SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
SCHEDULE 14A INFORMATION
PROXY STATEMENT PURSUANT TO SECTION 14(a) OF THE SECURITIES
EXCHANGE ACT OF 1934
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tion 240.14a-11(c) or Section 240.14a-12
ZAPATA CORPORATION
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[Zapata logo]
September 21, 2004
To Our Stockholders:
You are cordially invited to attend the Annual Meeting of Stockholders of
Zapata Corporation, to be held on November 1, 2004, at 11:00 a.m., local time,
at the Canandaigua Inn on the Lake, 770 South Main Street, Canandaigua, New
York, 14424.
At the meeting, stockholders will be asked to consider matters contained in
the enclosed Notice of Annual Meeting of Stockholders, we will report on the
progress of the Company, comment on matters of interest and respond to your
questions. A copy of the Company's Annual Report to Stockholders for the year
ended December 31, 2003 containing our consolidated financial statements
preceded or accompanies this mailing.
Registered stockholders can vote their shares by using a toll-free
telephone number. Instructions for using this convenient service are provided on
the proxy card. You may still vote your shares by marking your votes on the
proxy/instruction card. You may also vote your shares in person if you attend
the Annual Meeting thereby canceling any proxy previously given.
We appreciate your continued interest in Zapata.
Sincerely,
/s/ Avram A. Glazer
AVRAM A. GLAZER
Chairman of the Board,
President and Chief Executive Officer
ZAPATA CORPORATION
100 MERIDIAN CENTRE, SUITE 350
ROCHESTER, NEW YORK 14618
(585) 242-2000
NOTICE OF ANNUAL MEETING OF STOCKHOLDERS
TO BE HELD NOVEMBER 1, 2004
To the Stockholders of Zapata Corporation:
Notice is hereby given that the Annual Meeting of Stockholders (the "Annual
Meeting") of Zapata Corporation, a Nevada corporation ("Zapata" or the
"Company"), will be held on November 1, 2004 at the Canandaigua Inn on the Lake,
770 South Main Street, Canandaigua, New York, 14424 at 11:00 a.m., local time,
for the following purposes:
1. To elect two Class III directors;
2. To ratify the appointment of PricewaterhouseCoopers, LLP as the
Company's independent auditors; and
3. To transact such other business as may properly come before the
Annual Meeting or any adjournments thereof.
A copy of the Annual Report of the Company's operations during the year
ended December 31, 2003 was previously forwarded or accompanies this Proxy
Statement. A Proxy Statement and proxy/voting instruction card ("Proxy Card")
accompany this Notice. The enclosed Proxy Statement contains information
regarding the matters to be acted upon at the Annual Meeting.
The Board of Directors has set the close of business on September 15, 2004
as the record date for the Annual Meeting. Only stockholders of record at the
close of business on the record date are entitled to notice of, and to vote at
the Annual Meeting and any adjournments thereof. The stock transfer books of the
Company will not be closed following the record date. A list of such
stockholders will be available at the place of the Annual Meeting for inspection
at least ten (10) days prior to the Annual Meeting.
Stockholders are cordially invited and encouraged to attend the Annual
Meeting in person. In the event that stockholders cannot attend the Annual
Meeting, registered stockholders can vote their shares by completing and
returning the enclosed Proxy Card, properly signed or by using a toll-free
telephone number. Instructions for using this convenient service are provided on
the Proxy Card.
By Order of the Board of Directors,
/s/ Avram A. Glazer
AVRAM A. GLAZER
Chairman of the Board,
President and Chief Executive Officer
Rochester, New York
September 21, 2004
ZAPATA CORPORATION
100 MERIDIAN CENTRE, SUITE 350
ROCHESTER, NEW YORK 14618
(585) 242-2000
PROXY STATEMENT
GENERAL
This Proxy Statement, the accompanying Notice of Annual Meeting of
Stockholders and Proxy/Voting Instructions Card (the "Proxy Card") are being
furnished to the stockholders of Zapata Corporation ("Zapata" or the "Company")
by the Board of Directors in connection with the solicitation of proxies for use
at the Annual Meeting of Stockholders to be held on November 1, 2004, at 11:00
a.m., local time, at the Canandaigua Inn on the Lake, 770 South Main Street,
Canandaigua, New York, 14424 and at any adjournments thereof (the "Annual
Meeting").
It is contemplated that this Proxy Statement and the accompanying form of
Proxy Card will first be mailed to Zapata stockholders on or about September 24,
2004. The principal executive offices of the Company are located at 100 Meridian
Centre, Suite 350, Rochester, New York 14618; telephone (585) 242-2000.
As an alternative to voting by proxy or in person, registered stockholders
can simplify their voting and save the Company expense by calling 1-800-PROXIES
(or 1-800-776-9437). Telephone voting information is provided on the Proxy Card.
A Control Number, located above the stockholder's name and address on the lower
left of the Proxy Card, is designed to verify stockholders' identity and allow
them to vote their shares and confirm that their voting instructions have been
properly recorded.
If your shares are held in the name of a bank or broker, follow the voting
instructions on the form you receive. The availability of telephone voting will
depend on the voting processes of the bank or broker that holds your shares.
If you do not choose to vote by telephone, you may still return your Proxy
Card, properly signed, and the shares represented will be voted in accordance
with your directions. You can specify your choices by marking the appropriate
boxes on the Proxy Card. If your Proxy Card is signed and returned without
specifying choices, the shares will be voted as recommended by the Board of
Directors. If you do vote by telephone, it is not necessary to return your Proxy
Card.
The Company effected a one-for-ten reverse split of its outstanding shares
of common stock, par value $.01 per share (the "Common Stock"), on January 30,
2001 at 5:00 p.m. Where a number of shares of Common Stock is listed in this
Proxy Statement for a date or period prior to the effective date of the reverse
stock split, that number of shares of Common Stock has been proportionately
adjusted as if the one-for-ten reverse stock split had been in effect on that
prior date or during that prior period.
MATTERS TO BE CONSIDERED AT THE ANNUAL MEETING
At the Annual Meeting, including any adjournment(s) thereof, the
stockholders of Zapata will be asked to consider and vote upon the proposals to
elect directors and to ratify the Company's independent auditors which are
summarized in the attached Notice of Annual Meeting. The director nominees and
each proposal are described in more detail in this Proxy Statement.
RECORD DATE; OUTSTANDING SHARES; QUORUM
The Board of Directors of the Company has fixed the close of business on
September 15, 2004 (the "Record Date") as the date for the determination of
stockholders who are entitled to vote at the Annual Meeting and at any
adjournment(s) or postponement(s) thereof. As of the Record Date, the Company's
outstanding capital stock consisted of 2,391,315 shares of Common Stock held by
approximately 2,950 holders of record entitled to vote on the matters described
herein. Each share of Common Stock is entitled to one vote
1
in the election of directors and on each matter submitted for stockholder
approval. The Common Stock is the Company's only outstanding class of stock as
of the date of this Proxy Statement.
QUORUM; ABSTENTIONS AND NON-VOTES; VOTE REQUIRED
The presence at the meeting, in person or by proxy, of the holders of a
majority of the Company's outstanding shares of voting stock is necessary to
constitute a quorum for the transaction of business at the Annual Meeting.
Abstentions and broker non-votes (which occur if a broker or other nominee does
not have discretionary authority and has not received voting instructions from
the beneficial owner with respect to the particular item) are counted for
purposes of determining the presence or absence of a quorum for the transaction
of business. If there are not sufficient shares represented in person or by
proxy at the meeting to constitute a quorum, the meeting may be adjourned or
postponed in order to permit further solicitations of proxies by the Company.
With respect to the election of two Class III directors, the two nominees
receiving the highest number of affirmative votes will be elected as Class III
directors. The proposal to ratify the appointment of PricewaterhouseCoopers, LLP
as the Company's independent auditors will be approved if the number of votes
cast in favor of the action exceeds the number of votes cast in opposition and a
quorum is present. Abstentions and broker non-votes will have no effect on the
outcome of the election of directors or the approval of the independent
auditors.
The Malcolm I. Glazer Family Limited Partnership, a Nevada limited
partnership, which, as of the date of this Proxy Statement, held approximately
51% of the outstanding shares of Common Stock, has notified the Company that it
intends to vote all of its shares at the Annual Meeting in favor of the election
of nominees for director named herein and for the ratification of the
appointment of PricewaterhouseCoopers LLP.
VOTING PROXIES
All shares which are entitled to vote and are represented at the Annual
Meeting by properly executed proxies received prior to or at the meeting and not
revoked, will be voted as specified in the proxy. If no instructions have been
given in a proxy and authority to vote has not been withheld, the shares
represented thereby will be voted: for the election of all nominees for director
named herein; for the ratification of the appointment of PricewaterhouseCoopers,
LLP as the Company's independent auditors; and, in the discretion of the persons
named in the proxy on any other business that may properly come before the
Annual Meeting. Proxies may be revoked at any time prior to the exercise thereof
by filing with the Corporate Secretary, at the Company's principal executive
offices, a written revocation or a duly executed proxy bearing a later date or
by appearing at the meeting and voting in person.
