 0
Vice President - North 1999 106,669(7) 176,183(7) 10,000/0 0
American Sales 1998 90,006(7) 62,549(7) 10,000/0 0
____________________
(1) Excludes perquisites and other personal benefits, the aggregate annual
amount of which for each officer was less than the lesser of $50,000 or 10%
of the total salary and bonus reported.
(2) The Company did not grant any restricted stock awards or stock appreciation
rights ("SARs") or make any long term incentive plan payouts during the
fiscal years ended December 31, 2000, 1999 and 1998.
(3) Indicates bonus payments earned by the Named Officers in the year indicated
for services rendered in such year, some of which were paid in the
subsequent year.
(4) Mr. Lucchese retired from the position of President and Chief Executive
Officer on November 7, 2000. Mr. Lucchese remains Chairman of the Board of
Directors and is an employee of the Company. The amounts include $341,118
and bonus of $133,613 received by Mr. Lucchese while serving as President
and Chief Executive Officer through November 7, 2000. Between November 8,
2000 and December 31, 2000, Mr. Lucchese earned salary of $58,890 and bonus
of $20,462 as an employee Board Advisor.
-8-
(5) Mr. Sample began full-time employment as President and Chief Executive
Officer on November 7, 2000.
(6) Includes amounts earned as Director North American Sales.
(7) Includes amounts earned as Regional Vice President, Sales.
OPTIONS/SAR GRANTS IN LAST FISCAL YEAR
Shown below is information with respect to options to purchase the Company's
Common Stock granted to the Named Officers during the fiscal year ended December
31, 2000 under the Company's stock option plans. No stock appreciation rights
were granted to these individuals during such year.
INDIVIDUAL GRANTS
Number of Percent of Total
Securities Options/SARs Potential Realizable Value at
Underlying Granted To Exercise of Assumed Annual Rates Of Stock Price
Option/SARs Employees In Base Price Appreciation for Option Term
Granted (#) Fiscal Year ($/Sh) Expiration Date 5% ($) 10% ($)
----------- ---------------- ----------- ---------------- -----------------------------------
Alphonse M. Lucchese -/- - - - - -
David M. Sample 400,000/0 22.38% 8.13 October 6, 2010 2,043,908 5,179,663
Douglas W. Smith 10,000/0 0.56% 8.41 August 1, 2010 62,029 148,565
Mark Donovan 10,000/0 0.56% 29.50 January 26, 2010 169,235 444,217
10,000/0 0.56% 8.41 August 1, 2010 62,029 148,565
Jeffrey E. Anderholm 10,000/0 0.56% 8.41 August 1, 2010 62,029 148,565
25,000/0 1.40% 8.75 August 14, 2010 150,296 368,895
Mark Zabroske 10,000/0 0.56% 19.63 January 3, 2010 137,673 335,467
4,000/0 0.22% 26.13 May 4, 2010 68,163 170,437
36,000/0 2.01% 10.38 July 26, 2010 211,072 557,334
OPTION EXERCISES AND YEAR-END VALUES
Shown below is information with respect to (i) exercises of stock options
of the Named Officers during the fiscal year ended December 31, 2000 and (ii)
unexercised options outstanding at December 31, 2000 and the value of such
unexercised in-the-money options at December 31, 2000.
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AGGREGATED OPTION/SAR EXERCISES IN LAST FISCAL YEAR AND FISCAL YEAR END
OPTION VALUES
Number of Unexercised Value of Unexercised
Shares Options/SARs at In-the-money
Acquired December 31, 2000 Options/SARs at
On Value (#)(1) December 31, 2000 ($)(2)
Name Exercise(#) Realized($) Exercisable Unexercisable Exercisable Unexercisable
------------------------- ---------- ---------- ----------- ------------- ------------ -------------
Alphonse M. Lucchese - - 760,206 - 2,809,866.76 -
David M. Sample - - - 400,000 - 650,000.00
Douglas W. Smith - - 67,169 - 23,289.16 -
Mark Donovan - - 78,125 51,249 63,046.87 20,858.87
Jeffrey E. Anderholm - - 20,000 75,000 16,875.00 66,562.00
Mark Zabroske 5,000 73,515.62 11,750 62,000 1,484.37 7,421.87
_______________________
(1) Options granted to the Named Officers become fully vested immediately prior
to the merger, consolidation, liquidation or sale of substantially all of
the assets of the Company and terminate immediately after the effective
date of such merger, consolidation, liquidation or sale.
