UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
SCHEDULE 14A
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 Rule14a-6(e)(2))
[X] Definitive Proxy Statement
[ ] Definitive Additional Materials
[ ] Soliciting Material Pursuant to ss.240.14a-12
THE ARISTOTLE CORPORATION
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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)(4) and 0-11.
1) Title of each class of securities to which transaction applies:
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2) Aggregate number 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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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:
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THE ARISTOTLE CORPORATION
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NOTICE OF ANNUAL MEETING OF STOCKHOLDERS
TO BE HELD AUGUST 31, 2005
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To the Stockholders of
THE ARISTOTLE CORPORATION:
NOTICE IS HEREBY GIVEN that the Annual Meeting of Stockholders of THE
ARISTOTLE CORPORATION (the 'Company') will be held on August 31, 2005 at
9:30 A.M., EDT, at the Hyatt Regency Greenwich, 1800 E. Putnam Avenue, Old
Greenwich, Connecticut for the following purposes:
1. To elect eight directors of the Company; and
2. To transact such other business as may properly come before the
meeting and any adjournment thereof.
Only stockholders of record at the close of business on July 22, 2005 are
entitled to notice of, and to vote at, the Annual Meeting of Stockholders. A
list of these stockholders will be available at the Company's headquarters,
96 Cummings Point Road, Stamford, Connecticut, before the Annual Meeting.
Your attention is directed to the Proxy Statement submitted with this
notice. WHETHER OR NOT YOU PLAN TO ATTEND THE MEETING IN PERSON, PLEASE DATE AND
SIGN THE ENCLOSED FORM(S) OF PROXY AND RETURN THEM PROMPTLY IN THE ENCLOSED
ENVELOPE. IF YOU OWN SHARES OF COMMON STOCK AND SERIES I PREFERRED STOCK, PLEASE
COMPLETE AND RETURN EACH OF THE FORMS OF PROXY. THE WHITE FORM SHOULD BE SIGNED
WITH RESPECT TO YOUR SHARES OF COMMON STOCK AND THE FORM WITH THE BLACK STRIPE
SHOULD BE SIGNED WITH RESPECT TO YOUR SHARES OF SERIES I PREFERRED STOCK. IF YOU
DO NOT OWN SHARES OF BOTH CLASSES OF STOCK, ONLY ONE FORM OF PROXY IS ENCLOSED,
AND YOU SHOULD SIGN, DATE AND RETURN SUCH PROXY. IN THE EVENT A STOCKHOLDER
DECIDES TO ATTEND THE MEETING, SUCH STOCKHOLDER MAY REVOKE SUCH PROXY AND VOTE
SUCH SHARES IN PERSON. No postage need be affixed to the enclosed envelope if
mailed in the United States.
By Order of the Board of Directors
H. William Smith
Secretary
July 27, 2005
THE ARISTOTLE CORPORATION
96 CUMMINGS POINT ROAD
STAMFORD, CT 06902
(203) 358-8000
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PROXY STATEMENT
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This Proxy Statement is furnished in connection with the solicitation by the
Board of Directors of The Aristotle Corporation (the 'Company') of proxies to be
used at the 2005 Annual Meeting of Stockholders to be held at the Hyatt Regency
Greenwich, 1800 E. Putnam Avenue, Old Greenwich, Connecticut on August 31, 2005
at 9:30 A.M., EDT. In addition to solicitation of proxies by mail, the
directors, officers and employees of the Company may solicit proxies personally,
by telephone, facsimile, or telegram. The expense of all such solicitation,
including the cost of preparing, printing and mailing this Proxy Statement, will
be borne by the Company. The Company will, upon request, reimburse brokers,
banks, or other persons for their reasonable out-of-pocket expenses in
forwarding proxy material to beneficial owners of the Company's shares. This
Proxy Statement and the accompanying proxy and the Company's Annual Report to
Stockholders, which contains financial statements for the fiscal year ended
December 31, 2004, will first be mailed to stockholders of the Company on or
about July 28, 2005.
If the enclosed form(s) of proxy are signed and returned, they will be voted
as directed by the stockholder. If no directions are given, proxies will be
voted FOR the election as directors of all of the nominees specified therein. A
proxy may be revoked at any time, insofar as the authority granted thereby has
not been exercised at the meeting, by filing with the Secretary of the Company a
written revocation or a duly executed proxy bearing a later date. Any
stockholder present at the meeting may vote personally on all matters brought
before the meeting and, in that event, such stockholder's proxy will not be used
at the meeting by holders of the proxy.
Only stockholders of record as of the close of business on July 22, 2005
will be entitled to vote at the meeting. On June 30, 2005, the Company had
outstanding and entitled to one vote per share, 17,157,829 shares of Common
Stock, par value $.01 per share ('Common Stock'). The Company also had
outstanding as of June 30, 2005, 1,096,622 shares of Series I Preferred Stock,
par value $.01 per share ('Series I Preferred Stock'), currently entitled to
one-half (.5) of a vote per share. Shares representing a majority of votes
entitled to be cast will constitute a quorum at the meeting. Abstentions and
broker non-votes are counted for purposes of determining the presence or absence
of a quorum for the transaction of business. Abstentions are counted in
tabulations of the votes cast on proposals presented to stockholders, whereas
broker non-votes are not counted for purposes of determining whether a proposal
has been approved.
If no contrary instruction is indicated, shares represented by properly
executed proxies in the accompanying form(s) of proxy will be voted by the
persons designated in the printed portion thereof FOR the election of the
nominees named below to serve as directors until the next annual meeting of
stockholders and until such director's successor shall be elected and shall
qualify, or until such director's earlier resignation or removal. Each director
must be elected by the affirmative vote of a plurality of the votes cast at the
meeting by the holders of shares of Common Stock and Series I Preferred Stock,
voting together as a single class, represented in person or by proxy.
Management does not know of any other matters to be brought before the
meeting at this time; however, if any other matters may properly be brought
before the meeting, the proxy holder shall vote in his discretion with respect
to the matter. In the event a stockholder specifies a different choice on the
proxy, such stockholder's shares will be voted or withheld in accordance with
the specifications so made. Should any nominee for director named herein become
unable or unwilling to accept nomination or election, it is intended that the
persons acting under proxy will vote for the election of such other person as
the Board of Directors of the Company may recommend unless the number of
directors is reduced by the Board of Directors. Each person named as a nominee
has consented to his nomination and the Company has no reason to believe that
any nominee will be unable or unwilling to serve if elected.
STOCK OWNED BY MANAGEMENT AND PRINCIPAL
STOCKHOLDERS OF THE COMPANY
The following table sets forth information as of June 30, 2005 regarding
beneficial ownership of the Company's Common Stock and Series I Preferred Stock
by:
each person who owns more than 5% of the outstanding voting shares of any
class of the Company's securities;
each individual who is a director of the Company;
the President and Chief Operating Officer of the Company (the Company's
principal executive officer), and the four other most highly compensated
executive officers of the Company (the 'Named Officers'); and
all Named Officers and directors of the Company as a group.