STOCKHOLDER LIST
For a period of at least ten (10) days prior to the Annual Meeting, a
complete list of stockholders entitled to vote at the meeting will be available
at the place of the Annual Meeting so that stockholders of record may inspect
the list only for proper purposes.
EXPENSES OF SOLICITATION
The Company pays the cost of preparing, assembling and mailing this
proxy-soliciting material, and all costs of solicitation, including certain
expenses of brokers and nominees who mail proxy material to their customers or
principals.
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PROPOSAL 1
ELECTION OF DIRECTORS
Pursuant to the Company's Articles of Incorporation (the "Articles") and
By-Laws, the Board of Directors has fixed the size of the Board at seven (7)
directors. The Articles provide for division of the Board into three classes
(Class I, Class II and Class III) of as nearly equal number of directors as
possible. Thus, Class I and Class III are comprised of two directors each and
Class II is comprised of three directors.
The term of each Class of directors is three years with the term for one
Class expiring each year in rotation. As a result, each year, one Class of
directors is elected. The term of the Class III directors expires at the Annual
Meeting.
Proxies cannot be voted for a greater number of persons than the two
nominees named. If any nominee becomes unavailable for any reason, shares
represented by the proxies designated as such in the enclosed Proxy Card will be
voted for such person or persons, if any, as may be designated by the Board of
Directors. At present, it is not anticipated that any nominee will be unable to
serve. Directors will be elected by a plurality of the votes cast for each
director at the Annual Meeting.
NOMINEES FOR ELECTION AS DIRECTORS
Class III Nominees -- Three Year Term Expiring in the Year 2007
Edward S. Glazer, age 34, has served as a director since 1997. For more
than the past five years, he has been employed by, and has worked on behalf of,
Malcolm I. Glazer a self-employed private investor whose diversified portfolio
consists of investments in television broadcasting, restaurant equipment, food
services equipment, health care, banking, real estate, stocks, government
securities and corporate bonds, and who owns and controls the Malcolm I. Glazer
Family Limited Partnership. He has also been employed by, and has worked on
behalf of a number of entities owned and controlled by Malcolm I. Glazer,
including The Tampa Bay Buccaneers, a National Football League franchise, where
he serves as the Executive Vice President. Mr. E. Glazer is the brother of Avram
A. Glazer, Bryan G. Glazer and Darcie S. Glazer.
Robert V. Leffler, Jr., age 58, has served as a director since May 1995.
For more than the past five years, Mr. Leffler has owned and operated the
Leffler Agency, an advertising and marketing/public relations firm based in
Baltimore, Maryland and Tampa, Florida, which specializes in sports, rental real
estate and broadcast television. Mr. Leffler serves on the Audit and
Compensation Committees of the Company's Board of Directors.
THE BOARD RECOMMENDS A VOTE "FOR" THE ELECTION OF ALL NOMINEES AS CLASS III
DIRECTORS.
INFORMATION REGARDING DIRECTORS WHO ARE NOT NOMINEES FOR ELECTION AT THE ANNUAL
MEETING
Class I Directors -- Three Year Term Expiring in the Year 2005
Darcie S. Glazer, age 36, has served as a director since 2002. For more
than the past five years, she has been employed by, and has worked on behalf of,
Malcolm I. Glazer and a number of entities owned and controlled by Malcolm I.
Glazer, including First Allied Corporation. Ms. Glazer serves as the Executive
Vice President of First Allied Corporation. Ms. Glazer served as an investment
analyst for Zapata from 1996 to February 2001. She also serves as a director of
Omega Protein Corporation (NYSE: OME), Zapata's majority-owned subsidiary. Ms.
Glazer is the sister of Avram A. Glazer, Bryan G. Glazer, and Edward S. Glazer.
Bryan G. Glazer, age 39, has served as a director since May 1997. For more
than the past five years, he has been employed by, and has worked on behalf of,
Malcolm I. Glazer and a number of entities owned and controlled by Malcolm I.
Glazer, including The Tampa Bay Buccaneers. Mr. B. Glazer serves as the
Executive Vice President of The Tampa Bay Buccaneers. He also serves as a
director of the Tampa Bay Performing Arts Center. He is the brother of Avram A.
Glazer, Edward S. Glazer and Darcie S. Glazer.
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Class II Directors -- Three Year Term Expiring in the Year 2006
Avram A. Glazer, age 43, has been a director of Zapata since July 1993. Mr.
Glazer has served as President and Chief Executive Officer of the Company since
March 1995, and has also served as Chairman of the Board since March 1, 2002. He
serves as a director, president, and chief executive officer of Zap.Com
Corporation (OTCBB: ZPCM), Zapata's 98%-owned subsidiary (which until December
2000 was an internet advertising and e-commerce network company, and is
currently a public shell company). He is also Chairman of the Board and a
director of Omega Protein Corporation (NYSE: OME), Zapata's majority-owned
subsidiary, and a director of Safety Components International, Inc. (OTCBB:
SAFY), Zapata's majority-owned subsidiary. He has served in these capacities
with Omega Protein and Safety Components since January 1998 and January 2004,
respectively. Avram A. Glazer is the brother of Bryan G. Glazer, Edward S.
Glazer and Darcie S. Glazer.
Warren H. Gfeller, age 52, has served as a director since May 1997. For
more than the past five years, he has operated Clayton/Hamilton Equities,
L.L.C., Stranger Valley Company, L.L.C. and Tatgc Chemical and Manufacturing,
Inc. Mr. Gfeller also serves as a director and as chairman of the audit
committee of Inergy, LP (NASD: NRGY) and Duckwall-ALCO Stores, Inc. (NASD:
DUCK), and as a director of Gardner Bancshares, Inc., and the Kansas Wildscape
Foundation. Mr. Gfeller serves on the Audit and Compensation Committees of the
Company's Board of Directors.
John R. Halldow, age 37, has served as a director since June 2001. Mr.
Halldow is currently employed as the Director of Public Affairs for Rural Metro
Medical Services. From January 1999 through March 2003, Mr. Halldow served as
the Director of Government Relations for Erdman Anthony, an engineering firm, in
its Rochester, New York office. Prior to that time, from 1992 through December
1998, Mr. Halldow worked as the Eastern Regional Manager in the Office of U.S.
Representative Bill Paxon, in Victor, New York. Mr. Halldow serves on the Audit
Committee of the Company's Board of Directors.
BOARD OF DIRECTORS -- COMMITTEES AND MEETINGS
The Board of Directors has as two standing committees, the Audit Committee
and the Compensation Committee. The Board of Directors does not have a
nominating committee or a committee performing the function of a nominating
committee. The Board of Directors has determined that Zapata is a "controlled
company" for the purposes of Section 303A of the New York Stock Exchange Listed
Company Manual (the "NYSE Rules"), as the Malcolm I. Glazer Family Limited
Partnership holds more than 50% of the Company's Common Stock and voting power.
As a result, the Company is exempt from the provisions of Section 303A that
require it, among other things, to have a board of directors comprised of a
majority of independent directors, to have a compensation committee charter, and
a nominating committee, and it is making use of these exemptions.
Audit Committee. The primary objective and role of the Audit Committee is
to assist the Board in monitoring:
- the integrity of the accounting and financial reporting practices of the
Company;
- the qualifications and independence of the public accounting firm engaged
to prepare or issue an audit report on the financial statements of the
Company;
- performance of the Company's internal audit function; and
- the compliance by the Company with legal and regulatory requirements.
In doing so, the Audit Committee:
- meets with the Company's independent auditors to review the Company's
accounting policies, internal controls and other accounting and auditing
matters;
- confirms and assures the outside auditor's independence; makes
recommendations to the Board of Directors as to the engagement of
independent auditors; and
- approves the fees and other compensation to be paid to the independent
auditors.
4
The Board of Directors has adopted an amended and restated charter for the
Audit Committee which governs its structure, membership and operation, which is
attached as Appendix A to this Proxy Statement. The Committee has also
established procedures for the receipt, retention and treatment of complaints
received by the Company regarding accounting, internal accounting controls or
auditing matters, and the confidential, anonymous submission by employees of
concerns regarding these matters.
The Audit Committee currently is composed of Mr. Warren Gfeller (Chairman),
Mr. Robert V. Leffler, Jr. and Mr. John R. Halldow. The Board of Directors has
determined that Mr. Warren Gfeller qualifies as an "audit committee financial
expert," as defined by Item 402(h)(2) of Regulation S-K promulgated the
Securities and Exchange and Commission (the "Commission") under the Securities
Act of 1933, as amended (the "Securities Act"). The Board of Directors has also
determined that each member is "independent," as such term is defined by the
current listing standards of the NYSE Rules governing audit committees.
Compensation Committee. The Committee has overall responsibility for:
- approving and evaluating officer compensation plans, policies and
programs of the Company; and
- overseeing the production of an annual report on executive compensation
for inclusion in the Company's proxy statement.
The Compensation Committee currently is composed of Mr. Robert W. Leffler,
Jr. (Chairman) and Mr. Warren H. Gfeller. The Compensation Committee does not
have a charter.