(2) Value is based on the difference between the option exercise price and the
fair market value of the Company's Common Stock on December 31, 2000
($9.750 per share, the last reported sales price of the Company's Common
Stock on the Nasdaq National Market System on December 29, 2000) multiplied
by the number of shares underlying the option.
-10-
COMPENSATION COMMITTEE REPORT ON EXECUTIVE COMPENSATION
The Company's executive compensation program is administered by the three
member Compensation Committee of the Board of Directors (the "Compensation
Committee"). Mr. Peter Gyenes was appointed to the Compensation Committee in
May 2000, whereupon the number of committee members was increased to three (3).
The three members of the Compensation Committee are all non-employee Directors.
Pursuant to the authority delegated by the Board of Directors, the Compensation
Committee establishes each year the compensation of the Chief Executive Officer,
and together with the Chief Executive Officer, establishes the compensation of
the other executive officers of the Company.
Under the supervision of the Compensation Committee, the Company developed
and implemented the 2000 Management Compensation Plan for the Chief Executive
Officer and certain of the executive officers of the Company (the "Plan"). The
Plan is designed to reward executive officers whose performance yields
improvement in corporate operating results, market share and shareholder value.
The ultimate goal of the Plan is to align the interests of management with those
of the stockholders. Compensation under the Plan is comprised of cash
compensation in the form of annual base salary, incentive compensation in the
form of performance-based cash bonuses, and long-term incentive compensation in
the form of stock options.
In setting cash compensation levels for executive officers (including the
Chief Executive Officer), the Compensation Committee takes into account such
factors as: (i) the Company's past financial performance and future
expectations, (ii) the general and industry-specific business environment and
(iii) corporate and individual performance goals. The base salaries are
established at levels comparable to the amounts paid to senior executives with
comparable qualifications, experience and responsibilities at other companies
located in the northeastern United States of similar size and engaged in a
similar business to that of the Company.
Incentive compensation in the form of performance-based bonuses for the
Chief Executive Officer and the Company's other executive officers is based upon
management's success in meeting the Company's financial and strategic goals as
well as meeting individual performance goals. Target levels of revenue and net
income were set at the time the Plan was established and bonuses were allocated
to the Chief Executive Officer and certain other executive officers contingent
upon the achievement of the target levels.
Until November 7, 2000, Mr. Alphonse M. Lucchese was the President and
Chief Executive Officer of the Company. His fiscal 2000 performance was
evaluated on the basis of the factors described above applicable to officers
generally. His base salary was based on a number of factors, including the base
salaries of executives performing similar functions for peer companies. The
annual bonus component, as well as his salary, reflect the Company's financial
performance, the continued introduction and commercialization of new products
and progress toward achieving business goals and the achievement by Mr. Lucchese
of non-financial goals. In assessing Mr. Lucchese's performance for fiscal
2000, the Compensation Committee took into account the degree to which the
financial and non-financial goals on which his compensation was based had been
achieved.
Mr. David Sample joined the Company on November 7, 2000, as the President
and Chief Executive Officer. His beginning base salary was based on a number of
factors, including the base salaries of executives performing similar functions
for peer companies. The annual bonus component, as well as his salary, reflect
the Company's financial performance, the continued introduction and
commercialization of new products and progress toward achieving business goals
and the achievement by Mr. Sample of non-financial goals.
