DEF 14A 1 a2042580zdef14a.txt DEF 14A SCHEDULE 14A INFORMATION Proxy Statement Pursuant to Section 14(a) of the Securities Exchange Act of 1934 (Amendment No. ) Filed by the Registrant /X/ Filed by a Party other than the Registrant / / Check the appropriate box: / / Preliminary Proxy Statement / / Confidential, for Use of the Commission Only (as permitted by Rule 14a-6(e)(2)) /X/ Definitive Proxy Statement / / Definitive Additional Materials / / Soliciting Material Pursuant to Section240.14a-11(c) or Section240.14a-12 INFORMATION HOLDINGS INC. ----------------------------------------------------------------------- (Name of Registrant as Specified In Its Charter) ----------------------------------------------------------------------- (Name of Person(s) Filing Proxy Statement, if other than the Registrant)
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INFORMATION HOLDINGS INC. ------------------ NOTICE OF ANNUAL MEETING OF STOCKHOLDERS APRIL 24, 2001 --------------------- The Annual Meeting of Stockholders (the "Annual Meeting") of Information Holdings Inc., a Delaware corporation (the "Company"), will be held at the Loews New York Hotel, 569 Lexington Avenue (at 51st Street), New York, New York 10017 on Tuesday, April 24, 2001, at 2:00 p.m., Eastern Standard Time, for the purpose of considering and acting upon the following matters, which are described more fully in the accompanying Proxy Statement: (a) To elect five directors to serve until the 2002 annual meeting of stockholders or until their respective successors are duly elected and qualified; (b) To approve a 600,000 share increase in the number of shares reserved for issuance under the Company's 1998 Stock Option Plan; (c) To ratify the appointment by the Board of Directors of Ernst & Young LLP as the Company's independent auditors for the fiscal year ending December 31, 2001; and (d) To transact such other business as may properly come before the meeting or any adjournment or postponement thereof. Holders of the Company's Common Stock of record at the close of business on March 15, 2001 (the "Record Date") are entitled to vote at the Annual Meeting or any adjournment or postponement thereof. A list of stockholders of the Company as of the Record Date will be available for inspection during business hours through April 23, 2001, at the Company's offices, 2777 Summer Street, Suite 209, Stamford, Connecticut, and will also be available for inspection at the Annual Meeting. ALL STOCKHOLDERS ARE CORDIALLY INVITED TO ATTEND THE ANNUAL MEETING IN PERSON. HOWEVER, WHETHER OR NOT YOU EXPECT TO ATTEND THE ANNUAL MEETING IN PERSON, YOU ARE URGED TO COMPLETE, SIGN AND DATE THE ENCLOSED PROXY CARD AND RETURN IT AS SOON AS POSSIBLE IN THE ENCLOSED ENVELOPE WHICH HAS BEEN PROVIDED FOR YOUR CONVENIENCE AND WHICH REQUIRES NO POSTAGE IF MAILED IN THE UNITED STATES. THE PROMPT RETURN OF PROXY CARDS WILL ENSURE A QUORUM. IF YOU SEND IN YOUR PROXY CARD AND THEN DECIDE TO ATTEND THE ANNUAL MEETING TO VOTE YOUR SHARES IN PERSON, YOU MAY STILL DO SO. YOUR PROXY IS REVOCABLE IN ACCORDANCE WITH THE PROCEDURES SET FORTH IN THE PROXY STATEMENT. By Order of the Board of Directors, [LOGO] Vincent A. Chippari Secretary March 27, 2001 INFORMATION HOLDINGS INC. 2777 SUMMER STREET, SUITE 209 STAMFORD, CT 06905 ------------------------ PROXY STATEMENT --------------------- ANNUAL MEETING OF STOCKHOLDERS This Proxy Statement is furnished in connection with the solicitation of proxies by the Board of Directors (the "Board") of Information Holdings Inc., a Delaware corporation (the "Company"), for use at the Annual Meeting of Stockholders of the Company (the "Annual Meeting") to be held on Tuesday, April 24, 2001, at 2:00 p.m., Eastern Standard Time, at the Loews New York Hotel, 569 Lexington Avenue (at 51st Street), New York, New York, 10017, or at any adjournment or postponement thereof, for the purposes set forth in the accompanying Notice of Annual Meeting of Stockholders. It is expected that the Notice of Annual Meeting of Stockholders, this Proxy Statement and the enclosed proxy card, together with the Company's Annual Report to stockholders for the fiscal year ended December 31, 2000, will be mailed to stockholders entitled to vote at the Annual Meeting commencing on or about March 30, 2001. Any stockholder or stockholder's representative who, because of a disability, may need special assistance or accommodation to allow him or her to participate at the Annual Meeting may request reasonable assistance or accommodation from the Company by contacting Information Holdings Inc., 2777 Summer Street, Suite 209, Stamford, Connecticut 06905. To provide the Company sufficient time to arrange for reasonable assistance, please submit all requests by April 13, 2001. RECORD DATE AND VOTING SECURITIES Stockholders can ensure that their shares are voted at the Annual Meeting by attending the Annual Meeting or signing and returning the enclosed proxy card in the envelope provided. The submission of a signed proxy will not affect a stockholder's right to attend the Annual Meeting and vote in person. Stockholders who execute proxies retain the right to revoke them at any time before they are voted by filing with the Company's Secretary a written revocation or a proxy bearing a later date. The presence at the Annual Meeting of a stockholder who has signed a proxy does not itself revoke that proxy unless the stockholder attending the Annual Meeting files written notice of revocation of the proxy with the Company's Secretary at any time prior to the voting of the proxy. Proxies will be voted as specified by the stockholders. Where specific choices are not indicated, proxies will be voted FOR the proposals submitted for approval, and in accordance with the proxyholder's best judgment as to any other business as may properly come before the Annual Meeting. The proxy card provides space for a stockholder to withhold voting for any or all nominees to the Board or to abstain from voting for any proposal if the stockholder chooses to do so. Under Delaware law and the Company's Bylaws, the presence of a quorum is required to transact business at the Annual Meeting. A quorum is defined as the presence, either in person or by proxy, of a majority of the shares entitled to vote. Proxies marked "abstain" will be included in determining a quorum. On routine matters, brokers who hold customer shares in "street name" but have not timely received voting instructions from such customers have discretion to vote such shares. Since all of the matters to be voted upon at the Annual Meeting are routine, the presence of such shares will be included in determining a quorum. Under Delaware law and the Company's Bylaws, proposals must be approved by the affirmative vote of a majority, or, in the case of the election of directors, a plurality, of the shares present, either in person or by proxy, at the Annual Meeting and entitled to vote. Accordingly, abstentions have the same effect as votes "against" a proposal, whereas instructions to withhold voting on the election of any nominee for director have no effect on the outcome of the vote. The Board has fixed the close of business on March 15, 2001 as the record date (the "Record Date") for the determination of the Company's stockholders who are entitled to receive notice of and to vote at the Annual Meeting. At the close of business on the Record Date, the Company had outstanding 21,615,798 shares of common stock, par value $0.01 per share (the "Common Stock"), excluding treasury shares. The holders of Common Stock are entitled to one vote for each share held on the Record Date. PROXIES IN THE FORM ENCLOSED ARE BEING SOLICITED BY, OR ON BEHALF OF, THE BOARD. THE PERSONS NAMED IN THE ACCOMPANYING FORM OF PROXY HAVE BEEN DESIGNATED AS PROXIES BY THE BOARD. Such persons designated as proxies are the Company's officers. Any stockholder desiring to appoint another person to represent him or her at the Annual Meeting may do so either by inserting such person's name in the blank space provided on the accompanying form of proxy, or by completing another form of proxy and, in either case, delivering an executed proxy to the Company's Secretary at the address indicated above, before the time of the Annual Meeting. It is the responsibility of the stockholder appointing such other person to represent him or her to inform such person of this appointment. The Company will bear the cost of solicitation of proxies. Further solicitation may be made by the Company's directors, officers and employees personally, by telephone or otherwise, but such persons will not be specifically compensated for such services. The Company also intends to make, through bankers, brokers or other persons, a solicitation of proxies of beneficial holders of the Common Stock. Upon request, the Company will reimburse brokers, dealers, banks or similar entities acting as nominees for reasonable expenses incurred in forwarding copies of the proxy materials relating to the Annual Meeting to the beneficial owners of Common Stock which such persons hold of record. The Company may send only one annual report and proxy statement to multiple shareholders that share the same address. Upon written or oral request, the Company will promptly supply such shareholders additional copies of the annual report and proxy statement. Such requests should be made by contacting the Company either by mail at the Company's offices at 2777 Summer Street, Suite 209, Stamford, Connecticut 06905 or by telephone at (203) 961-9106. If shareholders sharing the same address are receiving multiple copies of the annual report and proxy statement, such shareholders can request delivery of a single copy of the annual report and proxy statement by contacting the Company at the above address. 