1
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-12
VASCO DATA SECURITY INTERNATIONAL, INC.
- --------------------------------------------------------------------------------
(Name of Registrant as Specified in Its Charter)
- --------------------------------------------------------------------------------
(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:
- --------------------------------------------------------------------------------
(2) Aggregate number of securities to which transaction applies:
- --------------------------------------------------------------------------------
(3) Per unit price or other underlying value of transaction computed
pursuant to Exchange Act Rule 0-11 (set forth the amount on which the
filing fee is calculated and state how it was determined):
- --------------------------------------------------------------------------------
(4) Proposed maximum aggregate value of transaction:
- --------------------------------------------------------------------------------
(5) Total fee paid:
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[ ] Fee paid previously with preliminary materials.
- --------------------------------------------------------------------------------
[ ] Check box if any part of the fee is offset as provided by Exchange Act
Rule 0-11(a)(2) and identify the filing for which the offsetting fee
was paid previously. Identify the previous filing by registration
statement number, or the form or schedule and the date of its filing.
(1) Amount Previously Paid:
- --------------------------------------------------------------------------------
(2) Form, Schedule or Registration Statement No.:
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(3) Filing Party:
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(4) Date Filed:
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[VASCO LOGO]
[LETTERHEAD OF VASCO DATA SECURITY INTERNATIONAL, INC.]
-------------------
NOTICE OF ANNUAL MEETING OF STOCKHOLDERS
TO BE HELD JUNE 12, 2001
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, June 12,
2001 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;
2. To consider, approve and ratify the action of the Board of Directors in
appointing KPMG LLP as the Company's independent auditors for the fiscal year
ending December 31, 2001; and
3. 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.
Only stockholders of record on April 29, 2001 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,
/s/ Dennis D. Wilson
Dennis D. Wilson
Secretary
Oakbrook Terrace, Illinois
April 30, 2001
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.
3
[LETTERHEAD OF VASCO DATA SECURITY INTERNATIONAL, INC.]
---------------
PROXY STATEMENT
FOR
ANNUAL MEETING OF STOCKHOLDERS
TO BE HELD JUNE 12, 2001
---------------
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, June 12, 2001 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 April 30, 2001. Holders of
record of the Company's common stock (the "Common Stock") at the close of
business on April 29, 2001 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; (ii) consider, approve and ratify the action
of the Board of Directors in appointing KPMG LLP as the Company's independent
auditors for the fiscal year ending December 31, 2001; and (iii) 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 on April 29, 2001 are entitled to notice of and
to vote at the Annual Meeting. As of April 29, 2001, there were 28,255,459
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
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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. Similarly, stockholders may vote in
favor of, against or abstain from voting with respect to the proposal to ratify
the appointment of the Company's independent auditors. 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, (b) FOR the
approval and ratification of the appointment of KPMG LLP as the Company's
independent auditors for the fiscal year ending December 31, 2001, and (c) 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, 2000 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 FOR
THE FISCAL YEAR ENDED DECEMBER 31, 2000; ADDITIONAL COPIES OF THE FORM 10-K 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.
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SECURITY OWNERSHIP OF CERTAIN
BENEFICIAL OWNERS AND MANAGEMENT
The following table sets forth certain information with respect to the
beneficial ownership of Common Stock as of March 31, 2001 for each person or
entity who is known to the Company 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.
CLASS OF NAME AND ADDRESS OF AMOUNT AND NATURE OF
SECURITIES BENEFICIAL OWNER BENEFICIAL OWNERSHIP PERCENT OF CLASS
---------- ---------------- -------------------- ----------------
T. Kendall Hunt
1901 S. Meyers Road
Common Suite 210 10,081,475(1) 35.680%
Oakbrook Terrace, IL 60181
L&H Investment Company
Common St. Krispijnstraat 7 1,928,572 6.825%
B-8900 Ieper, Belgium
(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 table below sets forth certain information with respect to the beneficial
ownership of Common Stock as of March 31, 2001 for (i) each of the Company's
directors, (ii) each of the named executive officers of the Company, 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 ownership
of any shares as of a given date which such person has the right to acquire
within 60 days after such date.