Incentive compensation in the form of stock options is designed to provide
long term incentives to executive officers and other employees, to encourage the
executive officers and other employees to remain with the Company and to enable
optionees to develop and maintain a significant, long-term stock
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ownership position in the Company's Common Stock. The Compensation Committee
grants stock options to the Company's executive officers in consideration of the
strategic goals and direction of the Company. The Company's 1996 Stock Plan (the
"1996 Stock Plan"), administered by the Board of Directors, is the vehicle for
the granting of stock options.
The 1996 Stock Plan permits the Board of Directors to grant stock options
to eligible employees, including executive officers. Options become exercisable
in increments over time, contingent upon continued employment. The value
realizable from exercisable options is dependent upon the extent to which the
Company's performance is reflected in the market price of the Company's Common
Stock at any particular point in time.
The Company also maintains the 1991 Employee Stock Purchase Plan (the
"1991 Stock Plan") in which all executives may participate on the same terms as
non-executive employees who meet applicable eligibility criteria. The 1991
Stock Plan provides for the sale of shares of the Company's Common Stock to
employees (as defined in the 1991 Stock Plan) of the Company pursuant to non-
transferable options at less than fair market value. Employees who own 5% or
more of the Common Stock of the Company and non-employee directors are not
eligible to participate in the 1991 Stock Plan. As of March 23, 2001, 184,644
shares of Common Stock had been issued under the 1991 Stock Plan.
In general, under Section 162(m) of the Internal Revenue Code of 1986, as
amended (the "Code"), the Company cannot deduct, for federal income tax
purposes, compensation in excess of $1,000,000 paid to certain executive
officers. This deduction limitation does not apply, however, to compensation
that constitutes "qualified performance-based compensation" within the meaning
of Section 162(m) of the Code and the regulations promulgated thereunder. The
Compensation Committee has considered the limitations on deductions imposed by
Section 162(m) of the Code, and it is the Compensation Committee's present
intention that, for so long as it is consistent with its overall compensation
objective, substantially all tax deductions attributable to executive
compensation will not be subject to the deduction limitations of Section 162(m)
of the Code.
The Compensation Committee is satisfied that the executive officers of the
Company are dedicated to achieving significant improvements in the long-term
financial performance of the Company and that the compensation policies and
programs implemented and administered have contributed and will continue to
contribute towards achieving this goal.
The members of the Compensation Committee have submitted this report:
R. Scott Asen
Peter Gyenes
Michael D. Kaufman
-12-
AUDIT COMMITTEE REPORT
This report is submitted by the Audit Committee of the Board of Directors,
which reviews with the independent auditors and management the annual financial
statements and independent auditors' opinion, reviews the results of the audit
of the Company's financial statements with the independent auditors, recommends
the retention of the independent auditors to the Board of Directors and
periodically (at least quarterly) reviews the Company's accounting policies and
internal accounting and financial controls for the fiscal year ended December
31, 2000. The Audit Committee is composed of Messrs. Asen, Gyenes, and Kaufman.
None of Messrs. Asen, Gyenes, and Kaufman are officers or employees of the
Company, and aside from being directors of the Company, each is otherwise
independent of the Company (as independence is defined pursuant to Rule
4200(a)(15) of the National Association of Securities Dealers' listing
standards). The Audit Committee operates under a written charter adopted by the
Board of Directors, a copy of which is attached as Exhibit A to this Proxy
Statement.
The Audit Committee has reviewed the audited balance sheets of the Company
for the fiscal years ending December 31, 2000 and December 31, 1999, and the
audited statements of income, stockholders' equity and cash flows for each of
the three years ended December 31, 2000, and has discussed them with both
management and Arthur Andersen LLP, the Company's independent auditors. The
Audit Committee has also discussed with the independent auditors the matters
required to be discussed by Statement on Auditing Standards No. 61
(Communications with Audit Committees), as currently in effect. The Audit
Committee has received the written disclosures and the letter from the
independent auditors required by Independence Standards Board Standard No. 1
(Independence Discussions with Audit Committees), as currently in effect, and
has discussed with Arthur Andersen LLP that firm's independence. Based on its
review of the financial statements and these discussions, the Audit Committee
concluded that it would be reasonable to recommend, and on that basis did
recommend, to the Board of Directors that the audited financial statements be
included in the Company's Annual Report on Form 10-K for the fiscal year ended
December 31, 2000.