Unless otherwise indicated, all persons listed below have sole voting and
investment power with respect to their shares.
2
NUMBER OF SHARES
5% STOCKHOLDERS, DIRECTORS OF VOTING STOCK VOTING
AND EXECUTIVE OFFICERS BENEFICIALLY OWNED POWER(1)
---------------------- ------------------ --------
5% Stockholders:
Geneve Corporation(2)................................... 15,984,971 90.3%
John J. Crawford........................................ 208,414(3) 1.0%
Directors (excluding Mr. Crawford):
John Lahey.............................................. 12,296(4) *
Steven B. Lapin......................................... 427,940(5) 2.3%
Donald T. Netter........................................ 50,450(6) *
Edward Netter........................................... 15,984,971(7) 90.3%
Sharon M. Oster......................................... 119,846(8) *
James G. Tatum.......................................... 20,429(9) *
Roy T.K. Thung.......................................... 0(10) *
Named Officers (excluding Mr. Lapin):
Dean T. Johnson......................................... 50,217(11) *
W. Phillip Niemeyer..................................... 111,425(12) *
Brian R. Schlier........................................ 12,500(13) *
H. William Smith........................................ 52,000(14) *
All Named Officers and Directors as a Group (12 persons).... 17,049,498 92.4%
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* Less than 1%
(1) This column represents voting power rather than percentage of equity
interest as each share of Common Stock is entitled to one vote while each
share of Series I Preferred Stock is currently entitled to one-half (.5) of
a vote per share.
(2) Geneve Corporation ('Geneve') is a private diversified financial holding
company located at 96 Cummings Point Road, Stamford, Connecticut. Geneve is
an affiliate and the majority stockholder of the Company. Director Edward
Netter is the Chairman and Chief Executive Officer of Geneve, director
Steven B. Lapin is the President and Chief Operating Officer of Geneve,
director Roy T.K. Thung is the Executive Vice President of Geneve, director
Donald T. Netter is a Senior Vice President of Geneve, Brian R. Schlier is
the Senior Vice President -- Taxation of Geneve and H. William Smith is the
Vice President -- Legal and Secretary of Geneve.
(3) Consists of 111,745 shares of Common Stock, 69,003 shares of Series I
Preferred Stock, and 27,666 shares of Common Stock subject to options
granted to Mr. Crawford which are exercisable within 60 days after
June 30, 2005. Mr. Crawford's address is 27 Elm Street, New Haven,
Connecticut. Mr. Crawford is the beneficial owner of .7% of the outstanding
shares of Common Stock and 6.3% of the outstanding shares of Series I
Preferred Stock. Mr. Crawford is a director of the Company.
(4) Consists of 5,898 shares of Common Stock, 4,898 shares of Series I
Preferred Stock, and 1,500 shares of Common Stock subject to options
granted to Mr. Lahey which are exercisable within 60 days after June 30,
2005.
(5) Consists of 20,665 shares of Common Stock, 32,275 shares of Series I
Preferred Stock, and 375,000 shares of Common Stock subject to options
granted to Mr. Lapin which are exercisable within 60 days after June 30,
2005. Does not include any shares beneficially owned by Geneve.
(footnotes continued on next page)
3
(footnotes continued from previous page)
(6) Consists of 50,450 shares of Series I Preferred Stock. Does not include any
shares beneficially owned by Geneve.
(7) Consists of 15,984,971 shares of Common Stock beneficially owned by Geneve.
Mr. Netter disclaims beneficial ownership of these shares.
(8) Consists of 18,273 shares of Common Stock and 18,273 shares of Series I
Preferred Stock held by Ms. Oster directly, 39,100 shares of Common Stock
and 35,700 shares of Series I Preferred Stock held by her husband, and
5,000 shares of Common Stock and 3,500 shares of Series I Preferred Stock
subject to options granted to Ms. Oster which are exercisable within
60 days after June 30, 2005. Ms. Oster disclaims beneficial ownership of
the shares held by her husband.
(9) Consists of 11,929 shares of Common Stock and 3,000 shares of Series I
Preferred Stock held by Mr. Tatum directly, 2,000 shares of Common Stock
held by his wife, and 3,500 shares of Common Stock subject to options
granted to Mr. Tatum which are exercisable within 60 days after June 30,
2005. Mr. Tatum disclaims beneficial ownership of the shares held by his
wife.
(10) Does not include any shares beneficially owned by Geneve.
(11) Consists of 2,300 shares of Series I Preferred Stock, and 47,917 shares of
Common Stock subject to options granted to Mr. Johnson which are
exercisable within 60 days after June 30, 2005.
(12) Consists of 11,425 shares of Series I Preferred Stock, and 100,000 shares
of Common Stock subject to options granted to Mr. Niemeyer which are
exercisable within 60 days after June 30, 2005.
(13) Consists of 12,500 shares of Common Stock subject to options granted to Mr.
Schlier which are exercisable within 60 days after June 30, 2005. Does not
include any shares beneficially owned by Geneve.
(14) Consists of 2,000 shares of Common Stock, and 50,000 shares of Common Stock
subject to options granted to Mr. Smith which are exercisable within
60 days after June 30, 2005. Does not include any shares beneficially owned
by Geneve.
SECTION 16(A) BENEFICIAL OWNERSHIP REPORTING COMPLIANCE
Section 16(a) of the Securities Exchange Act of 1934 (the 'Exchange Act')
requires the Company's executive officers and directors, and persons who
beneficially own more than ten percent (10%) of any class of equity securities
of the Company registered pursuant to Section 12 of the Exchange Act, to file
with the Securities and Exchange Commission ('SEC') and any national securities
exchange on which these securities are registered, initial reports of beneficial
ownership and reports of changes in beneficial ownership of equity securities of
the Company. Executive officers, directors and greater than ten percent (10%)
beneficial owners are required by the Exchange Act to furnish the Company with
copies of all Section 16(a) forms they file. To the Company's knowledge, based
solely upon a review of the copies of such reports furnished to the Company, all
Section 16(a) filing requirements applicable to its executive officers,
directors and greater than ten percent (10%) beneficial owners were complied
with for the fiscal year ended December 31, 2004 except that Mr. Lapin filed a
Form 4 reporting one transaction one day later than required by the Exchange
Act.
4
PROPOSAL 1
NOMINEES FOR ELECTION AS DIRECTORS
Eight directors will be elected at the meeting, each to hold office until
the next annual meeting of stockholders and until such director's successor
shall be elected and shall qualify, or until such director's earlier resignation
or removal.
It is intended that shares represented by proxies will be voted for the
election of the nominees named below. If at the time of the meeting any of the
nominees should be unwilling or unable to serve, the discretionary authority
provided in the proxy will be exercised to vote for a substitute or substitutes,
as the Board of Directors recommends. Each person named below has consented to
his nomination and has advised the Company that he intends to serve the entire
term if elected.
The persons named below are nominees for election as directors. Current
directors John J. Crawford and Sharon M. Oster are not nominees for reelection.