CLASS OF NAME AND ADDRESS OF AMOUNT AND NATURE OF
SECURITIES BENEFICIAL OWNER BENEFICIAL OWNERSHIP(1) PERCENT OF CLASS
---------- ---------------- ----------------------- ----------------
T. Kendall Hunt
1901 S. Meyers Road
Common Suite 210 10,081,475(2) 35.680%
Oakbrook Terrace, IL 60181
Forrest D. Laidley
Common 552 Stevenson Drive 620,883 2.197%
Libertyville, IL 60048
Michael P. Cullinane
Common 2233 Edgebrooke Drive 18,000 0.064%
Lisle, IL 60532
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Christian Dumolin
Common Ter Bede Business Center 859,143(3) 3.041%
B-8500 Kortrijk, Belgium
Mario R. Houthooft
Common Koningin Astridlaan 164 649,783 2.300%
B-1780 Wemmel Belgium
Michael A. Mulshine
Common 2517 Route 35, Suite D-201 295,000 1.044%
Manasquan, New Jersey 08736
Jan Valcke
Common Koningin Astridlaan 164 42,500 0.150%
B-1780 Wemmel Belgium
Dennis D. Wilson
Common 1108 Captains Lane 300 0.001%
Wheeling, IL 60090
Daniel Mouly
Common 16 rue de l'Arsenal 123,239 0.436%
Bordeaux, France 33000
All Executive Officers and
Common Directors as a Group 12,690,323 44.913%
(9 persons)
(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, 2001 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.
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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. Messrs. Cullinane, Dumolin, Houthooft, Hunt, Laidley
and Mulshine are each a current director 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. 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 57 years old.
MICHAEL P. CULLINANE -- Mr. Cullinane has been a director since April 10, 1998.
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 51 years old.
CHRISTIAN DUMOLIN -- Mr. Dumolin has been a director since April 23, 1999. 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 55 years old.
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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. 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 48 years old.
FORREST D. LAIDLEY -- Mr. Laidley has been a director since July 1997 and 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 56 years old.
CHRIS LEBEER -- 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 46 years old.
MICHAEL A. MULSHINE -- Mr. Mulshine has been a director since July 1997. 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 61 years old.
MEETINGS OF THE BOARD OF DIRECTORS
The Board of Directors of the Company met five times during 2000. In addition,
the Board of Directors took action by unanimous written consent one time during
2000. Messrs. Cullinane, Dumolin, Hunt, Houthooft, Laidley and Mulshine each
attended all of the meetings of the Company's Board of Directors during 2000.
Pol Hauspie, who resigned as a director on March 28, 2001, attended two meetings
of the Board of Directors during 2000.
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.
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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,
which is attached as Exhibit A to this Proxy Statement, 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, subject to stockholder ratification, the selection of the
Company's independent auditors.
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 three times in 2000 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 for the year
ended December 31, 2000, for filing with the Securities and Exchange Commission.
The Audit Committee and the Board of Directors have also recommended the
selection of KPMG LLP as the company's independent auditors for 2001, subject to
stockholder ratification.
Respectfully submitted,
Michael P. Cullinane, Chair
Christian Dumolin, Member
Michael A. Mulshine, Member
10
COMPENSATION COMMITTEE
The Compensation Committee reviews and sets the salaries and incentive
compensation for the executive officers, the directors and other key personnel
of the Company. The Compensation Committee also administers the Company's stock
option plan. In its capacity as administrator of the Company's stock option
plan, the Compensation Committee has authority to grant stock options and
determine the terms thereof. During 2000, the Compensation Committee met three
times. The members of the Compensation Committee for 2000 were: Forrest D.
