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 Statement
[ ] Definitive Additional Materials
[ ] Soliciting Material Pursuant to Section 240.14a-11c or Section 240.14a-12
METATEC INTERNATIONAL, INC.
--------------------------------------------------------------------------------
(Name of Registrant as Specified In Its Charter)
--------------------------------------------------------------------------------
(Name of Person(s) Filing Proxy Statement)
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 the
filing fee is calculated and state how it was determined):
----------------------------------------------------------------------
(4) Proposed maximum aggregate value of transaction:
----------------------------------------------------------------------
(5) Total fee paid:
----------------------------------------------------------------------
[ ] Fee paid previously with preliminary materials.
[ ] Check box if any part of the fee is offset as provided by Exchange Act Rule
0-11(a)(2) and identify the filing for which the offsetting fee was paid
previously. Identify the previous filing by registration statement number,
or the Form or Schedule and the date of its filing.
(1) Amount Previously Paid:
----------------------------------------------------------------------
(2) Form, Schedule or Registration Statement No.:
----------------------------------------------------------------------
(3) Filing Party:
----------------------------------------------------------------------
(4) Date Filed:
----------------------------------------------------------------------
[METATEC INTERNATIONAL LOGO]
METATEC INTERNATIONAL, INC.
NOTICE OF ANNUAL MEETING OF SHAREHOLDERS
TO BE HELD ON MAY 16, 2002
To the Shareholders of
METATEC INTERNATIONAL, INC.:
Notice is hereby given that the Annual Meeting of Shareholders of Metatec
International, Inc., an Ohio corporation (the "Company"), will be held at the
Company's principal executive offices located at 7001 Metatec Boulevard, Dublin,
Ohio 43017, on Thursday, May 16, 2002, at 1:00 p.m., local time, for the
following purposes:
1. To elect two Class III directors; and
2. To transact such other business as may properly come before the meeting
or any adjournment thereof.
The close of business on March 22, 2002, has been fixed as the record date
for the determination of shareholders entitled to notice of and to vote at the
meeting and any adjournment thereof.
In order that your shares may be represented at this meeting and to assure
a quorum, please sign and return the enclosed proxy promptly. A return addressed
envelope, which requires no postage, is enclosed. If you are able to attend the
meeting and wish to vote in person, at your request we will cancel your proxy.
By Order of the Board of Directors
JULIA A. POLLNER, Secretary
Dated: April 12, 2002
METATEC INTERNATIONAL, INC.
PROXY STATEMENT
GENERAL
This Proxy Statement is being furnished to the holders of common shares,
without par value, of the Company ("Metatec Shares") in connection with the
solicitation of proxies by the Board of Directors of the Company to be used at
the Company's Annual Meeting of Shareholders. The Annual Meeting will be held at
the Company's principal executive offices located at 7001 Metatec Boulevard,
Dublin, Ohio 43017, on Thursday, May 16, 2002, at 1:00 p.m., local time, for the
purposes set forth on the accompanying Notice of Annual Meeting.
The approximate date on which this Proxy Statement and the form of proxy
will be first sent to shareholders is April 12, 2002.
PROXIES AND VOTING
The close of business on March 22, 2002, has been fixed as the record date
for the determination of shareholders entitled to notice of and to vote at the
Annual Meeting and any adjournment thereof. On the record date, 6,536,113
Metatec Shares were outstanding and entitled to vote. Each Metatec Share is
entitled to one vote.
All Metatec Shares represented by properly executed proxies will be voted
at the Annual Meeting in accordance with the choices indicated on the proxy. If
no choices are indicated on a proxy, the Metatec Shares represented by that
proxy will be voted in favor of the nominees for election as Class III
directors. Any proxy may be revoked at any time prior to its exercise by
delivering to the Company a subsequently dated proxy or by giving notice of
revocation to the Company in writing or in open meeting. A shareholder's
presence at the Annual Meeting will not by itself revoke the proxy. Abstentions
will not be counted in determining the votes cast for the election of directors
and will not have a positive or negative effect on the outcome of the election.
If your Metatec Shares are held in street name, you will need to instruct your
broker regarding how to vote your Metatec Shares. If you do not provide your
broker with voting instructions regarding the election of directors, your broker
will nevertheless have discretion to vote your Metatec Shares for the election
of directors. There are certain matters, however, over which your broker will
not have discretion to vote your Metatec Shares without your instructions--these
situations are referred to as "broker non-votes". If such a matter comes before
the Annual Meeting (which is not anticipated), your Metatec Shares will not be
voted on that matter. Abstentions, but not broker non-votes, will be considered
as Metatec Shares present and entitled to vote at the Annual Meeting and will be
counted for purposes of determining whether a quorum is present.
Shareholders do not have the right to cumulate their votes in electing
directors, and the nominees who receive the highest number of votes will be
elected.
ELECTION OF DIRECTORS
The number of directors currently is fixed at nine. The Board of Directors
is divided into three classes, Class I, Class II, and Class III, with three
directors in each class. The directors in each class are elected to three-year
terms. The terms of office of one class of directors expire each year at the
annual meeting of shareholders and at such time as their successors are duly
elected and qualified. The term of office of the Class III directors
1
expires concurrently with the holding of the Annual Meeting, and the two
incumbent directors in Class III have been nominated for re-election. There is a
vacancy in each of the Class I and Class III directors.
At the Annual Meeting, it is the intention of the persons named in the
accompanying form of proxy, unless a contrary position is indicated on such
proxy, to vote the proxy for the election of the two nominees named in the
following table as Class III directors, each to hold office until the 2005
annual meeting of shareholders and until a successor is elected and qualified.
In the event that any nominee named below as a Class III director is unable to
serve (which is not anticipated), the persons named in the proxy may vote for
another nominee of their choice.
