FORM 6-K
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
Report of Foreign Issuer
Pursuant to Rule 13a-16 or 15d-16 of
the Securities Exchange Act of 1934
For the month of October, 2002
Perle Systems Limited
(Registrant's name)
60 Renfrew Drive, Suite 100
Markham, Ontario, Canada
L3R OE1
(Address of principal executive offices)
Indicate by check mark whether the registrant files or will file
annual reports under cover Form 20-F or Form 40-F:
Form 20-F X Form 40-F ___
Indicate by check mark whether the registrant by furnishing the
information contained in this Form is also thereby furnishing the
information to the Commission pursuant to Rule 12g3-2(b) under the
Securities Exchange Act of 1934.
Yes ____ No X
Documents Included as Part of this Report
No. Document
--- -------
1. Management Information Circular dated October 31, 2002.
PERLE SYSTEMS LIMITED
[Perle logo]
MANAGEMENT INFORMATION CIRCULAR
GENERAL PROXY INFORMATION
Solicitation of Proxies
This information circular (the "Information Circular") is
furnished in connection with the solicitation of proxies by management of
Perle Systems Limited (the "Corporation") for use at the Annual General
Meeting of Shareholders (the "Meeting") to be held on Friday, November 28,
2002, at 10:00 a.m. (local time in Toronto) at the offices of Goodman and
Carr LLP, 200 King Street West, Suite 2300, Main Boardroom, Toronto,
Ontario, M5H 3W5, or at any adjournment(s) thereof, for the purposes set
forth in the accompanying notice of the Meeting (the "Notice"). It is
expected that proxies will be solicited primarily by mail, but proxies may
also be solicited personally or by telephone by directors, officers,
employees and agents of the Corporation at nominal cost. The cost of the
solicitation by management will be borne by the Corporation. Except as
otherwise indicated, all dollar figures contained herein are stated in
Canadian currency and information contained herein is given as at October
18, 2002
This Information Circular, the accompanying proxy and the annual
report are expected to be first mailed to shareholders on or about October
31, 2002.
Appointment of Proxyholders
The persons named in the enclosed form of proxy are directors
and/or officers of the Corporation. A shareholder has the right to appoint
a person (who need not be a shareholder) other than those named in the
enclosed form of proxy to attend, act and vote for such shareholder at the
Meeting. A shareholder desiring to appoint some other person to represent
such shareholder at the Meeting may do so either by inserting such person's
name in the blank space provided in the enclosed form of proxy or by
completing another form of proxy.
Deposit of Proxies
In order to be effective, proxies must be deposited with the
Secretary of the Corporation, c/o CIBC Mellon Trust Company, the
Corporation's transfer agent, at 200 Queens Quay East, Unit # 6, Toronto,
Ontario M5A 4K9, Attention: Proxy Department, or returned by mail in the
envelope provided for that purpose, in either case so that it is received
by CIBC Mellon Trust Company at the above-noted address not later than 5:00
p.m. (local time in Toronto) on November 26, 2002 (being the second
business day immediately preceding the date of the Meeting) or in the case
of an adjournment on the second business day immediately preceding the date
of such adjourned Meeting. The proxy must be signed by the shareholder, or
by his or her attorney authorized in writing, as his or her name appears on
the Corporation's register of shareholders. If the shareholder is a
corporation, the proxy must be executed by an officer or attorney thereof
duly authorized.
Revocation of Proxies
A proxy given pursuant to this solicitation may be revoked by
instrument in writing executed by the shareholder or by his or her attorney
authorized in writing, or, if the shareholder is a corporation, by an
officer or attorney thereof duly authorized, and deposited either at the
registered office of the Corporation at 60 Renfrew Drive, Suite 100,
Markham, Ontario, L3R 0E1 at any time up to 5:00 p.m. (local time in
Toronto) on the last business day preceding the day of the Meeting or any
adjournment thereof, or with the Chairman of the Meeting on the day of the
Meeting, or any adjournment thereof, or in any other manner permitted by
law.
Voting of Proxies
The persons named in the enclosed form of proxy will vote or
withhold from voting the shares in respect of which they are appointed in
accordance with the directions of the shareholders appointing them. If no
direction is made in a proxy with respect to any matter set out therein,
the proxy will be voted FOR such matter.
The enclosed form of proxy confers discretionary authority upon
the person(s) named therein with respect to amendments or variations to
matters identified in the Notice to which the proxy relates and with
respect to other matters which may properly come before the Meeting. As of
the date of this Information Circular, management of the Corporation knows
of no such amendment, variation or other matter to come before the Meeting.
However, if any matter(s) not now known to management of the Corporation
would properly come before the Meeting, the shares represented by the proxy
hereby solicited will be voted on such matters in accordance with the best
judgment of the person(s) voting the shares represented by such proxy.