2 PROPOSAL NUMBER ONE ELECTION OF DIRECTORS All of the Company's directors serve annual terms which expire on the date of the Annual Meeting. At the Annual Meeting, the stockholders will elect five directors to hold office, subject to the provisions of the Company's Certificate of Incorporation and Bylaws, until the Annual Meeting of Stockholders in 2002 and until their respective successors shall have been duly elected and qualified. The Company has agreed to nominate and use its best efforts to elect and cause to remain as directors (i) Mason P. Slaine, for so long as he beneficially owns, within the meaning of Rule 13d-3 under the Securities Exchange Act of 1934, as amended (the "Exchange Act"), at least 5% of the outstanding shares of Common Stock, unless the Company terminates his employment for "Just Cause" (as defined in his employment agreement) and (ii) at least one or two nominees of Warburg Pincus Ventures, L.P. ("Warburg Pincus"), for so long as Warburg Pincus owns at least 10% or 20%, respectively, of the outstanding shares of Common Stock. Unless contrary instructions are given, the persons named in the enclosed proxy or their substitutes will vote FOR the election of the five director nominees named below. The Board believes that all of the nominees are willing to serve as directors. However, if any nominee at the time of election is unable to serve or is otherwise unavailable for election, and as a result other nominees are designated by the Board, the persons named in the enclosed proxy or their substitutes intend to vote for the election of such designated nominees. The nominees for election as directors to serve until the Annual Meeting of Stockholders in 2002, together with certain information about them, are set forth below: MICHAEL E. DANZIGER....... Michael E. Danziger, 42, has served as one of the Company's directors since July 1998. Mr. Danziger is currently a consultant in the information and publishing field. From 1991 to 1999, Mr. Danziger was Chairman of Thomson Financial's Database Group, a division of Thomson Financial which provides financial information, products and services. Since 1993, he has also been an executive officer of Rand Publishing Company Inc., a small holding company that has made investments in the publishing industry ("Rand"). DAVID R. HAAS............. David R. Haas, 59, has served as one of the Company's directors since July 1998. Mr. Haas has been a financial consultant in the entertainment and communications industries since 1995. From 1990 until 1994, he was Senior Vice President and Controller of Time Warner, a leading media and entertainment company. SIDNEY LAPIDUS............ Sidney Lapidus, 63, has served as one of the Company's directors since December 1996. Mr. Lapidus has been a General Partner of Warburg Pincus & Co. ("WP") and a Member and Managing Director of E.M. Warburg Pincus & Co., LLC ("EMW LLC") or its predecessors since January 1982, where he has been employed since 1967. He is currently a director of Radio Unica Communications Corp., Lennar Corporation and several privately held companies.
3 DAVID E. LIBOWITZ......... David E. Libowitz, 38, has served as one of the Company's directors since December 1996. Mr. Libowitz is a General Partner at WP and a Member and Managing Director of EMW LLC, where he has been employed since July 1991. He is currently a director of Audio Visual Services Corporation and several privately held companies. MASON P. SLAINE........... Mason P. Slaine, 47, has served as one of the Company's directors since December 1996. Mr. Slaine has been President and Chief Executive Officer since December 1996. Since 1993, Mr. Slaine has been President of Rand. Mr. Slaine is also Trustee of The Stockback Fund. From 1994 to 1996, Mr. Slaine served as President of Thomson Financial, a division of the Thomson Corporation that provides financial information, research, analysis and software products worldwide. From 1993 to 1994, he served as President of Thomson Financial Publishing, a division of Thomson Financial.
RECOMMENDATIONS AND VOTE The affirmative vote of a plurality of the shares of Common Stock present, either in person or by proxy, at the Annual Meeting and entitled to vote is required for the election of the directors. THE BOARD RECOMMENDS A VOTE "FOR" ELECTION OF THE NOMINEES LISTED ABOVE. 4 PROPOSAL NUMBER TWO THE STOCK OPTION PLAN PROPOSAL On July 15, 1998, the Board adopted the Company's 1998 Stock Option Plan (the "Option Plan"), and reserved 866,886 shares of Common Stock for issuance under the Option Plan. In April 2000, the shareholders authorized an increase in the number of shares of Common Stock reserved for issuance by 500,000 to a total of 1,366,886. The Board has amended and restated the Option Plan, subject to stockholder approval, to increase the number of shares of Common Stock reserved for issuance thereunder by an additional 600,000 to a total of 1,966,886 shares. The Company is seeking stockholder approval of the Option Plan in order to comply with the requirements of Sections 162(m) and 422 of the Internal Revenue Code of 1986 (the "Code") and the requirements of the New York Stock Exchange ("NYSE"). The following summary of the Option Plan is qualified in its entirety by express reference to the text of the Option Plan, a copy of which was filed with the Commission as an appendix to this Proxy Statement. Under the Option Plan, options to purchase shares of Common Stock may be granted which are qualified as "incentive stock options" within the meaning of Section 422 of the Code ("ISOs") and which are not so qualified ("NQSOs") (collectively or individually, ISOs and NQSOs may be referred to as "Options"). PURPOSE AND ELIGIBILITY The purpose of the Option Plan is to promote the Company's long-term financial success by enhancing the Company's ability to attract, retain and reward individuals who can and do contribute to such success and to further align the interests of the Company's key personnel with its stockholders. The full-time employees of the Company and its subsidiaries, and its directors, are eligible to receive Options under, and participate in, the Option Plan. The approximate number of individuals eligible to participate in the Option Plan is 470. ADMINISTRATION The Option Plan is administered by the Board and a Committee (the entity administering the Option Plan hereafter called the "Committee") appointed by the Board from among its members. The Committee, in its sole discretion, determines which individuals may participate in the Option Plan and the type, extent and terms of the Option awards to be granted. In addition, the Committee interprets the Option Plan and makes all other determinations with respect to the administration of the Option Plan. OPTIONS The Option Plan allows for the discretionary grant of Options by the Committee to eligible individuals. The terms and conditions of Options granted under the Option Plan are set out from time to time in agreements between the Company and the individuals receiving such Options. The Committee may grant Options to any eligible person; provided, however, that only employees of the Company and its subsidiaries may receive ISOs. The exercise price of the Options will be determined by the Committee at the time of grant and will be set forth in a Stock Option Agreement between the Company and the participant ("Stock Option Agreement"); provided, however, that the exercise price of an ISO will not be less than the fair market value of the Common Stock on the date of grant. Options will vest and become exercisable within such period or periods (not to exceed 10 years) as determined by the Committee and set forth in the Stock Option Agreement. Options will have a 10-year term from the date of grant, subject to earlier termination upon termination of a participant's employment or service as a director, as applicable, as determined by the Committee and as set forth in the Stock Option Agreement. Options that have become exercisable may be exercised by 5 delivery of written notice of exercise to the Committee accompanied by full payment of the Option exercise price and any applicable withholding. The Option exercise price may be paid in cash, by certified check, bank draft or money order payable to the order of the Company or in accordance with any cashless exercise procedures adopted by the Committee. ADJUSTMENTS FOR RECAPITALIZATION, MERGER, ETC. OF THE COMPANY The Option Plan and any outstanding Options shall be subject to adjustment, as determined by the Committee, as to the maximum number of shares that may be granted under the Option Plan, the maximum number of shares with respect to which options may be granted to any single individual during any calendar year under the Option Plan, the number of shares covered by each outstanding Option, and/or the exercise price thereof in the event of certain changes in the outstanding Common Stock by reason of stock splits or other subdivision or consolidation of shares of Common Stock, or by reason of other capital adjustments occurring after the date of grant of any such Option. In the event of a sale, reorganization, consolidation or merger of the Company (a "Corporate Event"), (i) an individual holding outstanding Options shall be entitled to receive upon the exercise of an Option, the same number and kind of shares of Common Stock or the same amount of property, cash or other securities as he would have been entitled to receive upon the occurrence of such Corporate Event as if he had been, immediately prior to such event or on the record date relating to such event, the holder of the number of shares of Common Stock covered by his Options, and (ii) if the Company is not the surviving corporation as a result of such Corporate Event, the Company shall require the successor corporation or its parent to assume such outstanding Options; provided, however, that