The reason for nominating a lesser number of persons to fill the number of
director positions in Class III is that the Company believes it is desirable to
have a vacancy available which could be filled by the Board of Directors without
the time and expense involved in holding a special meeting of shareholders
should a person who could make a valuable contribution as a director of the
Company become available. No decision has been made to fill the vacancy, nor has
any candidate been considered or approved by the Board of Directors.
Proxies cannot be voted at the Annual Meeting for a greater number of
persons than the two nominees named in this Proxy Statement.
2
CLASS III DIRECTORS
(NOMINEES FOR ELECTION)
METATEC SHARES
NAME OF OF THE COMPANY
NOMINEE/DIRECTOR DIRECTOR OF BENEFICIALLY OWNED
AND POSITION PRINCIPAL OCCUPATION(S) THE COMPANY AS OF PERCENT OF
WITH THE COMPANY AGE DURING THE PAST FIVE YEARS SINCE MARCH 8, 2002 (1) CLASS
---------------- --- -------------------------- -------------- ------------------ --------------
David P. Lauer,
Director................ 59 Retired President and 2001 17,500 *
Chief Operating Officer of
Bank One, Columbus, NA, a
national banking
association. He was
appointed to his former
position with Bank One,
Columbus, NA in June 1997,
and retired from that
position in January 2001.
Mr. Lauer was the managing
partner of the Columbus
office of Deloitte &
Touche LLP from January
1989 through his
retirement in June 1997.
Mr. Lauer is also a
director of Wendys
International, Inc. and
AirNet Sytems, Inc.
Jeffrey M. Wilkins,
Chairman of the Board
of the Company.......... 57 Chairman of the Board of 1989 792,468(2) 11.6%
the Company. Mr. Wilkins
was the Chief Executive
Office of the Company from
1989 through December
2001, and President from
July 1998 through December
2001. Mr. Wilkins is also
a director of CheckFree
Holdings, Inc.
3
Set forth below is information relating to directors whose terms will continue
after the Annual Meeting.
CLASS I DIRECTORS
(TERMS EXPIRING IN 2003)
METATEC SHARES
NAME OF OF THE COMPANY
DIRECTOR DIRECTOR OF BENEFICIALLY OWNED
AND POSITION PRINCIPAL OCCUPATION(S) THE COMPANY AS OF PERCENT OF
WITH THE COMPANY AGE DURING THE PAST FIVE YEARS SINCE MARCH 8, 2002 (1) CLASS
---------------- --- -------------------------- -------------- ------------------ --------------
Joseph F. Keeler, Jr.,
Director................ 61 Chairman and Chief 1997 275,034(3) 4.2%
Executive Officer of the
Fishel Company, a national
underground utility
contractor, since 1978.
Mr. Keeler has been with
The Fishel Company since
1967.
Peter J. Kight,
Director................ 45 Chairman, Chief Executive 1994 83,334 1.3%
Officer and President of
Checkfree Corporation, a
company that provides a
nationwide electronic bill
paying system, since
January 1981.
CLASS II DIRECTORS
(TERMS EXPIRING IN 2004)
METATEC SHARES
NAME OF OF THE COMPANY
DIRECTOR DIRECTOR OF BENEFICIALLY OWNED
AND POSITION PRINCIPAL OCCUPATION(S) THE COMPANY AS OF PERCENT OF
WITH THE COMPANY AGE DURING THE PAST FIVE YEARS SINCE MARCH 8, 2002 (1) CLASS
---------------- --- -------------------------- -------------- ------------------ --------------
Jerry D. Miller,
Director................ 66 President of D&D 1976 22,000 *
Properties, Inc. and
President of MGB, Inc.,
two companies engaged in
the real estate business,
since May 1992. President
and Treasurer of the
Company from its
incorporation in 1976
until May 1993. Chairman
of the Board of the
Company from June 1978
until August 1989.
4
METATEC SHARES
NAME OF OF THE COMPANY
DIRECTOR DIRECTOR OF BENEFICIALLY OWNED
AND POSITION PRINCIPAL OCCUPATION(S) THE COMPANY AS OF PERCENT OF
WITH THE COMPANY AGE DURING THE PAST FIVE YEARS SINCE MARCH 8, 2002 (1) CLASS
---------------- --- -------------------------- -------------- ------------------ --------------
James V. Pickett,
Director................ 60 Principal of Stonehenge 1995 147,623(4) 2.3%
Financial Holdings, Inc.,
a private equity
investment firm, since
August 1999. Vice Chairman
of Banc One Capital Corp.,
a subsidiary of Banc One
Holding Corporation, from
1993 through July 1999.
Principal of Pickett
Realty Advisors, Inc., an
asset management firm for
hotel owners, since
December 1991. Mr. Pickett
is also a director of
Wendys International, Inc.
Daniel D. Viren,
Director................ 55 Senior Vice President of 2000 12,500 *
Finance and Chief
Financial Officer of R.G.
Barry Corporation , a
manufacturer and marketer
of home comfort footwear,
since June 2000; was also
Senior Vice President of
Administration of R.G.
Barry Corporation from
1992 to July 1998; Senior
Vice President and Chief
Financial Officer of the
Company from July 1998 to
June 2000. Mr. Viren is
also a director of R.G.
Barry Corporation.
---------------
* Less than 1%
(1) Except as otherwise indicated in the notes to this table, the persons named
in the table and their spouses (if applicable) have sole voting and
investment power with respect to all Metatec Shares owned by them. For each
of the directors, this table includes the following number of Metatec Shares
which may be acquired upon the exercise of options that are currently
exercisable or exercisable within 60 days of March 8, 2002: Mr.
Kight -- 20,000 Metatec Shares; Mr. Keeler -- 27,500 Metatec Shares; Mr.
Lauer -- 7,500 Metatec Shares; Mr. Miller -- 20,000 Metatec Shares; Mr.
Pickett -- 20,000 Metatec Shares; Mr. Wilkins -- 325,000 Metatec Shares; and
Mr. Viren -- 7,500 Metatec Shares.