Laidley, Michael P. Cullinane and Michael A. Mulshine.
COMPENSATION OF DIRECTORS
Our directors are reimbursed for expenses incurred in connection with their
attendance at periodic Board meetings. Directors received no cash compensation
for their services during 2000; however, non-employee directors are eligible to
receive stock option grants from time to time. In January 2000 non-employee
directors Messrs. Cullinane, Dumolin, Hauspie, Laidley and Mulshine each
received options to purchase 8,000 shares of Common Stock at an exercise price
of $8.875 per share.
COMPENSATION COMMITTEE INTERLOCKS AND INSIDER PARTICIPATION
For 2000, 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 noncompensation basis, although his firm is compensated for services
rendered to us by attorneys other than Mr. Laidley. Mr. Laidley's firm was paid
approximately $250.00 as reimbursement for a disbursement on our behalf during
the year ended December 31, 2000.
SECTION 16(a) BENEFICIAL OWNERSHIP COMPLIANCE
Section 16(a) of the Exchange Act requires the Company's directors and executive
officers, and persons who beneficially own more than 10% of a registered class
of the Company's equity securities, to file reports of ownership and changes in
ownership with the 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 the
Company 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, the Company believes that for the year period
ended December 31, 2000, all of its directors, executive officers and greater
than 10% beneficial owners complied with Section 16(a) filing requirements
applicable to them.
11
EXECUTIVE COMPENSATION
The following table sets forth all compensation awarded to, earned by, or paid
for services rendered to the Company and its subsidiaries in all capacities
during the three years ended December 31, 1998, 1999 and 2000 for our Chief
Executive Officer and President and Executive Vice Presidents, who are the only
executive officers of the Company and its subsidiaries whose salary and bonus
for such year exceeded $100,000 (collectively, "Named Executive Officers").
SUMMARY COMPENSATION TABLE
Long-Term
Annual Compensation Compensation Awards All Other
Name and ------------------- Securities Underlying Compensation
Principal Position Year Salary ($) Bonus ($) Options/SARs (#) ($)
------------------ ---- ---------- --------- --------------------- ------------
T. Kendall Hunt 2000 165,000 -0- 30,000 -0-
Executive Vice President 1999 165,000 -0- 30,000 -0-
and Chairman of the Board 1998 155,000 -0- -0- -0-
Mario R. Houthooft(1) 2000 167,480 -0- -0- -0-
Chief Executive Officer, 1999 165,000 -0- 430,000 -0-
President and Director
Jan Valcke(2) 2000 113,640 34,250 -0- -0-
Executive Vice President 1999 142,800 -0- 115,000 -0-
of Sales and Marketing
Dennis D. Wilson(3) 2000 94,170 15,000 100,000 -0-
Executive Vice President,
Chief Financial Officer and
Secretary
Daniel Mouly(4) 2000 99,570 -0- -0- -0-
Executive Vice President 1999 64,640 -0- 40,000 -0-
and Chief Technology
Officer
(1) Mr. Houthooft was appointed as our President and Chief Executive Officer on
June 16, 1999.
(2) Mr. Valcke became an executive officer of the Company on December 28, 1999.
(3) Mr. Wilson was not an employee of the Company during 1998 or 1999.
(4) Mr. Mouly was not an employee of the Company during 1998.
12
OPTION GRANTS IN LAST FISCAL YEAR
The following table sets forth all options granted to the Named Executive
Officers during 2000.
Potential Realizable
Percent of Value at Assumed
Number of Total Annual Rates
Securities Options Of Stock
Underlying Granted to Exercise Price Appreciation
Options Employees in Price Expiration For Option Term(3)
Name Granted Fiscal Year ($/Sh) Date 5% ($) 10% ($)
---- ---------- ------------ -------- ---------- ------- --------
T. Kendall Hunt(1) 30,000 2.0% 8.99 1/11/10 167,538 424,573
Dennis D. Wilson(2) 100,000 8.0% 11.75 3/20/10 738,951 1,872,647
(1) Options vest in four equal installments beginning on the anniversary date of
grant.