The members of the Audit Committee have submitted this report:
R. Scott Asen
Peter Gyenes
Michael D. Kaufman
AUDIT FEES
The aggregate fees billed by Arthur Andersen LLP for professional services
rendered for the audit of the Company's annual financial statements for the
fiscal year ended December 31, 2000 and for the review of the financial
statements included in the Company's Forms 10-Q for the fiscal year ended
December 31, 2000 were $ 91,000.
Financial Information Systems Design and Implementation Fees
------------------------------------------------------------
There were no fees billed by Arthur Andersen LLP for financial information
systems design and implementation professional services for the fiscal year
ended December 31, 2000.
All Other Fees
--------------
The aggregate fees billed by Arthur Andersen LLP for services other than
those described above for the fiscal year ended December 31, 2000 totaled $
195,000 and were primarily for tax services performed.
Davox's Audit Committee has determined that the provision of the services
provided by Arthur Andersen LLP as set forth herein are compatible with
maintaining Arthur Andersen LLP's independence.
-13-
PERFORMANCE GRAPH
The following graph compares the yearly percentage change in the
cumulative total stockholder return on the Company's Common Stock for the five
fiscal years ended December 31, 2000, with the cumulative total return on (i)
the Nasdaq Market Index and (ii) a broad peer group index prepared by Media
General consisting of Nasdaq listed companies grouped under SIC Code 7373,
Computer Integrated Systems Design. The comparison assumes $100 was invested on
December 29, 1995 in the Company's Common Stock and in each of the foregoing
indices and assumes reinvestment of dividends, if any.
COMPARISON OF FIVE YEAR CUMULATIVE TOTAL RETURN AMONG DAVOX CORPORATION,
NASDAQ MARKET INDEX AND SIC CODE INDEX
[GRAPH APPEARS HERE]
12/29/95 12/31/96 12/31/97 12/31/98 12/31/99 12/29/00
Davox Corporation 100.00 347.37 411.90 96.27 247.77 123.10
Nasdaq Market Index 100.00 106.14 126.84 276.29 629.57 309.49
Peer Group Index 100.00 124.27 152.00 214.39 378.12 237.66
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The stock price performance shown on the graph above is not necessarily
indicative of future price performance. Information used in the graph was
obtained from Media General Financial Services, a source believed to be
reliable; however, the Company is not responsible for any errors or omissions in
such information.
-14-
SEVERANCE ARRANGEMENTS
Pursuant to the terms of an agreement between the Company and Mr. David M.
Sample, if Mr. Sample is terminated without cause or in the event of a change in
control of the Company that results in the demotion of Mr. Sample's title,
change in responsibilities, relocation of the Company or removal from the Board
of Directors without cause, the Company shall continue to provide Mr. Sample
with benefits continuation for a period of twelve months from the termination
date and the Company shall pay Mr. Sample's base salary (in effect at the time
of such termination) for twelve (12) months from such termination, plus an
amount pro-rated over a twelve (12) month period from the termination date, but
yet equal to the actual earned bonus paid during the previous twelve (12) months
prior to the date of termination. The Company will not be obligated to make any
future payments if, and when, Mr. Sample assumes new employment within twelve
months from the date of his termination of employment.
Pursuant to the terms of agreements between the Company and each of Mr.
Mark Donovan, Mr. Jeffrey E. Anderholm and Mr. Mark Zabroske (each, an
"executive"), if the executive is terminated due to an economic layoff, a
downsizing that eliminates his position or a reorganization that would require
the executive to relocate, then the Company shall continue the executive's base
salary and medical benefits until the earlier of (i) six months from the date of
the executive's termination of employment or (ii) the executive assumes new
employment.
CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS OF THE COMPANY
The Company has adopted a policy that all transactions between the Company
and its officers, directors, principal stockholders and their affiliates be on
terms no less favorable to the Company than could be obtained from unrelated
third parties and that any loans by the Company to officers, directors,
principal stockholders and their affiliates must be approved by a majority of
the outside independent and disinterested directors.