During 2003, the Board of Directors held 4 meetings and acted by unanimous
written consent 3 times. In addition, the Audit Committee held 4 meetings and
the Compensation Committee held 3 meetings. During 2003, each director of the
Company attended at least 75% of the aggregate number of meetings of the Board
of Directors and committees on which each of them sit, except Edward Glazer who
attended 50% of the Board of Directors meetings in 2003.
CORPORATE GOVERNANCE
As a controlled company for the purposes of Section 303A of the NYSE Rules,
the Company is exempt from the provisions that require it, among other things,
to have a board of directors comprised of a majority of independent directors,
to have a compensation committee charter, and a nominating committee, and it is
making use of these exemptions. At such time when the Company ceases to be a
controlled company, it will adhere to the applicable transition periods provided
for by the NYSE Rules, in coming into full compliance with all of the
requirements of Section 303A.
Assuming the re-election of each of the nominees for director at the Annual
Meeting, the Board of Directors will have three members who have been determined
by the Board of Directors to be independent under Section 303A.02 of the NYSE
Rules. These directors are Messrs. Gfeller, Halldow and Leffler. The Board of
Directors made this determination on the basis that none of these directors has
any material relationship with the Company or any of its subsidiaries.
The non-management directors will meet at least four times a year without
management present. The Board will designate a director to lead such sessions.
The Board has not yet designated such director. The non-management directors can
set their own agenda, maintain minutes and report back to the Board as a whole.
Non-management directors who do not meet the independence requirements of the
NYSE Rules and any other applicable laws, rules and regulations regarding
independence may participate in these sessions, but those directors who do meet
the referenced independence requirements must meet in separate executive session
without the participation of other directors at least once a year.
As a "controlled company" for the purposes of Section 303A of the NYSE
Rules, and because of the relatively small size of the Board of Directors, the
Board of Directors has determined that it is appropriate not to have a
nominating committee. The entire Board of Directors functions in the capacity of
a nominating committee (which includes members that do not meet the NYSE
definition of "independent director").
5
Stockholders and members of the Company's Board submit nominees for
election to the Company's Board of Directors to the entire Board for its
consideration. Historically, the Company has not had a formal policy concerning
stockholder recommendations to the Board of Directors. Except for the
nominations made by the Malcolm I. Glazer Family Limited Partnership, the
Company has not received any recommendations from stockholders requesting that
the Board consider a candidate for inclusion among the slate of nominees in the
Company's Proxy Statement. The absence of such a policy does not mean, however,
that a recommendation would not have been considered had one been received. The
Board would consider any candidate proposed in good faith by a stockholder. To
do so, a stockholder should send the candidate's name, credentials, contact
information, and his or her consent to be considered as a candidate to the
Company's Chief Executive Officer and Chairman of the Board of Directors, Avram
Glazer. The proposing stockholder should also include his or her contact
information and a statement of his or her share ownership (how many shares owned
and for how long).
In evaluating director nominees, the Board considers the appropriate skills
and personal characteristics needed in light of the makeup of the current Board,
including considerations of character, background and experience. Other than the
foregoing, there are no stated minimum criteria for director nominees, although
the Board of Directors may also consider such other factors as it may deem are
in the best interests of the Company and its stockholders.
The Board of Directors identifies nominees by first evaluating the current
members of the Board willing to continue in service. Current members of the
Board with skills and experience that are relevant to the Company's business and
who are willing to continue in service are considered for re-nomination. If any
member of the Board does not wish to continue in service or if the Board decides
not to re-nominate a member for re-election, the Board then identifies the
desired skills and experience of a new nominee in light of the criteria above.
Current members of the Board of Directors are polled for suggestions as to
individuals meeting the criteria described above. The Board may also engage in
research to identify qualified individuals. To date, the Company has not engaged
third parties to identify or evaluate or assist in identifying potential
nominees, although the Company reserves the right in the future to retain a
third party search firm, if necessary.
Director nominee E. Glazer and directors A. Glazer, D. Glazer and B. Glazer
were submitted for nomination for election to the Company's Board of Directors
by the Malcolm I. Glazer Family Limited Partnership.
The Company encourages all incumbent directors, as well as all nominees for
election as director, to attend the Annual Meeting of Stockholders.
Stockholders who wish to communicate with the Board or any individual
director can write to:
Zapata Corporation
Board Administration
100 Meridian Centre, Suite 350
Rochester, New York 14618
The letter should indicate that the sender is a stockholder. Depending on
the subject matter, management will:
- forward the letter to the director or directors to whom it is addressed;
- attempt to handle the matter directly (as where information about the
Company or its stock is requested); or
- not forward the letter if it is primarily commercial in nature or relates
to an improper or irrelevant topic.
6
A summary of all relevant communications that are received after the last
meeting and which are not forwarded will be presented at each Board meeting
along with any specific communication requested by a director.
DIRECTORS' COMPENSATION
During 2003, directors who were not employees of the Company were paid an
annual retainer of $30,000 (on a quarterly basis), plus $1,000 for each
committee of the Board of Directors on which a director served. Those directors
who also are employees of the Company do not receive any additional compensation
for their services as directors.
EXECUTIVE OFFICERS
The following sets forth certain information with respect to the Executive
Officers of the Company, as of the date of this Proxy Statement. All officers of
the Company serve at the pleasure of the Company's Board of Directors until
their successors are elected and qualified.
NAME AGE POSITION
---- --- --------
Avram A. Glazer........................... 43 Chairman of the Board, President and Chief
Executive Officer
Leonard DiSalvo........................... 46 Vice President -- Finance and Chief Financial
Officer
Gordon E. Forth........................... 43 Secretary
Leonard DiSalvo, age 46, joined Zapata in September 1998 and currently
serves as its Vice President -- Finance and Chief Financial Officer. Mr. DiSalvo
also currently serves as Vice President -- Finance and Chief Financial Officer
of Zap.Com Corporation, a position he has held since April 1999, and a director
of Zapata's majority-owned subsidiary, Safety Components International, Inc.
(OTCBB: SAFY), a position he has held since January 2004. Mr. DiSalvo also
serves as Chairman of the Safety Components' Compensation Committee. Mr. DiSalvo
has 20 years of experience in the areas of finance and accounting. Mr. DiSalvo
served as a finance manager for Constellation Brands, Inc., a national
manufacturer and distributor of wine, spirits and beer, from 1996 to 1998. Prior
to that position, Mr. DiSalvo held various management positions in the areas of
finance and accounting at Bausch & Lomb Incorporated. Mr. DiSalvo is a Certified
Public Accountant.
Gordon E. Forth, age 43, has served as Zapata's Secretary since December
1998. Mr. Forth also serves as Secretary of Zap.Com Corporation, a position he
has held since April 1999. Mr. Forth is a partner of Woods Oviatt Gilman LLP, a
Rochester, New York based law firm. Mr. Forth has practiced law at the Woods
Oviatt firm since 1987.
See Proposal 1 -- Election of Directors above for information concerning
the Company's Chairman of the Board, President and Chief Executive Officer,
Avram A. Glazer.
7
EXECUTIVE COMPENSATION
The summary compensation table below sets forth information regarding
compensation with respect to 2003, 2002 and 2001 for services in all capacities
rendered to the Company and its subsidiaries by the Company's Chief Executive
Officer and the other most highly compensated executive officers of the Company
with annual compensation in excess of $100,000 who were serving as executive
officers during 2003 (the "Named Officers").
EXECUTIVE COMPENSATION
LONG-TERM
COMPENSATION
AWARDS
---------------
ANNUAL COMPENSATION SECURITIES
FISCAL ---------------------- UNDERLYING ALL OTHER
NAME AND PRINCIPAL POSITION YEAR SALARY($) BONUS($) OPTIONS/SARS(#) COMPENSATION
--------------------------- ------ --------- -------- --------------- ------------
Avram A. Glazer,(2)................... 2003 $400,000 $200,000 -- --
Chairman of the Board, President 2002 400,000 200,000 -- --
and Chief Executive Officer 2001 300,000 200,000 -- --
Leonard DiSalvo,(3)................... 2003 $150,594(1) $ 25,000 20,000 $7,025(4)
Vice President -- Finance and Chief 2002 139,880(1) 25,000 -- 5,550(4)
Financial Officer 2001 137,025(1) 25,000 12,500 3,154(4)
---------------
(1) Includes compensation deferred pursuant to the Company's qualified 401K
Plan.
(2) Mr. A. Glazer was elected Chairman of the Board of Zapata on March 1, 2002.
He also serves as President and Chief Executive Officer of both Zapata and
Zap.Com, Zapata's 98% owned subsidiary. Zapata allocated approximately
$4,000, $4,000 and $0 of Mr. A. Glazer's annual salary for 2003, 2002 and
2001, respectively, to Zap.Com under a shared services agreement between the
two companies. No amounts of Mr. A. Glazer's bonuses have been allocated to
Zap.Com.