DIRECTOR
OF THE
COMPANY
NAME AGE SINCE POSITIONS HELD WITH THE COMPANY
---- --- ----- -------------------------------
Ira A. Harkavy................ 56 -- Nominee for Director
John Lahey.................... 58 1999 Director
Steven B. Lapin............... 59 1998 Director, President and Chief Operating Officer
Donald T. Netter.............. 43 2002 Director
Edward Netter................. 72 1998 Director
James G. Tatum................ 63 2002 Director
Roy T.K. Thung................ 61 2002 Director
John A. Whritner.............. 70 -- Nominee for Director
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IRA A. HARKAVY has been an Associate Vice President at the University of
Pennsylvania since 1996, and Director, Center for Community Partnerships ('CCP')
at the University of Pennsylvania since CCP's inception in 1992. CCP and its
school and community partners have created university assisted community schools
that educate children, their families and the broader community through
school-day curriculum based problem solving learning, and after school and other
programs that advance learning, development and an array of other needs and
interests of the wider community.
JOHN LAHEY has been the President of Quinnipiac University, a private
university located in Hamden, Connecticut, for more than the past eighteen
years. Mr. Lahey serves on the Board of Trustees of Yale-New Haven Hospital and
on the Board of Directors of UIL Holdings Corporation and The United
Illuminating Company, publicly-held utility companies. Mr. Lahey also serves as
a director of the New York City St. Patrick's Day Parade, Inc. and the American
Bar Association's Council of the Section of Legal Education and Admissions to
the Bar.
STEVEN B. LAPIN has served as President and Chief Operating Officer of the
Company since June 2002. Mr. Lapin has also been the President, Chief Operating
Officer and a director of Geneve for more than the past five years. Mr. Lapin is
Vice Chairman and a director of Independence Holding Company ('IHC'), a
publicly-held holding company engaged principally in the life and health
insurance business.
DONALD T. NETTER, for more than the past five years, has served as Chairman,
Chief Executive Officer and Senior Managing Director of the managing member of
the general partner of the Dolphin
5
Limited Partnerships, investment limited partnerships. Mr. Netter has served as
a Senior Vice President of Geneve for more than the past five years. Donald T.
Netter is the son of Edward Netter.
EDWARD NETTER has been Chairman, Chief Executive Officer and a director of
Geneve for more than the past five years. Mr. Netter is Chairman and a director
of IHC, and a director of American Independence Corp. ('AMIC'), a holding
company which, through its subsidiaries, is in the insurance and reinsurance
business. Edward Netter is the father of Donald T. Netter.
JAMES G. TATUM, C.F.A. has served as a registered investment advisor for
more than the past five years in Birmingham, Alabama, managing funds for
individual, corporate and trust clients. Mr. Tatum has been a Chartered
Financial Analyst for more than twenty-five years. Mr. Tatum is a director of
IHC.
ROY T.K. THUNG has served as Chief Executive Officer and President of IHC
since January 2000. From July 1999 through January 2000, he served as President
of IHC. For more than five years prior to July 1999, Mr. Thung served as
Executive Vice President and Chief Financial Officer of IHC. He has served as
the Executive Vice President of Geneve for more than the past five years. Mr.
Thung has served as a director of AMIC since July 2002 and as the Chief
Executive Officer and President of AMIC since November 2002.
JOHN A. WHRITNER has been a Senior Associate with Hazard, Young, Attea &
Associates, a school superintendent search firm, since 1997. Prior thereto, Mr.
Whritner spent more than forty years in the education field including as a
teacher and school administrator, and as the Superintendent of Schools in East
Lyme, Connecticut, Grosse Pointe, Michigan, and Greenwich, Connecticut. Mr.
Whritner was a director of Nasco International, Inc. ('Nasco') from April 1998
until the merger (the 'Merger') of the Company and Nasco on June 17, 2002.
BOARD OF DIRECTORS AND COMMITTEES AND SELECTION PROCESS
The Company's Board of Directors held eight meetings in 2004. Each director
attended at least 75% of the aggregate of: (i) the total number of meetings of
the Board of Directors held during the period in which such person was a
director; and (ii) the total number of meetings held by all committees of the
Board of Directors on which such person served.
Directors are elected annually and serve until their successors are duly
elected and qualified, or until their earlier resignation or removal. Officers
serve at the discretion of the Board of Directors.
The Company qualifies as a 'controlled company' as defined in
Rule 4350(c)(5) of the NASDAQ Marketplace Rules because more than 50% of the
Company's voting power is held by Geneve. Please see 'Stock Owned by Management
and Principal Stockholders of the Company' above. Therefore, the Company is not
subject to the requirements of Rule 4350(c) that would otherwise require the
Company to have (i) a majority of independent directors on the Board of
Directors; (ii) compensation of the Company's executive officers determined by a
majority of the independent directors or a compensation committee composed
solely of independent directors; (iii) director nominees selected, or
recommended for the Board of Director's selection, either by a majority of the
independent directors or a nominating committee composed solely of independent
directors; and (iv) adopted a formal written charter or board resolution
addressing the nominations process and related matters.
In light of Geneve's voting power, the Board of Directors has determined
that the Board of Directors, rather than a nominating committee, is the most
appropriate body for identifying director candidates and selecting nominees to
be presented at the annual meeting. The Board of Directors seeks candidates who
will bring outstanding business experience that will benefit all of the
stockholders of the
6
Company. The Board of Directors has further determined that a policy with
respect to consideration of candidates recommended by security holders would not
be appropriate.
Geneve, the Company's majority stockholder, recommended Messrs. Harkavy and
Whritner to the Company's Board of Directors for consideration as nominees for
election as directors of the Company at the annual meeting.
MEETINGS AND COMMITTEES OF THE BOARD OF DIRECTORS
The Board of Directors has an Executive Committee, an Audit Committee, an
Investment Committee and a Compensation Committee. The Executive Committee and
the Audit Committee were established in June 2002, immediately following the
Merger. The Compensation Committee was established in January 2004 and the
Investment Committee was established in June 2004. The Executive Committee is
comprised of one independent director, one non-employee director and one
employee director. The Audit Committee is comprised exclusively of independent
directors. The Compensation Committee and the Investment Committee are each
comprised of two independent directors and one non-employee director. The
Company does not have a standing nominating committee or a nominating committee
charter.
EXECUTIVE COMMITTEE. The Executive Committee, which has all powers and
authority of the Board of Directors with respect to the management of the
business and affairs of the Company, currently consists of Messrs. Lapin, Edward
Netter and Tatum. The Executive Committee did not hold any meetings or take any
action by written consent in 2004.
COMPENSATION COMMITTEE. The principal functions of the Compensation
Committee are to: (i) develop corporate goals and objectives relevant to the
compensation of the Company's President and Chief Operating Officer, evaluate
the President and Chief Operating Officer's performance in light of such goals
and objectives, and exercise sole authority to determine the President and Chief
Operating Officer's compensation based upon such evaluation; (ii) make
recommendations to the Board of Directors with respect to the compensation of
the Company's other executive officers; and (iii) administer the Company's 2002
Employee, Director and Consultant Stock Plan (the '2002 Stock Plan').