Non-Registered Shareholders
Only registered shareholders of the Corporation or the persons
they appoint as their proxies are entitled to vote at the Meeting. However,
in many cases, shares beneficially owned by a person (a "Non-Registered
Holder") are registered in the name of the nominee such as an intermediary
(an "Intermediary") that the Non-Registered Holder deals with in respect of
the Common Shares (Intermediaries include, among others, banks, trust
companies, securities dealers or brokers and trustees or administrators of
self-administered RRSPs, RRIFs, RESPs and similar plans) or clearing agency
(such as The Canadian Depository for Securities Limited) of which the
Intermediary is a participant.
Generally, Non-Registered Holders who have not waived the right to
receive meeting materials will either be given a form of proxy or request
for voting instructions (often called a "proxy authorization form"). In
either case, Non-Registered Holders who wish their Shares to be voted at
the Meeting should carefully follow the instructions of their Intermediary
or other nominee, including those regarding when and where the proxy or
proxy authorization form is to be delivered.
Voting Shares
The authorized capital of the Corporation consists of an unlimited
number of common shares. As at October 18, 2002, there were 9,592,293
common shares of the Corporation were issued and outstanding. Each common
share entitles the holder thereof to one vote in respect of each matter to
be voted upon at the Meeting.
Record Date
The record date for the purpose of determining the shareholders
entitled to receive notice of the Meeting has been fixed as October 9, 2002
(the "Record Date"). In accordance with the provisions of the Business
Corporations Act (Ontario), the Corporation has prepared a list of
shareholders as at the close of business on the Record Date. Each holder of
common shares named in the list will be entitled to one vote for each
common share held on all resolutions put forth at the Meeting for which
such shareholder is entitled to vote, except to the extent that: (i) the
shareholder has transferred any of his or her common shares after the
Record Date; and (ii) the transferee of those common shares produces
properly endorsed share certificates or otherwise establishes that he or
she owns the common shares and demands, not later than ten days before the
Meeting, that his or her name be included in the list of shareholders
before the Meeting, in which case the transferee will be entitled to vote
such common shares at the Meeting. The failure of a shareholder to receive
the Notice does not deprive him or her of the right to vote at the Meeting.
PRINCIPAL HOLDERS OF SHARES
As at the date of this Information Circular, the only person who,
to the knowledge of the directors or senior officers of the Corporation,
beneficially owned, directly or indirectly, or exercised control or
direction over, securities of the Corporation carrying more than 10% of the
voting rights attaching to any class of outstanding voting securities of
the Corporation is Joseph E. Perle who directly beneficially owns 1,074,257
(approximately 11%) of the outstanding common shares of the Corporation.
ELECTION OF DIRECTORS
The articles of the Corporation provide that the board of
directors of the Corporation shall consist of a minimum of four and a
maximum of ten directors. The board of directors has resolved that the
number of directors to be elected at the Meeting be fixed at five.
The persons named in the enclosed form of proxy intend to vote
such proxies FOR the election as directors of the nominees whose names are
set forth below, unless the shareholder who has given the proxy directs
otherwise. All of the nominees listed below presently serve as directors of
the Corporation, and have so served since the dates indicated. The present
term of office of each director of the Corporation will expire immediately
prior to the election of directors at the Meeting. Each member of the board
of directors elected at the Meeting will hold office until the next annual
meeting of the shareholders of the Corporation or until his or her
successor is elected or appointed.
Management does not contemplate that any of the proposed nominees
will be unable to serve as a director but, if that should occur for any
reason prior to the Meeting, the form of proxy accompanying this
Information Circular confers the right on the persons named in the proxy,
in their discretion, to vote for another person or persons as directors.
Set forth below are the names of each person proposed to be
nominated for election to the board of directors at the Meeting, any
positions or offices with the Corporation now held by each nominee and his
or her principal occupation or employment at present and for the five
preceding years.
Total Common
Position with Corporation or Total Common Shares
Principal Occupation if Shares Under Beneficially
Name of Nominee and Different from Position With Director Options Owned or
Municipality of Residence Age Corporation Since Granted(4) Controlled(4)
------------------------- --- ----------------------------- -------- ------------- -------------
LAWRENCE S. CHERNIN (1) (2) 51 Partner, Goodman and Carr 1995 29,000 500
Toronto, Ontario LLP, Barristers and
Solicitors
GEOFFREY MATUS (1)(2)(3) 53 Chairman of H.O. Financial 1980 73,696 15,945
Toronto, Ontario Limited
JOSEPH E. PERLE (3) 56 Chairman, Secretary, 1976 357,294 1,074,257
Toronto, Ontario President and Chief
Executive Officer of the
Corporation
E. DUFF SCOTT (1)(2) 65 President of Multibanc 1996 42,000 2,000
Toronto, Ontario Financial Corp.
NEIL SUNDSTROM 49 Vice President of 1997 31,000 9,000
Sunnyvale, California Worldwide Sales,
Packeteer, Inc.
Notes:
(1) Member of the Audit Committee.
(2) Member of the Compensation Committee.
(3) Member of the Executive Committee.
(4) The information as to the common shares beneficially owned, directly
and indirectly, or over which control or direction is exercised and
stock options granted is based on information furnished to the
Corporation by the respective nominees as at the Record Date. The
total number of common shares beneficially owned or controlled does
not include the number of common shares held under options granted.