(3) Mr. DiSalvo serves as Vice President -- Finance and Chief Financial Officer
of both Zapata and Zap.Com. Zapata allocated approximately $7,000, $7,000
and $0 of Mr. DiSalvo's annual salary for 2003, 2002 and 2001, respectively,
to Zap.Com under a shared services agreement between the two companies. No
amounts of Mr. DiSalvo's bonuses have been allocated to Zap.Com.
(4) Amounts presented represent the Company's matching contribution to Mr.
DiSalvo's account under the Zapata Corporation 401(k) Plan.
While the Company's officers receive benefits in the form of certain
perquisites, none of the Named Officers received perquisites which exceeded in
value the lesser of $50,000 or 10% of such officer's total annual salary and
bonus for any of the years shown in the Summary Compensation Table.
8
During 2002 and 2001, the Company did not grant or award any stock options,
stock appreciation rights or stock awards or cash awards to any of the Named
Officers. The following table provides information concerning the grant of stock
options for the Company's Common Stock made to the Named Officers during 2003:
OPTION GRANTS IN FISCAL 2003
POTENTIALLY REALIZABLE
PERCENT OF VALUE AT ASSUMED ANNUAL
NUMBER OF TOTAL RATE OF STOCK PRICE
SECURITIES OPTIONS APPRECIATION FOR
UNDERLYING GRANTED TO EXERCISE OPTION TERM(2)
OPTIONS EMPLOYEES IN PRICE EXPIRATION ------------------------
NAME GRANTED(1) FISCAL YEAR ($/SHARE) DATE 5% 10%
---- ---------- ------------ --------- ---------- ---------- ------------
Leonard DiSalvo............... 20,000 74.2% $54.50 12/08/2013 $685,000 $1,737,000
---------------
(1) Stock options are awarded at the fair market value of Common Stock at the
date of grant. All options are exercisable in cumulative one-third
installments vesting annually beginning on the first anniversary of the date
of grant.
(2) The amounts shown as potentially realizable values are based on arbitrarily
assumed rates of stock price appreciations of 5% and 10% over the full term
of the options (10 years), as required by applicable regulations and are
provided for illustrative purposes only and do not reflect the Company's
estimate or projection of future Common Stock prices.
The following table provides information concerning options held by the
Named Officers as of end of 2003.
AGGREGATED OPTION EXERCISES IN LAST FISCAL YEAR AND FISCAL YEAR-END OPTION
VALUES
NUMBER OF
SECURITIES UNDERLYING VALUE OF UNEXERCISED
SHARES UNEXERCISED OPTIONS IN-THE-MONEY OPTIONS
ACQUIRED VALUE AT FISCAL YEAR-END AT FISCAL YEAR-END($)
NAME ON EXERCISE REALIZED EXERCISABLE/UNEXERCISABLE EXERCISABLE/UNEXERCISABLE(1)
---- ----------- -------- ------------------------- ----------------------------
Avram A. Glazer............... -- -- 13,459/0 $158,009/$0
Leonard DiSalvo............... -- -- 9,833/24,167 $298,238/$218,937
---------------
(1) On December 31, 2003, the closing price per share of the Company's Common
Stock on the NYSE was $57.99.
CERTAIN EMPLOYEE BENEFITS
Zapata's executive officers participate or have participated in certain
stock option and incentive plans, retirement and profit sharing/401(k) plans
sponsored by Zapata, some of which are intended to qualify for tax-favored
treatment under the Internal Revenue Code, as amended (the "Code"). These plans
include Zapata's Amended and Restated 1996 Long-Term Incentive Plan, the Zapata
Pension Plan ("Pension Plan"), the Zapata Supplemental Pension Benefit Plan and
the Zapata Corporation 401(k) Plan.
The Amended and Restated 1996 Long-Term Incentive Plan (the "1996 LTIP")
was approved by the stockholders on December 5, 1996. The 1996 LTIP provides for
the granting of nonqualified stock options to key employees of the Company.
Under the 1996 LTIP, options may be granted by the Committee at prices
equivalent to the market value of the common stock on the date of grant. Options
become exercisable in one or more installments on such dates as the Committee
may determine. Unexercised options will expire on varying dates up to a maximum
of ten years from the date of grant. During 1999, the stockholders amended and
restated the 1996 LTIP to increase the number of shares available for options
granted under the plan from 500,000 to 1,000,000 shares. At December 31, 2003,
stock options covering a total of 104,566 shares had been exercised and a total
of 738,550 shares of common stock are available for future stock options or
other awards
9
under the 1996 LTIP. As of December 31, 2003 there were options for the purchase
of up to 156,884 shares outstanding under the 1996 LTIP.
Zapata maintains a pension plan that is a non-contributory qualified
defined benefit pension plan and is intended to qualify under Internal Revenue
Code sec.401(a). All employees of Zapata are eligible. Highly compensated
employees (generally, employees who own more than 5% of the stock of Zapata and
employees earning in excess of $85,000) became eligible to participate on
January 1, 2002. Based on the January 1, 2002 plan amendment, highly compensated
employees were credited with up to 5 years of prior service. An employee becomes
a participant upon completion of one-year of service (1,000 hours in a
computation period) or attainment of age 21, whichever is later. Retirement
benefits under the pension plan are based on an employee's length of employment,
average monthly compensation and social security covered compensation.
Compensation for this purpose includes salary and other compensation paid by
Zapata and reportable on Form W-2, but excludes fringe benefits (cash and
non-cash), including compensation related to stock option plans which is
reported in the above Summary Compensation Table. The Code limits the amount of
compensation that may be considered ($200,000 for 2003) and the annual benefits
which may be payable from the pension plan. Pension plan participants are 100%
vested in accrued benefits after five years of vesting service.
The following table shows the estimated annual benefit payable to employees
on retirement under Zapata's pension plan to employees in the specified
compensation and years of service classification. The retirement benefits shown
are based upon an employee retiring at age 65 in 2003 who elect to receive
benefits in the form of a single life annuity (although a participant can select
other methods of calculating benefits). The amounts shown are based on current
average social security wage base amounts and are not subject to any deduction
for social security or other offset amounts.
PENSION PLAN BENEFITS TABLE
YEARS OF SERVICE
------------------------------------------------
REMUNERATION(*) 15 20 25 30 35
--------------- ------- ------- ------- ------- --------
$125,000...................................... $29,804 $39,739 $49,674 $59,608 $ 69,543
150,000...................................... 36,179 48,239 60,299 72,358 84,418
175,000...................................... 42,554* 56,739* 70,924* 85,108* 99,293*
200,000...................................... 48,929* 65,239* 81,549* 97,858* 114,168*
225,000...................................... 48,929* 65,239* 81,549* 97,858* 114,168*
250,000...................................... 48,929* 65,239* 81,549* 97,858* 114,168*
300,000...................................... 48,929* 65,239* 81,549* 97,858* 114,168*
400,000...................................... 48,929* 65,239* 81,549* 97,858* 114,168*
450,000...................................... 48,929* 65,239* 81,549* 97,858* 114,168*
500,000...................................... 48,929* 65,239* 81,549* 97,858* 114,168*
---------------
(*) Internal Revenue Code limits covered compensation to $200,000 for 2003.
As a result of the January 2002 amendment to the pension plan, Zapata's
Named Officers who are currently employed by the Company are now eligible to
participate under the Pension Plan. The compensation covered by the pension plan
includes the annual salaries and bonus of Messrs. Avram Glazer and Leonard
DiSalvo, but no other amounts shown in the above Summary Compensation table.
Estimated credited years of service for Mr. Glazer is 7 years, and for Mr.
DiSalvo is 5 years. Amounts shown in the pension plan table are subject to
deductions to for social security.
The Zapata Supplemental Pension Plan was adopted effective April 1, 1992.
This plan provides supplemental retirement payments to certain former senior
executives of Zapata. The amounts of such payments equal the difference between
the amounts received under the applicable pension plan and the amounts that
would otherwise be received if pension plan payments were not reduced as the
result of the limitations upon compensation and benefits imposed by federal law.
Effective December 1994, the supplemental pension plan was frozen, except with
respect to benefits already accrued.
10
The Zapata 401(k) Plan is qualified under Sections 401(a) and 401(k) of the
Code. Under the Plan, 3 types of contributions are authorized: (1) employee
pre-tax, salary reduction contributions ("elective deferrals"); (2) matching
employer contributions for participants who make elective deferrals to the Plan;
and (3) discretionary employer contributions, based on cash flow, profitability
and other financial circumstances as Zapata determines to be relevant. The
matching contribution formula is 100% on elective deferrals up to 3% of
compensation for the year and 50% of all deferral contributions of more than 3%;
elective deferrals exceeding 5% of compensation for the year are not matched.
All employees are eligible for participation in the elective deferral and
matching contribution features of the plan upon attainment of age 21 or
completion of 3 months of service, whichever is later. For the purposes of
employer discretionary contributions, an employee enters the plan after
completing 1 year of service or attaining age 21, whichever is later. Matching
contributions are fully vested while discretionary employer contributions, if
any, vest 20% for each year of vesting service.