the Committee may, in its discretion and in lieu of requiring such assumption, provide that all outstanding Options shall terminate as of the consummation of such Corporate Event and accelerate the exercisability of all outstanding Options to any date prior to the date of such Corporate Event. EFFECT OF CHANGE IN CONTROL In the event of a Change in Control (as defined in the Option Plan), notwithstanding any vesting schedule provided for by the Committee, all Options shall become immediately exercisable with respect to 100 percent of the shares subject to such Option. SHARES SUBJECT TO THE OPTION PLAN As noted above, the Option Plan has been amended, subject to shareholder approval, to increase the maximum number of shares of Common Stock available for issuance thereunder by 600,000 to a total of 1,966,886 shares; provided, however, that no more than 350,000 shares of Common Stock may be issued to any one person pursuant to awards of Options during any one year. MARKET VALUE The closing price of the Common Stock on the NYSE on March 15, 2001 was $22.34 per share. AMENDMENT AND TERMINATION The Board may from time to time, to the extent permitted by applicable law, amend, suspend, or discontinue the Option Plan; provided, however, that the Board may not take any action which would have a material adverse effect on outstanding Options or any unexercised rights under outstanding Options without the consent of participants whose Options would be adversely affected thereby. FEDERAL TAX CONSEQUENCES The following is a brief discussion of the Federal income tax consequences of transactions with respect to Options under the Option Plan based on the Code, as in effect as of the date of this 6 summary. This discussion is not intended to be exhaustive and does not describe any state or local tax consequences. ISOS. No taxable income is realized by the optionee upon the grant or exercise of an ISO. If Common Stock is issued to an optionee pursuant to the exercise of an ISO, and if no disqualifying disposition of such shares is made by such optionee within two years after the date of grant or within one year after the transfer of such shares to such optionee, then (1) upon the sale of such shares, any amount realized in excess of the Option price will be taxed to such optionee as a long-term capital gain and any loss sustained will be a long-term capital loss, and (2) no deduction will be allowed to the Company for Federal income tax purposes. If the Common Stock acquired upon the exercise of an ISO is disposed of prior to the expiration of either holding period described above, generally, (1) the optionee will realize ordinary income in the year of disposition in an amount equal to the excess (if any) of the fair market value of such shares at exercise (or, if less, the amount realized on the disposition of such shares) over the Option price paid for such shares and (2) the Company will be entitled to deduct such amount for Federal income tax purposes if the amount represents an ordinary and necessary business expense. Any further gain (or loss) realized by the optionee upon the sale of the Common Stock will be taxed as short-term or long-term capital gain (or loss), depending on how long the shares have been held, and will not result in any deduction by the Company. If an ISO is exercised more than three months following termination of employment (subject to certain exceptions for disability or death), the exercise of the Option will generally be taxed as the exercise of a NQSO, as described below. For purposes of determining whether an optionee is subject to an alternative minimum tax liability, an optionee who exercises an ISO generally would be required to increase his or her alternative minimum taxable income, and compute the tax basis in the stock so acquired, in the same manner as if the optionee had exercised a NQSO. Each optionee is potentially subject to the alternative minimum tax. In substance, a taxpayer is required to pay the higher of his/her alternative minimum tax liability or his/her "regular" income tax liability. As a result, a taxpayer has to determine his/her potential liability under the alternative minimum tax. NQSOS. With respect to NQSOs: (1) no income is realized by the optionee at the time the Option is granted; (2) generally, at exercise, ordinary income is realized by the optionee in an amount equal to the excess, if any, of the Fair Market Value of the shares on such date over the exercise price, and the Company is generally entitled to a tax deduction in the same amount, subject to applicable tax withholding requirements; and (3) at sale, appreciation (or depreciation) after the date of exercise is treated as either short-term or long-term capital gain (or loss) depending on how long the shares have been held. SPECIAL RULES APPLICABLE TO CORPORATE INSIDERS As a result of the rules under Section 16(b) of the Exchange Act ("Section 16(b)"), and depending upon the particular exemption from the provisions of Section 16(b) utilized, the officers and directors and persons owning more than 10 percent of the outstanding shares of stock ("Insiders") may not receive the same tax treatment as set forth above with respect to the grant and/or exercise of Options. Generally, Insiders will not be subject to taxation until the expiration of any period during which they are subject to the liability provisions of Section 16(b) with respect to any particular Option. Insiders should check with their own tax advisers to ascertain the appropriate tax treatment for any particular Option. 7 NEW PLAN BENEFITS Because the grant of awards under the Option Plan is entirely within the discretion of the Committee, the Company cannot forecast the extent or nature of awards that will be granted in the future. Therefore, the Company has omitted the tabular disclosure of the benefits or amounts allocated under the Option Plan. Information with respect to compensation paid and other benefits, including Options granted in respect of the 2000 fiscal year to the Named Executive Officers is set forth in the Summary Compensation Table and the Stock Option Grants in 2000 table contained herein. RECOMMENDATION AND VOTE Approval of the Option Plan Proposal requires the affirmative vote of a majority of the shares of Common Stock present, in person or by proxy, at the Annual Meeting, and entitled to vote thereon. THE BOARD RECOMMENDS A VOTE "FOR" THE APPROVAL OF THE OPTION PLAN PROPOSAL. 8 PROPOSAL NUMBER THREE RATIFICATION OF INDEPENDENT AUDITORS Subject to stockholder ratification, the Board, upon recommendation of the Audit Committee, has appointed the firm of Ernst & Young LLP as the Company's independent auditors for the fiscal year ending December 31, 2001. This firm has examined the accounts of the Company since inception. If the stockholders do not ratify this appointment, the Board will consider other independent auditors. One or more members of Ernst & Young LLP is expected to be present at the Annual Meeting and will have the opportunity to make a statement if they so desire and will be available to respond to questions. AUDIT FEES Audit fees billed to the Company by Ernst & Young LLP during the Company's 2000 fiscal year for review of the Company's annual financial statements and those financial statements included in the Company's quarterly reports on Form 10-Q totaled $237,000. FINANCIAL INFORMATION SYSTEMS DESIGN AND IMPLEMENTATION FEES The Company did not engage Ernst & Young LLP to provide advice to the Company regarding financial information systems design and implementation during the Company's 2000 fiscal year. ALL OTHER FEES Fees billed to the Company by Ernst & Young LLP during the Company's 2000 fiscal year for all other services rendered to the Company totaled $361,000, including audit related services of $220,000 and non-audit services of $141,000. RECOMMENDATION AND VOTE The affirmative vote of a majority of the shares of Common Stock present, either in person or by proxy, at the Annual Meeting and entitled to vote is required for the ratification of the independent auditors. THE BOARD OF DIRECTORS RECOMMENDS A VOTE "FOR" RATIFICATION OF THE APPOINTMENT OF ERNST & YOUNG LLP AS INDEPENDENT AUDITORS. THE BOARD AND ITS COMMITTEES The Board is responsible for the Company's management and direction and for establishing broad corporate policies. The Board held five meetings during the year ended December 31, 2000. All directors were present in person at all meetings. COMMITTEES OF THE BOARD The Board has two standing committees: the Audit Committee and the Compensation Committee. The Company does not have a standing committee on nominations. The principal responsibilities of each committee are described below. AUDIT COMMITTEE. In 2000, the Audit Committee was comprised of Michael Danziger and David Haas. The Audit Committee is responsible for meeting with the Company's independent auditors regarding, among other issues, audits and adequacy of the Company's accounting and control systems. The Audit Committee also recommends a firm of certified independent auditors to serve as the Company's independent auditors, authorizes all audit fees and other professional services rendered by 9 the accountants, reviews the independence of the accountants and ensures the objectivity of the Company's financial statements. It held five meetings in 2000. Additional information regarding the Audit Committee and its functions and responsibilities is included in this Proxy Statement under the caption "Report of the Audit Committee of the Board of Directors." COMPENSATION COMMITTEE. Through December 2000, the Compensation Committee was comprised of Sidney Lapidus and David Libowitz. Since December 2000, the Compensation Committee was comprised of David Haas and David Libowitz. The Compensation Committee has the authority