5
(2) Includes 4,000 Metatec Shares owned by a trust for the benefit of one of Mr.
Wilkins' grandchildren, of which Mr. Wilkins is the trustee. Also includes
46,000 Metatec Shares owned by a limited partnership, of which Mr. Wilkins
is a general partner.
(3) Includes 48,334 Metatec Shares owned by a family limited partnership, of
which Mr. Keeler is a partner.
(4) Includes 24,000 Metatec Shares owned by a corporation controlled by Mr.
Pickett.
In addition to the Metatec Shares beneficially owned by Mr. Wilkins, as set
forth above, Christopher A. Munro, Martin G. Stokman, and Julia A. Pollner, the
other named executive officers in the Summary Compensation Table set forth
below, beneficially owned 113,500, 18,000, and 57,500 Metatec Shares,
respectively, as of March 8, 2002. Each such person and their spouses (if
applicable) have sole voting and investment power with respect to all Metatec
Shares owned by them. The number of Metatec Shares beneficially owned by Messrs.
Munro, Stokman, and Ms. Pollner include 62,500, 18,000, and 57,500 Metatec
Shares, respectively, which may be acquired upon the exercise of options which
are currently exercisable or exercisable within 60 days of March 8, 2002. In
addition, 20,000 of Mr. Munro's Metatec Shares are subject to risk of forfeiture
if his employment is terminated for any reason prior to January 2, 2003. On
February 13, 2002, Gary W. Qualmann, the Company's Chief Financial Officer,
received 100,000 Metatec Shares pursuant to the terms of a restricted share
agreement entered into in connection with his employment by the Company. All
100,000 of these Metatec Shares are subject to risk of forfeiture if his
employment is terminated for any reason prior to February 13, 2003, and 50,000
of these Metatec Shares are subject to risk of forfeiture if his employment is
terminated for any reason prior to February 13, 2004.
As of March 8, 2002, the number of Metatec Shares owned by all directors
and executive officers of the Company as a group (11 persons) was 1,639,459
(23.1%). The foregoing amount includes 565,500 Metatec Shares which may be
acquired upon the exercise of options which are currently exercisable or
exercisable within 60 days of March 8, 2002.
BOARD OF DIRECTORS COMMITTEES AND MEETINGS
The Board of Directors held five meetings during 2001. Each director
attended at least 75% of the meetings held by the Board of Directors and the
committees on which he served during 2001.
The Board of Directors has established an Executive Committee, a
Compensation Committee, and an Audit Committee. The members of the Executive
Committee are David P. Lauer, Joseph F. Keeler, Jr., Peter J. Kight and James V.
Pickett. The Executive Committee, which may exercise all of the authority of the
Board of Directors between its meetings, held two meetings and took action two
times by written consent during 2001. The members of the Compensation Committee
are Jerry D. Miller, Joseph F. Keeler, Jr., and James V. Pickett. The
Compensation Committee, which is responsible for administering the Company's
stock option plans and which may exercise the authority of the Board of
Directors with respect to the compensation of employees of the Company, held two
meetings and took action one time by written consent during 2001. The members of
the Audit Committee are David P. Lauer, Joseph F. Keeler, Jr., James V. Pickett
and Daniel D. Viren. The Audit Committee, which is responsible for recommending
the appointment of the independent auditors, reviewing with the independent
auditors the annual audit of the Company's accounts by the independent auditors,
and all related matters, along with other activities undertaken by such
committee, held five meetings and took action one time by written consent during
2001. See also "Executive Compensation -- Compensation Committee Report on
Executive Compensation" and "Report of Audit Committee" included elsewhere in
this Proxy Statement.
The Board of Directors has no standing nominating committee or committee
performing similar functions.
6
COMPENSATION OF DIRECTORS
Employee directors receive no additional compensation for service on the
Board of Directors or its committees. Directors of the Company who are not also
employees of the Company receive a fee of $1,500 per board meeting and a
quarterly retainer of $1,500. In addition, directors of the Company who are not
officers or employees of the Company do not receive any additional compensation
for committee meetings attended, with the exception of members of the Audit
Committee. Each member of the Audit Committee receives an annual fee of $2,000
for serving on that committee, and the Chairman of the Audit Committee receives
an annual fee of $4,000 for chairing that committee. The Company has a directors
deferred compensation plan pursuant to which directors may defer all or a
portion of their director fees.
Directors of the Company who are not officers or employees of the Company
or any of its subsidiaries currently receive stock options pursuant to the
Company's 1999 Directors Stock Option Plan. Under this plan, immediately
following each annual meeting of shareholders of the Company, each eligible
director is automatically granted an option to purchase 5,000 Metatec Shares.
These options are fully vested at the time of grant and must be exercised within
five years of the grant date. In addition, each new director is automatically
granted an option, on a one-time basis, to purchase 10,000 Metatec Shares. These
one-time options have five-year terms and vest in equal annual installments over
a four-year period. All options are granted at an exercise price equal to the
fair market value of the Metatec Shares on the last trading day prior to the
annual meeting relating to the date of grant.
EXECUTIVE COMPENSATION
Set forth below is summary information regarding the annual and long-term
compensation of the Company's chief executive officer and its four most highly
compensated executive officers, other than the chief executive officer, at the
end of 2001.
