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 (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 Rule 14a-11(c) or Rule 14a-12
VASCO DATA SECURITY INTERNATIONAL, INC.
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(Name of Registrant as Specified in Its Charter)
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(Name of Person(s) Filing Proxy Statement, if other than the Registrant)
Payment of filing fee (Check the appropriate box):
[X] No fee required.
[ ] Fee computed on table below per Exchange Act Rules 14a-6(i)(1) and
0-11.
(1) Title of each class of securities to which transaction applies:
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(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):
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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:
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[VASCO LOGO]
---------------------
NOTICE OF ANNUAL MEETING OF STOCKHOLDERS
TO BE HELD JULY 16, 2002
To the Stockholders of
VASCO Data Security International, Inc.:
The Annual Meeting of Stockholders of VASCO Data Security International,
Inc., a Delaware corporation (the "Company"), will be held on Tuesday, July 16,
2002 at 10:00 a.m., local time, at 1901 South Meyers Road, Oakbrook Terrace,
Illinois 60181 for the following purposes, as described in the Proxy Statement
accompanying this Notice:
1. To elect seven (7) directors to serve on the Company's Board of
Directors, and;
2. To transact such other business as may properly come before the Annual
Meeting.
The Board of Directors has no knowledge of any other business to be
presented or transacted at the meeting. The Company is not required under its
charter or bylaws to submit the selection of auditors to a vote of the company's
shareholders.
Only stockholders of record on May 29, 2002 are entitled to notice of and
to vote at the Annual Meeting. Further information as to the matters to be
considered and acted upon at the Annual Meeting can be found in the accompanying
Proxy Statement.
By Order of the Board of Directors,
DENNIS D. WILSON Signature
DENNIS D. WILSON
Secretary
Oakbrook Terrace, Illinois
May 30, 2002
YOU ARE CORDIALLY INVITED AND URGED TO ATTEND THE ANNUAL MEETING IN PERSON. TO
ASSURE YOUR REPRESENTATION AT THE MEETING, PLEASE SIGN, DATE AND RETURN THE
ENCLOSED PROXY CARD, WHETHER OR NOT YOU EXPECT TO ATTEND IN PERSON. STOCKHOLDERS
WHO ATTEND THE MEETING MAY REVOKE THEIR PROXIES AND VOTE IN PERSON IF THEY
DESIRE.
[VASCO LOGO]
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PROXY STATEMENT
FOR
ANNUAL MEETING OF STOCKHOLDERS
TO BE HELD JULY 16, 2002
---------------------
SOLICITATION AND VOTING OF PROXIES
This Proxy Statement is furnished by the Board of Directors of VASCO Data
Security International, Inc., 1901 South Meyers Road, Suite 210, Oakbrook
Terrace, Illinois 60181 (the "Company"), in connection with the solicitation of
proxies for use at the annual meeting of stockholders of the Company to be held
on Tuesday, July 16, 2002 at 10:00 a.m., local time, at 1901 South Meyers Road,
Oakbrook Terrace, Illinois 60181, and at any postponement or adjournment thereof
(the "Annual Meeting"). This Proxy Statement, the foregoing Notice of Annual
Meeting of Stockholders and the accompanying form of proxy are being mailed to
stockholders of the Company commencing on or about May 30, 2002. Holders of
record of the Company's common stock (the "Common Stock") at the close of
business on May 29, 2002 will be entitled to one vote for each share held on all
matters to come before the meeting.
If the accompanying form of proxy is properly executed and returned, the
shares represented by the proxy will be voted in accordance with the
instructions specified therein. In the absence of instructions to the contrary,
such shares will be voted "FOR" each of the proposals set forth in this Proxy
Statement. Any stockholder executing a proxy has the power to revoke it at any
time before it has been voted at the Annual Meeting by delivering written notice
to the Secretary of the Company, by executing another proxy dated as of a later
date or by voting in person at the Annual Meeting. Any written notice of
revocation or subsequent proxy should be delivered to VASCO Data Security
International, Inc., 1901 South Meyers Road, Suite 210, Oakbrook Terrace,
Illinois 60181, Attention: Secretary, or hand delivered to the Secretary, before
the closing of the polls at the Annual Meeting.
THE ANNUAL MEETING
MATTERS TO BE CONSIDERED
The Annual Meeting has been called to (i) elect seven (7) directors to
serve on the Company's Board of Directors; and (ii) transact such other business
as may properly come before the Annual Meeting.
VOTING AT THE ANNUAL MEETING
A majority of the votes entitled to be cast on matters to be considered at
the Annual Meeting will constitute a quorum for the transaction of business at
the Annual Meeting. If a share is represented for any purpose at the meeting, it
is deemed to be present for all other matters. Holders of record of the Common
Stock at the close of business are entitled to notice of and to vote at the
Annual Meeting. As of May 29, 2002, there were 28,389,484 shares of Common Stock
outstanding and entitled to vote at the Annual Meeting, each such share being
entitled to cast one vote. Assuming the presence of a quorum, the affirmative
vote of a plurality of the votes cast and entitled to vote in the election at
the Annual Meeting will be required for the election of directors, and the
affirmative vote of a majority of the votes cast and entitled to vote thereon
will be required to act on all other matters to come before the Annual Meeting.
