SEC Info - Peerless Group Inc - DEF 14A

SEC Info

Home

My Interests

Help

Please Sign In

Peerless Group Inc · DEF 14A · For 5/4/98

Filed On 4/3/98 · SEC File 0-21399 · Accession Number 1047469-98-13591

  As Of               Filer                 Filing     On/For/As Docs:Pgs              Issuer               Agent

 4/03/98  Peerless Group Inc                DEF 14A     5/04/98    1:18                                     Merrill Corp/New/- FA

Definitive Proxy Solicitation Material · Schedule 14A
Filing Table of Contents

Document/Exhibit                   Description                      Pages   Size 

 1: DEF 14A     Schedule 14a                                          18     89K

Document Table of Contents

Page	(sequential)	\|	(alphabetic)	Top
			Alternative Formats (RTF, XML, et al.) Certain Transactions Employee Stock Purchase Plan Executive Compensation Report on Executive Compensation Rodney L. Armstrong, Jr Stock Options
1	1st Page
2	Rodney L. Armstrong, Jr
9	Executive Compensation
"	Stock Options
11	Employee Stock Purchase Plan
12	Report on Executive Compensation
13	Certain Transactions

DEF 14A 1st Page of 18 TOC Top Previous Next Bottom Just 1st
Sponsored Ads...

SCHEDULE 14A INFORMATION

PROXY STATEMENT PURSUANT TO SECTION 14(a) OF THE SECURITIES EXCHANGE ACT OF 1934

Filed by the Registrant ( X )
Filed by a Party other than the Registrant ( )

Check the appropriate box:
( ) Preliminary Proxy Statement
( ) Confidential, for Use of the Commission Only
( X ) Definitive Proxy Statement (as Permitted by Rule 14a-6(e)(2))
( ) Definitive Additional Materials
( ) Soliciting Material Pursuant to Section 240.14a-11(c) or Section
240.14a-12

PEERLESS GROUP, INC.
(Name of Registrant as Specified in Its Charter)

(Name of Person(s) Filing Proxy Statement, If Other Than The Registrant)

Payment of Filing Fee (Check the appropriate box):
( X ) No fee required.
( ) Fee computed on table below per Exchange Act Rules 14a-6(i)(1) and 0-11.

1) Title of each class of securities to which transaction applies:

2) Aggregate number of securities to which transaction applies:

3) Per unit price or other underlying value of transaction computed
pursuant to Exchange Act Rule 0-11 (Set forth the amount on which the filing
fee is calculated and state how it was determined):

4) Proposed maximum aggregate value of transaction:

5) Total fee paid:

( ) Fee paid previously with preliminary materials.

( ) Check box if any part of the fee is offset as provided by Exchange Act
Rule 0-11(a)(2) and identify the filing for which the offsetting fee
was paid previously. Identify the previous filing by registration
statement number, or the form or schedule and the date of its filing.
1) Amount Previously Paid:
2) Form, Schedule or Registration Statement No.:
3) Filing Party:
4) Date Filed:

DEF 14A 2nd Page of 18 TOC 1st Previous Next Bottom Just 2nd

PEERLESS GROUP, INC.
1212 EAST ARAPAHO ROAD
RICHARDSON, TEXAS 75081
TELEPHONE (972) 497-5500

Dear Stockholder:

You are cordially invited to attend the 1998 Annual Meeting of Stockholders
of Peerless Group, Inc. on Monday, May 4, 1998, at 1:00 p.m., Central Daylight
Time. The meeting will be held in the Michelangelo Room at the Omni Richardson
Hotel, 701 East Campbell Road, Richardson, Texas. Your Board of Directors and
management look forward to greeting those stockholders able to attend in person.

At the meeting, you will be asked to consider and elect two Class II
directors to serve until the 2001 Annual Meeting of Stockholders. Your Board of
Directors has unanimously nominated William F. Dunbar and Allen D. Fleener for
re-election as directors. You are also being asked to ratify the appointment of
Ernst & Young LLP as the Company's independent auditors for 1998. Information
about the business to be conducted at the meeting is set forth in the
accompanying proxy statement, which you are urged to read carefully. During the
meeting, I will review with you the affairs and progress of the Company during
1997. Officers of the Company will be present to respond to questions from
stockholders.