SUMMARY COMPENSATION TABLE
ANNUAL
COMPENSATION LONG-TERM AWARDS
-------------------- --------------------------------
RESTRICTED METATEC SHARES
NAME AND STOCK UNDERLYING ALL OTHER
PRINCIPAL POSITION YEAR SALARY BONUS (1) AWARDS OPTIONS GRANTED (2) COMPENSATION (3)
------------------------------------ ---- -------- --------- ---------- ------------------- ----------------
Jeffrey M. Wilkins.................. 2001 $450,000 $ -- -- $ 6,750
Chairman of the Board, 2000 $450,000 $ -- -- $ 6,750
President, and Chief 1999 $449,055 $ -- 100,000 $ 8,210
Executive Officer (4)
Christopher A. Munro (4)............ 2001 $234,461 $60,000 $60,000 100,000 $ 6,674
President and Chief Executive
Officer
Martin G. Stockman.................. 2001 $100,687 $ -- -- $20,927
Vice President, Europe 2000 $131,344 $15,073 -- $ 3,447
1999 $114,954 $ 6,332 -- $ 366
Julia A. Pollner.................... 2001 $124,800 $ -- -- $ 4,680
Senior Vice President, 2000 $114,443 $ 4,254 10,000 $ 4,292
Finance 1999 $101,462 $ 7,445 -- $ 5,044
---------------
(1) For 2000 and 1999, bonuses paid to the named executive officers were earned
pursuant to the Company's Open Book Management Plan. Under this plan,
executives and employees (called "associates" at the Company) share a
portion of the Company's pre-tax income each year. The amount of pre-tax
income shared
7
by executives and employees depends upon the Company's actual performance
for the year relative to its targeted pre-tax income for that year.
Individual financial awards are based upon the number of points earned under
the plan by the executive or employee during the year.
For Mr. Munro, the bonus shown in the 2001 column represents a one-time
bonus paid to Mr. Munro in connection with entering into an amendment to his
employment agreement. This one-time bonus was paid in satisfaction of all
remaining bonuses, expense reimbursements, and other amounts payable to Mr.
Munro in connection with his employment in 2001. See "Employment and
Separation Agreements."
(2) This column sets forth the number of Metatec Shares subject to options
granted during the indicated year pursuant to the Company's 1990 Stock
Option Plan.
(3) Represents amounts contributed by the Company as matching contributions to
its 401(K) retirement plan, excess group term life insurance, car leases,
and pension plan for the Company's European subsidiary.
(4) On December 7, 2001, Mr. Wilkins' employment with the Company was terminated
in accordance with the terms of a separation agreement between the parties,
and at that time Mr. Wilkins ceased serving as an officer of the Company and
its subsidiaries, although he continues to serve as a director of the
Company and to hold the office of Chairman of the Board. At that time, the
Board of Directors elected Mr. Munro as President and Chief Executive
Officer of the Company to replace Mr. Wilkins. Mr. Munro joined the Company
in January 2001. See "Employment and Separation Agreements."
OPTION GRANTS IN LAST FISCAL YEAR
The following table sets forth all grants of stock options during 2001 to
the executive officers named in the Summary Compensation Table:
POTENTIAL
REALIZABLE VALUE
INDIVIDUAL GRANTS AT ASSUMED
---------------------------------------------------------------- ANNUAL
% OF TOTAL RATES OF STOCK
NUMBER OF OPTIONS APPRECIATION FOR
METATEC SHARES GRANTED TO OPTION TERM (3)
NAME AND UNDERLYING EMPLOYEES IN EXERCISE PRICE EXPIRATION ------------------
PRINCIPAL POSITION OPTIONS GRANTED (1) FISCAL YEAR PER SHARE (2) DATE 5% 10%
--------------------------------- ------------------- ------------ -------------- ---------- ------- --------
Jeffrey M. Wilkins............... -- -- -- -- $ 0 $ 0
Chairman of the Board,
President, and Chief Executive
Officer
Christopher A. Munro............. 100,000 70.7% $1.00 1/2/2011 $62,889 $159,374
President and Chief Executive
Officer
Martin Stokman................... -- -- -- -- $ 0 $ 0
Vice President, Europe
Julia A. Pollner................. -- -- -- -- $ 0 $ 0
Senior Vice President, Finance
---------------
(1) Except as otherwise indicated in the notes to this table, all of the options
were granted under the Company's 1990 Stock Option Plan and are subject to a
one-year or four-year vesting schedule.
(2) The per share exercise price is equal to the fair market value of Metatec
Shares on the date of grant.
(3) The dollar amounts under the 5% and 10% columns are the result of
calculations required by the rules of the Securities and Exchange
Commission. Although permitted by these rules, the Company did not use an
alternate formula for a grant date valuation because the Company is not
aware of a formula that would determine with reasonable accuracy a present
value based on future unknown factors.
8
OPTION EXERCISES IN LAST FISCAL YEAR AND YEAR END OPTION VALUES
The following table sets forth stock options exercised during 2001 by the
executive officers named in the Summary Compensation Table and the value of
in-the-money stock options held by those individuals as of December 31, 2001:
NUMBER OF
METATEC SHARES VALUE OF
UNDERLYING UNEXERCISED
UNEXERCISED IN-THE-MONEY
OPTIONS AT OPTIONS AT
METATEC SHARES 12/31/2001 12/31/2001
ACQUIRED VALUE EXERCISABLE/ EXERCISABLE/
NAME ON EXERCISE REALIZED (1) UNEXERCISABLE UNEXERCISABLE (2)
--------------------------------------- -------------- ------------ -------------- -----------------
Jeffrey M. Wilkins..................... 0 0 325,000/0 $0/$0
Chairman of the Board,
President, and Chief Executive
Officer
Christopher A. Munro................... 0 0 0/100,000 $0/$0
President and Chief Executive Officer
Martin Stokman......................... 0 0 18,000/6,000 $0/$0
Vice President, Europe
Julia A. Pollner....................... 0 0 57,500/7,500 $0/$0
Senior Vice President, Finance
---------------
(1) Aggregate market value of the Metatec Shares covered by the option less the
aggregate price paid by the executive officer.
(2) The value of in-the-money options was determined by subtracting the exercise
price from the closing price of Metatec Shares as of December 31, 2001.
EMPLOYMENT AND SEPARATION AGREEMENTS
Christopher A. Munro joined the Company as Chief Operating Officer on
January 2, 2001, and entered into an employment agreement with the Company at
that time. On December 7, 2001, Mr. Munro replaced Jeffrey M. Wilkins as the
President and Chief Executive Officer of the Company. On March 26, 2002, Mr.