Stockholders may vote in favor of or withhold authority to vote for the
nominees for election as directors listed herein. Directions to withhold
authority, abstentions and broker non-votes (which occur when a nominee holding
shares for a beneficial owner does not vote on a particular proposal because the
nominee does
not have discretionary voting power with respect to that item and has not
received instructions from the beneficial owner) will be counted in determining
the presence or absence of a quorum for the transaction of business at the
Annual Meeting. Directions to withhold authority, because directors are elected
by a plurality of votes cast, will have no effect on the election of directors.
Broker non-votes, because they are not considered "votes cast," are not counted
in the vote totals and will have no effect on any proposal scheduled for
consideration at the Annual Meeting. Abstentions will have the effect of a vote
against the proposal being considered.
If a properly executed, unrevoked proxy does not specifically direct the
voting of the shares covered by such proxy, the proxy will be voted (a) FOR the
election of all nominees for election as director as listed herein, and (b) in
accordance with the judgment of the persons named in the proxy as to such other
matters as may properly come before the Annual Meeting.
ANNUAL REPORT
The Company's annual report to stockholders for the fiscal year ended
December 31, 2001 has been included in the mailing of this Proxy Statement.
Stockholders are referred to the report for financial and other information
about the Company, but such report is not incorporated in this Proxy Statement
and is not to be deemed a part of the proxy soliciting material. THE ANNUAL
REPORT INCLUDES, AMONG OTHER INFORMATION, THE COMPANY'S ANNUAL REPORT ON FORM
10-K/A FOR THE FISCAL YEAR ENDED DECEMBER 31, 2001; ADDITIONAL COPIES OF THE
FORM 10-K/A WILL BE PROVIDED TO STOCKHOLDERS WITHOUT CHARGE UPON WRITTEN REQUEST
TO VASCO DATA SECURITY INTERNATIONAL, INC., 1901 SOUTH MEYERS ROAD, SUITE 210,
OAKBROOK TERRACE, ILLINOIS 60181, ATTENTION: DENNIS D. WILSON.
SECURITY OWNERSHIP OF CERTAIN
BENEFICIAL OWNERS AND MANAGEMENT
The following table sets forth certain information with respect to the
beneficial ownership of our Common Stock as of March 31, 2002 for each person or
entity who is known to us to beneficially own five percent or more of the Common
Stock. For purposes of the table, a person or group of persons is deemed to have
beneficial ownership of any shares as of a given date which such person has the
right to acquire within 60 days after such date.
AMOUNT AND
NATURE OF
CLASS OF BENEFICIAL PERCENT OF
NAME AND ADDRESS OF BENEFICIAL OWNER SECURITIES OWNERSHIP CLASS
------------------------------------ ---------- ------------- ----------
T. Kendall Hunt.......................................... Common 10,264,474(1) 35.171%
1901 S. Meyers Road
Ste. 210
Oakbrook Terrace, IL 60181
---------------
(1) Includes 200,000 shares held in the T. Kendall Hunt Charitable Remainder
Trust and 1,111,300 shares held by Barbara J. Hunt, Mr. Hunt's spouse, as to
which shares Mr. Hunt disclaims beneficial ownership.
The following table sets forth certain information with respect to the
beneficial ownership of our Common Stock as of March 31, 2002 for (i) each of
our directors, (ii) each of our named executive officers, and (iii) all
directors and executive officers as a group. The persons named in the table have
sole voting and investment power with respect to all shares of Common Stock
shown as beneficially owned by them unless otherwise indicated. For purposes of
the table, a person or group of persons is deemed to have beneficial
2
ownership of any shares as of a given date which such person has the right to
acquire within 60 days after such date.
AMOUNT AND NATURE
CLASS OF OF BENEFICIAL PERCENT OF
NAME AND ADDRESS OF BENEFICIAL OWNER SECURITIES OWNERSHIP(1) CLASS
------------------------------------ ---------- ----------------- ----------
T. Kendall Hunt........................................ Common 10,264,474(2) 35.171%
1901 S. Meyers Road
Ste. 210
Oakbrook Terrace, IL 60181
Forrest D. Laidley..................................... Common 676,903 2.319%
552 Stevenson Drive
Libertyville, IL 60048
Michael P. Cullinane................................... Common 29,500 0.101%
2233 Edgebrook Drive
Lisle, IL 60532
Christian Dumolin...................................... Common 870,643(3) 2.983%
Ter Bede Business Center
B-8500 Kortrijk, Belgium
Mario R. Houthooft..................................... Common 621,286 2.129%
Koningin Astridlaan 164
B-1780 Wemmel, Belgium
Michael A. Mulshine.................................... Common 163,050 0.238%
2517 Route 35, Suite D-201
Manasquan, NJ 08736
Jan Valcke............................................. Common 83,583 0.286%
Koningin Astridlaan 164
B-1780 Wemmel, Belgium
Dennis D. Wilson....................................... Common 8,633 0.030%
Chris Lebeer........................................... Common 7,500 0.026%
All Executive Officers and Directors as a Group (9
persons)............................................. Common 12,725,572 43.604%
---------------
(1) The number of shares beneficially owned by each director and executive
officer is determined under rules promulgated by the Securities and Exchange
Commission, and the information is not necessarily indicative of beneficial
ownership for any other purpose. Under such rules, beneficial ownership
includes any shares as to which the individual has sole or shared voting
power or investment power and also any shares which the individual has the
right to acquire within 60 days after March 31, 2002 through the exercise of
any stock option or other right. The inclusion herein of such shares,
however, does not constitute an admission that the named stockholder is a
direct or indirect beneficial owner of such shares. Unless otherwise
indicated, each person or entity named in the table has sole voting power
and investment power (or shares such power with his or her spouse) with
respect to all shares of capital stock listed as owned by such person or
entity.