CODE OF ETHICS AND BUSINESS CONDUCT
The Company has adopted a Code of Ethics and Business Conduct to provide
guidance to the Company's directors and key employees, including the Company's
principal executive officer, principal accounting officer or controller or
persons performing similar functions (collectively, the "Selected Officers").
The Company will provide without charge, upon request, a copy of the Code of
Ethics and Business Conduct. Anyone wishing to obtain a copy should write to
Zapata Corporation Investor Relations, 100 Meridian Centre Suite 350, Rochester,
NY 14618.
SECTION 16(a) BENEFICIAL OWNERSHIP REPORTING COMPLIANCE
Section 16(a) of the Securities Exchange Act of 1934, as amended (the
"Exchange Act") requires the Company's directors and executive officers, and
persons who own more than 10% of a registered class of the Company's equity
securities, to file with the Commission and the NYSE initial reports of
ownership and reports of changes in ownership of Common Stock and other equity
securities of the Company. Directors, officers and greater than 10% stockholders
are required by the Commission's regulations to furnish the Company with copies
of all Section 16(a) forms they file. Based upon a review of the copies of such
forms furnished to the Company and written representations that no other reports
were required, the Company believes that during 2003, all such filings required
to be made by such persons were timely made in accordance with the requirements
of the Exchange Act.
REPORT OF THE COMPENSATION COMMITTEE
The Compensation Committee of the Board of Directors (the "Committee") is
composed of two non-employee directors. The Committee is responsible for setting
and administering the policies that govern executive salaries, bonuses, and
other compensation including stock option grants.
The Committee endeavors to ensure that the compensation programs for the
Company's executive officers are effective in attracting and retaining key
executives responsible for the success of the Company and are administered in an
appropriate fashion in the long-term best interests of the Company and its
stockholders. The Committee seeks to align total compensation for the Company's
executive officers with the performance of the Company in light of its corporate
strategy and objectives, including the returns to stockholders, and the
individual performance of each executive officer in assisting the Company in
accomplishing its goals. The Company's compensation program consists of (1) an
annual component, which includes base salary and an annual incentive bonus, and
(2) a long-term component potentially consisting of stock options, stock
appreciation rights, stock awards and cash awards. The Committee takes into
consideration the recommendations of management in awarding compensation and
setting compensation levels.
The Committee's policy with respect to 2003 base salaries and bonuses for
executive officers was to keep such amounts competitive with other companies of
comparable size and complexity. Compensation in any particular case may vary
from the industry average on the basis of annual and long-term Company
performance as well as individual performance. The Committee will exercise its
discretion to set compensation where, in its judgment, external, internal or
individual circumstances warrant it.
11
BASE SALARY
The determination of the base salaries for all the executive officers
during 2003 was based on the Committee's subjective evaluation of individual and
Company performance and did not involve application of objective measures of
performance.
ANNUAL INCENTIVE BONUS
Bonuses were paid to executive officers for 2003 based on the subjective
evaluation of individual and Company performance.
STOCK OPTIONS
Stock options are designed to provide long-term incentives and rewards,
tied to the price of the Company's Common Stock. The Committee believes that
stock options, which provide value to the participants only when the Company's
stockholders benefit from stock price appreciation, are an appropriate
complement to the Company's overall compensation policies. All employees,
including executive officers, may receive stock options from time to time under
the Company's stock option plan. The Committee takes into consideration the
recommendations of management in awarding stock option grants to non-executive
employees and directors. The decision to award stock options to an executive is
based upon such considerations as the executive's overall compensation package,
job performance, future potential, awards made to executives at comparable
companies and other factors.
Stock option grants made during 2003 were based on the subjective criteria
as described above.
COMPENSATION OF CHIEF EXECUTIVE OFFICER
The compensation policies described above apply to the compensation of the
President and Chief Executive Officer. The Committee is directly responsible for
determining the salary level, annual bonuses and all awards and grants to the
President and Chief Executive Officer. The Committee also gives consideration to
its assessment of past performance and its expectations of future contributions.
In the Committee's opinion, the salary and bonus of Mr. Avram Glazer reflect his
position, duties, responsibilities with, and contributions to the Company.
Robert V. Leffler, Jr., Chairman
Warren H. Gfeller
COMPENSATION COMMITTEE INTERLOCKS AND INSIDER PARTICIPATION
During 2003, Mr. Robert V. Leffler, Jr. and Mr. Warren H. Gfeller served on
the Company's Compensation Committee.
REPORT OF THE AUDIT COMMITTEE
The Company's management has the primary responsibility for the financial
statements and the reporting process including the systems of internal controls.
The primary purpose of the Audit Committee of the Company's Board of Directors
is to assist the Board of Directors in to assist the Board in monitoring:
- the integrity of the accounting and financial reporting practices of the
Company,
- the qualifications and independence of the public accounting firm engaged
to prepare or issue an audit report on the financial statements of the
Company,
- performance of the Company's internal audit function, and
- the compliance by the Company with legal and regulatory requirements.
The Audit Committee met four times during 2003. Representatives from the
Company's independent auditors, PricewaterhouseCoopers, LLC ("PwC") were present
at each of the Committee's four meetings.
12
On January 8, 2004, the Audit Committee received from PwC the written
disclosures and the letter regarding PwC's independence required by Independence
Standards Board Standard No. 1, Independence Discussions with Audit Committees.
Additionally, the Audit Committee and PwC have also discussed PwC's independence
relative to the Company.
The Audit Committee has discussed with PwC the Company's financial
management and financial structure and the matters relating to the conduct of
the audit required to be discussed by Statement on Auditing Standards 61. The
Audit Committee has also reviewed and discussed with the Company's management
the Company's audited consolidated financial statements relating to 2003.
Based upon the review and discussions described above, the Audit Committee
recommended to the Company's Board of Directors that the Company's consolidated
financial statements for 2003, audited by PwC be included in the Company's 2003
Annual Report on Form 10-K filed with the Securities and Exchange Commission on
March 26, 2004.
Warren H. Gfeller, Chairman
John R. Halldow
Robert V. Leffler, Jr.
CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS
During 2002, the Company finalized the terms of a consulting agreement with
its former Chairman of the Board of Directors, Malcolm Glazer. Subject to the
terms of the agreement, the Company pays Malcolm Glazer $122,500 per month until
April 30, 2006. The agreement also provides for health and other medical
benefits for Mr. Glazer and his wife. This agreement will terminate in the event
of Mr. Glazer's death or permanent disability.
Gordon E. Forth, who serves as corporate secretary of Zapata and Zap.Com,
is a partner at Woods Oviatt Gilman LLP which has acted as counsel to Zapata and
Zap.Com.
SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT
The following table indicates the number of shares of Common Stock owned
beneficially as of August 31, 2004 by:
- each person known to the Company to beneficially own more than 5% of the
outstanding shares of Common Stock,
- each director,
- the Named Officers, and
- all directors and executive officers as a group.
Except to the extent indicated in the footnotes to the following table,
each of the persons or entities listed therein has sole voting and investment
power with respect to the shares which are reported as beneficially owned by
such person or entity. The Company does not know of any arrangements, including
any pledge by any person of securities of the Company, the operation of which
may at a subsequent date result in a change of control of the Company.
The following calculations are based upon the shares of the Company's
Common Stock issued and outstanding on August 31, 2004 plus the number of such
shares of common stock outstanding pursuant to Commission Rule 13d-3(d)(1).
Shares of the Company's common stock subject to options exercisable within 60
days of August 31, 2004 are deemed outstanding for purposes of computing the
percentage of the person holding such option but are not deemed outstanding for
computing the percentage of any other person.
13
ZAPATA CORPORATION
AMOUNT AND
NATURE OF
NAME AND ADDRESS BENEFICIAL PERCENT
OF BENEFICIAL OWNER OWNERSHIP(1) OF CLASS(1)
------------------- ------------ -----------
Malcolm I. Glazer(2)(3)..................................... 1,259,138 51.9%
Wellington Management Company, LLP(4)....................... 208,800 8.7%
Royce & Associates, LLC(5).................................. 180,500 7.5%
Avram A. Glazer(3).......................................... 17,159 *
Robert V. Leffler, Jr.(3)................................... 1,333 *
Warren H. Gfeller(3)........................................ 2,666 *
Bryan G. Glazer(3).......................................... 15,625 *
Edward S. Glazer(3)......................................... 14,125 *
Darcie S. Glazer(3)......................................... 14,125 *
Leonard DiSalvo(3).......................................... 9,833 *
John R. Halldow(3).......................................... 666 *
All directors and executive officers of Zapata as a group (8
persons).................................................. 75,532 3.1%
---------------
* Represents beneficial ownership of less than 1.0%.
(1) The calculations for these columns are based upon the number of shares of
Common Stock issued and outstanding on August 31, 2004, plus the number of
shares of Common Stock deemed outstanding pursuant to Commission Rule
13d-3(d)(1). Shares of Company Common Stock subject to options exercisable
within 60 days of August 31, 2004 are deemed outstanding for purposes of
computing the percentage of the person holding such option but are not
deemed outstanding for computing the percentage of any other person.
(2) 1,226,638 of the shares reported are held in the name of the Malcolm I.
