PROPOSAL ONE:
ELECTION OF DIRECTORS
The Board of Directors is elected by and accountable to the
stockholders. The Board of Directors establishes policy and provides strategic
direction, oversight and control of the Company. The Board of Directors is
comprised of seven directors. The directors are divided into three classes
comprised as follows: two directors each in Class A and Class C, and three
directors in Class B. Generally, one class is elected each year for a three-year
term. The two nominees for election as directors to serve a regular three-year
term until the Annual Meeting of Stockholders in 2007, or until their respective
successors are elected and qualified, are Phillips W. Smith and Bruce R. Culver.
Directors are elected by a plurality of the votes of the shares present in
person or represented by proxy at the meeting and entitled to vote on the
election of directors. The two nominees for director receiving the highest
number of votes will be elected to the Board of Directors. Abstentions and
broker non-votes will not be taken into account in determining the outcome of
the election.
Unless marked otherwise, proxies received will be voted FOR the election
of each of the nominees named below.
If any nominee is unable or unwilling to serve as a director at the date
of the Annual Meeting or any postponement or adjournment thereof, the proxies
may be voted for a substitute nominee, designated by the proxy holders or by the
present Board of Directors to fill such vacancy, or for the other nominee named
without nomination of a substitute, or the number of directors may be reduced
accordingly. The Board of Directors has no reason to believe that any of the
nominees will be unwilling or unable to serve if elected a director.
The Board of Directors recommends a vote FOR the election of Phillips W.
Smith and Bruce R. Culver.
The following table sets forth certain information about each nominee
for election to the Board of Directors, each continuing director and an
additional executive officer of the Company.
Director or Expiration of
Name Age Positions Officer Since Current Term
---------------------------- ------ ------------------------ ------------------- -------------------
Nominees for Election
Class C (for three-year
term)
Phillips W. Smith 66 Chairman of the Board of
Directors 1993 2004
Bruce R. Culver(1)(2)(3) 58 Director 1994 2004
Directors Continuing in
Office
Class B
Patrick W. Smith 33 Chief Executive Officer
and Director 1993 2005
Bernard B. Kerik(3) 48 Director 2002 2005
Mark W. Kroll(1)(3) 52 Director 2003 2005
Class C
Thomas P. Smith 36 President and Director 1993 2006
Mathew R. McBrady(1)(2) 33 Director 2000 2006
Additional Executive Officer
Kathleen C. Hanrahan 40 Chief Financial Officer
and Chief Operating
Officer 2000 -
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(1) Member of the Audit Committee.
(2) Member of the Compensation Committee.
(3) Member of the Nominating Committee.
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Directors and Executive Officers
Phillips W. Smith, Chairman of the Board of Directors. Dr. Smith has
served as a director of the Company since 1993. Since August 1997, Dr. Smith has
served on the Board of Directors of Pentawave, Inc., a developer of cross-media
publishing software. Dr. Smith was Chairman of the Board of Pentawave from
January 1999 through October 2000 and its Chief Executive Officer from January
through March 1999. From June 1990 to September 1997, Dr. Smith served as the
President and Chief Executive Officer of Zycad Corporation, a developer of
engineering and manufacturing applications software. Dr. Smith holds a B.S.E.
degree from West Point, a M.B.A. degree from Michigan State University, and a
Ph.D. degree in Business Administration from St. Louis University. Since 1999
Dr. Smith has served as Director of Investor Relations with the Company.
Bruce R. Culver, Director. Mr. Culver has served as a director of the
Company since January 1994. In 1986 Mr. Culver founded Lab Support, Inc, now
called On Assignment, Inc. (NASDAQ ASGN) and co-founded Professional Staff,
P.L.C. (PSTF) in 1990 in the UK; both companies are human resource staffing
businesses. He served as Founder, CEO, and Chairman and on the Board of
Directors of both. In March 1993, Mr. Culver acquired California Distribution.
California Distribution provides warehouse, trucking and distribution services
in Southern California. In June 2001, Mr. Culver co-founded and serves as the
CEO and Chairman of IdealHire, Inc., an internet software company that provides
Candidate Identification technology for corporate and organizational websites.