Munro's original employment agreement was amended to recognize his increased
responsibilities as President and Chief Executive Officer.
Under his employment agreement, Mr. Munro received a base salary of
$240,000 in 2001. Effective January 1, 2002, Mr. Munro's base salary was
increased to $300,000 in recognition of his increased responsibilities as
President and Chief Executive Officer. In connection with entering into the
amendment to his employment agreement, Mr. Munro received a one-time bonus of
$60,000 in satisfaction of all remaining bonuses, expense reimbursements, and
other amounts payable to Mr. Munro in connection with his employment in 2001.
For 2002, Mr. Munro is entitled to receive a bonus ranging up to a maximum of
60% of his base salary, which bonus will be a cumulative percentage based upon
the Company's level of achievement of the objective performance thresholds
specified in his employment agreement.
Mr. Munro's employment continues until terminated by either Mr. Munro or
the Company. Mr. Munro may terminate his employment at any time on or after
March 1, 2003, upon notice to the Company of not less than 60 days prior to the
proposed termination date. The Company may terminate Mr. Munro's employment at
any time upon notice to Mr. Munro. However, if the Company terminates Mr.
Munro's employment without cause prior to January 2, 2004, Mr. Munro is entitled
to receive severance payments in an amount equal to his base
9
salary payable over a one-year period, as well as health benefits during that
same period. Mr. Munro is also entitled to receive the fringe benefits generally
offered to the Company's personnel.
In connection with joining the Company in January 2001, Mr. Munro received
40,000 Metatec Shares pursuant to the terms of a restricted share agreement. All
40,000 of these Metatec Shares were subject to a risk of forfeiture if Mr.
Munro's employment was terminated for any reason prior to January 2, 2002. A
total of 20,000 of these Metatec Shares remain subject to a risk of forfeiture
if Mr. Munro's employment is terminated for any reason prior to January 2, 2003.
In addition, in connection with joining the Company in January 2001, Mr. Munro
was granted options to purchase a total of 100,000 Metatec Shares. In connection
with entering into the amendment to his employment agreement in March 2002, Mr.
Munro was granted options to purchase a total of 150,000 Metatec Shares.
The Company and Jeffrey M. Wilkins were parties to an employment agreement
pursuant to which Mr. Wilkins served as Chairman of the Board and Chief
Executive Office of the Company. On December 7, 2001, Mr. Wilkins' employment
with the Company was terminated in accordance with the terms of a separation
agreement between the parties, and at that time Mr. Wilkins ceased serving as an
officer of the Company and its subsidiaries, although he continues to serve as a
director of the Company and to hold the office of Chairman of the Board. Under
the separation agreement, Mr. Wilkins is receiving severance pay in an amount
equal to two years of his base salary, or a total of $900,000, 50% of which is
payable over a one-year period, with the balance payable in one-lump sum within
30 days after the completion of the one-year payment period. If the Company is
prohibited from making the lump-sum payment by the terms of the Company's loan
covenants, then instead the Company is required to make this lump-sum payment
over a one-year period. The amount of this severance pay is consistent with the
amount which would have been payable to Mr. Wilkins under his employment
agreement for a termination by the Company without cause (which required one
year's prior notice to Mr. Wilkins plus a $450,000 lump-sum payment). In
addition to the severance pay, the Company is obligated to pay health insurance
coverage for Mr. Wilkins for 18 months, provide group life insurance coverage
for 12 months, provide directors and officers liability coverage for two years,
and reimburse Mr. Wilkins' legal fees up to a maximum of $15,000. Finally, the
terms of all stock options granted to Mr. Wilkins were amended to provide for
exercisability for the entire term or terms of the stock option. The separation
agreement also provides a mutual release and includes noncompetition,
confidentiality, and non-solicitation provisions applicable to Mr. Wilkins.
Prior to his termination, Mr. Wilkins served as President and Chief
Executive Officer of the Company under the term of his employment agreement.
Under the terms of this employment agreement, Mr. Wilkins received a base salary
of $450,000 during 2001. Mr. Wilkins was also entitled to receive fringe
benefits, as determined by the Board of Directors, of the type typically
provided to chief executive officers of similarly situated companies, and an
annual incentive bonus equal to a specified percentage of the net pre-tax profit
of the Company. However, Mr. Wilkins did not receive a bonus in 2001 or 2000
under this incentive bonus calculation.
COMPENSATION COMMITTEE INTERLOCKS AND INSIDER PARTICIPATION
The members of the Company's Compensation Committee are Joseph F. Keeler,
Jr., Jerry D. Miller and James V. Pickett. Until May 1993, prior to his
appointment to the Compensation Committee, Mr. Miller served as President of the
Company. There are no interlocking relationships between any executive officers
of the Company and any entity whose directors or executive officers serve on the
Company's Board of Directors or the Compensation Committee.
10
COMPENSATION COMMITTEE REPORT ON EXECUTIVE COMPENSATION
The Compensation Committee of the Board of Directors regularly reviews
executive compensation policies and levels and evaluates the performance of
management in the context of the Company's performance. The Compensation
Committee is composed entirely of independent outside directors.
As previously discussed in this Proxy Statement, Jeffrey M. Wilkins served
as Chief Executive Officer of the Company until December 7, 2001, and
Christopher A. Munro served as Chief Executive Officer for the balance of the
year. Prior to assuming his new duties, Mr. Munro served as Chief Operating
Officer of the Company. Mr. Wilkins' employment with the Company was terminated
in accordance with the terms of a separation agreement between the parties, and
at that time Mr. Wilkins ceased serving as an officer of the Company and its
subsidiaries, although he continues to serve as a director of the Company and to
hold the office of Chairman of the Board. The following discussion includes a
report on Mr. Wilkins' compensation for 2001, as well as Mr. Munro's
compensation in his positions as Chief Operating Officer and Chief Executive
Officer. Please see "Employment and Separation Agreements" for a description of
the terms of Mr. Wilkins's separation agreement and Mr. Munro's employment
agreement.