to determine all matters relating to the compensation of the Company's employees. It held one meeting during 2000. The Board of Directors did not reject any recommendations of the Compensation Committee in 2000. COMPENSATION OF DIRECTORS Each director who is not an employee of the Company or its affiliates (each, an "Independent Director"), receives a fee of $1,000 for each meeting of the Board attended in person and $500 for each telephonic meeting of the Board attended. The Chairman of each committee of the Board also receives an annual fee of $1,000. On August 12, 2000, each Independent Director received a grant of options to purchase 474 shares of Common Stock at the then current market price of $31.625 per share. Subsequent to 2000, each Independent Director will receive an annual grant of a number of options equal to $15,000 divided by the fair market value of one share of Common Stock on the date of grant, which options will be exercisable at a price per share equal to the fair market value of the Common Stock on such date. All options granted to Independent Directors will vest immediately. Directors who are not Independent Directors will not receive fees for serving on the Board or any committee thereof. In 2000, the Company had two Independent Directors (Messrs. Danziger and Haas) and three directors employed by the Company or its affiliates. All directors are reimbursed for reasonable out-of-pocket expenses incurred in attending meetings of the Board and any committee thereof. COMPENSATION COMMITTEE INTERLOCKS AND INSIDER PARTICIPATION The Securities and Exchange Commission (the "Commission") requires issuers to disclose the existence of any other company in which both (i) the Company's executive officer serves on the board of directors and/or compensation committee and (ii) the Company's director serves as an executive officer. There are no relationships that are required to be disclosed hereunder. EXECUTIVE OFFICERS Executive officers are elected by the Board of Directors and hold office until their successors have been duly elected and qualified or until their earlier resignation or removal from office. A brief biography of each executive officer of the Company as of February 15, 2001 is provided below (other than Mr. Slaine, whose biography is set forth above). Vincent A. Chippari, 40, has served as Executive Vice President and Chief Financial Officer of the Company since January 1998. From 1990 to 1996, Mr. Chippari was Chief Financial Officer of Thomson Business Information, which serves the global scientific, medical, intellectual property, technical and general reference markets. From 1996 to 1997, he was Executive Vice President, Operations, of Thomson Intellectual Property/Automotive Group, as well as General Manager of its Derwent Information North America unit, a patent and scientific information business. Mark Clinton, 41, has served as President of the Company's Master Data Center unit ("MDC") since December 1995. The Company acquired MDC in August 1999. Mr. Clinton has held senior management positions at MDC since February 1991. Prior to joining MDC, Mr. Clinton was a consultant with Andersen Consulting for eight years. 10 Jay Nadler, 36, has served as President of the Company's CorporateIntelligence.com unit since April 2000. From February 1993 to March 2000 Mr. Nadler held senior management positions in various units of Thomson Financial. From December 1999 to March 2000 he was Chief Executive Officer of the its Corporate Group; from January 1999 to December 1999 he was Chief Executive Officer of the Investment Information Group; from July 1996 to December 1998 he was Chief Operating Officer of CDA Investment Technologies; and from February 1993 to April 1997 he was president of Weisenberger. Aneel M. Pandey, 34, has served as President and Chief Executive Officer of the Company's Transcender unit since it was acquired by the Company in November 2000. Mr. Pandey founded Transcender in 1992 and served as its Chief Executive Officer through November 2000. Norman R. Snesil, 57, has served as President of the Company's CRC Press unit since May 1999. From 1998 to 1999, he was President of Q.E.P. Co., Inc. From 1996 to 1998, Mr. Snesil was President of Continental Graphics Company. From 1990 to 1996, he was President and Chief Executive Officer of Thomson Healthcare, a medical information unit of Thomson. Steven Wolfson, 56, has served as President of the Company's MicroPatent unit since July 1997. From 1996 to 1997, Mr. Wolfson was Vice President and Chief Financial Officer of MicroPatent's predecessor. From 1994 to 1996, he was Vice President and Chief Financial Officer of American Banker, a financial information publishing company. From 1993 to 1994, Mr. Wolfson was an independent consultant in the financial and administrative fields. EMPLOYMENT AGREEMENTS MASON P. SLAINE The Company has an employment agreement, dated as of March 15, 2000, with Mason P. Slaine which provides that Mr. Slaine will serve as President and Chief Executive Officer of the Company until June 30, 2001, subject to automatic one-year renewals unless either party provides notice of non-renewal. Mr. Slaine's employment agreement provides for a base salary of $325,000 through June 30, 2000, increasing to $700,000 through June 30, 2001 and $750,000 through June 30, 2002 if the employment term is extended. Thereafter Mr. Slaine's base salary will be subject to increases at the discretion of the Board of Directors. In addition, Mr. Slaine is eligible to receive an annual cash bonus, as determined by the Board of Directors. He is also entitled to participate in health, insurance, pension, automobile and other benefits provided to other senior executives of the Company. In connection with the execution of the employment agreement, the Company granted options to Mr. Slaine to purchase 200,000 shares of Common Stock at a purchase price per share equal to the fair market value of one share of Common Stock on the date of grant. These options will vest and become exercisable at the rate of 100,000 shares each on the first and second anniversaries of the date of grant; provided, however, that the options shall become immediately vested and exercisable upon the occurrence of a Change of Control (as defined in the employment agreement), Mr. Slaine's death or his termination of employment on account of disability. In the event of (i) Mr. Slaine's death during his term of employment with the Company or (ii) the termination of his employment by the Company without "Just Cause" (as defined in the employment agreement) or (iii) his resignation from employment for "Good Reason" (as defined in the employment agreement), the Company is obligated to continue paying Mr. Slaine's base salary for a 12 month period following the date of termination. In addition, the Company is required to continue to provide health insurance benefits during such 12 month period. In the event that Mr. Slaine resigns within 90 days following a Change of Control or the Company terminates Mr. Slaine's employment without Just Cause following a Change of Control, the Company is obligated to pay to Mr. Slaine a lump sum amount equal to three times the sum of (i) his then current base salary and (ii) the bonus he received 11 in the prior fiscal year. In addition, the Company is required to continue to provide health insurance benefits during the 12 month period immediately following such termination. To the extent that any payment under the employment agreement would be subject to an excise tax imposed by Section 4999 of the Code, the Company is required to make gross-up payment (the "Gross-up Payment") to Mr. Slaine to cover the excise tax and any taxes incurred by Mr. Slaine upon the payment of the Gross-up Payment. Mr. Slaine's employment agreement also contains a non-complete clause, which applies until the second anniversary of the termination of Mr. Slaine's employment, unless he is terminated by the Company without Just Cause or resigns for Good Reason. The employment agreement also contains confidentiality and non-solicitation provisions. In consideration for these non-compete, non-solicitation and confidentiality covenants the Company has agreed to pay to Mr. Slaine 50% of his then current base salary over the course of the two-year period. VINCENT A. CHIPPARI The Company has an employment agreement, dated as of January 19, 1998, with Vincent A. Chippari which provides that Mr. Chippari will serve as Executive Vice President and Chief Financial Officer of the Company until January 19, 2002, subject to automatic one-year renewals unless either party provides notice of non-renewal. Mr. Chippari's employment agreement provides for an initial base salary of $200,000 per year, increased annually to the extent of any net increase in the Consumer Price Index. In addition, Mr. Chippari is eligible to receive an annual cash bonus in an amount up to 50% of his base salary based upon the meeting of certain objectives approved by the Board of Directors. Mr. Chippari is also entitled to participate in health, insurance, pension and other benefits provided to other senior executives of the Company. In the event that Mr. Chippari resigns or his employment terminates for "Cause" (as defined in his employment agreement), Mr. Chippari will be entitled to receive any accrued but unpaid base salary, unused vacation and unreimbursed expenses. In the event the Company terminates his employment without Cause, in addition to the amounts specified in the foregoing sentence, Mr. Chippari will continue to receive his base salary and health and insurance benefits for a period of 12 months following the date of such termination. Mr. Chippari's employment agreement also contains a non-compete clause, which applies until the first anniversary of the termination of Mr. Chippari's