(2) Includes 200,000 shares held in the T. Kendall Hunt Charitable Remainder
Trust and 1,111,300 shares held by Barbara J. Hunt, Mr. Hunt's spouse, as to
which shares Mr. Hunt disclaims beneficial ownership.
(3) Includes 857,143 shares held by Trust Capital Technology NV/SA, an entity of
which Mr. Dumolin is the chief executive officer. Mr. Dumolin disclaims
beneficial ownership of all of these shares.
3
PROPOSAL I
ELECTION OF DIRECTORS
The Company's Bylaws, as amended (the "Bylaws"), set the number of
directors of the Company at not less than four nor more than twenty, which
number may be changed from time to time by the Board of Directors. The Board of
Directors increased the number of directors of the Company to seven (7) by a
Consent of Directors, effective January 27, 1999. All of the directors of the
Company will be elected at the Company's Annual Meeting and will hold office
until their respective successors have been duly elected and qualified, or until
their earlier resignation or removal.
The Board of Directors has nominated the following individuals for election
as directors of the Company at the Annual Meeting: Michael P. Cullinane,
Christian Dumolin, Mario R. Houthooft, T. Kendall Hunt, Forrest D. Laidley,
Chris Lebeer and Michael A. Mulshine, all of whom are current directors of the
Company.
While the Board of Directors does not contemplate that any nominee for
election as a director will not be able to serve, if any of the nominees for
election shall be unable to or for good cause will not serve as a director, the
persons listed in the enclosed proxy shall vote such proxy, if properly executed
and returned and unrevoked, for such other person or persons as shall be
recommended by the Board of Directors or the Board of Directors may, in its
discretion, reduce the number of directors to be elected. The affirmative vote
of a plurality of the votes cast and entitled to vote at the Annual Meeting is
required for the election of directors. THE BOARD OF DIRECTORS RECOMMENDS THAT
THE STOCKHOLDERS VOTE "FOR" EACH OF THE NOMINEES LISTED HEREIN.
The name of and certain information regarding each nominee for election as
a director of the Company at the Annual Meeting appears below.
T. KENDALL "KEN" HUNT -- Mr. Hunt is Chairman of the Board and Executive
Vice President. He served as our Chief Executive Officer through June 1999. He
has been a director since July 1997 and currently serves a one-year term. He
served since 1990 as Chairman and President of our predecessor, VASCO Corp. Mr.
Hunt received a B.B.A. from the University of Miami, Miami, Florida and an
M.B.A. from Pepperdine University, Malibu, California. Mr. Hunt is 58 years old.
MICHAEL P. CULLINANE -- Mr. Cullinane has been a director since April 10,
1998 and currently serves a one-year term. He is the Chairman of our Audit
Committee and a member of our Compensation Committee. Mr. Cullinane is currently
the Executive Vice President and Chief Financial Officer of Divine, Inc. From
1988 to June 1999 he served as Executive Vice President, Chief Financial Officer
and a director of PLATINUM Technology International, Inc. PLATINUM Technology
International, Inc. provides software products and consulting services that help
Global IT organizations manage and improve their IT infrastructure, which
consists of data, systems, and applications. Mr. Cullinane is a director of
Divine, Inc., Made 2 Manage Systems, Inc. and Interactive Intelligence, Inc.,
all of which are public companies. Mr. Cullinane received a B.B.A. from the
University of Notre Dame, South Bend, Indiana. Mr. Cullinane is 52 years old.
CHRISTIAN DUMOLIN -- Mr. Dumolin has been a director since April 23, 1999
and currently serves a one-year term. He is a member of our Audit Committee. Mr.
Dumolin is President and CEO of Koceram NV/SA since 1980. Koceram is a producer
of building products, developing business through several subsidiaries,
including Koramic Building Products NV/SA and TrustCapital NV/SA, both of which
are quoted on the Brussels' (Belgium) Stock Exchange. In addition, Koceram is
involved in financial activities (development and venture capital) and real
estate activities. Mr. Dumolin is also a member of the Council of Regency of the
National Bank of Belgium. Mr. Dumolin is 56 years old.
MARIO R. HOUTHOOFT -- Mr. Houthooft serves as our Chief Executive Officer,
President and a Director. Mr. Houthooft was elected to our Board of Directors as
of April 10, 1998 and currently serves a one-year term. From 1992 until joining
us, he served in various management roles with Lintel Security. Prior to that
time, Mr. Houthooft held a number of positions with Cryptech Company, which he
founded, from 1985 until 1992. He received a degree in Electrical Engineering
from University of Ghent, Ghent, Belgium. Mr. Houthooft is 49 years old.