The Compensation Committee believes that the Company's compensation policy
must be designed to attract, retain, reward, and motivate highly qualified
individuals to manage the Company to meet corporate growth and earnings
objectives and to maximize shareholder value. The Company's compensation policy
has three primary components, which are described below.
Base Salary. The primary component of executive compensation is an annual
base salary. In establishing the amount of an executive officer's annual base
salary (other than the chief executive officer), the Compensation Committee
reviews a recommendation made by the Company's chief executive officer and
considers other factors as well, including the position held by the executive
officer, his or her accomplishments during the year, his or her level of
responsibility and experience, and the relationship of the executive officer's
salary to the salaries of other managers and associates of the Company. After
considering these factors, the Compensation Committee subjectively determines
the amount of each executive officer's annual base salary.
The annual base salary of Mr. Wilkins was paid pursuant to his employment
agreement with the Company. In 2001, Mr. Wilkins' base salary was $450,000, the
same base salary he received in 2000 and 1999.
The annual base salary of Mr. Munro is paid pursuant to his employment
agreement with the Company. In 2001, Mr. Munro's base salary was $240,000.
Effective January 1, 2002, Mr. Munro's base salary was increased to $300,000 in
recognition of his increased responsibilities as President and Chief Executive
Officer.
Incentive Compensation. In 2001, the Company discontinued the use of the
Open Book Management Plan as an incentive compensation arrangement. The Open
Book Management Plan was used in 1999 and 2000 and was designed to give
employees a stake in the outcome of the Company's business by sharing with them
on an annual basis a predetermined portion of the Company's pre-tax income. No
specific incentive compensation arrangements were offered to employees in 2001
due to the Company's financial performance.
Mr. Wilkins received an annual incentive bonus under his employment
agreement equal to a specified percentage of the net pre-tax profit of the
Company. However, Mr. Wilkins did not receive a bonus in 2001, 2000, or 1999
under this incentive bonus calculation.
In connection with entering into the amendment to his employment agreement,
Mr. Munro received a one-time bonus of $60,000 in satisfaction of all remaining
bonuses, expense reimbursements, and other amounts payable to Mr. Munro in
connection with his employment in 2001. For 2002, Mr. Munro is entitled to
receive a
11
bonus ranging up to a maximum of 60% of his base salary, which bonus will be a
cumulative percentage based upon the Company's level of achievement of the
objective performance thresholds specified in his employment agreement.
Long-Term Awards. In 2001, stock options were used only in limited
circumstances as a form of executive compensation. These options were granted
under the Company's 1990 Stock Option Plan, which is designed to align a portion
of the executive and key associates compensation package with the long-term
interests of shareholders. All options are granted by the Compensation
Committee, whose members are not eligible to participate in this Plan. Options
are granted under this plan in amounts subjectively determined by the
Compensation Committee to be appropriate given the relative positions and
responsibilities of the associates.
The Compensation Committee did not grant any options to Mr. Wilkins or any
other executive officer in 2001, other than to Mr. Munro as described below.
In connection with joining the Company in January 2001, Mr. Munro received
40,000 Metatec Shares pursuant to the terms of a restricted share agreement. All
40,000 of these Metatec Shares were subject to a risk of forfeiture if Mr.
Munro's employment was terminated for any reason prior to January 2, 2002. A
total of 20,000 of these Metatec Shares remain subject to a risk of forfeiture
if Mr. Munro's employment is terminated for any reason prior to January 2, 2003.
In addition, in connection with joining the Company in January 2001, Mr. Munro
was granted options to purchase a total of 100,000 Metatec Shares. In connection
with entering into the amendment to his employment agreement in March 2002, Mr.
Munro was granted options to purchase a total of 150,000 Metatec Shares.
JERRY D. MILLER, Chairman
JOSEPH F. KEELER, JR.
JAMES V. PICKETT
SECTION 16(A) BENEFICIAL OWNERSHIP REPORTING COMPLIANCE
Section 16(a) of the Securities Exchange Act of 1934 requires the Company's
officers and directors, and persons who own more than 10% of a registered class
of the Company's equity securities, to file reports of ownership and changes in
ownership with the Securities and Exchange Commission. Officers, directors, and
greater than 10% shareholders are required by the Securities and Exchange
Commission's regulations to furnish the Company with copies of all Section 16(a)
forms they file. Based solely on a review of the copies of such forms furnished
to the Company, the Company believes that during 2001 all Section 16(a) filing
requirements applicable to its officers and directors were complied with by such
persons except as follows: (i) Jeffrey M. Wilkins, Chairman of the Board of the
Company, failed to timely report the inheritance of 1,840 Metatec Shares in 1999
from his father's estate; and (ii) Christopher A. Munro, President and Chief
Executive Officer of the Company, failed to timely report the acquisition of
3,600 Metatec Shares in August 2001.
12
PRINCIPAL HOLDERS OF VOTING SECURITIES
The following table sets forth certain information with respect to the only
persons known by the Company to own beneficially 5% or more of Metatec Shares:
AMOUNT AND NATURE OF
NAME AND ADDRESS OF BENEFICIAL OWNER BENEFICIAL OWNERSHIP (1) PERCENT OF OWNERSHIP
------------------------------------ --------------------------- --------------------
Jeffrey M. Wilkins.......................... 792,468(2) 11.6%
7001 Metatec Boulevard
Dublin, Ohio 43017
Dimensional Fund Advisors, Inc.............. 509,800 8.3%
1299 Ocean Avenue
Santa Monica, California 90401
---------------
(1) Beneficial ownership as of December 31, 2001, except in the case of Mr.
Wilkins, which is as of March 8, 2002.