Mr. Chernin holds a Bachelor of Arts degree, a Bachelor of Civil
Law and a LL.B., all from McGill University. He has been a partner in the
law firm of Goodman and Carr LLP, Toronto, since 1984. He is a member of
the Canadian Bar Association and the Law Society of Upper Canada.
Mr. Matus has served as a director of the Company since 1980. He
holds a Bachelor of Commerce (Accounting and Business Administration)
degree and a Bachelor of Law degree from the University of the
Witwatersrand, South Africa, and a Master of Law degree from Columbia
University. Since 1984, he has served as Chairman of the Board of H.O.
Financial Limited, an Ontario publicly held investment company.
Mr. Perle is Chairman of the Board of Directors, President, Chief
Executive Officer and the founder of the Corporation. He received his
Bachelor of Applied Science (Engineering) degree from the University of
Toronto in 1969, specializing in physics and mathematics, and is a member
of the Association of Professional Engineers of Ontario. He was employed by
IBM from 1970 until founding the Corporation.
Mr. Scott is currently the President of Multibanc Financial Corp.,
a financial services company. He is Chairman of the Board of QLT Inc., a
publicly held biopharmaceutical company. He is a director of Aberdeen
Global Fund Inc., a registered investment company whose securities are
traded on the New York Stock Exchange and a director of several other
Canadian publicly held companies. Mr. Scott is a former Chairman of The
Toronto Stock Exchange.
Mr. Sundstrom is currently the Vice President of Worldwide Sales
for Packeteer, Inc., a public company founded to develop products for
application adaptive bandwidth management related to the Internet and data
networks. He holds a Bachelor of Arts degree from Simon Fraser University,
British Columbia. He has over 16 years' experience in computer networking,
including with 3Com Corporation where he was Vice President of
International Business for the company's Networking Service Provider
Division. Mr. Sundstrom previously spent five years with SynOptics
Communications, Inc. (now Bay Networks), as Intercontinental Area Manager,
and also held sales and marketing management positions with Wyse Technology
and CDI Computer Distribution.
EXECUTIVE COMPENSATION
The following table sets forth information for each of the three
most recently completed fiscal years concerning the compensation earned by
the Chief Executive Officer of the Corporation and the only other executive
officers of the Corporation other than the Chief Executive Officer who
earned a salary and bonus totaling in excess of $100,000 during the fiscal
year ended May 31, 2002 (collectively, the "Named Executive Officers").
Annual Compensation Long Term
Compensation All Other
Name and Principal Position Year Salary Bonus Options Granted Compensation(3)
$ $ (#) $
----------------------------------------------------------------------------------------------------------------------------------
Derrick Barnett(5) 2002 (1) 178,800 4,570 122,500 -
Vice President, Finance, Chief 2001 (1) 169,300 6,430 20,000 -
Financial Officer 2000 (1) 54,800 - 10,000 -
Alan Carney(4) 2002 (1) 102,470 4,570 30,000 -
Vice-President 2001 (1) 190,427 - 3,000 -
Chief Operation Officer 2000 (2) 87,000 18,140 10,000 -
John Feeney(5) 2002 (1) 300,807 5,484 137,917 -
Senior Vice President and 2001 (1) 276,000 7,400 12,000 -
Chief Operating Officer 2000 (1) 265,000 171,440 45,000 -
Peter Graham(5) 2002 (2) 118,000 11,226 52,083 10,800
President, EMEA 2001 (2) 108,000 66,500 3,000 10,350
2000 (2) 64,500 100,221 - 8,400
Joseph Perle 2002 365,000 - 179,167 12,252
Chairman, President, Chief 2001 365,000 - - 12,252
Executive Officer and Director 2000 365,000 65,705 56,000 12,252
1. Amounts are shown in Canadian dollars.
2. Amounts are shown in Great British Pounds ((pound)).
3. The value of each Named Executive Officer's perquisites and other
benefits do not exceed the lesser of $50,000 or 10% of such
officer's total annual salary and bonus.
4. Mr. Alan Carney retired on September 7, 2001. All options not
exercised by Mr. Carney prior to such date were cancelled.
5. In fiscal 2002, options to purchase Common Shares granted on June
27, 2001 were cancelled for Joe Perle, John Feeney Derrick Barnett
and Peter Graham in respect of 45,833, 32,083, 27,500 and 25,000
options.
Stock Option Plan
On October 21, 1994, the shareholders approved the 1995 Employee
Stock Option Plan for the Corporation, which was amended as approved by the
shareholders on October 7, 1998, October 31, 2000 and November 9, 2001 (the
"Stock Option Plan"). Under the terms of the Stock Option Plan, options may
be granted to eligible employees, directors, officers or service providers
of the Corporation or subsidiaries of the Corporation. The exercise price
of options granted under the Stock Option Plan may not be less than the
closing Market Price (as that term defined in the Stock Option Plan) for
the common shares of the Corporation on The Toronto Stock Exchange.