Ms. Oster and Messrs. Crawford and Tatum are the current members of the
Compensation Committee. Mr. Crawford is the Company's former Chief Executive
Officer. A copy of the Compensation Committee Charter adopted by the Board of
Directors in March 2004 was attached to the proxy statement issued in connection
with the 2004 Annual Meeting of Stockholders. The Compensation Committee held
two meetings in 2004. The entire Board of Directors made decisions regarding the
compensation of the Company's executive officers for 2003 and 2002 and with
respect to the administration of the 2002 Stock Plan.
INVESTMENT COMMITTEE. The principal function of the Investment Committee is
to consider and make recommendations to the Board of Directors regarding
investment opportunities and strategies for the Company with respect to the
utilization of excess cash generated by the Company's normal business
operations. Messrs. Lahey, Edward Netter and Tatum are the current members of
the Investment Committee, which did not hold any meetings or take any actions by
written consent in 2004.
AUDIT COMMITTEE. The Audit Committee operates under an amended and restated
Audit Committee Charter adopted by the Board of Directors in March 2004, which
was attached to the proxy statement issued in connection with the 2004 Annual
Meeting of Stockholders. The principal functions
7
of the Audit Committee are to: (i) select and engage the Company's independent
registered public accounting firm ('independent auditors'); (ii) review and
approve management's plan for engaging the Company's independent auditors during
the year to perform non-audit services and consider what effect these services
will have on the independence of the Company's independent auditors;
(iii) review the Company's annual financial statements and other financial
reports which require approval by the Board of Directors; (iv) oversee the
integrity of the Company's financial statements, the Company's systems of
disclosure controls and internal controls and the Company's compliance with
legal and regulatory requirements; (v) review the scope of the Company's
independent auditors' audit plans and the results of their audit; and
(vi) evaluate the performance of the Company's internal audit function and
independent auditors.
The Audit Committee met five times during 2004. The current members of the
Audit Committee are Ms. Oster and Messrs. Lahey and Tatum. Each of these
individuals meets the independence requirements of NASDAQ and applicable SEC
rules and regulations. The Audit Committee and the Board of Directors have
determined that each member of the Company's Audit Committee is financially
literate and that Mr. Tatum qualifies as an 'audit committee financial expert'
as defined by applicable SEC rules.
COMPENSATION OF DIRECTORS
Each of the three independent members of the Board of Directors, Ms. Oster
and Messrs. Lahey and Tatum, as well as Mr. Crawford, the Company's former Chief
Executive Officer, receives an annual retainer of $10,000. The Chairperson of
the Audit Committee, Ms. Oster, receives an additional annual retainer of
$5,000. In addition to the retainer, the members of the Board of Directors
receive $500 for each board or committee meeting attended.
Non-employee directors are eligible to receive grants of stock options under
the 2002 Stock Plan. The 2002 Stock Plan provides for the automatic grant of
non-qualified options to non-employee directors. Each non-employee director,
upon first being elected to the Board of Directors, receives an option to
purchase 2,500 shares of Common Stock, which will vest one year after the date
of the grant of the option, assuming uninterrupted service on the Board of
Directors. Additionally, the 2002 Stock Plan provides for a grant to each
non-employee director on the date of his or her reelection (provided that the
director has served as a director since his or her initial election) of an
option to purchase 500 shares of Common Stock, which will vest one year after
the date of the grant of the option, assuming uninterrupted service on the Board
of Directors.
Messrs. Donald T. Netter, Edward Netter and Thung, due to their positions
with Geneve, have elected to waive their rights to compensation as directors of
the Company.
COMPENSATION COMMITTEE INTERLOCKS AND INSIDER PARTICIPATION
No member of the Compensation Committee, other than Mr. Crawford, has ever
been an officer or employee of the Company. Mr. Crawford retired as an officer
of the Company in December 2002. During 2004, (i) no executive officer of the
Company served as a member of a board of directors or compensation committee of
any entity that has one or more executive officers serving as a member of the
Company's Compensation Committee; and (ii) no executive officer of the Company
served as a member of a compensation committee of any entity that has one or
more executive officers serving as a member of the Company's Board of Directors.
8
OTHER INFORMATION ABOUT THE BOARD OF DIRECTORS
The Company provides an informal process for stockholders to send
communications to the Board of Directors. Stockholders who wish to contact the
Board of Directors or any of its members may do so by writing to The Aristotle
Corporation, Attn: Board of Directors, 96 Cummings Point Road, Stamford,
Connecticut 06902. At the direction of the Board of Directors, all mail received
will be opened and screened for security purposes. Correspondence directed to an
individual member of the Board of Directors is referred to that member.
Correspondence not directed to a particular member of the Board of Directors is
referred to the Company's General Counsel, Mr. Smith.
All of the members of the Board of Directors are encouraged to attend the
Company's annual meeting of stockholders. All of the Company's directors were in
attendance at the Company's 2004 Annual Meeting of Stockholders.
THE BOARD OF DIRECTORS UNANIMOUSLY RECOMMENDS THAT YOU VOTE 'FOR' EACH OF
THE NOMINEES FOR ELECTION TO THE BOARD OF DIRECTORS.
9
EXECUTIVE OFFICERS
The following table sets forth the names of the Company's executive
officers, who are not directors, their ages at June 30, 2005 and their positions
currently held with the Company. The executive officers serve at the discretion
of the Board of Directors.
POSITIONS HELD
NAME AGE WITH THE COMPANY
---- --- ----------------
W. Phillip Niemeyer....................... 59 Vice President-Production Coordination,
and President-Nasco Division
Dean T. Johnson........................... 49 Vice President and Chief Financial
Officer, and Chief Financial Officer-Nasco
Division
Brian R. Schlier.......................... 50 Vice President-Taxation
H. William Smith.......................... 42 Vice President, General Counsel and
Secretary
W. PHILLIP NIEMEYER has been the President-Nasco Division of the Company
since September 2002. Mr. Niemeyer has been the Vice President-Production
Coordination of the Company since the Merger. Mr. Niemeyer has held various
positions with Nasco for over 30 years.
DEAN T. JOHNSON has been a Vice President of the Company since June 2003 and
the Chief Financial Officer of the Company since October 2002. For more than the
five years prior to the Merger, Mr. Johnson was Chief Financial Officer of
Nasco.
BRIAN R. SCHLIER has been the Vice President-Taxation of the Company since
January 2003. Mr. Schlier has been the Senior Vice President-Taxation of Geneve
since March 2005, prior to which for more than the past five years he was the
Vice President-Taxation of Geneve. Mr. Schlier has been the Vice
President-Taxation of IHC for more than the past five years, and the Vice
President-Taxation of AMIC since November 2002.
H. WILLIAM SMITH has been the Vice President, General Counsel and Secretary
of the Company since July 2002. Mr. Smith has been the Vice President-Legal and
Secretary of Geneve since July 2002. For more than five years prior to joining
the Company, Mr. Smith practiced law with the private law firms Paul, Hastings,
Janofsky & Walker LLP and Pillsbury Winthrop Shaw Pitman LLP.
