SCHEDULE 14A INFORMATION
PROXY STATEMENT PURSUANT TO SECTION 14(a) OF THE SECURITIES
EXCHANGE ACT OF 1934 (AMENDMENT NO. )
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(Name of Registrant as Specified in Its Charter)
MIM CORPORATION
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(Name of Person(s) Filing Proxy Statement)
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EXECUTIVE SUMMARY OF PROPOSALS FOR
STOCKHOLDER APPROVAL AT THE 1999 ANNUAL MEETING
The following is a brief summary of the Proposals set forth in the Company's
Proxy Statement for the 1999 Annual Meeting of Stockholders. We encourage you to
carefully read the Proxy Statement. This summary description of the Proposals is
qualified in its entirety by the Proxy Statement and any relevant agreements or
other documents described in the Proxy Statement.
PROPOSAL 1: Election of Directors
"To elect six (6) Directors to the Board of Directors
("Board"), each to hold office, subject to the provisions
of the Company's Restated Certificate of Incorporation and
Amended and Restated By-Laws, for a term of between one
(1) and three (3) years (as described in Proposal 2 below)
and until their respective successors shall have been duly
elected and qualified."
o This proposal simply requests the re-election of the Company's
existing Board of Directors--
Rich Friedman, Scott Yablon, Lou Luzzi, Dick Cirillo, Lou DiFazio
and Michael Kooper.
o THE BOARD OF DIRECTORS UNANIMOUSLY RECOMMENDS A VOTE "FOR" THIS
PROPOSAL.
PROPOSAL 2: STAGGERED BOARD
"To approve an amendment to the Company's Restated
Certificate of Incorporation to divide the Board into
three classes of Directors with only one class being
elected each year, such that the term of the Class I
Directors, Class II Directors and Class III Directors
would expire at the 2000, 2001 and 2002 annual meetings of
stockholders, respectively. If this proposal is not
approved by the Company's stockholders, all Directors
elected at the 1999 Annual Meeting will serve for a term
of one year until the 2000 Annual Meeting and until their
respective successors shall have been duly elected and
qualified."
How It Works:
o When fully implemented, a staggered Board would divide the Board
into three classes of two persons each, with only one class
standing for re-election each year.
o Class I - Messrs. Kooper and Luzzi (term to expire at the 2000
Annual Meeting).
o Class II - Messrs. Yablon and DiFazio (term to expire at the 2001
Annual Meeting).
o Class III - Messrs. Friedman and Cirillo (term to expire at the
2002 Annual Meeting).
o After the 2002 Annual Meeting, members of each class would stand
for re-election every three years. Hence, it would generally take
two annual elections to replace a majority of a classified Board
of Directors and effect a forced change in the control of the
Company.
o Rationale:
1. To deter coercive takeover tactics and to otherwise encourage
third parties interested in acquiring the Company to negotiate
with the Board of Directors, thereby facilitating the Board's
objective to maximize shareholder value.
2. Dividing the directors into three classes is in the best
interests of the Company and its stockholders because the
likelihood of increased continuity and stability in the
policies formulated by those members of the Board will be
enhanced by having directors serve for three-year terms rather
than one-year terms.
o THE BOARD OF DIRECTORS UNANIMOUSLY RECOMMENDS A VOTE "FOR" THIS
PROPOSAL.
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PROPOSAL 3: COMPENSATION AND RELATED PROVISIONS OF THE CHIEF EXECUTIVE
OFFICER'S EMPLOYMENT AGREEMENT AND OPTION PLAN
"To approve certain performance-based and other
compensation provisions, including compensation payable in
connection with termination and change in control, set
forth in the employment agreement dated December 2, 1998
(the "CEO Employment Agreement") between the Company and
its Chairman and Chief Executive Officer, and to approve
the related option plan and agreement ("CEO Option
Plan")."
BACKGROUND:
o On December 2, 1998, Mr. Friedman entered into an employment
agreement to serve as the Company's Chairman and Chief Executive
Officer for the next five years.
o The compensation provisions of the CEO Employment Agreement were
based in part on the recommendations of Strategic Compensation
Research Associates ("SCRA"), an independent executive
compensation consulting firm retained by the Board of Directors,
specializing in executive officer and director compensation
matters. The Board had retained SCRA to develop an appropriate
compensation package for the CEO in order to secure a long term
employment agreement and to more closely align his interests with
those of the Company's stockholders. The Board carefully
considered the recommendations of SCRA and approved the
compensation provisions of the CEO Employment Agreement and the
related CEO Option Plan.
COMPENSATION AND OTHER MATERIAL TERMS:
o Under the CEO's Employment Agreement, the CEO was granted options
to purchase 800,000 shares(1) of Common Stock, 200,000 performance
units and 300,000 performance shares. Under the CEO Employment
Agreement, in the discretion of the Compensation Committee (the
"Committee"), the CEO is also entitled to receive an annual cash
bonus under the Company's Senior Executive Bonus Program.
o Each of these grants to the CEO as well as related termination and
change of control provisions are subject to stockholder approval
under the terms of the CEO Employment Agreement. If any one of
these provisions is not approved, the CEO and the Company may
renegotiate all of these provisions. In addition, certain of these
provisions require stockholder approval in order to provide the
Company with a deduction for tax purposes with respect to such
compensation paid to the CEO under applicable Federal tax law and
regulations.
o The ISOs have an exercise price of $4.95 (110% of fair market
value on the grant date) and the NQSO's have an exercise price of
$4.50 (fair market value on the grant date) and vest in three
equal installments on the first three anniversaries of the date of
grant.
o IF THE COMPANY ACHIEVES SPECIFIED LEVELS OF AFTER-TAX NET EARNINGS
(GIVING EFFECT TO THE ACCRUALS REQUIRED IN CONNECTION WITH THE
EXECUTIVE COMPENSATION PROGRAM), THE PERFORMANCE UNITS WOULD
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(1) These options are intended to be treated as incentive stock options ("ISOs")
to the maximum extent permitted under Federal tax law, with the remainder
treated as non-qualified stock options ("NQSOs").