Typically, options are exercisable annually on a cumulative basis as to
one-fifth of the optioned shares each year (for five years from the date of
grant) and expire ten years from the date of grant. Options may be
exercised, in general, only if the optionholder remains continuously
employed by the Corporation or a subsidiary thereof from the date of grant
to the date of exercise. The Stock Option Plan contains certain
anti-dilution provisions and is administered by the Compensation Committee
of the board of directors. The maximum aggregate number of common shares
which may currently be issued to eligible persons pursuant to the Stock
Option Plan is 2,317,000.
Executive Bonus Plan
Pursuant to the Corporation's executive bonus plan (the "Executive
Bonus Plan"), each year all officers are entitled to receive bonuses equal
to predetermined percentages of their base salary if the Corporation
achieves its projected operating targets during such year as determined by
the board of directors. The amounts received for the fiscal year ended May
31, 2002 by the Named Executive Officers are set out in the Summary
Compensation Table above.
Stock Option Grants and Exercises
The following table sets out information relating to the
individual grants of stock options to purchase common shares of the
Corporation during the fiscal year ended May 31, 2002 to each of the Named
Executive Officers:
Options Granted During the Most Recently Completed Fiscal Year
----------------------------------------------------------------------------------------------------------------------------------
% of Total Options Market Value of
Number of Common Granted to Common Shares
Shares Under Employees in Underlying Options on
Options Granted Fiscal 2002 Exercise or Base the Date of Grant
Name Price Expiration Date
----------------------------------------------------------------------------------------------------------------------------------
(Cdn$/Share) (Cdn$/Share)
Derrick Barnett(2) 60,000 9% 1.20 1.20 June 27, 2011
2,500 22% 0.71 0.71 December 31, 2011
60,000 20% 0.63 0.63 February 26, 2012
Alan Carney(1) 30,000 5% 1.20 1.20 June 27, 2011
John Feeney(2) 70,000 11% 1.20 1.20 June 27, 2011
2,917 25% 0.71 0.71 December 31, 2011
65,000 22% 0.63 0.63 February 26, 2012
Peter Graham(2) 50,000 8% 1.20 1.20 June 27, 2011
2,083 100% 0.70 0.70 March 27, 2012
Joseph Perle(2) 100,000 15% 1.20 1.20 June 27, 2011
4,167 36% 0.71 0.71 December 31, 2011
75,000 25% 0.63 0.63 February 26, 2012
(1) Mr. Alan Carney retired on September 7, 2001. All options not exercised by Mr. Carney prior to
such date were cancelled.
(2) In fiscal 2002, options to purchase Common Shares granted on June 27, 2001 were cancelled for
Joe Perle, John Feeney, Derrick Barnett and Peter Graham in respect of 45,833, 32,083, 27,500
and 25,000 options, respectively.
The following table sets out information with respect to
individual exercises of stock options during the fiscal year ended May 31,
2002 by each of the Named Executive Officers and the fiscal year-end number
and value of unexercised options held, on an aggregate basis:
Options Exercised During the Most Recently Completed Fiscal Year and Fiscal Year-End Option Values
------------------------------------------------------------------------------------------------------------------------------
Common Aggregate Value of Unexercised in-the-money
Shares Acquired Value Number of Unexercised Options Options as at
Name on Exercise Realized (1) as at May 31, 2002 May 31, 2002(2)
------------------------------------------------------------------------------------------------------------------------------
Exercisable Unexercisable Exercisable Unexercisable
---------------------------------------------------------------------
(#) (Cdn$) (#) (#) (Cdn$) (Cdn$)
Derrick Barnett(3) Nil Nil 34,500 80,500 Nil Nil
Alan Carney(4) Nil Nil Nil Nil Nil Nil
John Feeney(3) Nil Nil 73,619 98,769 Nil Nil
Peter Graham(3) Nil Nil 15,616 20,467 Nil Nil
Joseph Perle(3) Nil Nil 210,000 92,121 Nil Nil
------------------------------------------------------------------------------------------------------------------------------
1. Calculated as the difference between the fair market value of the Company's Common Shares at the time of the option
exercise and the exercise price.
2. Market value expressed in Canadian dollars of underlying securities at exercise date or year-end, as the case may be,
minus the exercise price of options. As at May 31, 2002 the closing price for the Common Shares on OTCBB and the TSE
was $0.29 and Cdn$0.48, respectively.
3. In fiscal 2002, options to purchase Common Shares granted on June 27, 2001 were cancelled for Joe Perle, John Feeney,
Derrick Barnett and Peter Graham in respect of 45,833, 32,083, 27,500 and 25,000 options, respectively.
4. Ceased to be an employee on September 7, 2001. All options not exercised by Mr. Carney prior to such date were
cancelled.
Employment Contracts
Mr. Joseph Perle is employed as the President and Chief Executive
Officer of the Company under an employment agreement dated February 26,
2002 at an annual base salary as may be agreed to between the Company and
Mr. Perle (currently $365,000). The employment agreement provides that Mr.
Perle, upon termination of his services without cause, is entitled to a
lump sum payment equal to thirty months' salary plus a bonus amount equal
to 50% his regular salary for the thirty month period. In addition Mr.
Perle is entitled to receive any accrued bonus and other employment
benefits including vacation pay.