Glazer Family Limited Partnership, 270 Commerce Drive, Rochester, New York
14623, in which Malcolm Glazer controls the sole general partner.
(3) Presently reported ownership includes 32,500, 13,459, 1,333, 2,666, 14,125,
14,125, 9,833, 666 and 14,125 shares issuable under options exercisable
within 60 days of March 31, 2004 held by Messrs. M. Glazer, A. Glazer,
Leffler, Gfeller, B. Glazer, E. Glazer, DiSalvo, Halldow and Ms. D. Glazer,
respectively.
(4) Based solely on a Schedule 13G, dated February 12, 2004, Wellington
Management Company ("WMC"), LLP, 75 State St., Boston, Massachusetts 02109,
is the beneficial owner of 208,800 shares. WMC is an investment adviser
registered under Section 203 of the Investment Advisers Act of 1940 and acts
as parent company or control person in accordance with Rule
13d-b1(b)(1)(ii)(G).
(5) Based solely on a Schedule 13G, dated February 9, 2004, Royce & Associates
("Royce"), LLC, 1414 Avenue of the Americas, New York, New York 10019, is
the beneficial holder of 80,500 shares. Royce is an investment adviser
registered under Section 203 of the Investment Advisers Act of 1940. Royce
possesses voting power over the shares owned.
The following tables indicate the number of shares of common stock of
Zapata's subsidiaries owned beneficially as of August 31, 2004 by each Named
Officer and all directors and executive officers as a group. Except to the
extent indicated in the footnotes to the following table, each of the persons or
entities listed
14
therein has sole voting and investment power with respect to the shares which
are reported as beneficially owned by such person or entity.
Safety Components International, Inc.
AMOUNT AND
NATURE OF
NAME AND ADDRESS BENEFICIAL PERCENT
OF BENEFICIAL OWNER OWNERSHIP OF CLASS
------------------- ---------- --------
Avram Glazer................................................ -- --
Leonard DiSalvo............................................. -- --
All directors and executive officers of Zapata as a group... -- --
Omega Protein Corporation
AMOUNT AND
NATURE OF
NAME AND ADDRESS BENEFICIAL PERCENT
OF BENEFICIAL OWNER OWNERSHIP OF CLASS
------------------- ---------- --------
Avram Glazer(1)............................................. 568,200 2.3%
Leonard DiSalvo............................................. -- --
All directors and executive officers of Zapata as a group... 568,200 2.3%
---------------
* Represents beneficial ownership of less than 1.0%.
(1) Includes 568,200 shares issuable under options exercisable within 60 days of
August 31, 2004.
Zap.Com Corporation
AMOUNT AND
NATURE OF
NAME AND ADDRESS BENEFICIAL PERCENT
OF BENEFICIAL OWNER OWNERSHIP OF CLASS
------------------- ---------- --------
Avram Glazer(1)............................................. 415,000 *
Leonard DiSalvo(2).......................................... 100,000 *
All directors and executive officers of Zapata as a group... 525,000 *
---------------
* Represents beneficial ownership of less than 1.0%
(1) Includes 365,000 shares issuable under options exercisable within 60 days of
August 31, 2004. These options expire on October 20, 2004.
(2) Includes 100,000 shares issuable under options exercisable within 60 days of
August 31, 2004. These options expire on October 20, 2004.
CHANGE OF CONTROL
On September 2, 2004, the Malcolm I. Glazer Family Limited Partnership
filed a Schedule 13D (the "13D") indicating that it had acquired 114,700 shares
of the Company's Common Stock in a broker assisted open market transaction at
the price of $61.50 per share, for an aggregate consideration of $7,054,050.
Malcolm Glazer controls the sole general partner of the Malcolm I. Glazer Family
Limited Partnership. The 13D states that the Malcolm I. Glazer Family Limited
Partnership acquired the Company's shares with a capital contribution of
personal funds from Mr. Glazer.
15
Following completion of the transaction, the Malcolm I. Glazer Family
Limited Partnership beneficially owns 1,259,138 shares of the Company's Common
Stock, which constitutes approximately 51.9% of the Company's outstanding shares
of Common Stock. As the result the transaction, the Malcolm I. Glazer Family
Limited Partnership's beneficial ownership of the Company's voting securities
increased from approximately 47.2%. This amount includes 32,500 shares
beneficially owned by Malcolm Glazer that are purchasable upon the exercise of
stock options presently or within 60 days after the date hereof under certain of
the Registrant's stock option plans.
16
STOCKHOLDER RETURN PERFORMANCE GRAPH
The Commission requires a five-year comparison of the cumulative total
return of the Company's Common Stock with that of (1) a broad equity market
index and (2) a published industry or line-of-business index, or index of peer
companies with similar market capitalization. Pursuant to the Commission's
rules, the graph presented below includes comparisons of the performance (on a
cumulative total return basis) of the Company's Common Stock with the S&P
SmallCap 600 Index and the Dow Jones US Industrial Diversified Index. The stock
price performance shown on the graph is not necessarily indicative of future
price performance.
The Stock Performance Graph shall not be deemed incorporated by reference
by any general statement incorporating by reference the Proxy Statement into any
filing under the Securities Act or under the Exchange Act, except to the extent
that the Company specifically incorporates this document by reference and shall
not otherwise be deemed filed.
COMPARISON OF 5 YEAR CUMULATIVE TOTAL RETURN*
AMONG ZAPATA CORPORATION, THE S & P SMALLCAP 600 INDEX
AND THE DOW JONES US INDUSTRIAL, DIVERSIFIED INDEX
(LINE GRAPH)
CUMULATIVE TOTAL RETURN
-------------------------------------------------------------------------------------
12/98 12/99 12/00 12/01 12/02 12/03
-------------------------------------------------------------------------------------
Zapata Corporation 100.00 37.76 12.76 23.67 24.94 47.34
S & P SmallCap 600 100.00 112.40 125.67 133.89 114.30 158.63
Dow Jones US Industrial,
Diversified 100.00 135.47 136.45 122.67 79.65 107.76
---------------
* $100 invested on 12/31/98 in stock or index -- including reinvestment of
dividends. Fiscal year ending December 31.
Copyright (C) 2002, Standard & Poor's, a division of The McGraw-Hill Companies,
Inc. All rights reserved.
www.researchdatagroup.com/S&P.htm
17
PROPOSAL 2
RATIFICATION OF APPOINTMENT OF INDEPENDENT AUDITORS
The Board of Directors, acting on the recommendation of its Audit
Committee, has selected the firm of PricewaterhouseCoopers, LLP to act as the
Company's independent auditors for 2004. The Board of Directors considers
PricewaterhouseCoopers, LLP to be well qualified. A representative of that firm
is expected to be present at the Annual Meeting to respond to appropriate
questions and will be given an opportunity to make a statement if he or she so
desires. Neither the firm nor any of its partners has any direct financial
interest or any indirect financial interest in the Company other than as
independent auditors. This selection is being submitted for ratification at the
meeting.
This proposal will be ratified if the number of votes cast in favor of the
action exceeds the number of votes cast in opposition to the action, and a
quorum is present. If not ratified, the selection will be reconsidered by the
Board, although the Board of Directors will not be required to select different
independent auditors for the Company.
THE BOARD OF DIRECTORS RECOMMENDS A VOTE "FOR" THE RATIFICATION OF THE
BOARD'S APPOINTMENT OF PRICEWATERHOUSECOOPERS LLP AS THE COMPANY'S INDEPENDENT
AUDITORS.
AUDITORS' FEES
Our Audit Committee's policy is to pre-approve all audit and permitted
non-audit services provided by the independent auditors, PricewaterhouseCoopers
LLP subject to the de minimis exceptions for non-audit services described in
Section 10A(i)(1)(B) of the Exchange Act which are approved by the Audit
Committee prior to the completion of the audit. The Audit Committee may delegate
authority to a subcommittee to grant pre-approvals of audit and permitted
non-audit services, provided that decisions of such subcommittee to grant
pre-approvals shall be presented to the full Audit Committee at its next
scheduled meeting. Our Audit Committee pre-approved all such audit and non-audit
services provided by the independent auditors. These services have included
audit services, audit-related services, tax services and other services. Any
pre-approval is detailed as to the particular service or category of services.
The independent auditors and management are required to periodically report to
the Audit Committee regarding the extent of services provided by the independent
auditors in accordance with this pre-approval and the fees for the services
performed to date. The Audit Committee may also pre-approve particular services
on a case-by-case basis.