(2) Options vest on the earlier of March 18, 2004 or in 25,000 share increments
based on the stock price achieving the following levels:
- 25,000 shares when the stock price is above $30.00 per share for 30
consecutive trading days;
- 25,000 shares when the stock price is above $40.00 per share for 30
consecutive trading days;
- 25,000 shares when the stock price is above $50.00 per share for 30
consecutive trading days; and
- 25,000 shares when the stock price is above $60.00 per share for 30
consecutive trading days.
(3) The potential realizable value amounts shown illustrate the values that
might be realized upon exercise immediately prior to the expiration of their
term using five percent and ten percent appreciation rates as required to be
used in this table by the Securities and Exchange Commission, compounded
annually, and are not intended to forecast possible future appreciation, if any,
of our stock price. Additionally, these values do not take into consideration
the provisions of the options providing for nontransferability or termination of
the options following termination of employment. Therefore, the actual values
realized may be greater or less than the potential realizable values set forth
in the table.
13
YEAR-END OPTION VALUES
The following table sets forth the aggregate value as of December 31, 2000 of
unexercised stock options held by the Named Executive Officers. The Named
Executive Officers did not exercise any stock options during 2000 and the
relevant columns have, therefore, been omitted.
Number of Securities Value (1) of Unexercised
Underlying Unexercised In-the-Money Options
Options at Fiscal Year-End At Fiscal Year End ($)
---------------------------- ----------------------------
Name Exercisable Unexercisable Exercisable Unexercisable
---- ----------- ------------- ----------- -------------
T. Kendall Hunt 99,750 85,250 142,406 (8,031)
Mario R. Houthooft 263,000 342,000 599,375 763,125
Jan Valcke 41,000 92,750 77,156 206,750
Dennis D. Wilson -0- 100,000 -0- (637,500)
Daniel Mouly 10,000 30,000 23,750 71,250
(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 29, 2000
($5.375) minus the exercise price.
The Report of the Compensation Committee on Executive Compensation shall not be
deemed incorporated by reference by any general statement incorporating by
reference this Proxy Statement or any portion hereof into any filing under the
Securities Act of 1933, as amended, or the Securities Exchange Act of 1934, as
amended (the "Exchange Act"), and shall not otherwise be deemed filed under such
acts.
14
REPORT OF THE COMPENSATION COMMITTEE ON EXECUTIVE COMPENSATION
OVERVIEW
The Board of Directors of the Company established a Compensation Committee in
March of 1998. For 2000, the Compensation Committee consisted of Messrs.
Laidley, Cullinane and Mulshine, none of whom is employed by the Company, and
none of whom has any "interlocking" relationships as defined for proxy statement
disclosure purposes. For 2001, the members of the Compensation Committee will be
Messrs. Cullinane, Laidley and Lebeer.
The Compensation Committee is responsible for determining the compensation for
the Company's officers and employees, subject to the right of the Committee to
delegate to the Company's Chief Executive Officer the fixing of salaries below
certain levels designated by the Committee. The Compensation Committee also
administers the Company's 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
The Company operates in the competitive technology industry and views its
ability to attract and retain highly qualified and dedicated executives and key
employees as a critical component of its future success. The Company strives to
maintain an entrepreneurial atmosphere and to maintain a low cost operating
structure. Consequently, the Company employs a combination of salary, bonuses
and stock options to reward and provide incentive its executives and key
employees.
2000 CHIEF EXECUTIVE OFFICER COMPENSATION
The Compensation Committee believes that the Company compensated Mr. Houthooft,
the Chief Executive Officer of the Company, below the market value for his
services in 2000. 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 2000, the Compensation
Committee of the Company believes that Mr. Houthooft's compensation is
appropriate.