4
FORREST D. LAIDLEY -- Mr. Laidley has been a director since July 1997 and
currently serves a one-year term. Mr. Laidley was our Secretary from our
inception through September 2000. He has been involved with us and our
predecessor, VASCO Corp., for certain periods since 1984 in similar capacities
and currently serves as Chairman of our Compensation Committee. Mr. Laidley is a
partner in the law firm of Tressler, Soderstrom, Maloney & Priess, where he has
practiced since 1999. Prior to that he was a partner in the law firm of Laidley
& Porter (a predecessor firm) in Libertyville, Illinois since 1985. He serves on
the Advisory Council on Main Street Libertyville and is a director of Harris
Bank Libertyville, an Illinois chartered banking institution, and is President
and sole stockholder of Forrest Properties, Inc., an Illinois real estate
development corporation. Mr. Laidley received a B.A. in History from Yale
University, New Haven, Connecticut and a J.D. from DePaul University, Chicago,
Illinois. Mr. Laidley is 58 years old.
CHRIS LEBEER -- Mr. Lebeer has been a director since June, 2001 and
currently serves a one-year term. Mr. Lebeer has been Chief Executive Officer of
Banksys, a high-technology firm based in Brussels, Belgium that develops and
processes end-to end electronic payment systems, since 1999. Between 1990 and
1999, he was with Bekaert Steel Wire Corporation, where he was responsible for
the company's world-wide operations and served on the executive committee of its
$1 billion Steel Cord Division. Mr. Lebeer serves on the Boards of Directors of
Belgium-based Proton World International and Lannoo Publishing. He received
Master's Degrees in Chemical Engineering and Applied Economics from the
University of Leuven, Leuven, Belgium and a Master's Degree in Engineering and
Management from the Massachusetts Institute of Technology, Cambridge,
Massachusetts. Mr. Lebeer is 47 years old.
MICHAEL A. MULSHINE -- Mr. Mulshine has been a director since July 1997 and
currently serves a one-year term. He served since 1992 as a director of our
predecessor, VASCO Corp. He is a member of our Audit Committee and Compensation
Committee. He is, and since 1977 has been, a principal of Osprey Partners, a
management consulting firm. Since 1985 he has been a director and Secretary of
SEDONA Corporation, a developer and marketer of enterprise scale Internet
solutions. Mr. Mulshine received a B.S. in Electrical Engineering from Newark
College of Engineering, Newark, New Jersey. Mr. Mulshine is 62 years old.
MEETINGS OF THE BOARD OF DIRECTORS
The Board of Directors of the Company met six times during 2001. Messrs.
Cullinane, Dumolin, Hunt, Houthooft, Laidley and Mulshine each attended all of
the meetings of the Company's Board of Directors during 2001.
A stockholder of the Company may nominate persons for election to the Board
of Directors if the stockholder submits such nomination, together with certain
related information required by the Company's By-Laws, in writing so as to be
received by the Secretary of the Company not less than 60 nor more than 90 days
prior to the date of the annual meeting of stockholders at which the nomination
is to be made.
The Board of Directors presently has two standing committees * an Audit
Committee and a Compensation Committee, each of which is described more fully
below.
REPORT OF THE AUDIT COMMITTEE
The Audit Committee of the Board of Directors of the Company is composed of
three independent directors, as required by Nasdaq listing standards. The Audit
Committee operates under a written charter adopted by the Board of Directors and
is responsible for overseeing the Company's financial reporting process on
behalf of the Board of Directors. The members of the Audit Committee are Michael
P. Cullinane, Michael A. Mulshine, and Christian Dumolin, all of whom are
independent (as independence is defined in Rule 4200(a)(14) of the National
Association of Securities Dealers' listing standards). Each year, the Audit
Committee recommends to the Board of Directors, the selection of the Company's
independent auditors. The Company is not required under its charter or bylaws to
submit the selection of auditors to a vote of the company's shareholders.
5
Management is responsible for the Company's financial statements and the
financial reporting process, including internal controls. The independent
auditors are responsible for performing an independent audit of the Company's
consolidated financial statements in accordance with generally accepted auditing
standards and for issuing a report thereon. The Audit Committee's responsibility
is to monitor and oversee these processes.
In this context, the Audit Committee met four times in 2001 and held
discussions with management and KPMG LLP, the Company's independent auditors.
Management represented to the Committee that the Company's consolidated
financial statements were prepared in accordance with generally accepted
accounting principles, and the Committee has reviewed and discussed the
consolidated financial statements with management and the independent auditors.
The Audit Committee discussed with KPMG the matters required to be discussed by
Statement on Auditing Standards No. 61 (Communication with Audit Committees).
These matters included a discussion of KPMG LLP's judgments about the quality
(not just the acceptability) of the Company's accounting principles as applied
to financial reporting.
KPMG LLP also provided the Audit Committee with the written disclosures and
letter required by Independence Standards Board Standard No. 1 (Independence
Discussions with Audit Committees), and the Audit Committee discussed with KPMG
LLP that firm's independence. The Audit Committee further considered whether the
provision by KPMG LLP of the non-audit services described elsewhere in this
Proxy Statement is compatible with maintaining the auditors' independence.
Based upon the Audit Committee's discussion with management and the
independent auditors and the Audit Committee's review of the representation of
management and the disclosures by the independent auditors to the Audit
Committee, the Audit Committee ratified the inclusion of the Company's audited
consolidated financial statements in the Company's Annual Report on Form 10-K/A
for the year ended December 31, 2001, for filing with the Securities and
Exchange Commission.