Mr. Paul Lucchese, Esq., Vice President, General Counsel and Secretary of
the Company is the son of Mr. Alphonse M. Lucchese, Chairman of the Board of
Directors, and received approximately $157,528 in total compensation during the
fiscal year ended December 31, 2000.
Mr. Peter Gyenes, a Director, had a consulting agreement with the Company
between May 2000 and November 2000. Under such agreement, Mr. Gyenes received
$105,000.
Mr. Anthony A. Colangelo, an executive officer of the Company, was given a
loan from the Company in the amount of $100,000.00. Such loan includes imputed
interest based upon the then applicable federal rate of interest in accordance
with the Internal Revenue Code Section 7872. The loan amount, including
interest, will be forgiven over a three year period, with one-third being
forgiven on Mr. Colangelo's yearly anniversary date of his hire. In the event
of a voluntary or involuntary termination, the outstanding portion of the loan
and interest thereon, shall be due and payable to the Company.
Mr. Alphonse M. Lucchese and the Company entered into an agreement, which
became effective on November 7, 2000. As a result of such agreement, and
effective November 7, 2000, Mr. Lucchese resigned as President and Chief
Executive Officer and became Board Advisor, which is an employee position, while
remaining Chairman of the Board. Under such agreement, and from November 7,
2000 through December 31, 2000, Mr. Lucchese received $58,890 salary and a
$20,462 bonus.
-15-
PROPOSAL II
RATIFICATION OF SELECTION OF AUDITORS
The Board of Directors has selected the firm of Arthur Andersen LLP,
independent public accountants, to serve as auditors for the fiscal year ending
December 31, 2001. Arthur Andersen LLP has served as the Company's auditors
since fiscal year ended December 31, 1983. It is expected that a member of the
firm will be present at the meeting with the opportunity to make a statement if
so desired and will be available to respond to appropriate questions. The Board
of Directors recommends a vote FOR the ratification of this selection.
OTHER MATTERS
The Board of Directors does not intend to bring any matters before the
Annual Meeting other than those specifically set forth in the Notice of Meeting
and it knows of no matters to be brought before the Annual Meeting by others.
If any other matters properly come before the Annual Meeting, it is the
intention of the persons named in the accompanying proxies to vote such proxies
in accordance with the judgment of the Board of Directors.
EXPENSES AND SOLICITATION
The cost of solicitation of proxies will be borne by the Company, and in
addition to soliciting stockholders by mail through its regular employees, the
Company may request banks, brokers and other custodians, nominees and
fiduciaries to solicit their customers who have stock of the Company registered
in the names of a nominee and, if so, will reimburse such banks, brokers and
other custodians, nominees and fiduciaries for their reasonable out-of-pocket
costs. Solicitation by officers and employees of the Company may also be made
of some stockholders in person or by mail, email, telephone or telegraph
following the original solicitation. The Company will bear all reasonable
solicitation fees.
SECTION 16(A) BENEFICIAL OWNERSHIP REPORTING COMPLIANCE
Section 16(a) of the Exchange Act requires the Company's directors,
executive officers and holders of more than 10% of the Company's Common Stock
(collectively, "Reporting Persons") to file with the Commission initial reports
of ownership and reports of changes in ownership of Common Stock of the Company.
Such persons are required by regulations of the Commission to furnish the
Company with copies of all such filings. Anthony A. Colangelo, an officer of
the Company, failed to file his Initial Statement of Beneficial Ownership of
Securities in a timely manner when he joined the Company in December 2000. Mr.
Colangelo subsequently filed such a report. Based on its review of the copies
of such filings received by it with respect to the fiscal year ended December
31, 2000 and written representations from certain Reporting Persons, the Company
believes that all other Reporting Persons complied with all Section 16(a) filing
requirements in 2000.