employment, and confidentiality and non-solicitation provisions. JAY NADLER The Company has an employment agreement, dated as of April 10, 2000, with Jay Nadler which provides that Mr. Nadler will serve as President of CorporateIntelligence.com until April 10, 2002, subject to automatic one-year renewals unless either party provides notice of non-renewal. Mr. Nadler's employment agreement provides for an initial base salary of $250,000 per annum, increased annually to the extent of any increase in the Consumer Price Index. In addition, Mr. Nadler is entitled to receive a cash bonus in an amount up to 50% of his base salary based upon meeting objectives determined by the Board of Directors. Mr. Nadler is also entitled to participate in health, insurance, pension and other benefits provided to other senior executives of the Company. Mr. Nadler's employment agreement provided for the grant of options, dated April 25, 2000, to purchase 100,000 shares of Common Stock at the then current market price of $25.75 per share. Pursuant to a stock option agreement, Mr. Nadler's options are exercisable for a period of ten years from the date of grant. The options vest and become exercisable in four equal annual installments from the date of grant. In the event that Mr. Nadler's employment is terminated for "Cause" (as defined in his employment agreement), he will be entitled to receive any accrued but unpaid base salary, unused 12 vacation and unreimbursed expenses. In the event the Company terminates his employment without Cause, or if he resigns within 90 days following a change in control, in addition to the amounts specified in the foregoing sentence, Mr. Nadler will continue to receive his base salary and health and insurance benefits for a period equal to the greater of 6 months from the date of termination or the remainder of the employment term. In the event the Company does not renew the employment agreement, Mr. Nadler will continue to receive his base salary and health and insurance benefits for a period of 4 months from the expiration date of the employment contract. Mr. Nadler's employment agreement also contains a non-compete clause, which applies until the first anniversary of the termination of Mr. Nadler's employment, and confidentiality and non-solicitation provisions. ANEEL M. PANDEY The Company has an employment agreement, dated as of November 6, 2000 with Aneel Pandey which provides that Mr. Pandey will serve as Chief Executive Officer of Transcender until November 6, 2001, subject to automatic one-year renewals unless either party provides notice of non-renewal. Mr. Pandey's employment agreement provides for a base salary of $200,000 per annum. In addition, Mr. Pandey is entitled to receive a bonus equal to 50% of his base salary based upon meeting objectives determined by the Board of Directors. Mr. Pandey is also entitled to participate in health, insurance, pension and other benefits provided to other senior executives of the Company. The Company also has a confidentiality and non-competition agreement, dated November 6, 2000, which provides that for a period ending on the later of (i) November 6, 2005 and (ii) the third anniversary of the termination of Mr. Pandey's employment, Mr. Pandey will not, directly or indirectly, engage in any business which competes with Transcender. In the event that Mr. Pandey's's employment is terminated for "Cause" (as defined in his employment agreement), Mr. Pandey will be entitled to receive any accrued but unpaid base salary, unused vacation and unreimbursed expenses. In the event the Company terminates his employment without Cause, in addition to the amounts specified in the foregoing sentence, Mr. Pandey will continue to receive his base salary and health and insurance benefits for the remainder of the employment term. NORMAN R. SNESIL The Company has an employment agreement, dated as of May 17, 1999, with Norman Snesil which provides that Mr. Snesil will serve as President of CRC Press until May 17, 2001. Mr. Snesil's employment agreement provides for a base salary of $225,000 per annum. In addition, Mr. Snesil is entitled to receive a bonus equal to 50% of his base salary based upon meeting objectives determined by the Chairman and Board of Directors. Mr. Snesil is also entitled to participate in health, insurance, pension and other benefits provided to other senior executives of the Company. Mr. Snesil's employment agreement provided for the grant of options, dated May 25, 1999, to purchase 50,000 shares of Common Stock at the then current market price of $19.125 per share. Pursuant to a stock option agreement, Mr. Snesil's options are exercisable for a period of ten years from the date of grant. The options vest and become exercisable in three equal annual installments from the date of grant. In the event that Mr. Snesil's employment is terminated for "Cause" (as defined in his employment agreement), Mr. Snesil will be entitled to receive any accrued but unpaid base salary, unused vacation and unreimbursed expenses. In the event the Company terminates his employment without Cause, in addition to the amounts specified in the foregoing sentence, Mr. Snesil will continue to receive his base salary and health and insurance benefits for a period equal to 12 months from the date of termination. Mr. Snesil's employment agreement also contains a non-compete clause, which applies until the first anniversary of the termination of Mr. Snesil's employment, and confidentiality and non-solicitation provisions. 13 NOTWITHSTANDING ANYTHING TO THE CONTRARY SET FORTH IN ANY OF THE COMPANY'S FILINGS UNDER THE SECURITIES ACT OF 1933, AS AMENDED (THE "SECURITIES ACT"), OR THE EXCHANGE ACT THAT MIGHT INCORPORATE FILINGS BY REFERENCE, INCLUDING THIS PROXY STATEMENT, IN WHOLE OR IN PART, THE FOLLOWING REPORT OF THE BOARD OF DIRECTORS AND COMPENSATION COMMITTEE (THE "COMPENSATION COMMITTEE") ON EXECUTIVE COMPENSATION AND THE PERFORMANCE GRAPHS SHALL NOT BE INCORPORATED BY REFERENCE INTO ANY SUCH FILINGS. REPORT OF THE BOARD OF DIRECTORS AND THE BOARD COMPENSATION COMMITTEE ON EXECUTIVE COMPENSATION The Compensation Committee's responsibilities include establishing the Company's policies governing the compensation of its officers and other key executives. The Compensation Committee approves all elements of compensation for executive officers. The Board is responsible for the administration of the Company's 1998 Stock Option Plan. EXECUTIVE COMPENSATION. The Company's compensation program consists of base salary, annual incentive payments, stock options and employee benefits. The goal of the Company's compensation program is to motivate and reward its executive officers and other key employees to improve long-term stockholder value and to attract and retain the highest quality executive and key employee talent available. The Company's executive compensation program is designed to align executive compensation practices with increasing the value of the Common Stock and to foster adherence to, and promotion of, the Company's business mission, values, strategic goals and annual objectives. The Compensation Committee has the authority to determine all matters relating to compensation of the Company's employees. The Compensation Committee will consider an executive's scope of responsibilities, level of experience, individual performance and attainment of pre-established goals as well as the Company's business plan and general economic factors. In making its decisions, and to maintain the desired levels of competitiveness and congruity with the Company's long-term performance goals, the Compensation Committee will receive input from the Company's Chief Executive Officer and Chief Financial Officer. BASE SALARY AND BONUS. The salary levels for executive officers are determined by such officer's level of job responsibility and experience, job performance and attainment of pre-established goals. Additional consideration is given to salaries for a comparable position within the industry and the Company's ability to pay. Bonus payouts to the Company's executive officers and other key employees are based on the attainment of corporate earnings goals and certain individual performance goals. OPTIONS. The Board believes that stock options are important to provide an inducement to obtain and retain the services of the Company's employees and the employees of its subsidiaries and to increase their proprietary interest in the Company's success. Long-term incentives in the form of stock options provide a vehicle to reward executive officers only if there is an increase in stockholder value. Stock options are granted on a discretionary basis within a guideline range that takes into account the position responsibilities of the Company's executive officers and key employees whose contributions and skills are important to the Company's long-term success. In February 2000, March 2000, April 2000, June 2000, July 2000, August 2000, October 2000, November 2000 and December 2000, the Board granted 13,900, 200,000, 110,360, 1,500, 50,200, 948, 16,000, 105,500 and 1,500 options, respectively, to purchase Common Stock to officers or key employees of the Company or its subsidiaries. Such options were granted at exercise prices equal to the respective market prices of the Common Stock on the dates of grant. POLICY REGARDING QUALIFYING COMPENSATION. Section 162(m) of the Internal Revenue Code imposes a $1,000,000 limitation on tax-deductible remuneration paid to any one of the five most highly compensated executive officers of a publicly-held corporation, unless the compensation is treated as 14 performance related or is otherwise exempt from the provisions of Section 162(m). The compensation paid to executive officers complies with these performance requirements for the fiscal year ending December 31, 2000.