Mr. John Feeney is employed as the Senior Vice President and Chief
Operating Officer of the Company under an employment agreement dated
February 26, 2002, at an annual base salary as may be agreed to between the
Company and Mr. Feeney (currently Cdn$305,000). The employment agreement
provides that Mr. Feeney upon termination of his services without cause, is
entitled to a lump sum payment equal to twenty four months' salary plus a
bonus amount equal to 50% of his regular salary for the twenty four month
period. In addition, Mr. Feeney is entitled to receive any accrued bonus
and other employment benefits including vacation pay.
Mr. Derrick Barnett is employed as the Vice President Finance and
Chief Financial Officer of the Company under an employment agreement dated
February 26, 2002, at an annual base salary as may be agreed to between the
Company and Mr. Barnett (currently Cdn$206,000). The employment agreement
provides that Mr. Barnett, upon termination of his services without cause,
is entitled to a lump sum payment equal to eighteen months salary plus a
bonus amount equal to 50% of his regular salary for the eighteen month
period. In addition Mr. Barnett is entitled to receive any accrued bonus
and other employment benefits including vacation pay.
REPORT ON EXECUTIVE COMPENSATION
The Compensation Committee of the board of directors consists of
Messrs. Chernin, Matus and Scott. None of the members of the Compensation
Committee was an officer or employee of the Corporation or any of its
subsidiaries during the 2002 fiscal year.
Under the supervision of the Compensation Committee, the
Corporation has developed and implemented compensation policies, plans, and
programs which seek to enhance the long-term growth in the value of the
Corporation, and thus shareholder value, by closely aligning the financial
interests of the Corporation's senior managers with those of its
shareholders. In furtherance of these goals, compensation is generally set
at levels that allow the Corporation to rely, to some degree, on a
combination of annual and incentive compensation, in order to attract and
retain corporate officers and other key employees of outstanding abilities.
Compensation of the executive officers, as well as other senior
executives, consists of an annual base salary and an executive bonus
calculated as a percentage of annual base salary. The Executive Bonus Plan
is tied to the Corporation's success in achieving its financial goals
determined in accordance with the Executive Bonus Plan (described above
under "Executive Bonus Plan").
At the beginning of each fiscal year, the Compensation Committee
establishes an annual salary for the Chief Executive Officer, together with
any modification thereto as it deems appropriate, reviews and approves the
executive bonus plan for all of the Corporation's senior executives,
including the Chief Executive Officer and advises the Chief Executive
Officer with respect to the annual salary plan for the Corporation's other
senior executives. The salary plans are developed based on industry, peer
group and national surveys, and performance judgments as to the past and
expected future contribution of each individual senior executive.
In addition, at the beginning of each fiscal year, specific
performance goals are established for the purpose of determining the
executive bonus compensation. These goals are tied to the financial results
of the Corporation and performance against these goals is assessed.
During each fiscal year, the Compensation Committee considers the
desirability of granting senior executives, employees and directors,
including executive officers, options to purchase common shares through the
Corporation's Stock Option Plan. The exercise price of options granted
under the Stock Option Plan may not be less than the closing Market Price
(as that term is defined in the Stock Option Plan) for the common shares of
the Corporation on The Toronto Stock Exchange. In the granting of options
to individuals, the Compensation Committee reviews with the Chief Executive
Officer the recommended individual awards, taking into account anticipated
performance requirements and the contribution of each individual. The same
process is used with respect to the granting of options to the Chief
Executive Officer.
In evaluating the performance and setting the annual and incentive
compensation of the Chief Executive Officer and the Corporation's other
senior management, the Compensation Committee has taken particular note of
management's success towards the development of key corporate projects such
as acquisitions and financings. The Compensation Committee has also taken
into account management's consistent commitment to the long-term success of
the Corporation through the development of new or improved products.
Based on its evaluation of these factors, the Compensation
Committee believes that senior management of the Corporation is dedicated
to achieving long-term growth in the value of the Corporation and that the
compensation policies and incentive programs implemented by the
Compensation Committee have contributed to achieving this management focus.
The foregoing report is submitted by the Compensation Committee of
the Board of Directors.