STOCKHOLDERS PROPOSALS
Proposals of stockholders intended for inclusion in the Company's
proxy materials to be furnished to all stockholders entitled to vote at the 2002
Annual Meeting of Stockholders pursuant to SEC Rule 14a-8 must be received at
the Company's principal executive offices not later than December 3, 2001.
Stockholders who wish to make a proposal at the 2002 Annual Meeting - other than
one that
-16-
will be included in the Company's proxy materials - should notify the Company no
later than February 15, 2002. If a stockholder who wishes to present a proposal
fails to notify the Company by this date, the proxies that management solicits
for the meeting will have discretionary authority to vote on the stockholder's
proposal if it is properly brought before the meeting. If a stockholder makes a
timely notification, the proxies may still exercise discretionary voting
authority under circumstances consistent with the SEC's proxy rules.
-17-
EXHIBIT A
---------
--------------------------------------------------------------------------------
Davox Corporation
Audit Committee Charter
A. PURPOSE AND SCOPE
The primary function of the Audit Committee (the "Committee") is to assist
the Board of Directors in fulfilling its responsibilities by reviewing: (i) the
financial reports provided by the Corporation to the Securities and Exchange
Commission ("SEC"), the Corporation's shareholders or to the general public, and
(ii) the Corporation's internal financial and accounting controls.
B. COMPOSITION
The Committee shall be comprised of a minimum of three directors as
appointed by the Board of Directors, who shall meet the independence and audit
committee composition requirements under any rules or regulations of The NASDAQ
National Market, as in effect from time to time, and shall be free from any
relationship that, in the opinion of the Board of Directors, would interfere
with the exercise of his or her independent judgment as a member of the
Committee.
All members of the Committee shall either (i) be able to read and
understand fundamental financial statements, including a balance sheet, cash
flow statement and income statement, or (ii) be able to do so within a
reasonable period of time after appointment to the Committee. At least one
member of the Committee shall have employment experience in finance or
accounting, requisite professional certification in accounting, or other
comparable experience or background which results in the individual's financial
sophistication, including being or having been a chief executive officer, chief
financial officer or other senior officer with financial oversight
responsibilities.
The Board may appoint one member who does not meet the independence
requirements set forth above and who is not a current employee of the
Corporation or an immediate family member of such employee if the Board, under
exceptional and limited circumstances, determines that membership on the
Committee by the individual is required in the best interests of the Corporation
and its shareholders. The Board shall disclose in the next proxy statement
after such determination the nature of the relationship and the reasons for the
determination.
The members of the Committee shall be elected by the Board of Directors at
the meeting of the Board of Directors following each annual meeting of
stockholders and shall serve until their successors shall be duly elected and
qualified or until their earlier resignation or removal. Unless a Chair is
elected by the full Board of Directors, the members of the Committee may
designate a Chair by majority vote of the full Committee membership.
C. RESPONSIBILITIES AND DUTIES
To fulfill its responsibilities and duties the Committee shall:
Document Review
---------------
1. Review and assess the adequacy of this Charter periodically as conditions
dictate, but at least annually (and update this Charter if and when
appropriate).
2. Review with representatives of management and representatives of the
independent accounting firm the Corporation's audited annual financial
statements prior to their filing as part of the Annual Report on Form 10-K.
After such review and discussion, the Committee shall recommend to the
Board of Directors whether such audited financial statements should be
published in the Corporation's annual report on Form 10-K. The Committee
shall also review the Corporation's quarterly financial statements prior to
their inclusion in the Corporation's quarterly SEC filings on Form 10-Q.
3. Take steps designed to insure that the independent accounting firm reviews
the Corporation's interim financial statements prior to their inclusion in
the Corporation's quarterly reports on Form 10-Q.
Independent Accounting Firm
---------------------------
4. Recommend to the Board of Directors the selection of the independent
accounting firm, and approve the fees and other compensation to be paid to
the independent accounting firm. The Committee shall have the ultimate
authority and responsibility to select, evaluate and, when warranted,
replace such independent accounting firm (or to recommend such replacement
for shareholder approval in any proxy statement).