10
EXECUTIVE COMPENSATION
The following table sets forth information for the periods indicated
regarding cash and other compensation paid or awarded to the Company's President
and Chief Operating Officer and the Named Officers whose salary and bonus
exceeded $100,000 during the last three fiscal years ended December 31, 2004,
2003 and 2002:
SUMMARY COMPENSATION TABLE
LONG-TERM
ANNUAL COMPENSATION COMPENSATION
------------------------- ----------------------
SECURITIES
UNDERLYING LTIP ALL OTHER
SALARY BONUS OPTIONS/ PAYOUTS COMPENSATION
NAME AND PRINCIPAL POSITION YEAR ($) ($) SARS(#) ($) ($)
--------------------------- ---- --- --- ------- --- ---
Steven B. Lapin(1)...................... 2004 235,000 70,000 -- -- --
President and Chief Operating Officer 2003 235,000 50,000 150,000 -- --
2002 109,158 -- 250,000 -- --
W. Phillip Niemeyer(2).................. 2004 196,900 60,000 -- -- 954(5)
Vice President -- Production 2003 193,000 45,000 -- -- 955(5)
Coordination, and President -- 2002 171,781 45,000 100,000 -- 960(5)
Nasco Division
Dean T. Johnson(3)...................... 2004 137,600 40,000 -- -- 895(6)
Vice President and 2003 135,000 25,000 -- -- 887(6)
Chief Financial Officer, and 2002 107,500 25,000 50,000 -- 800(6)
Chief Financial Officer -- Nasco
Division
H. William Smith(4)..................... 2004 130,000 40,000 -- -- --
Vice President, General Counsel 2003 130,000 25,000 -- -- --
and Secretary 2002 56,250 16,875 50,000 -- --
---------
(1) Following the retirement of Mr. Crawford on December 31, 2002, the Company
did not appoint a new Chief Executive Officer. Since January 1, 2003, Mr.
Lapin has served as the Company's principal executive officer. Mr. Lapin was
appointed President and Chief Operating Officer of the Company in June 2002.
Amounts include payments and option grants made by the Company for the
entire 2002 fiscal year.
(2) Mr. Niemeyer was appointed Vice President-Production Coordination of the
Company in June 2002 and President-Nasco Division in September 2002. Amounts
include payments made by the Company and Nasco, and option grants made by
the Company, for the entire 2002 fiscal year.
(3) Mr. Johnson has been a Vice President since June 2003 and was appointed
Chief Financial Officer of the Company in October 2002. Amounts include
payments made by the Company and Nasco, and option grants made by the
Company, for the entire 2002 fiscal year.
(4) Mr. Smith was appointed Vice President, General Counsel and Secretary of the
Company in July 2002.
(footnotes continued on next page)
11
(footnotes continued from previous page)
(5) Other compensation for Mr. Niemeyer is comprised of the following: in 2004,
$954 paid for term life, AD&D and disability insurance; in 2003, $955 paid
for term life, AD&D and disability insurance; and in 2002, $960 paid for
term life, AD&D and disability insurance.
(6) Other compensation for Mr. Johnson is comprised of the following: in 2004,
$895 paid for term life, AD&D and disability insurance; in 2003, $887 paid
for term life, AD&D and disability insurance; and in 2002, $800 paid for
term life, AD&D and disability insurance.
The Company has not entered into employment agreements with any of the
Company's executive officers.
-------------------
OPTION/SAR GRANTS IN LAST FISCAL YEAR
The Company did not grant any stock options or stock appreciation rights to
the Company's President and Chief Operating Officer or the Named Officers during
the fiscal year ended December 31, 2004.
AGGREGATED OPTION/SAR EXERCISES IN LAST FISCAL YEAR AND FISCAL YEAR-END
OPTION/SAR VALUES
The following table sets forth information regarding the aggregate number of
shares underlying options exercised in 2004 and the value at December 31, 2004
of options, whether or not exercisable, held by the Company's President and
Chief Operating Officer and the Named Officers:
VALUE OF
NUMBER OF SECURITIES UNEXERCISED
UNDERLYING UNEXERCISED IN-THE-MONEY
OPTIONS/SARS AT OPTIONS/SARS AT
SHARES VALUE DECEMBER 31, 2004(#) DECEMBER 31, 2004($)(2)
ACQUIRED ON REALIZED ------------------------------ ------------------------------
EXERCISE(#) ($)(1) EXERCISABLE UNEXERCISABLE EXERCISABLE UNEXERCISABLE
----------- ------ ----------- ------------- ----------- -------------
Steven B. Lapin........ -- -- 295,833 104,167 1,103,415 352,085
W. Phillip Niemeyer.... -- -- 83,333 16,667 339,165 67,835
Dean T. Johnson........ -- -- 37,500 12,500 145,958 47,542
Brian R. Schlier....... -- -- 8,750 6,250 25,550 18,250
H. William Smith....... -- -- 37,500 12,500 139,875 46,625
---------
(1) 'Value Realized' is the difference between the exercise price and the market
price on the exercise date, multiplied by the number of options or SARs
exercised, as the case may be. 'Value Realized' numbers do not necessarily
reflect what the holder might receive if such holder sells the shares
acquired upon the option exercise, since the market price of the shares at
the time of sale may be higher or lower than the price on the exercise date
of the option.
(2) The value of both exercisable and unexercisable 'in-the-money' options at
December 31, 2004 is the difference between (a) the closing price of the
Common Stock on December 31, 2004, as reported by NASDAQ ($7.02) and
(b) the per share option exercise price, multiplied by the number of shares
of Common Stock underlying the options.
12
EQUITY COMPENSATION PLAN INFORMATION
The following table summarizes the Company's Equity Compensation Plans as of
December 31, 2004:
(A) (B) (C)
NUMBER OF NUMBER OF SECURITIES
SECURITIES TO WEIGHTED REMAINING AVAILABLE
BE ISSUED UPON AVERAGE EXERCISE FOR FUTURE ISSUANCE
EXERCISE OF PRICE OF UNDER EQUITY
OUTSTANDING OUTSTANDING COMPENSATION PLANS
OPTIONS, OPTIONS, (EXCLUDING SECURITIES
WARRANTS AND WARRANTS AND REFLECTED IN COLUMN
PLAN CATEGORY RIGHTS(#) RIGHT($) (A))(#)
------------- --------- -------- -------
Equity Compensation Plans Approved by
Security Holders
1997 Stock Plan.......................... 12,000(1) 5.67 --
2002 Stock Plan.......................... 899,742(2) 3.50 529,066
Equity Compensation Plans Not Approved by
Security Holders........................... -- -- --
------- ----- -------
911,742 3.52 529,066
------- ----- -------
------- ----- -------
---------
(1) Includes 6,000 shares of the Company's Common Stock and 6,000 shares of the
Company's Series I Preferred Stock to be issued upon the exercise of
outstanding options granted pursuant to the Company's 1997 Employee and
Director Stock Plan (the '1997 Stock Plan'). Options granted under the 1997
Plan are exercisable for one share of Common Stock and one share of Series I
Preferred Stock. The Company does not currently intend to grant any
additional options under the 1997 Stock Plan.