Respectfully submitted,
Michael P. Cullinane, Chair
Christian Dumolin, Member
Michael A. Mulshine, Member
COMPENSATION COMMITTEE
The Compensation Committee of our Board of Directors reviews and sets the
salaries and incentive compensation for our executive officers, directors and
other key personnel. The Compensation Committee also administers our stock
option plan. In its capacity as administrator of the stock option plan, the
Compensation Committee has authority to grant stock options and determine the
terms thereof. The members of the Compensation Committee for 2001 were: Forrest
D. Laidley, Michael P. Cullinane and Michael A. Mulshine.
COMPENSATION OF DIRECTORS
Each of our directors received a quarterly cash payment of $3,750 in
connection with his service on the Board of Directors in 2001. Our directors are
also reimbursed for expenses incurred in connection with their attendance at
periodic Board meetings. In addition, non-employee directors are eligible to
receive stock option grants from time to time. In 2001, options to purchase
10,000 shares of our Common Stock, at a per share exercise price of $1.25, were
issued to each of Messrs. Cullinane, Dumolin, Laidley, Lebeer and Mulshine.
EMPLOYMENT CONTRACTS AND CHANGE IN CONTROL AGREEMENTS
Mr. Hunt's salary and bonus are determined pursuant to his employment
agreement dated July 1, 1998. Mr. Hunt's annual salary, his bonus and stock
options will be determined by the Compensation Committee for
6
each fiscal year of the Company during the employment period. In 2001, Mr. Hunt
received a base salary of $165,000, a cash bonus totaling $25,000 and 90,000
stock options. His severance and non-compete agreements are outlined below:
NUMBER OF MONTHS
-----------------------
SEVERANCE NON-COMPETE
--------- -----------
Terminated by the Company without cause..................... 18 18
Terminated by the Company with Cause........................ 0 12
Executive quits without good reason......................... 12 12
Executive quits with good reason............................ 18 18
Terminated due to a change of control....................... 36 12
Executive quits for good reason due to a change of
control................................................... 36 12
Mr. Houthooft's salary and bonus are determined pursuant to a consulting
agreement dated January 31, 1997. Mr. Houthooft's annual salary, his bonus and
stock options will be determined by the Compensation Committee for each fiscal
year of the Company during the employment period. In 2001, Mr. Houthooft
received a base salary of $225,000, a cash bonus totaling $110,000 and 120,000
stock options. Mr. Houthooft also received $92,960 in expense reimbursements.
His severance and non-compete arrangements under the consulting agreement are
outlined below:
NUMBER OF MONTHS
-----------------------
SEVERANCE NON-COMPETE
--------- -----------
Terminated by the Company without cause..................... 6 1
Terminated by the Company with Cause........................ 0 1
Executive quits without good reason......................... 6 1
Executive quits with good reason............................ 0 1
Terminated due to a change of control....................... None None
Executive quits for good reason due to a change of
control................................................... None None
Mr. Valcke's salary and bonus are determined pursuant to a consulting
agreement dated December 7, 1999. Mr. Valcke's annual salary, his bonus and
stock options will be determined by the Compensation Committee for each fiscal
year of the Company during the employment period. In 2001, Mr. Valcke received a
base salary of $155,000, a cash bonus totaling $45,000 and 50,000 stock options.
He also received $40,500 in expense reimbursements. His severance and
non-compete arrangements under the consulting agreement are outlined below:
NUMBER OF MONTHS
-----------------------
SEVERANCE NON-COMPETE
--------- -----------
Terminated by the Company without cause..................... 1 6
Terminated by the Company with Cause........................ 0 6
Executive quits without good reason......................... 1 6
Executive quits with good reason............................ 0 6
Terminated due to a change of control....................... None None
Executive quits for good reason due to a change of
control................................................... None None
During 2001, the Compensation Committee of our Board of Directors proposed,
and the Board of Directors adopted, a plan whereby each of our Named Executive
Officers would receive a bonus equal to 2.99 times his current annualized
compensation upon the closing of a transaction that results in a change-in-
control. The dollar amount of any such bonus cannot be determined until a change
in control occurs, but will exceed $100,000 for each Named Executive Officer.
7
COMPENSATION COMMITTEE INTERLOCKS AND INSIDER PARTICIPATION
For 2001, our Compensation Committee was comprised of Messrs. Laidley,
Cullinane and Mulshine. Forrest D. Laidley serves as a Director and our
Secretary. Mr. Laidley was a partner in the law firm of Laidley & Porter which
has performed various legal services for us since our inception. Mr. Laidley and
his former partners have made equity investments in us from time to time through
various private placements and are currently stockholders and warrant holders.
Mr. Laidley's law firm, Tressler, Soderstrom, Maloney & Priess, is currently
performing legal services for us. Mr. Laidley's services currently are and have
been on a no compensation basis, although his firm is compensated for services
rendered to us by attorneys other than Mr. Laidley.