(2) Includes the following: (i) 325,000 Metatec Shares which may be acquired
upon the exercise of options which are currently exercisable or exercisable
within 60 days of March 8, 2002; (ii) 4,000 Metatec Shares owned by a trust
which is for the benefit of one of Mr. Wilkins' grandchildren, of which Mr.
Wilkins is the trustee; and (iii) 46,000 Metatec Shares owned by a limited
partnership, of which Mr. Wilkins is a general partner.
13
PERFORMANCE GRAPH
The following graph compares the yearly percentage change in the cumulative
total return (assuming reinvestment of dividends) on Metatec Shares to the
yearly percentage change in the cumulative total return of the NASDAQ Computer
and Data Processing Services Index and the NASDAQ Stock Market Index -- United
States. This comparison is shown for the five previous fiscal years of the
Company. The graph and the amounts in the graph assume that $100 was invested on
December 31, 1996 in Metatec Shares or in the applicable stock index and that
all dividends were reinvested during the applicable fiscal year.
Performance Graph
DEC-96 DEC-97 DEC-98 DEC-99 DEC-00 DEC-01
------ ------ ------ ------ ------ ------
Metatec International................. $100 $ 70 $111 $ 44 $ 15 $ 5
NASDAQ -- Computer & Data
Processing.......................... $100 $123 $219 $482 $222 $179
NASDAQ Stock Market -- US............. $100 $122 $173 $321 $193 $153
The foregoing graph is not -- nor is it intended to be -- any indication of
the future performance of Metatec Shares.
14
REPORT OF THE AUDIT COMMITTEE
The Audit Committee is responsible to monitor and review the Company's
financial reporting process on behalf of the Board of Directors. Management has
the primary responsibility for the financial statements and the reporting
process, including the systems of internal controls. Management's responsibility
for financial reporting and the report and opinion of Deloitte & Touche LLP are
filed separately in the Company's Annual Report on Form 10-K for the 2001 fiscal
year and should be read in conjunction with this report and any review of the
audited financial statements.
The current members of the Audit Committee are David P. Lauer, its
Chairman, Joseph F. Keeler, Jr., James V. Pickett, and Daniel D. Viren. A. Grant
Bowen, who retired from the Company's Board of Directors in February 2001,
served as Chairman of the Audit Committee until his retirement. Mr. Lauer has
served on the Audit Committee since February 2001. All members of the Audit
Committee are independent directors as defined by the rules and regulations of
Nasdaq, with the exception of Daniel D. Viren, who served as the Company's
Senior Vice President and Chief Financial Officer from July 1999 to June 2000.
The Company's Audit Committee Charter permits the Board of Directors to appoint
one non-independent director to the Audit Committee under exceptional and
limited circumstances. In appointing Mr. Viren to the Audit Committee, the Board
of Directors considered his extensive experience in dealing with financial
statements and audit matters outside the scope of his employment with the
Company and believed that his membership on the Audit Committee was in the best
interests of the Company and its shareholders. The Committee held five meetings
during the 2001 fiscal year and took action one time by written consent. Each
member of the Audit Committee attended at least 75% of the meetings.
The full responsibilities of the Audit Committee are set forth in its
charter, which is reviewed and amended periodically by the Board of Directors. A
copy of the Audit Committee Charter was attached to the Proxy Statement for the
2001 annual meeting of shareholders. In fulfilling its responsibilities, the
Audit Committee reviewed the audited financial statements in the Annual Report
on Form 10-K for the 2001 fiscal year with management, including a discussion of
the quality, not just the acceptability, of the accounting principles, the
reasonableness of significant judgments, and the clarity of disclosures in the
financial statements. In addition, the Audit Committee recommended to the Board
of Directors (and the Board has approved) the selection of Deloitte & Touche LLP
as the Company's independent auditors for the 2002 fiscal year. Among other
things, the Audit Committee:
- Discussed and considered the independence of Deloitte & Touche LLP,
including reviewing as necessary all relationships and services which
might bear on the objectivity of the auditor;
- Received written affirmation that the auditor is in fact independent;
- Discussed the overall audit process, including receiving and reviewing
the Company's financial statements and related reports; and
- Provided to the independent auditors full access to the Audit Committee
(and the Board of Directors) to report on any and all matters
appropriate.
The Audit Committee also met with selected members of management and the
auditors to review financial statements (including quarterly reports),
discussing such matters as the quality of earnings; estimates, reserves and
accruals; suitability of accounting principles; highly judgmental areas; and
audit adjustments whether or not recorded. In addition, the Audit Committee
considered the quality and adequacy of the Company's internal controls and the
status of pending litigation, taxation matters and other areas of oversight to
the financial reporting and audit process that the committee felt appropriate.
15
Based upon its work and the information received in the inquiries outlined
above, the Audit Committee is satisfied that its responsibilities under the
charter for the period ending December 31, 2001, were met and that the financial
reporting and audit processes of the Company are functioning appropriately.
Furthermore, in reliance on the reviews and discussions referred to above, the
Audit Committee recommended to the Board of Directors (and the Board has
approved) that the audited financial statements be included in the Annual Report
on Form 10-K for the 2001 fiscal year for filing with the Securities and
Exchange Commission.
As discussed above, the Audit Committee is responsible to monitor and
review the Company's financial reporting process on behalf of the Board of
Directors. However, it is not the duty or responsibility of the Audit Committee
to conduct auditing or accounting reviews or procedures. Members of the Audit
Committee are not employees of the Company, and some members may not be
accountants or auditors by profession or experts in the fields of accounting or
auditing. Therefore, the Audit Committee has relied, without independent
verification, on management's representation that the financial statements have
been prepared with integrity and objectivity and in conformity with accounting
principles generally accepted in the United States of America and on the
representations of the independent auditors included in their report on the
Company's financial statements. The Audit Committee's review does not provide
its members with an independent basis to determine that management has
maintained appropriate accounting and financial reporting principles or
policies, or appropriate internal controls and procedures designed to assure
compliance with accounting standards and applicable laws and regulations.