2000 COMPENSATION OF OTHER EXECUTIVE OFFICERS
Although the Company strove to maintain a low cost operating structure, its
Compensation Committee aimed 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 the Company's 1999 Annual Meeting of Stockholders, the stockholders approved
the Amended and Restated Option Plan. The Amended and Restated Option Plan was
designed to serve as a performance incentive to encourage the Company's
executives, key employees and others to acquire or increase a proprietary
interest in the success of the Company. The Compensation Committee believes
that, over a period of time, the Company's 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.
15
The Incentive Compensation Plan covers the Company's 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 the
Company's independent accountants, and are distributed following the completion
of such audit.
The Incentive 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 Incentive Plan during 2000.
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
16
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, 2000, 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 the Company as described below.
The stock price performance shown on the graph below is not necessarily
indicative of future price performance.
12/31/98 12/31/99 12/31/00
-------- -------- --------
VASCO 59.40 159.38 107.50
SIC 67.36 358.96 276.24
Peer Group 68.68 208.23 150.51
Russell 2000 88.31 105.62 101.06
The Peer Group reflected above is made up of the following companies: ActivCard
S.A., Netegrity Inc., RSA Security Inc. and Secure Computing. In the Company's
proxy statement for the 2000 Annual Meeting of Stockholders, the performance of
the Common Stock was compared against a Peer Group comprised of Axent
Technologies, Inc., Netegrity Inc., RSA Security Inc. and Secure Computing.
Axent Technologies, Inc. is no longer publicly traded because it was acquired by
Symantec Corporation in a merger in December, 2000. The Company believes that
Symantec Corporation's business is not comparable to the Company's business for
a number of reasons. Therefore, ActivCard S.A. has replaced Axent Technologies,
Inc. in the Peer Group.
17
PROPOSAL II
RATIFICATION OF INDEPENDENT AUDITORS
RECOMMENDATION OF INDEPENDENT AUDITOR
The Board of Directors has selected KPMG LLP as the independent auditors of the
Company's books and records for the fiscal year ending December 31, 2000 and has
determined that it would be desirable to ask the stockholders to ratify this
appointment at the Annual Meeting.
KPMG LLP served as independent auditors of the Company's books and records for
the fiscal year ended December 31, 2000 and has acted as auditors for the
Company (and its predecessor, VASCO Corp.) since the 1994 fiscal year.
Representatives of KPMG LLP are expected to be present at the Annual Meeting
with the opportunity to make a statement if they desire to do so and are
expected to be available to respond to appropriate questions.
AUDIT FEES
KPMG LLP billed the Company an aggregate $125,166 in fees for professional
services rendered in connection with the preparation of the Company's 2000
annual financial statements and the review of financial statements included in
the Company's Forms 10-Q for the same year.
FINANCIAL INFORMATION SYSTEMS DESIGN AND IMPLEMENTATION FEES
KPMG LLP did not provide professional services to the Company in connection with
financial information systems design and implementation during the 2000 fiscal
year.
THE BOARD OF DIRECTORS RECOMMENDS A VOTE "FOR" RATIFICATION OF THE APPOINTMENT
OF KPMG LLP AS INDEPENDENT AUDITORS OF THE COMPANY'S BOOKS AND RECORDS FOR THE
FISCAL YEAR ENDING DECEMBER 31, 2001.
The affirmative vote of the majority of the votes cast and entitled to vote at
the Annual Meeting is required for ratification of the appointment of KPMG LLP
as described herein. No determination has been made as to what action the Board
of Directors would take if the appointment is not ratified.
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 2002 annual
meeting of stockholders, stockholder proposals must be received by the Company
at its principal executive offices not later than January 31, 2002 and must
otherwise comply with the requirements of Rule 14a-8.
18
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
April 30, 2001
19
EXHIBIT A
VASCO DATA INTERNATIONAL, INC.