SECTION 16(A) BENEFICIAL OWNERSHIP COMPLIANCE
Section 16(a) of the Exchange Act requires directors and executive
officers, and persons who beneficially own more than 10% of a registered class
of our equity securities, to file reports of ownership and changes in ownership
with the Commission and The Nasdaq Stock Market, Inc. Directors, executive
officers and beneficial owners of more than 10% of the outstanding shares of
Common Stock are required by Commission regulations to furnish us with copies of
all Section 16(a) forms that they file. Based solely on review of the copies of
such forms or written representations that no reports under Section 16(a) were
required, we believe that for the year period ended December 31, 2001, all of
its directors, executive officers and greater than 10% beneficial owners
complied with Section 16(a) filing requirements applicable to them.
EXECUTIVE COMPENSATION
The following table sets forth all compensation awarded to, earned by, or
paid for services rendered to VASCO and our subsidiaries in all capacities
during the three years ended December 31, 1999, 2000 and 2001 for our Chief
Executive Officer and President and Executive Vice Presidents, who are the only
executive officers of VASCO and our subsidiaries whose salary and bonus for such
year exceeded $100,000 (collectively, the "Named Executive Officers").
LONG-TERM COMPENSATION
-------------------------
AWARDS PAYOUTS
ANNUAL COMPENSATION ------------------------- -------
-------------------------------- RESTRICTED SECURITIES
OTHER ANNUAL STOCK UNDERLYING LTIP ALL OTHER
SALARY BONUS COMPENSATION AWARD(S) OPTIONS/SARS PAYOUTS COMPENSATION
NAME AND PRINCIPAL POSITION YEAR ($) ($) ($) ($) (#) ($) ($)
--------------------------- ---- ------- ------- ------------ ---------- ------------ ------- ------------
Mario R. Houthooft(1)....... 2001 225,000 110,000 -- -- 120,000 -- 92,960
Chief Executive Officer 2000 167,480 -- -- -- -- -- --
President and Director 1999 165,000 -- -- -- 430,000 -- --
T. Kendall Hunt............. 2001 165,000 25,000 -- -- 90,000 -- --
Executive Vice President
and 2000 165,000 -- -- -- 30,000 -- --
Chairman of the Board 1999 165,000 -- -- -- 30,000 -- --
Jan Valcke(2)............... 2001 155,000 45,000 -- -- 50,000 -- 40,500
Executive Vice President
of 2000 113,640 34,250 -- -- -- -- --
Sales and Marketing 1999 142,800 -- -- -- 115,000 -- --
Dennis D. Wilson(3)......... 2001 155,000 45,000 -- -- 50,000 -- --
Executive Vice President, 2000 94,170 15,000 -- -- -- -- --
Chief Financial Officer -- -- -- 100,000 -- --
and Secretary
---------------
(1) Mr. Houthooft was appointed President and Chief Executive Officer on June
16, 1999.
(2) Mr. Valcke became an executive officer of VASCO on December 28, 1999.
(3) Mr. Wilson was not an employee of VASCO during 1999.
8
OPTION/SAR GRANTS IN LAST FISCAL YEAR
The following table sets forth all options granted to the Named Executive
Officers during 2001.
INDIVIDUAL GRANTS POTENTIAL REALIZABLE
------------------------- VALUE AT
NUMBER OF PERCENT OF ASSUMED ANNUAL
SECURITIES TOTAL RATES OF
UNDERLYING OPTIONS/ STOCK PRICE
OPTIONS/ SARS APPRECIATION FOR
SARS GRANTED TO EXERCISE OF OPTION TERM(2)
GRANTED EMPLOYEES IN BASE PRICE EXPIRATION --------------------
NAME (#)(1) FISCAL YEAR ($/SH) DATE 5% ($) 10% ($)
---- ---------- ------------ ----------- ---------- -------- ---------
Mario R. Houthooft.......... 120,000 9.62% 1.25 11/30/2011 94,320 239,040
T. Kendall Hunt............. 90,000 7.21% 1.25 11/30/2011 70,740 179,280
Jan Valcke.................. 50,000 4.01% 1.25 11/30/2011 39,300 99,600
Dennis D. Wilson............ 50,000 4.01% 1.25 11/30/2011 39,300 99,600
---------------
(1) Vesting schedule is based on a time period of 36 months, with 6/36th of the
options vesting at the end of the first six months and 1/36th of the options
vesting each month thereafter on the last day of each month.
(2) The potential realizable value amounts shown illustrate the values that
might be realized upon exercise immediately prior to the expiration of their
term using five percent and ten percent appreciation rates as required to be
used in this table by the Securities and Exchange Commission, compounded
annually, and are not intended to forecast future appreciation, if any, of
our stock price. Additionally, these values do not take into consideration
the provisions of the options providing for nontransferability or
termination of the options following termination of employment. Therefore,
the actual values realized may be greater or less than the potential
realizable values set forth in the table.
AGGREGATED OPTION/SAR EXERCISES IN LAST FISCAL YEAR
AND FY-END OPTION/SAR VALUES
The following table sets forth the aggregate value as of December 31, 2001
of unexercised stock options held by the Named Executive Officers. The Named
Executive Officers did not exercise any stock options during 2001 and the
relevant columns have, therefore, been omitted.