YEAR ENDED YEAR ENDED
DECEMBER 31, 2003 DECEMBER 31, 2002
----------------- -----------------
Audit Fees.......................................... $93,000 $86,400
Audit-Related Fees.................................. 15,100 11,500
Tax Fees............................................ 105,200 236,900
All Other Fees...................................... -- --
18
HOUSEHOLDING
The Commission allows the Company to deliver a single proxy statement and
annual report to an address shared by two or more stockholders. This delivery
method, referred to as "householding," can result in significant cost savings
for the Company. In order to take advantage of this opportunity, Zapata and
banks and brokerage firms that hold your shares have delivered only one proxy
statement and annual report to multiple stockholders who share an address unless
the Company has received contrary instructions from one or more of the
stockholders. The Company will deliver promptly, upon written or oral request, a
separate copy of the proxy statement and annual report to a stockholder at a
shared address to which a single copy of the documents was delivered. A
stockholder who wishes to receive a separate copy of the proxy statement and
annual report, now or in the future, may obtain one, without charge, by
addressing a request to the Vice-President Finance and Chief Financial Officer,
Zapata Corporation, 100 Meridian Centre, Suite 350, Rochester, New York 14618,
(585) 242-2000. Stockholders sharing an address who are receiving multiple
copies of proxy materials and annual reports and wish to receive a single copy
of such materials in the future should submit their request by contacting the
Company in the same manner. If you are the beneficial owner, but not the record
holder, of the Company's shares and wish to receive only one copy of the proxy
statement and annual report in the future, you will need to contact your broker,
bank or other nominee to request that only a single copy of each document be
mailed to all stockholders at the shared address in the future.
OTHER MATTERS
As of the date of this Proxy Statement, the Board of Directors knows of no
other matter to be presented at the Annual Meeting. If any additional matter
properly comes before the meeting, it is intended that proxies in the enclosed
form will be voted on the matter in accordance with the discretion of the
persons named in the proxy.
STOCKHOLDER PROPOSALS FOR 2005 ANNUAL MEETING OF STOCKHOLDERS
Under applicable securities laws, stockholder proposals must be received by
the Company no later than May 24, 2005 to be considered for inclusion in the
Company's proxy statement relating to the 2005 Annual Stockholders Meeting. If
the Company changes the date of the 2005 Annual Meeting by more than 30 days
from the date of the 2004 Annual Meeting, then stockholder proposals must be
received by the Company a reasonable time before the Company begins to print and
mail its proxy statement for the 2005 Annual Meeting. A stockholder proposal
submitted outside the process of Commission Rule 14a-8 is considered untimely if
it is not received by August 9, 2005.
By Order of the Board of Directors,
/s/ AVRAM A. GLAZER
Avram A. Glazer,
Chairman of the Board,
President and Chief Executive Officer
Rochester, New York
September 21, 2004
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APPENDIX A
ZAPATA CORPORATION
AMENDED AND RESTATED AUDIT COMMITTEE CHARTER
I.
COMMITTEE PURPOSE
The Audit Committee of Zapata Corporation (the "COMPANY") is a standing
committee of the Board of Directors of the Company (the "BOARD") established by
action of the Board permitted under the By-Laws of the Company and the Nevada
Revised Statutes. The primary objective and role of the Audit Committee is to
(a) assist the Board in monitoring (1) the integrity of the accounting and
financial reporting practices of the Company, (2) the qualifications and
independence of the public accounting firm engaged to prepare or issue an audit
report on the financial statements of the Company (the "INDEPENDENT AUDITOR"),
(3) performance of the Company's internal audit function, and (4) the compliance
by the Company with legal and regulatory requirements; and (b) prepare any
reports required by law to be prepared by the Committee, including any reports
required to be included in the Company's annual proxy statement and as otherwise
required by law.
II.
COMMITTEE MEMBERSHIP
The membership of the Committee consists of at least three directors, as
determined by the Board. Each member shall meet the independence and experience
requirements of the listing standards of The New York Stock Exchange ("NYSE"),
Section 10A(m)(3) of the Securities Exchange Act of 1934 (the "EXCHANGE ACT")
and the rules and regulations of the Securities and Exchange Commission (the
"COMMISSION"). In addition, at least one member of the Committee shall be an
"audit committee financial expert," as defined by the Commission. Committee
members will not serve simultaneously on the audit committees of more than two
other public companies.
The members of the Committee shall be directors of the Company appointed by
the Board and shall serve until their successors are duly elected and qualified
or their earlier death or resignation. Any member of the Committee may be
replaced or removed by the Board at any time with or without cause. Resignation
or removal of a director from the Board, for whatever reason, shall
automatically constitute resignation or removal, as applicable, from the
Committee. Vacancies may be filled by the Board. Unless a Chair is appointed by
the Board, the Committee members may designate a Chair by majority vote of all
Committee members.
III.
COMMITTEE STRUCTURE AND OPERATIONS
The Committee shall meet as often as it determines necessary, but no less
frequently than once each quarter. The agenda for Committee meetings shall be
prepared by the Chair of the Committee with input from other Committee members,
management and the independent auditors. The Committee may request any officer
or employee of the Company or the Company's outside counsel or independent
auditor to attend a meeting of the Committee or to meet with any members of, or
consultants to, the Committee.
The Committee shall meet in person or by conference telephone or other
communications equipment by means of which all persons participating in the
meeting can hear all such participants. A majority of the members of the
Committee shall constitute a quorum for purposes of holding a meeting and the
Committee may act by a vote of a majority of members present at such meeting.
The Committee shall maintain written minutes of its meetings, which minutes will
be filed with the minutes of the meetings of the Board. In lieu of a meeting,
the Committee may act by unanimous written consent. Committee members will be
furnished with copies of the minutes of each meeting and any action taken by
unanimous consent. The Committee will report its actions at the next meeting of
the Board. The Committee is authorized and empowered to adopt its own
A-1
rules of procedure not inconsistent with (a) any provision hereof, (b) any
provision of the By-Laws of the Company, or (c) the Nevada Revised Statutes.
IV.
COMMITTEE COMMUNICATIONS/REPORTING
The independent auditor reports directly to the Committee. The Committee is
expected to maintain free and open communication with the independent auditor,
the Company's internal auditors, and the Company's management. This
communication will include periodic separate executive sessions with each of
these parties. The Committee shall meet periodically, but no less frequently
than annually, with management, the internal auditors (if applicable), and the
independent accountants in separate executive sessions.
V.
EDUCATION OF COMMITTEE MEMBERS
The Company is responsible for providing the Committee with educational
resources related to accounting principles and procedures, current accounting
topics pertinent to the Company and other material as may be requested by the
Committee. The Company will assist the Committee in maintaining appropriate
financial literacy.
VI.
AUTHORITY AND RESPONSIBILITY
The Committee has sole authority over the appointment and replacement of
the independent auditor and is directly responsible for compensation, and
oversight of the independent auditor (including resolution of disagreements
between management and the independent auditor regarding financial reporting).
The Committee shall pre-approve all auditing services and permitted
non-audit services, including the fees and terms thereof, to be performed for
the Company by its independent auditor, subject to the de minimis exceptions for
non-audit services described in Section 10A(i)(1)(B) of the Exchange Act which
are approved by the Committee prior to the completion of the audit. The
Committee may delegate authority to a subcommittee to grant pre-approvals of
audit and permitted non-audit services, provided that decisions of such
subcommittee to grant pre-approvals shall be presented to the full Audit
Committee at its next scheduled meeting.
The Committee will have the authority necessary to discharge its duties and
responsibilities, including the authority to retain independent legal,
accounting or other experts or consultants, as it deems appropriate and to
authorize and conduct investigations into any matters within the Committee's
scope of responsibilities. Any communications between the Committee and legal
counsel in the course of obtaining legal advice will be considered privileged
communications of the Company, and the Committee will take all necessary steps
to preserve the privileged nature of those communications.
The Company shall provide for appropriate funding, as determined by the
Committee, for payment of compensation to (a) the independent auditor for the
purpose of preparing or issuing an audit report or performing other audit,
review or attest services for the Company, (b) any independent counsel,
accountants or other advisors employed by the Committee, and (c) ordinary
administrative expenses of the Committee that are necessary or appropriate in
carrying out its duties.
The Committee's specific responsibilities, to the extent that the Committee
determines the performance of such responsibilities to be necessary or
appropriate, in carrying out its oversight role and the timing of the
performance of those responsibilities, are delineated in the Audit Committee
Responsibilities Calendar attached to this Charter as APPENDIX A. The
responsibilities set forth in APPENDIX A may be amended from time to time by the
Board and the timing of such responsibilities may be amended from time to time
by the Board or the Committee. In addition, the Committee may perform any other
activities consistent with this
A-2
Charter, the Company's By-Laws and policies and procedures and applicable laws,
rules and regulations, as the Committee or the Board deems necessary or
appropriate.
The Committee shall establish procedures for handling complaints regarding
accounting, internal accounting controls and auditing matters, including
procedures for confidential, anonymous submission of concerns by employees
regarding accounting and auditing matters.
The Committee will at least annually perform an evaluation of the
performance of the Committee and its members. The Committee will also review and
reassess the adequacy of this Charter annually and recommend any proposed
changes to the Board for approval.
VII.
LIMITATION OF COMMITTEE'S ROLE
The Committee relies on the expertise and knowledge of management, the
internal auditors and the independent auditor in carrying out its oversight
responsibilities. Management of the Company is responsible for determining the
Company's financial statements are complete, accurate and in accordance with
generally accepted accounting principles. The independent auditor is responsible
for auditing the Company's financial statements. It is not the duty of the
Committee to plan or conduct audits, to determine that the financial statements
are complete and accurate and are in accordance with generally accepted
accounting principles, to conduct investigations, or to assure compliance with
laws and regulations or the Company's internal policies, procedures and
controls.