Furthermore, the Audit Committee's considerations and discussions with
management and the independent auditors do not assure that the Company's
financial statements are presented in accordance with generally accepted
accounting principles, that the audit of the Company's financial statements has
been carried out in accordance with generally accepted auditing standards, or
that the Company's independent accountants are in fact "independent."
DAVID P. LAUER, Chairman
JOSEPH F. KEELER, JR.
JAMES V. PICKETT
DANIEL D. VIREN
INDEPENDENT PUBLIC ACCOUNTANTS
Deloitte & Touche LLP served as the independent public accountants for the
Company for its fiscal year ended December 31, 2001, and it has been selected by
the Board of Directors to be the Company's independent public accountants for
the fiscal year ending December 31, 2002. A representative of Deloitte & Touche
LLP is expected to be present at the Annual Meeting and to have an opportunity
to make a statement if desired and to respond to appropriate questions.
Aggregate fees billed to the Company for the year ending December 31, 2001,
by Deloitte & Touche LLP, the member firms of Deloitte Touche Tohmatsu, and
their respective affiliates (collectively, "Deloitte") are as follows:
Audit Fees.................................................. $128,860
Financial Information Systems
Design and Implementation Fees.............................. -0-
All Other Fees.............................................. $ 70,641(1)(2)
---------------
(1) Includes fees for tax consulting and other non-audit services.
(2) The Audit Committee has considered whether the provision of these services
is compatible with maintaining the principal accountant's independence.
16
SHAREHOLDER PROPOSALS
Proposals of shareholders intended to be presented at the 2002 annual
meeting of shareholders must be received by the Company for inclusion in the
proxy statement and form of proxy on or prior to 120 days in advance of the
first anniversary of the date of this Proxy Statement. If a shareholder intends
to present a proposal at the 2002 annual meeting of shareholders, but does not
seek to include such proposal in the Company's proxy statement and form of
proxy, such proposal must be received by the Company on or prior to 45 days in
advance of the first anniversary date of this Proxy Statement or the persons
named in the form of proxy for the 2002 annual meeting will be entitled to use
their discretionary voting authority should such proposal then be raised at such
meeting, without any discussion of the matter in the Company's proxy statement
or form of proxy.
OTHER MATTERS
Management does not know of any other matters which may come before the
Annual Meeting. However, if any other matters properly come before the Annual
Meeting, the persons named in the accompanying form of proxy intend to vote the
proxy in accordance with their judgment on such matters.
The Company will bear the cost of soliciting proxies. In addition to the
use of the mails, proxies may be solicited by officers, directors, and regular
employees, personally or by telephone or telegraph. The Company will reimburse
banks, brokers, and nominees for any out-of-pocket expenses incurred by them in
sending proxy materials to the beneficial owners of Metatec Shares held by any
banks, brokers or nominees. If follow-up requests for proxies are necessary, the
Company may employ other persons to make these requests.
JULIA A. POLLNER
Secretary
17
PLEASE MARK VOTES PROXY
[X] AS IN THIS EXAMPLE METATEC INTERNATIONAL,INC.
With- For All
ANNUAL MEETING OF SHAREHOLDERS 1. AUTHORITY TO ELECT ALL NOMI- For hold Except
MAY 16,2002 NEES LISTED BELOW AS CLASS III
THIS PROXY IS SOLICITED ON BEHALF OF THE BOARD OF DIRECTORS DIRECTORS (except as marked to the [ ] [ ] [ ]
contrary below):
The undersigned hereby appoints Christopher
A. Munro and Gary W. Qualmann, and each of them, with
full power of substitution, proxies to vote and act JEFFREY M. WILKINS DAVID P. LAUER
with respect to all Common Shares, without par value INSTRUCTION: TO WITHHOLD AUTHORITY TO VOTE
(the "Shares"), of Metatec International, Inc., an FOR ANY INDIVIDUAL NOMINEE, MARK "FOR ALL
Ohio corporation (the "Company"), which the EXCEPT" AND WRITE THAT NOMINEE'S NAME IN THE
undersigned is entitled to vote at the Annual Meeting SPACE PROVIDED BELOW.
of Shareholders to be held on Thursday, May 16, 2002,
at the Company's principal executive offices located
at 7001 Metatec Boulevard, Dublin, Ohio 43017, at ---------------------------------------------------------------
1:00 p.m., local time, and at any and all For Against Abstain
adjournments thereof, with all the powers the under- 2. IN THEIR DISCRETION,THE PROXIES
signed would possess if present in person, on the ARE AUTHORIZED TO VOTE UPON SUCH OTHER [ ] [ ] [ ]
following proposals and any other matters that may MATTERS AS MAY PROPERLY COME BEFORE THE
properly come before the Annual Meeting. MEETING OR ANY ADJOURNMENT THEREOF.
------------------------- The Shares represented by this
Please be sure to sign and date Proxy will be voted upon the proposal listed
this Proxy in the box below. Date above in accordance with the instructions
given by the undersigned, but if no
------------------------------------------------------------- instructions are given, this Proxy will be
Shareholder sign above Co-holder (if any) sign above voted to elect all directors as set forth in
Item 1, above, and in the discretion of the
proxies, on any other matter which properly
comes before the Annual Meeting.
--------------------------------------------------------------------------------
DETACH ABOVE CARD, SIGN, DATE AND MAIL IN POSTAGE PAID ENVELOPE PROVIDED.
METATEC INTERNATIONAL,INC.
PLEASE ACT PROMPTLY
SIGN, DATE & MAIL YOUR PROXY CARD TODAY
IF YOUR ADDRESS HAS CHANGED, PLEASE CORRECT THE ADDRESS IN THE SPACE PROVIDED
BELOW AND RETURN THIS PORTION WITH THE PROXY IN THE ENVELOPE PROVIDED.
____________________________________________________
____________________________________________________
____________________________________________________