(2) Options granted under the 2002 Stock Plan are exercisable for one share of
the Company's Common Stock.
DEFINED BENEFIT PENSION PLAN
The Company has a noncontributory defined benefit pension plan (the 'Pension
Plan') covering a significant number of its employees, including certain Named
Officers. The Pension Plan's benefits are computed based on years of service and
average compensation. Average compensation is computed by averaging the
employee's highest five consecutive annual salaries, up to a maximum of
$180,000, in the ten years immediately before retirement. Compensation under the
Pension Plan is defined as base salary including overtime, bonuses and
commissions. As of December 31, 2004, the credited years of service for Messrs.
Niemeyer and Johnson were 33 years and 11 years, respectively. The remaining
Named Officers are not eligible to participate in the Pension Plan. The Pension
Plan benefits for single and married participants are computed as a 10-year
certain and life annuity and joint-and-survivor annuity, respectively. Benefits
payable under the Pension Plan are not reduced for Social Security or other
offsets.
13
The following table sets forth information regarding annual retirement
benefits based on years of service that would be payable at normal retirement
(age 65) on December 31, 2004:
YEARS OF SERVICE
--------------------------------------------------------------
FINAL AVERAGE PAY($) 10 15 20 25 30 35 40
-------------------- -- -- -- -- -- -- --
100,000........................... 16,000 24,000 32,000 40,000 48,000 56,000 62,000
120,000........................... 19,000 29,000 39,000 49,000 58,000 68,000 74,000
140,000........................... 23,000 34,000 46,000 57,000 68,000 80,000 87,000
160,000........................... 26,000 39,000 52,000 65,000 78,000 91,000 100,000
180,000........................... 29,000 44,000 59,000 73,000 88,000 103,000 112,000
COMPENSATION COMMITTEE'S REPORT ON EXECUTIVE COMPENSATION
GENERAL
The purpose of the Company's compensation policy is to offer compensation
packages to attract, retain and motivate the Company's executive officers over
the long term. The primary components of the Company's executive compensation
program are base salary and bonuses, and long-term incentive compensation in the
form of stock options and other awards offered under the 2002 Stock Plan. The
Compensation Committee did not retain a compensation consultant.
BASE SALARIES AND BONUSES
Annual base salaries paid to the Company's executive officers have
historically been at levels comparable to those generally paid to executive
officers with comparable experience and responsibilities in industries similar
to that of the Company or other similarly-sized companies. The Compensation
Committee makes compensation adjustments based on a review of each individual's
performance, the individual's success in achieving Company and personal goals
and planned changes in responsibilities. The Compensation Committee also
considers an individual's extraordinary efforts resulting in tangible increases
in corporate, division or department success in recommending increases in base
salary and annual bonuses.
INCENTIVE COMPENSATION
The Compensation Committee believes that executive officers who are able to
contribute to the Company's long-term success and help build incremental
stockholder value should have a stake in that future success and value. This
stake focuses the executive officers' attention on managing the Company as
owners with equity positions in the Company and aligns their interests with the
long-term interests of the Company's stockholders. Stock options therefore
represent an important and significant component of the Company's compensation
program for executive officers.
Standard awards under the 2002 Stock Plan are based on a review of the
individual employee's performance, years of service, position with the Company
and long-term potential contribution to the Company. The number of options to be
granted at any one time is based upon consideration of the foregoing factors,
the employee's level of responsibility and the number of options previously
granted to the employee. The Company does not assign specific weights to these
factors, although the employee's position and a subjective evaluation of the
employee's performance are considered most important. To
14
encourage executive officers to remain in the Company's employ, options granted
under the 2002 Stock Plan generally vest on a quarterly basis over a period of
three years and have exercise prices not less than the fair market value of the
Company's Common Stock on the date of the grant.
COMPENSATION OF PRESIDENT AND CHIEF OPERATING OFFICER
Compensation paid to Mr. Lapin for 2004 was primarily based on the
achievement of individual performance criteria established by the Compensation
Committee including merging the Company's defined benefit pension plans,
identifying and acquiring attractive complementary businesses and matters
relating to the Company's revenues and earnings.
Respectfully submitted,
The Aristotle Corporation Compensation
Committee
John J. Crawford
Sharon M. Oster
James G. Tatum
The report of the Compensation Committee and the information contained therein
shall not be deemed to be 'solicited material' or 'filed' or incorporated by
reference in any filing the Company makes under the Securities Act of 1933 (the
'Securities Act') or under the Exchange Act, irrespective of any general
statement incorporating by reference this Proxy Statement into any such filing,
or subject to the liabilities of Section 18 of the Exchange Act, except to the
extent that the Company specifically incorporates this information by reference
into a document the Company files under the Securities Act or the Exchange Act.
REPORT OF THE AUDIT COMMITTEE
The role of the Audit Committee is to assist the Company's Board of
Directors in its oversight of the Company's financial reporting process, as is
more fully described in its charter, which the Board of Directors has adopted
and which is attached to the proxy statement issued in connection with the 2004
Annual Meeting of Stockholders. The Company's management is responsible for its
financial reporting process, including its system of internal controls, and for
the preparation and presentation of its consolidated financial statements in
accordance with U.S. generally accepted accounting principles ('GAAP'). The
Company's independent auditors are responsible for auditing those financial
statements and expressing an opinion as to their conformity with GAAP. The Audit
Committee's responsibility is to monitor and review these processes. It is not
the Audit Committee's duty or responsibility to conduct auditing or accounting
reviews or procedures. The members of the Audit Committee are not and may not be
employees of the Company. Therefore, the Audit Committee has relied without
independent verification on representations by the Company's management that its
financial statements have been prepared with integrity and objectivity and in
conformity with GAAP. The Audit Committee has also relied on representations of
the Company's independent auditors included in their report on its financial
statements. The Audit Committee's oversight does not provide the Audit Committee
with an independent basis to determine that management has maintained
appropriate accounting and financial reporting principles or policies or
appropriate internal controls and procedures designed to assure
15
compliance with accounting standards and applicable laws and regulations.
Furthermore, the Audit Committee's considerations and discussions with the
Company's management and independent auditors do not assure that the Company's
financial statements are presented in accordance with GAAP, that the audit of
the Company's financial statements has been carried out in accordance with
standards of the Public Company Accounting Oversight Board or that the Company's
independent auditors are in fact 'independent.'