AUDIT COMMITTEE OF THE BOARD OF DIRECTORS
CHARTER
I. PURPOSE
The primary function of the Audit Committee (Committee) is to assist the Board
of Directors in fulfilling its oversight responsibilities by reviewing: 1) the
financial reports and other financial information provided by the Corporation to
any governmental body or the public; 2) the Corporation's systems of internal
controls regarding finance, accounting, legal compliance and ethics that
management and the Board have established; and 3) the Corporation's auditing,
accounting and financial reporting processes generally. Consistent with these
functions, the Committee should encourage continuous improvement of, and should
foster adherence to, the Corporation's policies, procedures and practices at all
levels. The Committee's primary duties and responsibilities are to:
- - Serve as an independent and objective party to monitor the Corporation's
financial reporting process and internal control system.
- - Review and appraise the audits of the Corporation's independent accountants.
- - Provide an open avenue of communication among the independent accountants,
financial and senior management, and the Board of Directors.
The Committee will primarily fulfill these responsibilities by carrying out the
activities enumerated in Section IV. of this Charter.
II. COMPOSITION
The Audit Committee shall be comprised of three or more Directors as determined
by the Board, each of whom shall be an independent Director, and free from any
relationship that, in the opinion of the Board, would interfere with the
exercise of his or her independent judgment as a member of the Committee. All
members of the Committee shall have a working familiarity with basic finance and
accounting practices, and at least one member of the Committee shall have
accounting or related financial management expertise. Committee members may
enhance their familiarity with finance and accounting by participating in
educational programs conducted by the Corporation or by an outside consultant.
The members of by the Committee shall be elected by the Board at the Annual
Organizational Meeting of the Board or until their successors shall be duly
elected and qualified. Unless a Chair is elected by the full Board, the members
of the Committee may designate a Chair by majority vote of the full Committee
membership.
III. MEETINGS
The Committee shall meet at least annually, or more frequently as circumstances
dictate. As part of its job to foster open communication, the Committee should
meet at least annually with management, and the independent accountants in
separate executive sessions to discuss any matters that the Committee or each of
these groups believe should be discussed privately. In addition, the Committee
or at least its Chair should meet with the independent accountants and
management quarterly to review the Corporation's financial reports consistent
with IV.4. below).
20
IV. RESPONSIBILITIES AND DUTIES
To fulfill its responsibilities and duties the Committee shall:
Documents/Reports Review
1. Obtain the full Board of Directors' approval of this Charter and review and
update this Charter periodically, as conditions dictate, and at least
annually.
2. Review the Corporation's annual financial statements and any reports or
other financial information submitted to any governmental body, or the
public, including any certification, report, opinion, or review rendered by
the independent accountants.
3. Review the regular internal reports to management prepared by the internal
auditing personnel and management's response.
4. Review with financial management and the independent accountants the
Quarterly Report on Form 10-Q prior to its filing or prior to the public
release of earnings. The Chair of the Committee may represent the entire
Committee for purposes of this review.
5. Report the results of the Annual Audit to the Board of Directors. If
requested by the Board, invite the independent accountants to attend the
full Board of Directors meeting to assist in reporting the results of the
Annual Audit or to answer other Directors' questions.
6. Maintain and approve minutes of all Committee meetings. The Chairman shall
submit the minutes of all meetings of the Committee to, or discuss the
matters discussed at each Committee meeting with, the Board of Directors.
Independent Accountants
7. The Audit Committee shall consider the independence and effectiveness of
the outside auditors and shall recommend to the Board of Directors the
selection and contributions of the independent accountants and approve the
fees and other compensation to be paid to the independent accountants. On
an annual basis, obtain from the independent accountants a written
communication delineating all their relationships and professional services
as required by Independence Standards Board Standard No. 1: Independence
Discussions with Audit Committees. In addition, review with the independent
accountants the nature and scope of any disclosed relationships or
professional services and take, or recommend that the Board of Directors
take, appropriate action to ensure the continuing independence of the
accountants.