Lawrence S. Chernin
Geoffrey Matus
E. Duff Scott
SHAREHOLDER RETURN PERFORMANCE GRAPH
Set forth below is a line graph comparing the yearly percentage
change in the cumulative total shareholder return relating to the
Corporation's common shares with the cumulative total return of the NASDAQ
and the NASDAQ Computer Manufacturers' Index for the period of five fiscal
years commencing June 1, 1997, and ended May 31, 2002. The graph assumes
US$100 invested on June 1, 1997, in the Corporation's common shares and
each of the indices
SHAREHOLDER RETURN PERFORMANCE GRAPH
Graphic omitted
----------------------------------------------------------------------
Date Nasdaq US & Nasdaq Computer Perle Systems
Foreign Manufacturers Limited
----------------------------------------------------------------------
May-02 154.15 141.41 17.18
Apr-02 161.15 148.35 23.7
Mar-02 176.3 169.29 23.7
Feb-02 165.41 159.57 23.7
Jan-02 184.89 187.57 29.62
Dec-01 186.51 183.12 26.07
Nov-01 184.67 182.61 33.77
Oct-01 161.58 153.46 27.84
Sep-01 143.22 126.14 37.91
Aug-01 172.63 158.66 49.17
Jul-01 193.94 188.4 49.17
Jun-01 206.84 202.52 52.13
May-01 144.79 217.46 47.99
Apr-01 145.09 232.82 53.32
Mar-01 126.13 206.3 50
Feb-01 147.36 235.82 68.48
Jan-01 190.33 345.55 103.67
Dec-00 169.63 289.52 40.76
Nov-00 178.46 352.15 96.27
Oct-00 231.98 518.34 140.7
Sep-00 253.22 569.98 181.46
Aug-00 289.99 640.97 162.91
Jul-00 259.43 562.3 164.75
Jun-00 274.19 558.59 196.27
May-00 234.12 477.23 185.13
Apr-00 266.21 570.65 303.61
Mar-00 316.32 644 392.48
Feb-00 325.25 605.51 536.91
Jan-00 272.01 495.64 536.91
Dec-99 281.13 514.03 496.15
Nov-99 230.25 435.21 214.75
Oct-99 204.64 369.01 148.1
Sep-99 189.17 344.76 148.1
Aug-99 188.85 345.96 148.1
Jul-99 181.95 306.38 179.56
Jun-99 185.06 303.4 155.51
May-99 170.03 265.41 112.03
Apr-99 174.77 281.13 125.89
Mar-99 169 272.67 137.03
Feb-99 157.16 251.57 161.08
Jan-99 172.37 298.67 183.29
Dec-98 150.8 242.16 133.29
Nov-98 134.05 203.07 151.84
Oct-98 121.63 185.18 112.91
Sep-98 116.19 178.21 107.41
Aug-98 102.77 147.86 88.86
Jul-98 128.76 170.36 111.08
Jun-98 130.48 162.5 111.08
May-98 122.75 143.49 111.08
Apr-98 129.78 146.87 111.08
Mar-98 127.6 137.07 118.48
Feb-98 122.92 137.71 100
Jan-98 112.21 121.54 87.03
Dec-97 108.87 111.35 92.59
Nov-97 110.92 117.28 96.27
Oct-97 110.69 116.09 111.08
Sep-97 117.02 125.49 103.67
Aug-97 110.14 121.3 103.67
Jul-97 110.42 121.75 103.67
Jun-97 100 100 100
COMPENSATION OF DIRECTORS
In respect of the 2002 fiscal year, the compensation paid by the
Corporation to independent directors consisted of a combination of stock
options and cash remuneration. Cash remuneration includes an annual
retainer, a fee per board meeting for attending in person, an annual fee
for the chairman of a committee of the board, an annual fee for each member
of a committee of the board and a fee per committee meeting for attending
in person. For purposes of director compensation, the independent directors
are Messrs. Scott and Sundstrom. Compensation to other directors consists
only of stock options. During fiscal 2002, Messrs. Scott and Sundstrom
received total cash compensation of Cdn$7,250 and Cdn$3,750, respectively.
INDEBTEDNESS OF DIRECTORS, EXECUTIVE OFFICERS AND SENIOR OFFICERS
The following describes the indebtedness to the Corporation of the
directors, officers and employees of the Corporation and subsidiaries of
the Corporation. All such amounts are secured demand loans made by the
Corporation to such directors and officers to purchase common shares of the
Corporation. As of October 18, 2002 the aggregate amount of the demand
loans was equal to US$114,781 plus Cdn$49,936. Such demand loans bear
interest at rates between 2 1/2% and 5% per annum. No common shares of the
Corporation were purchased by directors, officers and employees of the
Corporation with financial assistance by the Corporation in fiscal 2002.
Common shares are pledged to the Corporation as security for such
indebtedness, as more particularly described in the table set out below.
Table of Indebtedness of Directors, Executive Officers and
Senior Officers Under Securities Purchase Programs
Largest Financially
Amount Assisted
Involvement of Outstanding Amount Securities
Name and Issuer or During Outstanding as Purchases During Security for
Principal Position Subsidiary Fiscal 2002 October 18, 2002 Fiscal 2002 Indebtedness
------------------ -------------- ----------- ---------------- ---------------- -------------
(Cdn$) (Cdn$) (#)
JOSEPH PERLE, Chairman, Loan $114,781 $114,781 Nil 58,686 common shares
President and Chief Cdn$49,936 Cdn$49,936
Executive Officer
INTERESTS OF INSIDERS IN MATERIAL TRANSACTIONS
Pursuant to an agreement between the Corporation and Mandukwe
Inc., Mandukwe Inc. provides the personal services of Mr. Geoffrey Matus to
the Corporation as (i) a consultant in the financial and business planning
areas; (ii) a director; and (iii) a member of the board committees, if
appointed. The fee billed from Mandukwe Inc. in the 2002 fiscal year was
Cdn$76,564. The agreement may be terminated by either party at any time
upon one month's notice. Mandukwe Inc. is a company controlled by Mr.