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APPENDIX A
AUDIT COMMITTEE RESPONSIBILITIES CALENDAR
WHEN PERFORMED
Audit Committee Meetings
---------------------------------------------------------------------------------------------------------
Q Q Q Q AS
RESPONSIBILITY 1 2 3 4 NEEDED
---------------------------------------------------------------------------------------------------------
A. FINANCIAL STATEMENT AND DISCLOSURE MATTERS
---------------------------------------------------------------------------------------------------------
1. Review and discuss with management and the internal auditor x
(if applicable) the annual audited financial statements,
including disclosures made in management's discussion and
analysis, and recommend to the Board whether the audited
financial statements should be included in the Company's
Form 10-K.
---------------------------------------------------------------------------------------------------------
2. Review and discuss with management and the independent x x x
auditor the Company's quarterly financial statements prior
to the filing of its Form 10-Q, including the results of the
independent auditor's review of the quarterly financial
statements.
---------------------------------------------------------------------------------------------------------
3. Discuss with management and the independent auditor x x x x
significant financial reporting issues and judgments made in
connection with the preparation of the Company's financial
statements, including any significant changes in the
Company's election or application of accounting principles,
any major issues as to the adequacy of the Company's
internal controls and any special steps adopted in light of
material control deficiencies and the adequacy of
disclosures about changes in internal controls over
financial reporting.
---------------------------------------------------------------------------------------------------------
4. Review and discuss quarterly reports from the independent x x x x
auditor on: (a) All critical accounting policies and
practices to be used.
(b) All alternative treatments of financial information
within GAAP that have been discussed with management,
ramifications of the use of such alternative disclosures and
treatments, and the treatment preferred by the independent
auditor.
(c) Other material written communications between the
independent auditor and management, such as any management
letter or schedule of unadjusted differences.
---------------------------------------------------------------------------------------------------------
5. Discuss with management the Company's earnings press x x x x
releases, including the use of "pro forma" or "adjusted"
non-GAAP information, as well as financial information and
earnings guidance provided to analysts and rating agencies
(if applicable). Such discussion may be done generally,
consisting of discussing the types of information to be
disclosed and the type of presentations to be made.
---------------------------------------------------------------------------------------------------------
6. Discuss with management and the independent auditor the x x x x x
effect of regulatory and accounting initiatives as well as
off-balance sheet structures on the Company's financial
statements.
---------------------------------------------------------------------------------------------------------
7. Discuss with management the Company's major financial risk x
exposures and the steps management has taken to monitor and
control such exposures, including the Company's risk
assessment and risk management policies.
---------------------------------------------------------------------------------------------------------
A-4
---------------------------------------------------------------------------------------------------------
Q Q Q Q AS
RESPONSIBILITY 1 2 3 4 NEEDED
---------------------------------------------------------------------------------------------------------
8. Discuss with the independent auditor the matters required to x x x x
be discussed by Statement on Auditing Standards No. 61
relating to the conduct of the audit, including any
difficulties encountered in the course of the audit work,
any restrictions on the scope of activities or access to
requested information, and any significant disagreements
with management.
---------------------------------------------------------------------------------------------------------
9. Review disclosures made to the Committee by the Company's x x x x
CEO and CFO during their certification process for the Form
10-K and Form 10-Q about any significant deficiencies in the
design or operation of internal controls or material
weaknesses therein and any fraud involving management or
other employees who have a significant role in the Company's
internal controls.
---------------------------------------------------------------------------------------------------------
10. Prepare the report required by the rules of the Commission x
to be included in the Company's annual proxy statement.
---------------------------------------------------------------------------------------------------------
11. Ensure that a public announcement of the Company's receipt x
of an audit opinion that contains a going concern
qualification is made promptly.
---------------------------------------------------------------------------------------------------------
B. OVERSIGHT OF THE COMPANY'S RELATIONSHIP WITH THE
INDEPENDENT AUDITOR.
---------------------------------------------------------------------------------------------------------
12. Review and evaluate the lead partner of the independent x x
auditor team.
---------------------------------------------------------------------------------------------------------
13. Obtain and review a report from the independent auditor at x x
least annually regarding (a) the independent auditor's
internal quality-control procedures, (b) any material issues
raised by the most recent internal quality-control review,
or peer review, of the firm, or by any inquiry or
investigation by governmental or professional authorities
within the preceding five years respecting one or more
independent audits carried out by the firm, (c) any steps
taken to deal with any such issues, and (d) all
relationships between the independent auditor and the
Company. Evaluate the qualifications, performance and
independence of the independent auditor, including
considering whether the auditor's quality controls are
adequate and the provision of permitted non-audit services
is compatible with maintaining the auditor's independence,
taking into account the opinions of management and internal
auditors (if applicable). The Committee shall present its
conclusions with respect to the independent auditor to the
Board.
---------------------------------------------------------------------------------------------------------
14. Ensure the rotation of the lead (or coordinating) audit x
partner and reviewing audit partner as required by law.
---------------------------------------------------------------------------------------------------------
15. Set policies for the Company's hiring of employees or former x
employees of the independent auditor who participated in any
capacity in the audit of the Company.
---------------------------------------------------------------------------------------------------------
16. Review with the independent auditor and management prior to x
the audit, the audit scope and the planning and staffing of
the audit.
---------------------------------------------------------------------------------------------------------
A-5
ZAPATA CORPORATION
PROXY / VOTING INSTRUCTIONS
ZAPATA CORPORATION
100 MERIDIAN CENTRE
SUITE 350
ROCHESTER, NEW YORK 14618
THIS PROXY IS SOLICITED ON BEHALF OF THE BOARD OF DIRECTORS
The undersigned hereby appoints Avram Glazer and Leonard DiSalvo, and each, as
attorney and agent with full power of substitution, to vote as proxy all the
shares of Common Stock of Zapata Corporation the undersigned would be entitled
to vote if personally present at the Annual Meeting of Stockholders of Zapata
Corporation to be held on November 1, 2004 and at any adjournment(s) thereof, in
the manner indicated on the reverse hereof and in their discretion on such other
matters as may properly come before said meeting or any adjournments thereof.
To vote by telephone, please follow the instructions on the reverse of this
card. To vote by mail, please sign and date the card on the reverse side and
return promptly by mail in the enclosed, postage pre-paid envelope.
If you wish to vote in accordance with the recommendations of the Board of
Directors, you may just sign and date below and mail in the postage paid
envelope provided. Specific choices may be made on the reverse side.
Dated __________________, 2004
________________________________
Signature
________________________________
Signature if held jointly
When signing as Executor, Administrator,
Trustee or the like, please give full title.
THIS PROXY WILL BE VOTED AS DIRECTED, OR IF NO DIRECTION IS INDICATED, WILL BE
VOTED FOR PROPOSAL 1 AND 2. ANY PROXY WHICH IS EXECUTED IN SUCH A MANNER AS NOT
TO WITHHOLD AUTHORITY TO VOTE FOR THE ELECTION OF ANY DIRECTOR NOMINEE, SHALL BE
DEEMED TO GRANT SUCH AUTHORITY. THE BOARD OF DIRECTORS RECOMMENDS A VOTE FOR
PROPOSALS 1 AND 2.
[X] Please mark your vote as in this example.
(1) Election of Directors FOR ALL [ ] WITHHOLD AUTHORITY TO VOTE FOR [ ] EXCEPTIONS [ ]
(except as specified below) nominees listed below all nominees listed below
Edward S. Glazer
Robert V. Leffler, Jr.
Instructions: To withhold vote for any individual nominee, mark the "Exceptions"
box and write that nominee's name(s) in the space provided below.
-------------------------
(2) Proposal to ratify selection of PricewaterhouseCoopers LLP as independent
auditors
FOR [ ] AGAINST [ ] ABSTAIN [ ]
(Sign and date on reverse side)
THE ZAPATA CORPORATION - ANNUAL MEETING - November 1, 2004
ZAPATA CORPORATION NOW OFFERS PHONE VOTING
24 HOURS A DAY, 7 DAYS A WEEK
ON A TOUCH-TONE PHONE, CALL TOLL-FREE 1-800-PROXIES (OR 1-800-776-9437). YOU
WILL HEAR THESE INSTRUCTIONS:
- - ENTER THE CONTROL NUMBER FROM THE BOX ABOVE, JUST BELOW THE PERFORATION.
- - YOU WILL THEN HAVE TWO OPTIONS: OPTION 1: TO VOTE AS THE BOARD OF
DIRECTORS RECOMMENDS ON ALL PROPOSALS; OR OPTION 2: TO VOTE ON EACH
PROPOSAL SEPARATELY.
- - YOUR VOTE WILL BE REPEATED TO YOU AND YOU WILL BE ASKED TO CONFIRM IT.
IF YOU HAVE VOTED BY PHONE, PLEASE DO NOT RETURN THE PROXY CARD.
THANK YOU FOR VOTING