Mr. Culver holds a B.Sc. in Chemistry and Physics from South Dakota State
University and a M.Sc. in Analytical Chemistry from Montana State University.
Patrick W. Smith, Chief Executive Officer and Director. Mr. Smith has
served as Chief Executive Officer and as a director of the Company since 1993.
He is a co-founder of the Company. Mr. Smith holds a B.S. degree in Biology from
Harvard University, an M.B.A. degree from the University of Chicago, and a
Masters Degree in International Finance from the University of Leuven in Leuven,
Belgium.
Bernard B. Kerik, Director. Mr. Kerik has served as a director of the
Company since May 2002. Mr. Kerik is Chief Executive Officer of Giuliani-Kerik
LLC, a Delaware company engaged in the security consulting business, and has
held that position since 2001. From August 2000 through 2001, Mr. Kerik was
New York City's 40th Police Commissioner. Prior to his appointment as Police
Commissioner, Mr. Kerik served as Commissioner of the New York Department of
Correction from 1998 to 2000, and as the Department's First Deputy Commissioner
and the Director of the Investigations Division from 1995 to 1998.
Mark W. Kroll, Director. Dr. Kroll has served as a director of the
Company since January 2003. Since 1995 Dr. Kroll has held various executive
level positions within St. Jude Medical Inc., most recently as Senior Vice
President and Chief Technology Officer, Cardiac Rhythm Management Division.
Dr. Kroll holds a B.S. degree in Mathematics and a M.S. degree and a Ph.D.
degree in Electrical Engineering from the University of Minnesota and a M.B.A.
degree from the University of St. Thomas. Dr. Kroll is a director of Harbinger
Medical, Inc (Cardiac Diagnostic), Guidance Interactive, Inc (Diabetes
Monitoring), Arrowhead Offshore Partners, Ltd (Venture Capital), and
OncoStim, Inc (DC Ablation for Cancer).
Thomas P. Smith, President and Director. Mr. Smith has served as
President of the Company since April 1994 and as a director since 1993. He is a
co-founder of the Company. Mr. Smith holds a B.S. degree in Ecology and
Evolutionary Biology from the University of Arizona and a M.B.A. degree from
Northern Arizona University.
Matthew R. McBrady, Director. Dr. McBrady has served as a director of
the Company since January 2001. From August 1998 through January 2000,
Dr. McBrady worked as an international economist for President Clinton's Council
of Economic Advisers and the United States Treasury Department. He began working
as a financial and analytical consultant for Avenue A, Inc., an internet
marketing company, in December 1997, and served as its vice president of
analytics from June 1999 through October 1999. Dr. McBrady taught corporate
finance and economics courses at Harvard University and the University of
Southern California in 1997 and 1998. He taught advanced corporate finance at
the University of Pennsylvania's Wharton School of Business from September 2002
through May 2003. In 2003, Dr. McBrady joined the faculty of the University of
Virginia's Darden Graduate School of Business Administration where he teaches
finance. Dr. McBrady holds a B.A. degree in Economics from Harvard University, a
M.S. degree in International Economics from Oxford University (UK), and a Ph.D.
degree in Business Economics from Harvard University.
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Kathleen C. Hanrahan, Chief Financial Officer. Ms. Hanrahan is the
Company's chief financial officer and chief operating officer serving in those
positions since November 2000 and November 2003 respectively. Ms. Hanrahan first
joined TASER in January 1996 as an internal controls consultant and became its
controller in March 1996.
Each officer serves at the discretion of our Board of Directors. No
officer is subject to an agreement that requires the officer to serve the
Company for a specified number of years although we have entered into employment
related agreements with each of our officers. These agreements require notice of
termination by the Company in certain situations that are described in further
detail in this proxy statement under the heading "Executive Compensation -
Employment Agreements and Other Arrangements".
Meetings of the Board of Directors
During the year ended December 31, 2003, the Board of Directors held
four meetings. The Board also acted during 2003 by unanimous written consent in
lieu of a meeting on three occasions, as permitted by Delaware law and the
Company's bylaws. Each director attended at least 75% of all Board and
applicable Committee meetings during fiscal 2003, except for Mr. Kerik who was
unable to attend two meetings due to his assignment by President Bush in Iraq.