Matus.
Mr. Chernin, a director of the Corporation, is a partner in the
law firm of Goodman and Carr LLP, which provides legal services to the
Corporation and is expected to continue to do so in fiscal 2003.
MANAGEMENT CONTRACTS
Please refer to "Interests of Insiders in Material Transactions".
CORPORATE GOVERNANCE PRACTICES
In 1994, The Toronto Stock Exchange Committee on Corporate
Governance in Canada issued a series of proposed guidelines for effective
corporate governance (the "TSX Guidelines"). The TSX Guidelines address
matters such as the constitution and independence of corporate boards, the
functions to be performed by boards and their committees and the
effectiveness and education of board members. The TSX has adopted as a
listing requirement the disclosure by each listed company incorporated in
Canada, on an annual basis, of its approach to corporate governance with
reference to the TSX Guidelines.
Set out below is a description of the Corporation's approach to
corporate governance in relation to the TSX Guidelines.
1. Mandate of Board of Directors
The board of directors is responsible for the stewardship of the
Corporation and is required to act with a view to the best interests of the
Corporation. This responsibility is discharged in several ways, including:
(i) Adoption of a strategic plan
Senior management is required to maintain an ongoing evaluation of
its strategic plan and to report to the Board. On an annual basis, the
Board reviews and approves a one year plan developed by management. The
plan includes financial resource requirements as well as strategic
direction encompassing technologies, market analysis and geographic
expansion.
(ii) Identification of principal risks and implementation of risk
management systems
Management of the Corporation provides an operational review of
the Corporation to the Board on a quarterly basis, and more frequently, if
necessary. In connection therewith, the Board discusses various planning
matters and identifies business risks associated with the activities of the
Corporation, as it considers appropriate.
(iii) Succession planning and monitoring senior management
In accordance with its legal responsibilities, the Board appoints
officers of the Corporation. The President and Chief Executive Officer of
the Corporation makes recommendations to the Board as to various senior
management positions.
(iv) Communication policy
The Board has implemented structures to ensure effective
communication between the Corporation, its shareholders and the public. The
annual financial statements, quarterly financial statements and management
information circulars are all submitted to the Board for approval prior to
their release.
(v) Integrity of internal control and management information systems
Through the Audit Committee, the Board has a means of assessing
the strength of the Corporation's internal control and management
information systems. The Audit Committee meets with the external auditors
on an annual basis.
2. Composition of Board of Directors
The Board currently consists of five members, two of whom are
"unrelated" directors within the meaning of the TXE Guidelines (that is,
independent of management and free of any business or other relationship
which could, or could reasonably be perceived to, materially interfere with
their ability to act as a director with a view to the best interests of the
Corporation, other than interests and relationships arising from
shareholdings). Mr. Perle, a nominee proposed for election to the Board, is
related within the meaning of the TSX Guidelines, as he is a member of
management. Mr. Matus is the sole shareholder of Mandukwe Inc., a
consulting company that provides certain consulting services to the
Corporation. Such activities are conducted on an arm's length basis and the
fees payable by the Corporation to Mandukwe Inc. may be material to
Mandukwe Inc.'s business as a whole. Mr. Chernin is a partner in the law
firm of Goodman and Carr LLP, which provides legal advice to the
Corporation on an ongoing basis. Such activity is conducted on an arm's
length basis and is not material to Goodman and Carr's business as a whole.
Messrs. Scott and Sundstrom are unrelated directors as defined in the TSX
Guidelines.
The Corporation does not have a "significant shareholder," defined
by the TSX Guidelines to be a shareholder with the ability to exercise a
majority of the votes for the election of directors. As well, none of the
directors are related to one another. All directors except for Mr. Perle
are "outside" directors of the Corporation as none of them are current or
former officers of the Corporation. The Corporation does not have formal
position descriptions for the Board members.
3. Nomination and Assessment of Board and Committees
The Board as a whole determines nominees to the Board, since the
Board has not appointed a formal nominating committee as such. The Board as
a whole assesses the effectiveness of its committees and the contribution
of individual directors. As a result of this ongoing assessment, the Board
from time to time makes changes to the composition of its members and its
committees.
4. Orientation and Education
Board members meet in a series of informal and formal meetings
with members of senior management and are provided with detailed materials
concerning the technology industry and the business and management of the
Corporation. From time to time, corporate officers and legal, financial and
other experts are invited to attend Board meetings to describe matters in
their areas of expertise.
5. Size of Board
The Board has considered its size with a view of the impact of
size upon its effectiveness and has concluded that at this time, given the
Corporation's scope of activity, five directors is the appropriate number
required to carry out the Board's responsibilities effectively while
maintaining a diversity of views and experience.
6. Review of Board's Compensation
The Compensation Committee, in consultation with senior
management, periodically makes recommendations to the Board concerning the
compensation of directors. The Corporation allows all directors to
participate in the Corporation's Stock Option Plan but does not require
directors to hold common shares of the Corporation.
7. Committees
During fiscal 2002, the board of directors held a total of 10
meetings. A majority of the members of the board of directors attended all
of the Board meetings and their respective committee meetings held during
the fiscal year.