8. Review the performance of the independent accountants and approve any
proposed discharge of the independent accountants when circumstances
warrant.
9. Periodically consult with the independent accountants out of the presence
of management about internal controls and the fullness, accuracy, and
expertise of the Corporation's financial statements.
21
Financial Reporting Processes
10. Inquire of management, the internal auditor and the independent accountants
about significant risks or exposures and assess the steps management has
taken to minimize any such risks to the Corporation.
11. Meet with the independent accountants and management of the Corporation to
review and approve the scope of the proposed audit and timely quarterly
reviews for the current year and the procedures to be utilized.
12. In consultation with the independent accountants and the internal auditors,
review the integrity of the Corporation's financial reporting processes,
both internal and external.
13. Consider the independent accountants' judgments about the quality and
appropriateness of the Corporation's accounting principles as applied in
its financial reporting requirements.
14. Review, at the conclusion of the annual audit and quarterly reviews, the
independent accountants' summary of significant accounting, auditing and
internal control issues identified, along with recommendations and
management's corrective action plans.
15. Consider and approve, if appropriate, major changes to the Corporation's
auditing and accounting principles and practices, if and as suggested by
the independent accountants, or management.
Process Improvement
16. Establish regular and separate systems of reporting to the Committee by
each of management and the independent accountants regarding any
significant judgments made in management's preparation of the financial
statements and the view of each as to the appropriateness of such
judgments.
17. Following completion of the annual audit, review separately with each of
management and the independent accountants any significant difficulties
encountered during the course of the audit, including any restrictions on
the scope of work or access to required or requested information.
18. Review any significant disagreement among management and the independent
accountants in connection with the preparation of the financial statements.
19. Review with the independent accountants and management the extent to which
changes or improvements in financial or accounting practices, as approved
by the Committee, have been implemented. (This review should be conducted,
as decided by the Committee, at an appropriate time subsequent to
implementation of suggested changes or improvements.)
22
Ethical and Legal Compliance
20. Establish, review and update periodically codes of ethical conduct and
ensure that Management has established a system to enforce these ethical
codes.
21. Review management's monitoring of the Corporation's compliance with the
Corporation's ethical codes, and ensure that management has the proper
review system in place to ensure that the Corporation's financial
statements, reports and other financial information disseminated to
governmental organizations and the public satisfy legal requirements.
22. Review the activities, organizational structure and qualifications of any
internal audit personnel deemed appropriate by the Committee and the
Corporation's management.
23. Review, with the Corporation's counsel, legal compliance matters including
corporate securities trading policies.
24. Review, with the Corporation's counsel, any legal matter, especially any
such matters that could have a significant impact on the Corporation's
financial statements.
25. Investigate any matter brought to the Committee's attention within the
scope of its duties, with the power to retain outside counsel for this
purpose if, and in the Committee's sole judgment that is appropriate.
26. Perform any other activities consistent with this Charter, the
Corporation's By-laws and governing law as the Committee or the Board deems
necessary or appropriate.
23
VASCO DATA SECURITY INTERNATIONAL, INC.
ANNUAL MEETING OF STOCKHOLDERS--JUNE 12, 2001
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 June 12, 2001 and 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 April
30, 2001.
IF PROPERLY EXECUTED, THIS PROXY WILL BE VOTED AS SPECIFIED HEREIN OR,
IF NOT SPECIFIED, WILL BE VOTED FOR THE PROPOSAL IN ITEM 2 WHICH IS DESCRIBED IN
THE ACCOMPANYING PROXY STATEMENT AND 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 and FOR the proposal in Item 2.
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:
- --------------------------------------------------------------------------------
2. Proposal to approve the appointment of KMPG LLP as independent accountants of
the Company for the fiscal year ended December 31, 2001.
__ FOR __ AGAINST __ ABSTAIN
Dated: , 2001
--------------
--------------------------------
Signature
--------------------------------
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.