5. On an annual basis, receive from the independent accounting firm a formal
written statement identifying all relationships between the independent
accounting firm and the Corporation consistent with Independence Standards
Board ("ISB") Standard 1. The Committee shall actively engage in a dialogue
with the independent accounting firm as to any disclosed relationships or
services that may impact its independence. The Committee shall take, or
recommend that the Board of Directors take, appropriate action to oversee
the independence of the independent accounting firm.
6. On an annual basis, discuss with representatives of the independent
accounting firm the matters required to be discussed by Statement on
Auditing Standards ("SAS") 61, as it may be modified or supplemented.
7. Meet with the independent accounting firm prior to the audit to review the
planning and staffing of the audit.
8. Evaluate the performance of the independent accounting firm and recommend
to the Board of Directors any proposed discharge of the independent
accounting firm when circumstances warrant. The independent accounting
firm shall be ultimately accountable to the Board of Directors and the
Committee.
Financial Reporting Processes
-----------------------------
9. In consultation with the independent accounting firm and management, review
annually the adequacy of the Corporation's internal financial and
accounting controls.
Compliance
----------
10. To the extent deemed necessary by the Committee, it shall have the
authority to engage outside counsel and/or independent accounting
consultants to review any matter under its responsibility.
Reporting
---------
11. Prepare, in accordance with the rules of the SEC as modified or
supplemented from time to time, a written report of the audit committee to
be included in the Corporation's annual proxy statement for each annual
meeting of stockholders occurring after December 14, 2000.
While the Audit Committee has the responsibilities and powers set forth in
this Charter, it is not the duty of the Audit Committee to plan or conduct
audits or to determine that the Corporation's financial statements are complete
and accurate and are in accordance with generally accepted accounting
principles.
-------------------------------------------------------------------------------
DAVOX CORPORATION
PROXY SOLICITATION ON BEHALF OF THE BOARD OF DIRECTORS
The undersigned hereby appoints David M. Sample and Michael J.
Provenzano, III and each or either of them, proxies with full power of
substitution to vote all shares of stock of Davox Corporation (the "Company")
which the undersigned is entitled to vote at the Annual Meeting of Stockholders
of the Company to be held on Wednesday, May 2, 2001, at 10:00 a.m. at the
offices of the Company, 6 Technology Park Drive, Westford, Massachusetts, and at
any adjournment thereof, upon matters set forth in the Notice of Annual Meeting
and Proxy Statement dated March 30, 2001, a copy of which has been received by
the undersigned. THIS PROXY WHEN PROPERLY EXECUTED WILL BE VOTED IN ACCORDANCE
WITH YOUR INDICATED DIRECTIONS. IF NO DIRECTION IS MADE, THIS PROXY WILL BE
VOTED FOR PROPOSALS 1, 2 AND 3.
(TO BE SIGNED ON REVERSE SIDE) ------------------
SEE REVERSE
SIDE
------------------
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/X/ PLEASE MARK YOUR
VOTES AS IN THIS
EXAMPLE.
FOR WITHHOLD Nominees: A.M. Lucchese
1. To fix the number [ ] [ ] M.D. Kaufman
of directors constituting R.S. Asen
the Board of Directors D.M. Sample
at five and to elect a Board of Directors for the ensuing year. P. Gyenes
INSTRUCTIONS: To withhold for a specific nominee, write
that nominee's name on the space provided
--------------------------------------------------------
FOR AGAINST ABSTAIN
2. To ratify the selection of the firm of Arthur [ ] [ ] [ ]
Andersen LLP as auditors for the Company
for the fiscal year ending December 31, 2001.
3. To consider and act upon any other matters that [ ] [ ] [ ]
may properly be brought before the Annual Meeting
of Stockholders of the Company.
SIGNATURE(S)_____________________ ___________________________ Dated:___________, 2001
signature if held jointly
Note: Please sign exactly as your name appears hereon. Joint owners should each
sign. When signing as attorney, executor, administrator, trustee or guardian,
please give full title as such.