The Corporation has three committees of its board of directors:
the Executive Committee, the Audit Committee and the Compensation
Committee.
Executive Committee
The Executive Committee is responsible for the management and
direction of the business and affairs of the Corporation between meetings
of the board of directors. The Executive Committee currently consists of
two members of the board of directors, being Messrs. Matus and Perle. In
fiscal 2002, the Executive Committee met on an informal basis as required.
Audit Committee
The Corporation is required by applicable corporate law to have an
audit committee comprising at least three directors, a majority of whom are
not officers or employees of the Corporation or its affiliates. Messrs.
Chernin, Matus and Scott are currently members of the Audit Committee. The
Audit Committee meets with the financial officers of the Corporation and
the independent auditors to review financial reporting matters, internal
accounting control systems and the overall audit plan and examines
quarterly and annual financial statements before their presentation to the
board of directors. The auditors of the Corporation are entitled to notice
of and to attend all meetings of the Audit Committee. In fiscal 2002, the
Audit Committee met six times.
Compensation Committee
The Compensation Committee establishes, reviews and approves
compensation arrangements for the Chief Executive Officer of the
Corporation. The committee and the Chief Executive Officer review and
comment upon compensation arrangements for all other officers of the
Corporation. The Compensation Committee currently consists of three members
of the board of directors, being Messrs. Chernin, Matus and Scott. The
Compensation Committee held one meeting in fiscal 2002.
Corporate Governance Committee
The Board has not established a corporate governance committee as
the Board has determined that it is appropriate, given the Corporation's
scope of activity, for the entire Board to assume responsibility for
corporate governance matters.
8. Independence of Board
The Board as a whole has responsibility for corporate governance
issues and part of that responsibility is to ensure that it can function
independent of management. To enhance its ability to act independent of
management, the Board may meet in the absence of members of management and
the related directors or may excuse such persons from all or a portion of
any meeting where a potential conflict of interest arises or where
otherwise appropriate. The Board has also adopted a policy of permitting
individual directors under appropriate circumstances to engage legal,
financial or other expert advisors at the Corporation's expense.
APPOINTMENT AND REMUNERATION OF AUDITORS
Unless such authority is withheld, the persons named in the
enclosed form of proxy intend to vote FOR the appointment of Ernst & Young
LLP, Chartered Accountants, Toronto, Ontario ("Ernst & Young"), as the
auditors of the Corporation to hold office until the next annual meeting of
shareholders of the Corporation, or until their successors are appointed,
and to authorize the board of directors to fix the remuneration of the
auditors.
Ernst & Young have audited the Corporation's financial statements
for each fiscal year since the fiscal year ended May 31, 1976.
Representatives of Ernst & Young are expected to be present at the Meeting
and will be given an opportunity to respond to appropriate questions asked
by shareholders.
AVAILABILITY OF CERTAIN DOCUMENTS
The Corporation shall provide to any person upon written request
to the Secretary of the Corporation at any time:
(i) one copy of the Corporation's annual information form
consisting of the Corporation's annual report on Form
20-F under the United States Securities Exchange Act of
1934, together with one copy of any document, or the
pertinent pages of any document incorporated by reference
therein;
(ii) one copy of the comparative financial statements of the
Corporation for its most recently completed fiscal year
together with the accompanying report of the auditors and
one copy of any interim financial statements of the
Corporation subsequent to the financial statements for
its most recently completed fiscal year end; and
(iii) one copy of the Annual Report Supplement prepared in
accordance with generally accepted accounting principles
(GAAP) in Canada in U.S. dollars together with one copy
of any document incorporated by reference therein, and
one copy of any interim financial statements of the
Corporation subsequent to the financial statements for
its most recently completed fiscal year end prepared in
accordance with Canadian GAAP;
(iv) one copy of the management information circular of the
Corporation in respect of its most recent annual meeting
of shareholders that involved the election of directors
or one copy of any annual filing prepared in lieu of that
information circular, as appropriate, provided that the
Corporation may require payment of a reasonable charge if
the request is made by a person who is not a security
holder of the Corporation. Written requests for a copy of
the above documents should be directed to the Investor
Relations Department, Perle Systems Limited, 60 Renfrew
Drive, Suite 100, Markham, Ontario, Canada L3R 0E1.
GENERAL
The annual report and consolidated financial statements of the
Corporation and the report of the auditors to the shareholders of the
Corporation in respect of the fiscal year ended May 31, 2002 will be placed
before the shareholders of the Corporation.
APPROVAL
The board of directors of the Corporation has approved the
contents and the sending of this Information Circular to the shareholders
of the Corporation.
DATED the 18th day of October 2002.
/s/ Joseph E. Perle
JOSEPH E. PERLE
Secretary
SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of
1934, the registrant has duly caused this report to be signed on its behalf
by the undersigned, thereunto duly authorized.
Date: October 31, 2002
PERLE SYSTEMS LIMITED
By: /s/ Joseph E. Perle
-----------------------------
Joseph E. Perle
President and Chief Executive
Officer