In the performance of its oversight function, the Audit Committee reviewed
and discussed with the Company's management its audited financial statements for
the fiscal year ended December 31, 2004. The Audit Committee also discussed
these financial statements with the Company's independent auditors, KPMG LLP
('KPMG'). The Audit Committee's discussions with the independent auditors
included the matters required to be discussed by Statement of Auditing Standards
No. 61, 'Communication with Audit Committees,' as currently in effect. The Audit
Committee also discussed with them their independence and any relationship that
might affect their objectivity or independence. In connection with these
discussions, the Audit Committee received and reviewed the written disclosures
from KPMG required by Independence Standards Board Standard No. 1, 'Independence
Discussions with Audit Committees.' Finally, the Audit Committee considered
whether the non-audit services provided by the independent auditors are
compatible with maintaining their independence.
Based on the reviews and discussions referred to above, the Audit Committee
is not aware of any relationship between the independent auditors and the
Company that affects the objectivity or independence of the independent
auditors. Based on these discussions and the Audit Committee's review discussed
above, and subject to the limitations on the role and responsibilities of the
Audit Committee referred to above and in the Audit Committee Charter, the Audit
Committee recommended to the Company's Board of Directors that its audited
financial statements for fiscal 2004 be included in the Company's Annual Report
on Form 10-K for the fiscal year ended December 31, 2004 for filing with the
SEC.
Respectfully submitted,
The Aristotle Corporation Audit
Committee
Sharon M. Oster (Chairperson)
John Lahey
James G. Tatum
The report of the Audit Committee and the information contained therein
shall not be deemed to be 'solicited material' or 'filed' or incorporated by
reference in any filing the Company makes under the Securities Act or under the
Exchange Act, irrespective of any general statement incorporating by reference
this Proxy Statement into any such filing, or subject to the liabilities of
Section 18 of the Exchange Act, except to the extent that the Company
specifically incorporates this information by reference into a document the
Company files under the Securities Act or the Exchange Act.
PERFORMANCE GRAPH
The following graph shows the changes in value over the five years ending
December 31, 2004 of an assumed investment of $100 in: (i) the Common Stock;
(ii) the stocks that comprise The NASDAQ Stock Market (U.S.) Index; and
(iii) two peer group indexes constructed by the Company. The old peer group is
comprised of: Nobel Learning Communities, Inc. (NLCI), Plato Learning, Inc.
(TUTR),
16
Renaissance Learning, Inc. (RLRN), Scholastic Corporation (SCHL) and School
Specialty, Inc. (SCHS). The new peer group is comprised of: Plato Learning,
Inc., Renaissance Learning, Inc., Scholastic Corporation, School Specialty, Inc.
and Excelligence Learning Corporation (LRNS). Excelligence Learning Corporation
first commenced public trading of its capital stock in May 2001. The Company
believes that the new peer group index more accurately reflects companies which
are in the same line of business as the Company. The value for assumed
investments depicted on the graph has been calculated assuming that cash
dividends are reinvested. The Series I Preferred Stock dividend distributed on
the date of the Merger is treated as a cash dividend and as reinvested. The
stock price performance shown in the graph below should not be considered
indicative of future stock price performance.
COMPARISON OF FIVE YEAR CUMULATIVE TOTAL RETURN
AMONG THE COMPANY, THE NASDAQ STOCK MARKET (U.S.) INDEX
AND THE PEER GROUPS
[GRAPHIC]
NASDAQ
STOCK MARKET OLD PEER NEW PEER
(U.S. INDEX) COMPANY GROUP GROUP
------------ ------- -------- --------
1999........... 100 100 100 100
2000........... 60 160 178 180
2001........... 45 193 189 192
2002........... 35 239 164 166
2003........... 26 352 128 131
2004........... 38 421 151 156
2005........... 41 568 153 155
* June 17, 2002 (date of Merger)
RELATED PARTY TRANSACTIONS
The Company and Geneve operate under cost-sharing arrangements pursuant to
which certain administrative items, such as certain executive officer
compensation and benefits, are allocated between the companies. During fiscal
2004, the Company accrued and paid to Geneve approximately $843,000 under such
arrangements, and accrued approximately an additional $217,500 for the first
quarter of fiscal 2005. Included in these amounts is consideration paid by the
Company to Geneve for the Company's use of office space at Geneve's corporate
headquarters. The foregoing is subject to approval of the Audit Committee of the
Board of Directors at least annually, and management of the Company believes
that the terms thereof are no less favorable than could be obtained by the
Company from
17
unrelated parties on an arm's length basis. In addition, certain directors,
officers and/or employees of the Company or its subsidiaries, who are also
directors, officers and/or employees of Geneve, received compensation and
benefits from Geneve for services rendered thereto since January 1, 2004.
The Company (including certain qualifying domestic subsidiaries) is included
in the Federal income tax return and certain State income tax returns of Geneve.
The provision for income taxes for the Company is determined on a separate
return basis in accordance with the terms of a tax sharing agreement with
Geneve, and payments for Federal and certain State income taxes are made to
Geneve. The Company made income tax payments to Geneve under such arrangement of
$690,000 and $160,000 in fiscal 2004 and the first quarter of fiscal 2005,
respectively.
During fiscal 2004, the Company invested $4,000,000 in an investment limited
partnership, the substantial portion of which was made at the end of the fourth
quarter of fiscal 2004. The general partner of the limited partnership is an
affiliate of the Company. The limited partnership invested its funds with a pool
of money managers that followed diversified investment strategies. In February
2005, the then-balance of the investment, approximately $4,055,000, was
transferred to another limited partnership, the general partner of which is an
affiliate of the Company; the assets of the limited partnership are managed
exclusively by a non-affiliate of the Company. None of the Company's affiliates
received material compensation in connection with such investment activities.
CODE OF ETHICS AND CORPORATE CODE OF BUSINESS CONDUCT AND ETHICS
The Company has adopted a Code of Ethics that applies to the Company's
President and Chief Operating Officer, principal accounting officer or
controller and other Company employees performing similar functions. The Company
has adopted a Corporate Code of Business Conduct and Ethics which applies to all
employees, officers and directors of the Company. The Code of Ethics and
Corporate Code of Business Conduct and Ethics are posted on the Company's
internet website at www.aristotlecorp.net. In addition, the Company filed its
Code of Ethics and Corporate Code of Business Conduct and Ethics as exhibits to
its Annual Report on Form 10-K. The Company intends to satisfy the disclosure
requirement under Item 5.05 of Form 8-K, if applicable, regarding any amendment
to, or waiver from, a provision of the Code of Ethics and Corporate Code of
Business Conduct and Ethics by posting such information on the Company's
internet website.
INDEPENDENT REGISTERED PUBLIC ACCOUNTANTS
The Audit Committee of the Board of Directors has selected KPMG as the
independent auditors of the Company for 2005. It is anticipated that
representatives of KPMG, who also served as the Company's independent auditors
for 2004, will be present at the annual meeting and will have an opportunity to
make a statement if they so desire and to answer any appropriate questions.