Committees of the Board of Directors
The Company maintains a standing Compensation Committee, Nominating
Committee, and Audit Committee. Messrs. Culver and McBrady are members of the
Compensation Committees; Messrs. Culver, Kroll and Kerik are the members of the
Nominating Committee; and Messrs. Culver, Kroll and McBrady are the members of
the Audit Committee,
The Compensation Committee held two meetings during the year ended
December 31, 2003. Among other matters, the Compensation Committee determines
salaries and bonuses and considers employment agreements for elected officers of
the Company, and prepares reports on these matters; considers, reviews and
grants options under the Company's compensation plans and administers the plans;
and considers matters of director compensation, benefits and other forms of
remuneration.
The Nominating Committee is charged with, among other matters,
identifying qualified candidates for nomination for election to the Board of
Directors, obtaining the consent of the candidates to the nomination, and
nominating such consenting candidates for election; and reviewing and making
recommendations to the Board of Directors concerning the composition and size of
the Board and its committees. The Nominating Committee held one meeting during
the year ended December 31, 2003. Mr. Culver, Dr. Kroll and Mr. Kerik are
independent under the applicable Nasdaq listing standards. The Nominating
Committee will consider nominees recommended by stockholders provided such
recommendations are made in accordance with procedures described in this Proxy
Statement under "Stockholder Proposals." When considering a potential director
candidate, the Nominating Committee looks for demonstrated character, judgment,
relevant business, functional and industry experience, and a high degree of
acumen. There are no differences in the manner in which the Nominating Committee
evaluates nominees for director based on whether the nominee is recommended by a
stockholder. The Company does not pay any third party to identify or assist in
identifying or evaluating potential nominees. The charter of the Nominating
Committee is attached as Appendix A to this proxy statement.
Among other things, the function of the Audit Committee is to exercise
its sole authority with respect to the selection of the Company's independent
auditors and the terms of their engagement; review the policies and procedures
of the Company and management with respect to maintaining the Company's books
and records; review with the independent auditors, upon the completion of their
audit, the results of the auditing engagement and any other recommendations the
auditors may have with respect to the Company's financial, accounting or
auditing systems; and review with the independent auditors, upon the completion
of their quarterly review of the Company's financial statements, the results of
the quarterly review and any other recommendations the auditors may have in
connection with their review. The Audit Committee operates under a written
charter which was adopted effective February 15, 2001. Dr. McBrady, Mr. Culver
and Dr. Kroll are independent directors within the meaning of that term under
applicable Securities and Exchange Commission rules. The Audit Committee held
four meetings during the year
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ended December 31, 2003. The report of the Audit Committee for the year ended
December 31, 2003 is included in this Proxy Statement.
Audit Committee Financial Expert
Dr. Matthew R. McBrady, a director of the Company, is a financial expert
serving on the Audit Committee within the meaning of that term under applicable
rules promulgated by the Securities and Exchange Commission.
Director Independence
The Board of Directors assesses director independence on an annual
basis. In January 2004 the Board of Directors determined that Messrs. Culver,
Kerik, McBrady and Kroll are all "independent directors" under the Rule 10A-3 of
the Securities Exchange Act of 1934 and under applicable Nasdaq listing
standards.
Shareholder Communications with Directors
Stockholders may communicate with members of the Board of Directors by
mail addressed to the Chairman, any other individual member of the Board, to the
full Board, or to a particular committee of the Board. In each case, such
correspondence should be sent to the Company's headquarters at 7860 East McClain
Drive, Scottsdale, AZ 85260.
Directors are encouraged by the Company to attend the Annual Meeting of
Stockholders if their schedules permit. All directors except for Mr. Kerik
attended the 2003 Annual Meeting of Stockholders. All of the directors are
expected to be in attendance at the 2004 Annual Meeting of Stockholders.
Code of Ethics
The Company has adopted a Code of Ethics which is applicable to all
employees, directors and consultants of the Company. A copy of the Company's
Code of Ethics is published and available on the Company's website at
www.TASER.com.
Family Relationships
Mr. Thomas P. Smith and Mr. Patrick W. Smith are Dr. Phillips W. Smith's
sons. No other family relationships exist among the Company's directors and
executive officers.