NUMBER OF SECURITIES
UNDERLYING UNEXERCISED VALUE OF UNEXERCISED
OPTIONS/SARS AT FISCAL IN-THE-MONEY OPTIONS/SARS
YEAR-END(#) AT FISCAL YEAR-END ($)(1)
--------------------------- ---------------------------
NAME EXERCISABLE UNEXERCISABLE EXERCISABLE UNEXERCISABLE
---- ----------- ------------- ----------- -------------
Mario R. Houthooft............................ 375,000 470,000 (648,875) (158,400)
T. Kendall Hunt............................... 144,500 250,500 (300,613) (114,788)
Jan Valcke.................................... 71,750 233,750 (90,075) (30,050)
Dennis D. Wilson.............................. -- 300,000 -- (948,000)
---------------
(1) Market value of underlying securities is based on the closing price of the
Common Stock as reported on the Nasdaq National market on December 31, 2001
($2.10) minus the exercise price.
REPORT OF THE COMPENSATION COMMITTEE ON EXECUTIVE COMPENSATION
OVERVIEW
Our Board of Directors established a Compensation Committee in March of
1998. For 2001, the Compensation Committee consisted of Messrs. Laidley,
Cullinane and Mulshine, none of whom is employed
9
by the Company, and none of whom has any "interlocking" relationships as defined
for proxy statement disclosure purposes.
The Compensation Committee is responsible for determining the compensation
for our officers and employees. In accordance with its right to do so, the
Committee has elected to delegate the fixing of salaries below certain levels to
VASCO's Chief Executive Officer. The Compensation Committee also administers our
Amended and Restated 1997 Stock Option Plan ("Amended and Restated Option Plan")
and the Executive Incentive Compensation Plan ("Incentive Plan"), including the
designation of which officers, key employees and directors shall receive options
under the Option Plan and the amount, terms, pricing, and vesting provisions of
options granted pursuant to the Option Plan.
EXECUTIVE COMPENSATION PHILOSOPHY
We operate in the competitive technology industry and view our ability to
attract and retain highly qualified and dedicated executives and key employees
as a critical component of our future success. We strive to maintain an
entrepreneurial atmosphere and to maintain a low cost operating structure.
Consequently, we employ a combination of salary, bonuses and stock options to
reward, retain and provide incentives to our executives and key employees.
2001 CHIEF EXECUTIVE OFFICER COMPENSATION
The Compensation Committee believes that VASCO compensated Mr. Houthooft,
the Chief Executive Officer of the Company, below the market value for his
services in 2001. Mr. Houthooft's cash compensation was set at this level to
provide an example for the balance of the Company's management team. Given this
and the relative performance of the Company during 2001, the Compensation
Committee of the Company believes that Mr. Houthooft's compensation is
appropriate.
2001 COMPENSATION OF OTHER EXECUTIVE OFFICERS
Although we strive to maintain a low cost operating structure, our
Compensation Committee aims to set other executives' and key employees' salaries
at a competitive level. The base salary for each executive officer is set on the
basis of personal performance and the salary level in effect for comparable
positions at companies that compete for executive talent.
At our 1999 Annual Meeting of Stockholders, VASCO's stockholders approved
the Amended and Restated Option Plan. The Amended and Restated Option Plan was
designed to serve as a performance incentive to encourage our executives, key
employees and others to acquire or increase a proprietary interest in the
success of VASCO. The Compensation Committee believes that, over a period of
time, our share performance will, to a great extent, reflect executive and key
employee performance.
The Amended and Restated Option Plan provides that options may be granted
at the discretion of the Compensation Committee, in such amounts and subject to
such conditions as the Compensation Committee may determine in accordance with
the terms thereof. Options granted to employees are priced at market, are
generally fully vested after five years and expire at the end of ten years.
The Executive Incentive Compensation Plan covers our eligible executives
and key employees (each a "participant"), with such eligibility determined at
the end of each year at the sole discretion of the Compensation Committee.
Awards are based on prior year operating results, such results being subject to
audit by our independent accountants, and are distributed following the
completion of such audit.
The Executive Incentive Compensation Plan allows for the creation of a cash
pool ("Pool") in the amount of 10% of the Company's annual pre-tax earnings.
Fifty percent (50%) of the Pool is awarded to the participants based on each
participant's earned salary as a percentage of all participants' salaries. The
remaining fifty percent (50%) is awarded at the sole discretion of the
Compensation Committee. Based on this formula, no awards were made under the
Executive Incentive Compensation Plan during 2001.
10
Awards, in whole or in part, may be offered in the form of shares of the
Common Stock or cash at the sole discretion of the Compensation Committee and
the Compensation Committee also may elect to delegate the choice of cash or
stock to the individual participants. To the extent that shares of stock are
awarded in lieu of cash, the number of shares is based on the market value of
the Common Stock on the date the award is determined, and are taxable to the
participant in the year the award is granted. Such shares are restricted and
cannot be sold or transferred except pursuant to registration under the
Securities Act or an exemption from such registration.
Respectfully submitted,
Forrest D. Laidley, Chairman
Michael P. Cullinane
Michael A. Mulshine
11
STOCK PERFORMANCE GRAPH
The Common Stock commenced trading on the NASD Electronic Bulletin Board on
March 28, 1998. On April 7, 2000, the Common Stock commenced trading on the
Nasdaq National Market. The Stock Performance Graph below compares the
cumulative total return through December 31, 2001, assuming reinvestment of
dividends, by an investor who invested $100.00 on March 28, 1998 in each of (i)
the Common Stock, (ii) the Russell 2000 index, (iii) the Standard Industrial
Code (SIC) Index 3577 -- Computer Peripheral Equipment, NEC and (iv) a
comparable industry (the "Peer Group") index selected by VASCO as described
below. The stock price performance shown on the graph below is not necessarily
indicative of future price performance.