18
FEES BILLED BY INDEPENDENT AUDITORS FOR 2004 AND 2003
The following table presents aggregate fees for professional services billed
to the Company for the fiscal years ended December 31, 2004 and 2003 by KPMG:
2004 2003
---- ----
Audit fees(1)................................... $197,000 $180,000
Audit related fees(2)........................... 21,000 35,000
Tax fees(3)..................................... 55,000 106,000
All other fees.................................. -- --
-------- --------
$273,000 $321,000
-------- --------
-------- --------
---------
(1) Audit fees consist of fees billed to the Company by KPMG for professional
services for the audit of the Company's financial statements filed with the
Company's Annual Report on Form 10-K, review of the financial statements
included in the Company's Quarterly Reports on Form 10-Q and services that
are normally provided by the independent auditors in connection with
statutory and regulatory filings or engagements.
(2) Audit related fees consist of fees billed to the Company by KPMG for
professional services for assurance and related services that are reasonably
related to the audit or review of the Company's financial statements for
2004 and 2003. These services include employee benefit plan audits and
audits of acquired businesses as part of the Company's due diligence
procedures.
(3) Tax fees consist of fees billed to the Company by KPMG for professional
services for tax compliance, tax advice and tax planning.
POLICY ON AUDIT COMMITTEE PRE-APPROVAL OF AUDIT AND PERMISSIBLE NON-AUDIT
SERVICES OF INDEPENDENT AUDITORS
The Audit Committee approved and adopted pre-approval policies and
procedures for non-audit services proposed to be performed by the Company's
independent auditors. The policies and procedures were implemented in 2002.
Departmental requests for non-audit services are reviewed by management and,
once approved, are forwarded to the Chairperson of the Audit Committee for
pre-approval. In addition, the Audit Committee reviewed the professional fees
billed by KPMG, and determined that the provision of non-audit services was
compatible with the maintenance of the auditors' independence. All non-audit
services billed to the Company by KPMG in 2004 were pre-approved by the Audit
Committee.
-------------------
DEADLINE FOR SUBMISSION OF STOCKHOLDER PROPOSALS
TO BE PRESENTED AT 2006 ANNUAL MEETING OF STOCKHOLDERS
Any proposal intended to be presented by any stockholder for action at the
2006 Annual Meeting of Stockholders must be received by the Company not later
than December 31, 2005, in order for the proposal to be considered for inclusion
in the proxy statement and proxy relating to such meeting.
To be considered at the 2006 Annual Meeting of Stockholders, although not
included in the proxy statement and proxy relating to the meeting, notice of
stockholder proposals and nominations for director must be delivered to the
Secretary of the Company not less than thirty days nor more than
19
ninety days prior to the date of the meeting, unless notice or public disclosure
of the date of the meeting occurs less than forty-five days prior to the date of
the meeting, in which event stockholders may deliver such notice not later than
the fifteenth day following the day on which notice of the date of the meeting
was mailed or public disclosure thereof was made. Proposals received after that
date will not be voted on at the 2006 Annual Meeting of Stockholders. If a
proposal is received before that date, the proxies that management solicits for
the meeting may still exercise discretionary voting authority on the proposal
under circumstances consistent with the proxy rules of the SEC.
Proposals should be sent to the attention of the Secretary at the Company's
offices at 96 Cummings Point Road, Stamford, Connecticut 06902.
OTHER INFORMATION
One or more persons will be appointed to act as the inspector of election at
the 2005 Annual Meeting of Stockholders. As of the date of this Proxy Statement,
the Board of Directors has no knowledge of any business that will be presented
for consideration at the meeting other than that described above. As to any
other business, if any, that may properly come before the meeting, the proxies
will vote in accordance with their judgment.
A copy of the Company's 2004 Annual Report to Stockholders is being sent
with this Proxy Statement. If, upon receiving this Proxy Statement, you have not
received the 2004 Annual Report to Stockholders, please contact H. William
Smith, Vice President, General Counsel and Secretary, at the Company's offices
at 96 Cummings Point Road, Stamford, Connecticut 06902 to request a copy. IN
ADDITION, A COPY OF THE COMPANY'S ANNUAL REPORT ON FORM 10-K AND FORM 10-K/A FOR
THE FISCAL YEAR ENDED DECEMBER 31, 2004, AS FILED WITH THE SEC, IS AVAILABLE
WITHOUT CHARGE UPON WRITTEN REQUEST.
By Order of the Board of Directors
/s/ H. William Smith
----------------------------------
H. WILLIAM SMITH
Vice President, General Counsel and
Secretary
July 27, 2005
20
Appendix 1
THE ARISTOTLE CORPORATION
THIS PROXY IS SOLICITED ON BEHALF OF THE BOARD OF DIRECTORS FOR
THE 2005 ANNUAL MEETING OF STOCKHOLDERS TO BE HELD ON
AUGUST 31, 2005
Whether or not you expect to attend the meeting, you are urged to sign
and return this proxy, which may be revoked at any time prior to its use.
Steven B. Lapin and Dean T. Johnson, and each of them, with full power of
substitution, are hereby authorized to represent and to vote the shares of The
Aristotle Corporation's Common Stock and Series I Preferred Stock held of record
by the undersigned on July 22, 2005, as directed on the reverse side and, in
their discretion, on all other matters which may properly come before the 2005
Annual Meeting of Stockholders to be held at the Hyatt Regency Greenwich, 1800
E. Putnam Avenue, Old Greenwich, Connecticut on August 31, 2005 at 9:30 A.M,
EDT, and at any adjournment thereof, which matters were unknown to the Board of
Directors prior to making this solicitation, as if the undersigned were present
and voting at the meeting. The undersigned hereby revokes all previous proxies.
The shares represented by this proxy, when properly signed, will be voted
as directed by the stockholder. Where no direction is given when the duly signed
proxy is returned, such shares will be voted FOR all items, and in the case of
other matters that legally come before the meeting, as said proxies may deem
advisable.
CONTINUED ON THE REVERSE SIDE
The Board of Directors recommends a vote FOR all items.
Proposal I. ELECTION OF DIRECTORS DULY NOMINATED AND LISTED BELOW:
For All Nominees [ ] TO WITHHOLD AUTHORITY [ ] Exception [ ] *
to vote for all nominees listed below
Nominees: Ira A. Harkavy, John Lahey, Steven B. Lapin, Donald T. Netter, Edward
Netter, James G. Tatum, Roy T.K. Thung, John A. Whritner.
*INSTRUCTION: To withhold authority to vote for any nominee(s), write that
nominee's name on the space provided below and check Exception box above.
________________________________________________________________________
Please note any address changes or comments below and mark here [ ]:
_________________________________________________
_________________________________________________
DATED ________________________, 2005 __________________________________
Signature
__________________________________
Signature if held jointly
(NOTE: Signature(s) should agree
with the name(s) stenciled hereon.
When signing as executor,
administrator, trustee, guardian or
attorney, please give full title as
such. For joint accounts or
co-fiduciaries, all joint owners or
co-fiduciaries should sign. For an
account in the name of two or more
persons, each should sign or if one
signs, he or she should attach
evidence of authority.)
Votes must be indicated (x) in Black or Blue ink [ ]
Mark here if you plan to attend the 2005 Annual Meeting of Stockholders [ ]
Sign, Date and Return this Proxy Promptly Using the Enclosed Envelope