BOARD OF DIRECTORS COMPENSATION COMMITTEE MICHAEL E. DANZIGER DAVID R. HAAS DAVID R. HAAS DAVID E. LIBOWITZ SIDNEY LAPIDUS DAVID E. LIBOWITZ MASON P. SLAINE
REPORT OF THE AUDIT COMMITTEE OF THE BOARD OF DIRECTORS The Audit Committee is responsible for overseeing the Company's financial reporting process and for recommending to the Board of Directors, subject to shareholder ratification, the selection of the Company's independent auditors. Management has the primary responsibility for the financial statements and the reporting process including the systems of internal controls. The Audit Committee is composed of independent directors of the Company, as defined by the New York Stock Exchange listing standards, and acts pursuant to a written charter adopted by the Board of Directors. A copy of the Audit Committee Charter is attached to this Proxy Statement as Appendix A. In fulfilling its oversight responsibilities, the Audit Committee reviewed the audited financial statements in the Annual Report 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. The Audit Committee reviewed with the independent auditors, who are responsible for expressing an opinion on the conformity of those audited financial statements with generally accepted accounting principles, their judgments as to the quality, not just the acceptability, of the Company's accounting principles and such other matters as are required to be discussed with the Audit Committee under generally accepted auditing standards. The Audit Committee has discussed with the independent auditors the matters required to be discussed by the Statement on Auditing Standards No. 61, Communications with Audit Committees, as amended, by the Auditing Standards Board of the American Institute of Certified Public Accountants. The independent auditors provided to the Audit Committee the written disclosures and the letter from the independent auditors required by Independence Standards Board Standard No. 1, Independence Discussions with Audit Committees, as amended. The Audit Committee has reviewed and discussed with the independent auditors the firm's independence and has considered the compatability of non-audit services with the auditor's independence. The Audit Committee discussed with the independent auditors the overall scope and plans for their audit. The Audit Committee meets with the independent auditors, both with and without management present, to discuss the results of their examinations, their evaluation of internal controls, and the overall quality of the Company's financial reporting. In reliance on the reviews and discussions referred to above, the Audit Committee recommended to the Board of Directors that the audited financial statements be included in the Annual Report on Form 10-K for the year ended December 31, 2000. AUDIT COMMITTEE MICHAEL E. DANZIGER DAVID R. HAAS March 1, 2001 15 NOTWITHSTANDING ANYTHING TO THE CONTRARY SET FORTH IN ANY OF THE COMPANY'S FILINGS UNDER THE SECURITIES ACT OR THE EXCHANGE ACT THAT MIGHT INCORPORATE FILINGS BY REFERENCE, INCLUDING THIS PROXY STATEMENT, IN WHOLE OR IN PART, THE FOREGOING REPORT OF THE AUDIT COMMITTEE OF THE BOARD OF DIRECTORS SHALL NOT BE INCORPORATED BY REFERENCE INTO ANY SUCH FILINGS. SUMMARY COMPENSATION TABLE
LONG TERM COMPENSATION AWARDS ------------ ANNUAL COMPENSATION SECURITIES --------------------------------- UNDERLYING NAME AND PRINCIPAL POSITION YEAR SALARY ($) BONUS ($) OTHER OPTIONS(#) --------------------------- -------- ---------- --------- -------- ------------ Mason Slaine.................................... 2000 512,000 300,000 -- 200,000 President and Chief Executive Officer 1999 325,000 -- -- -- 1998 325,000 -- -- -- Vincent A. Chippari (1)......................... 2000 210,000 92,000 -- -- Executive Vice President 1999 203,000 94,000 -- -- and Chief Financial Officer 1998 192,000 100,000 -- 104,167 Norman R. Snesil (2)............................ 2000 225,000 -- -- -- President, CRC Press LLC 1999 173,000 -- -- 50,000 Steven Wolfson.................................. 2000 151,000 65,000 -- -- President, MicroPatent LLC 1999 140,000 65,000 -- -- 1998 129,000 50,000 -- 10,417 Mark Clinton (3)................................ 2000 150,000 85,000 -- -- President, Master Data Center 1999 63,000 10,000 -- 10,997
------------------------ (1) Mr. Chippari's employment commenced on January 19, 1998. (2) Mr. Snesil's employment commenced on May 17, 1999. (3) Mr. Clinton's compensation includes compensation from August 13, 1999, the date of the Company's acquisition of Master Data Center, Inc. STOCK OPTION GRANTS IN 2000 The following table sets forth information concerning individual grants of options to purchase Common Stock made to the Named Executive Officers during the fiscal year ended December 31, 2000.
POTENTIAL REALIZABLE VALUE AT NUMBER OF ASSUMED ANNUAL RATES OF STOCK SECURITIES PERCENT OF PRICE APPRECIATION FOR OPTION UNDERLYING TOTAL OPTIONS EXERCISE OR TERM (1) OPTIONS GRANTED TO BASE PRICE EXPIRATION ----------------------------- NAME GRANTED (#) EMPLOYEES ($/SHARE) DATE 5% ($) 10% ($) ---- ------------ ------------- ----------- ---------- ----------- ----------- Mason P. Slaine........... 200,000(2) 40.0 37.50 3/15/10 4,717,000 11,953,000
------------------------ (1) Amounts reflect certain assumed rates of appreciation set forth in the executive compensation disclosure rules of the Commission. Actual gains, if any, on stock option exercises will depend on future performance of the Common Stock. No assurance can be made that the amounts reflected in these columns will be achieved. The values in these columns assume that the fair market value on the date of grant of each option was equal to the exercise price thereof. (2) Options were granted on March 15, 2000 and vest and become exercisable in two equal annual installments from the date of grant. 16 AGGREGATED OPTION EXERCISES IN 2000 AND FISCAL YEAR-END OPTION VALUES The following table sets forth information concerning option exercises by the Named Executive Officers and the fiscal year-end value of unexercised options for the fiscal year ended December 31, 2000.