[PERFORMANCE GRAPH]
----------------------------------------------------------------------------------------------------------
3/23/98 12/31/98 12/31/99 12/31/00 12/31/01
----------------------------------------------------------------------------------------------------------
VASCO Data Security International,
Inc. 100.00 59.40 159.38 107.50 42.00
----------------------------------------------------------------------------------------------------------
SIC Code Index 100.00 167.36 358.96 276.24 131.36
----------------------------------------------------------------------------------------------------------
Russell 2000 Index 100.00 88.31 105.62 101.06 102.09
----------------------------------------------------------------------------------------------------------
Peer Group Index 100.00 68.68 208.23 150.51 92.86
----------------------------------------------------------------------------------------------------------
The Peer Group reflected above is made up of the following companies:
ActivCard S.A., Netegrity Inc., RSA Security Inc. and Secure Computing
PROCEDURE FOR SUBMITTING STOCKHOLDER PROPOSALS
Pursuant to Rule 14a-8 under the Exchange Act, stockholders may present
proper proposals for consideration at and for inclusion in the Company's proxy
statement relating to the next annual meeting of stockholders by submitting
their proposals to the Company in a timely manner. In order to be considered for
inclusion in the proxy statement and proxy relating to the Company's 2003 annual
meeting of stockholders, stockholder proposals must be received by the Company
at its principal executive offices not later than January 31, 2003 and must
otherwise comply with the requirements of Rule 14a-8.
12
PROXY SOLICITATION
Proxies will be solicited by mail. Proxies may also be solicited by
directors, officers and a small number of regular employees of the Company
personally or by mail, telephone or telegraph, but such persons will not be
specially compensated for such services. Brokerage houses, custodians, nominees
and fiduciaries will be requested to forward the soliciting material to the
beneficial owners of Common Stock held of record by such persons, and the
Company will reimburse them for their expenses in doing so. The full cost of the
preparation and mailing of the Proxy Statement and accompanying materials and
the related proxy solicitations will be borne by the Company.
OTHER MATTERS
Management does not intend to present, and does not have any reason to
believe that others will present, any item of business at the Annual Meeting
other than those specifically set forth in the notice of the Annual Meeting.
However, if other matters are properly presented for a vote at the Annual
Meeting, the persons named in the enclosed proxy and acting thereunder will have
discretion to vote on those matters in accordance with their judgment to the
same extent as the person who signed the proxy would be entitled to vote.
By Order of the Board of Directors,
/s/ DENNIS D. WILSON
DENNIS D. WILSON
Secretary
Oakbrook Terrace, Illinois
May 30, 2002
13
VASCO DATA SECURITY INTERNATIONAL, INC.
ANNUAL MEETING OF STOCKHOLDERS -- JULY 16, 2002
THIS PROXY IS SOLICITED ON BEHALF OF THE BOARD OF DIRECTORS
The undersigned hereby appoints T. Kendall Hunt and Mario Houthooft, and
each of them individually, with full power of substitution, proxy to vote all
the shares of common stock of VASCO Data Security International, Inc., a
Delaware corporation, that the undersigned may be entitled to vote at the Annual
Meeting of Stockholders to be held on July 16, 2002 at any adjournment thereof,
as designated for the items set forth on the reverse side hereof and in the
Notice of Annual Meeting of Stockholders and the Proxy Statement dated May 30,
2002.
IF PROPERLY EXECUTED, THIS PROXY WILL BE VOTED AS SPECIFIED HEREIN OR, IF
NOT SPECIFIED, FOR THE ELECTION AS DIRECTORS OF THE NOMINEES NAMED IN ITEM 1. IN
THEIR DISCRETION, THE PROXIES ARE AUTHORIZED TO VOTE UPON SUCH OTHER BUSINESS AS
MAY PROPERLY COME BEFORE THE MEETING OR ANY ADJOURNMENT THEREOF. AT THIS TIME,
MANAGEMENT KNOWS OF NO SUCH OTHER BUSINESS.
The Board of Directors recommends a vote FOR the election of the Directors
set forth below.
1. Election of Directors
[ ] FOR all nominees listed below
[ ] WITHHOLD AUTHORITY to vote for all nominees listed below
Nominees: T. Kendall Hunt, Michael P. Cullinane, Christian Dumolin, Mario R.
Houthooft, Forrest D. Laidley, Chris Lebeer and Michael A. Mulshine.
Instruction: To withhold authority to vote for any individual nominee, write
the nominee's name in the space provided below:
--------------------------------------
SIGNATURE (IF HELD JOINTLY)
IMPORTANT: Please date and sign
exactly as the name appears herein and
return this proxy in the enclosed
envelope. Persons signing as
executors, administrators, trustees,
etc. should so indicate. If shares are
held jointly, each joint owner should
sign. In the case of a corporation or
partnership, the full name of the
organization should be used and the
signature should be that of a duly
authorized officer or partner.
PLEASE MARK, DATE, SIGN AND RETURN PROMPTLY IN THE ENCLOSED ENVELOPE.