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ENTITLE THE CEO TO A CASH PAYMENT (IN TWO INSTALLMENTS IN APRIL
2002 AND 2003) OF BETWEEN $10 AND $40 (WITH $25 AS THE TARGET
PAYMENT) PER UNIT.
o The performance shares are essentially restricted stock with
restrictions that lapse after eight years if the CEO is still
employed by the Company. IF THE COMPANY ACHIEVES SPECIFIED LEVELS
OF FULLY DILUTED EARNINGS PER SHARE IN 2001 OR 2002, SUCH
RESTRICTIONS WILL LAPSE EARLY.
o The Committee may authorize the payment of bonuses to the Chief
Executive Officer with such conditions and terms as the Committee
may determine. Performance goals for the payment of bonuses may
include individual objectives, Company objectives or both. Company
objectives may include, but not be limited to, one or more of the
following: total revenue, earnings, earnings per share or return
on equity or the extent of changes in such criteria.
o In the event of the CEO's termination (including following a
change in control), other than by the Company for "cause" or by
him without "good reason" (each, as defined in the Employment
Agreement), the options, performance units and performance shares
vest early.
o THE BOARD OF DIRECTORS (WITH THE CEO ABSTAINING) UNANIMOUSLY
RECOMMENDS A VOTE "FOR" THIS PROPOSAL.
PROPOSAL 4: AMENDMENT OF EMPLOYEE STOCK OPTION PLAN; IMPLEMENTATION OF
1998 TOTAL LONG-TERM COMPENSATION PROGRAM
"To approve amendments to the Company's Amended and
Restated 1996 Stock Incentive Plan (the "Employee
Plan") in order to add performance shares and
performance units as securities subject to grant by
the Company to employees under the Employee Plan, to
make available under the Employee Plan an additional
825,450 shares of the Company's Common Stock, and to
make certain other related technical changes to the
Employee Plan."
BACKGROUND:
o In addition to assisting with the CEO Employment Agreement, SCRA
was retained to assist the Company in developing a Company-wide
senior management long-term compensation program in order to more
closely align the interests of senior management with those of the
Company's stockholders and to rationalize the Company's
compensation arrangements to make them more consistent with
industry compensation practices. The Board carefully considered
the recommendations of SCRA and adopted a 1998 Total Long-Term
Compensation Program for Key Employees ("Program") that it
believes to be in the best interests of the Company and its
stockholders in that it properly incentivizes senior management to
maximize stockholder value for all stockholders and will enable
the Company to attract, retain and motivate key employees.
o In order to effectuate the Program, the Company amended the 1996
Stock Incentive Plan as of December 2, 1998 to provide for the
grant of performance units and performance shares under the Plan.
In addition, in order to make sufficient shares available
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for grant under the Plan in connection with the Program and to
satisfy the need to have other options available for non-senior
management, the Plan was also amended to make available for grant
an additional 825,450 shares of Common Stock (for a total of
2,375,000 shares).
GRANTS:
o As of July 2, 1999, excluding the CEO's grants which were not made
under the amended Employee Plan, an aggregate of 738,000 shares of
Common Stock have been reserved for issuance under the amended
Employee Plan in connection with grants to senior management of
360,000 options (of which 150,000 are ISOs) and 378,000
performance shares (restricted stock). In addition, the Company
granted such persons 185,000 performance units under the amended
Employee Plan which do not require the reservation of shares under
the Plan since they are paid in cash when they vest.
o These amendments to the Employee Plan and grants under the amended
Employee Plan are subject to stockholder approval at the 1999
Annual Meeting.
o THE BOARD OF DIRECTORS (WITH MR. YABLON ABSTAINING) UNANIMOUSLY
RECOMMENDS A VOTE "FOR" THIS PROPOSAL.
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PROPOSAL 5: AMENDMENT OF NON-EMPLOYEE DIRECTORS PLAN
"To approve an amendment to the Company's 1996
Non-Employee Directors Stock Incentive Plan in order
to make available under such Plan an additional
200,000 shares of Common Stock."
o At the beginning of 1999, no shares were available for grant under
the 1996 Non-Employee Directors Stock Incentive Plan. Accordingly,
the Board determined it was necessary to have additional shares
available for grant in order to continue to attract and retain
qualified Non-Employee Directors in the event that the Board was
expanded to comprise more than six directors or if one or more of
the current directors ceased to serve as such for whatever
reasons.
o Accordingly, effective March 1, 1999, the Company amended the 1996
Non-Employee Directors Stock Incentive Plan in order to make
available for grant an additional 200,000 shares under the Plan.
o These amendments to the Non-Employee Director Plan are subject to
stockholder approval at the 1999 Annual Meeting.
o No grants have been made to date under the amended Non-Employee
Director Plan, but would be available for the purposes discussed
above.
o THE BOARD OF DIRECTORS UNANIMOUSLY RECOMMENDS A VOTE "FOR" THIS
PROPOSAL.
GENERAL
o Some or all of the directors have a direct interest in certain of
the Proposals and have abstained, when appropriate, from
recommending a vote in favor of any such Proposal.
o As of July 2, 1999, the Company's directors and executive officers
as a group beneficially owned approximately 14% of the outstanding
Common Stock entitled to vote at the Annual Meeting and the
Company expects such persons to vote all of their shares in favor
of each Proposal.
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