NUMBER OF SECURITIES VALUE OF UNEXERCISED UNDERLYING UNEXERCISED IN-THE-MONEY OPTIONS AT SHARES OPTIONS AT FY-END (#) FY-END ($) ACQUIRED ON VALUE ------------------------- ------------------------- NAME EXERCISE (#) REALIZED ($) EXERCISABLE/UNEXERCISABLE EXERCISABLE/UNEXERCISABLE ---- ------------ ------------ ------------------------- ------------------------- Vincent A. Chippari............. 5,200 102,000 64,244/34,723 735,000/397,000 Mason Slaine.................... 0/200,000 0/0 Norman R. Snesil................ 16,667/33,333 72,000/144,000 Steven Wolfson.................. 5,208/5,209 60,000/60,000 Mark Clinton.................... 2,749/8,248 14,000/43,000
17 SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT The following table sets forth certain information, as of February 15, 2001, regarding the beneficial ownership of Common Stock by (i) each stockholder who the Company knows owns more than 5% of the outstanding shares of Common Stock, (ii) each director, (iii) each executive officer named in the Summary Compensation Table and (iv) all directors and executive officers as a group.
SHARES BENEFICIALLY OWNED --------------------------- NAME AND ADDRESS OF BENEFICIAL OWNER NUMBER PERCENT(1) ------------------------------------ ----------- ---------- Warburg, Pincus Ventures, L.P. (2)................... 8,802,970 40.7 466 Lexington Avenue New York, New York 10017 Mason P. Slaine...................................... 2,000,000 9.3 2777 Summer Street, Suite 209 Stamford, Connecticut 06905 Vincent A. Chippari (3).............................. 95,967 * Mark Clinton (3)..................................... 2,749 * Norman R. Snesil (3)................................. 16,667 * Steven Wolfson (4)................................... 6,208 * Michael E. Danziger (5).............................. 84,408 * David R. Haas (5).................................... 7,282 * Sidney Lapidus (6)................................... 8,802,970 40.7 David E. Libowitz (6)................................ 8,802,970 40.7 All directors and executive officers, as a group (nine persons)..................................... 11,016,251 51.0
------------------------ * Less than 1%. (1) Pursuant to the regulations of the Commission, shares are deemed to be "beneficially owned" by a person if such person directly or indirectly has or shares the power to vote or dispose of such shares, whether or not such person has any pecuniary interest in such shares, or the right to acquire the power to vote or dispose of such shares within 60 days, including any right to acquire through the exercise of any option, warrant or right. (2) The sole general partner of Warburg Pincus Ventures, L.P. ("Warburg Pincus") is Warburg, Pincus & Co., a New York general partnership ("WP"). E.M. Warburg Pincus & Co., LLC, a New York limited liability company ("EMW LLC"), manages Warburg Pincus. Lionel I. Pincus is the Managing Partner of WP and the Managing Member of EMW LLC and may be deemed to control both entities. (3) Represents shares issuable upon exercise of options that are vested and exercisable. (4) Includes 5,208 shares issuable upon exercise of options that are vested and exercisable. (5) Includes 2,802 shares issuable upon exercise of options that are vested and exercisable. (6) All shares indicated as beneficially owned by Mr. Lapidus and Mr. Libowitz are owned by Warburg Pincus and are included because of their affiliation with Warburg Pincus. Both of them are Members and Managing Directors of EMW LLC and General Partners of WP. Messrs. Lapidus and Libowitz disclaim beneficial ownership of the shares owned by Warburg Pincus. The mailing address for Messrs. Lapidus and Libowitz is c/o Warburg, Pincus & Co., 466 Lexington Avenue, New York, New York 10017. 18 CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS Warburg Pincus and Mr. Slaine (the "Initial Stockholders") are entitled to certain registration rights with respect to their respective shares of Common Stock. Pursuant to a registration rights agreement, the Initial Stockholders have the right to request two registrations of their shares of Common Stock, provided that the anticipated public offering price equals $15 million or more, and unlimited registrations on Form S-3, provided that the anticipated aggregate offering price exceeds $5 million. In addition, the Initial Stockholders are entitled to have their shares included in an unlimited number of registrations initiated by the Company, subject to certain customary restrictions. The rights of the Initial Stockholders pursuant to the registration rights agreement had been subject to a 180 day lock-up agreement which expired on February 12, 1999. In connection with the Company's public offering in March 2000, the Initial Stockholders, as well as the directors and Mr. Chippari agreed to a lockup which expired on June 20, 2000. In general, all fees, costs and expenses of such registration (other than underwriting discounts and selling commissions) will be borne by the Company. The Company has agreed to indemnify the Initial Stockholders from any liability arising out of or relating to any untrue statement of a material fact or any omission of a material fact in any registration statement or prospectus filed by the Company pursuant to the registration rights agreement, subject to certain exceptions. 19 SHARE INVESTMENT PERFORMANCE The following graph compares the cumulative total stockholder returns on the Common Stock based on an investment of $100 after the close of the market on (i) August 7, 1998, the effective date of the Company's initial public offering and (ii) the close of the market on December 29, 2000 against the Russell 2000 Index ("Russell 2000") and an industry peer group consisting of McGraw-Hill Companies, Thomson Corporation, Factset Research Systems and Reuters Group: EDGAR REPRESENTATION OF DATA POINTS USED IN PRINTED GRAPHIC
8/7/98 12/31/98 12/31/99 12/31/00 Information Holdings 100 130.57 240.93 194.3 Russell 2000 100 101.48 121.39 116.29 Peer Group 100 124.23 180.52 194.51
8/7/98 12/31/98 12/31/99 12/31/00 -------- -------- -------- -------- Information Holdings......................... 100 130.57 240.93 194.30 Russell 2000................................. 100 101.48 121.39 116.29 Peer Group................................... 100 124.23 180.52 194.51
20 SECTION 16(A) BENEFICIAL OWNERSHIP REPORTING COMPLIANCE Section 16(a) of the Exchange Act ("Section 16(a)") requires the Company's executive officers, directors and persons who beneficially own more than 10% of the Common Stock to file initial reports of ownership and reports of changes in ownership with the Commission and the NYSE. Executive officers, directors and greater than 10% beneficial owners are required by Commission regulations to furnish the Company with copies of all Section 16(a) forms they file. Based solely on the Company's review of the copies of such forms furnished to the Company and written representations from the executive officers, directors and greater than 10% beneficial owners, the Company believes that all Section 16(a) filing requirements applicable to the Company's executive officers, directors and greater than 10% owners were complied with during Fiscal 2000, except Mr. Slaine was not timely in filing Form 4's for changes in beneficial ownership that occurred in July and August. Such Form 4's were filed on December 15, 2000. STOCKHOLDER NOMINATIONS AND PROPOSALS FOR 2002 Any proposals intended to be presented by stockholders at the Company's 2002 Annual Meeting of Stockholders must be received by the Company for inclusion in the proxy statement for such annual meeting by November 28, 2001. Such proposals must also meet the requirements of Rule 14a-8 of the Commission relating to stockholders' proposals. A stockholder proposal outside of the processes of Rule 14a-8 will be considered untimely if received by the Company after February 11, 2002. OTHER BUSINESS It is not anticipated that there will be presented to the Annual Meeting any business other than the election of directors, the approval of the Option Plan and the ratification of accountants, and the Board was not aware, a reasonable time before this proxy solicitation, of any other matters which might properly be presented for action at the meeting. If any other business should come before the Annual Meeting, the persons named on the enclosed proxy card will have discretionary authority to vote all proxies in accordance with their best judgment. Proxies in the form enclosed are solicited by or on behalf of the Board. The cost of this solicitation will be borne by the Company. In addition to the solicitation of the proxies by use of the mails, some of the Company's officers and regular employees, without extra remuneration, may solicit proxies personally, or by telephone or otherwise. In addition, arrangements will be made with brokerage houses and other custodian, nominees and fiduciaries to forward proxies and proxy material to their principals, and the Company will reimburse them for their expenses in forwarding soliciting materials, which are not expected to exceed $5,000. It is important the proxies be returned promptly. Therefore, stockholders are urged to sign, date and return the enclosed proxy card in the accompanying stamped and addressed envelope. By Order of the Board [LOGO] Vincent A. Chippari Secretary March 27, 2001 21 APPENDIX A AUDIT COMMITTEE CHARTER ORGANIZATION There shall be an Audit Committee of the Board of Directors composed of three or more directors, as the Board of Directors may determine from time to time, each of whom shall be financially literate and shall otherwise comply with the independence requirements of the New York Stock Exchange, Inc. In addition, at least one member of the Audit Committee shall have accounting or related financial management expertise and one of the members of the Audit Committee shall be elected Committee Chairman by the Board of Directors. STATEMENT OF POLICY The Audit Committee shall assist the Board of Directors in fulfilling its responsibility relating to the Company's accounting, reporting practices, and the quality and integrity of its financial reports. The Audit Committee shall endeavor to maintain free and open communication between the Board of Directors, the independent auditors, the internal auditors, if any, and the financial management. The Audit Committee and the Board of Directors have the ultimate authority and responsibility to select, evaluate and, where appropriate, replace the independent auditors (or to nominate the independent auditors to be proposed for shareholder approval in the Company's proxy statement). The Committee should have a clear understanding with the independent auditors that the independent auditors must maintain an open and transparent relationship with the Committee and that the independent auditors are ultimately accountable to the Board of Directors and the Audit Committee. RESPONSIBILITIES The Audit Committee's policies and procedures should remain flexible in order to best react to changing conditions and to help ensure that the Company's accounting and reporting practices accord with all requirements and are of the highest quality. In carrying out its responsibilities, the Audit Committee shall: - Meet at least four times a year, or more often if circumstances so require. - Inquire as to the independence of the independent auditors and obtain from the independent auditors, on a periodic basis, a formal written statement delineating all relationships between the independent auditors and the Company. In addition, the Audit Committee shall review the extent of non-audit services provided by the independent auditors in relation to the objectivity needed in the independent audit and recommend that the Board of Directors take appropriate action in response to the independent auditors' written statement to satisfy the Board of Directors as to the independent auditors' independence. - Review and recommend to the Board of Directors the independent auditors to be selected to audit the financial statements. - Meet with the independent auditors and financial management to review the scope of the audit proposed for the current year and the audit procedures to be utilized and, at its conclusion, review the audit with the Audit Committee. Upon completion of the audit and following each interim review of the Company's financial statements, the Audit Committee should also discuss with the independent auditors all matters required to be communicated to the Audit Committee under generally accepted auditing standards including the judgments of the independent auditors 22 with respect to the quality, not just the acceptability, of the Company's accounting principles and underlying estimates in the financial statements. - Review with the independent auditors, the internal auditors, if any, and the financial and accounting personnel, the adequacy of the accounting and financial controls, and elicit any recommendations for improvement or particular areas where augmented controls are desirable. Particular emphasis should be given to the adequacy of such internal controls to expose any activity that might be unethical or otherwise improper. - Review the internal audit function of the Company, if any, including the independence and authority of its reporting obligations, the audit plans proposed for the coming year, and the coordination of such plans with the work of the independent auditors, if any. - Receive before each meeting, a summary of findings from completed internal audits, if any, and a progress report on the proposed internal audit plan, if any, with explanations for any deviations from the original plan. - Review the financial statements contained in the annual report with management and the independent auditors to determine that the independent auditors are satisfied with the disclosure and content of the financial statements. Any year-to-year changes in accounting principles or practices should be reviewed. - Provide sufficient opportunity at each meeting for the internal, if any, and independent auditors to meet with the committee without management present. Among the items to be discussed in these meetings are the independent auditors' evaluations of the financial, accounting, and auditing personnel, and their cooperation during the audit. - Review accounting and financial personnel and succession planning. - Submit the minutes of its meetings to, or discuss the matters discussed at each committee meeting with the Board. - Investigate any matter brought to its attention within the scope of its duties, with the power to retain professional advice for this purpose if, in its judgment, that is appropriate. 23 DETACH HERE PROXY INFORMATION HOLDINGS INC. PROXY FOR THE ANNUAL MEETING OF STOCKHOLDERS TO BE HELD APRIL 24, 2001 THIS PROXY IS SOLICITED ON BEHALF OF THE BOARD OF DIRECTORS OF THE COMPANY AND SHOULD BE RETURNED AS SOON AS POSSIBLE IN THE PRE-PAID ENVELOPE PROVIDED FOR YOU MAILING CONVENIENCE. The undersigned , having received notice of the meeting and proxy statement therefor, and revoking all prior proxies, hereby appoint(s) Mason P. Slaine and Vincent A. Chippari, and each of them, attorneys or attorney of the undersigned (with full power of substitution in them and each of them) for and in the name(s) of the undersigned to attend the Annual Meeting of Stockholders of INFORMATION HOLDINGS INC. (the "Company") to be held at the Loews New York Hotel, 569 Lexington Avenue, New York, New York on Tuesday, April 24, 2001 at 2:00 p.m., Eastern Standard Time, and any adjourned sessions thereof, and there to vote and act upon the following matters in respect of all shares of stock of the Company which the undersigned will be entitled to vote or act upon, with all the powers the undersigned would possess if personally present. IN THEIR DISCRETION, THE PROXIES ARE AUTHORIZED TO VOTE UPON SUCH OTHER MATTERS AS MAY PROPERLY COME BEFORE THE MEETING OR ANY ADJOURNMENT THEREOF. THE PROXY WHEN PROPERLY EXECUTED WILL BE VOTED IN THE MANNER DESCRIBED HEREIN BY THE UNDERSIGNED STOCKHOLDER. THE SHARES REPRESENTED BY THIS PROXY WILL BE VOTED AS DIRECTED BY THE UNDERSIGNED. IF NO DIRECTION IS GIVEN WITH RESPECT TO ANY PROPOSAL, THIS PROXY WILL BE VOTED FOR SUCH PROPOSAL. Attendance of the undersigned at the meeting or at any adjournment thereof will not be deemed to revoke this proxy unless the undersigned shall revoke this proxy in writing. WHETHER OR NOT YOU PLAN TO ATTEND THE ANNUAL MEETING, YOU ARE URGED TO COMPLETE, DATE, SIGN AND RETURN THIS PROXY IN THE ACCOMPANYING ENVELOPE. ----------- ----------- SEE REVERSE SEE REVERSE SIDE CONTINUED AND TO BE SIGNED ON REVERSE SIDE SIDE ----------- ----------- INFORMATION HOLDINGS INC. C/O EQUISERVE P.O. BOX 9398 BOSTON, MA 02205-9398 DETACH HERE PLEASE MARK /X/ VOTES AS IN THIS EXAMPLE. 1. Election of Directors. NOMINEES: (01) Michael E. Danzinger, (02) David R. Haas, (03) Sidney Lapidus, (04) David E. Libowitz, (05) Mason P. Slaine FOR WITHHELD ALL / / / / FROM ALL NOMINEES NOMINEES / / _______________________________________________________ For all nominees except as noted above 2. To ratify and approve the amendment to the FOR AGAINST ABSTAIN 1998 Stock Option Plan. / / / / / / 3. To ratify and approve the selection by the FOR AGAINST ABSTAIN Board of Directors of Ernst & Young LLP as independent public accountants for the / / / / / / Company for the current fiscal year ending December 31, 2001. 4. To transact such other business as may properly come before the meeting or any adjournment thereof. MARK HERE MARK HERE FOR ADDRESS / / / / IF YOU PLAN CHANGE AND TO ATTEND NOTE AT LEFT THE MEETING Please sign exactly as your name appears hereon. When shares are held by joint owners both should sign. When signing as attorney, executor, administrator, trustee or guardian, please give full title as such. If a corporation, please sign in full corporate name by president or other authorized officer. If a partnership, please sign in partnership name by authorized person. Signature:________________ Date:_______ Signature:________________ Date:_______