The vote of every stockholder is important. The Board of Directors
appreciates and encourages stockholder participation in the Company's affairs.
There is a space on the enclosed proxy for you to indicate if you will be able
to attend the meeting. Whether or not you plan to attend the meeting, please
sign, date and return the enclosed proxy promptly in the envelope provided. Your
shares will then be represented at the meeting, and the Company will be able to
avoid the expense of further solicitation. If you attend the meeting, you may,
at your discretion, withdraw the proxy and vote in person.

On behalf of the Board of Directors, thank you for your cooperation and
continued support.

Sincerely,

[PASTE UP SIG]

RODNEY L. ARMSTRONG, JR.
CHAIRMAN AND CHIEF EXECUTIVE OFFICER

April 3, 1998

DEF 14A 3rd Page of 18 TOC 1st Previous Next Bottom Just 3rd

PEERLESS GROUP, INC.
1212 EAST ARAPAHO ROAD
RICHARDSON, TEXAS 75081
TELEPHONE (972) 497-5500

------------------------

NOTICE OF ANNUAL MEETING OF STOCKHOLDERS
TO BE HELD MAY 4, 1998

------------------------

The Annual Meeting of Stockholders of Peerless Group, Inc., a Delaware
corporation (the "Company"), will be held in the Michelangelo Room at the Omni
Richardson Hotel, 701 East Campbell Road, Richardson, Texas, on Monday, May 4,
1998 at 1:00 p.m., Central Daylight Time, for the following purposes:

(1) To elect two persons to serve as Class II directors until the 2001
Annual Meeting of Stockholders and until their successors are elected;

(2) To approve the appointment of Ernst & Young LLP as independent auditors
of the Company for the year ending December 31, 1998; and

(3) To transact such other business as may properly come before the meeting
or any adjournments thereof.

Only stockholders of record on March 24, 1998 are entitled to notice of and
to vote at the meeting or any adjournment or adjournments thereof.

WHETHER OR NOT YOU PLAN TO ATTEND THE MEETING IN PERSON, YOU ARE URGED TO
FILL OUT, SIGN AND MAIL PROMPTLY THE ENCLOSED PROXY IN THE ACCOMPANYING
ENVELOPE. NO POSTAGE IS REQUIRED IF MAILED IN THE UNITED STATES. PROXIES
FORWARDED BY OR FOR BROKERS OR FIDUCIARIES SHOULD BE RETURNED AS REQUESTED BY
THEM. THE PROMPT RETURN OF PROXIES WILL SAVE THE EXPENSE INVOLVED IN FURTHER
COMMUNICATION.

By Order of the Board of Directors,
[PASTE UP SIG]

ANN L. PUDDISTER
CORPORATE SECRETARY

Richardson, Texas
April 3, 1998

DEF 14A 4th Page of 18 TOC 1st Previous Next Bottom Just 4th

PEERLESS GROUP, INC.
1212 EAST ARAPAHO ROAD
RICHARDSON, TEXAS 75081
TELEPHONE (972) 497-5500

------------------------

PROXY STATEMENT
FOR
ANNUAL MEETING OF STOCKHOLDERS
TO BE HELD MAY 4, 1998

------------------------

SOLICITATION AND REVOCABILITY OF PROXIES

This Proxy Statement is furnished in connection with the solicitation of
proxies by the Board of Directors of Peerless Group, Inc. ("Company") for use at
the Annual Meeting of Stockholders of the Company to be held on May 4, 1998 (the
"Annual Meeting") and at any and all adjournments thereof. The approximate date
on which this Proxy Statement and accompanying proxy card are first being sent
or given to stockholders is April 6, 1998.

Shares represented by each proxy, if properly executed and returned to the
Company prior to the Annual Meeting, will be voted as directed, but if not
otherwise specified, will be voted for the election of the two Class II
directors and to ratify the appointment of Ernst & Young LLP as independent
auditors, all as recommended by the Board of Directors. A stockholder executing
the proxy may revoke it at any time before it is voted by giving written notice
to the Secretary of the Company, by subsequently executing and delivering a new
proxy or by voting in person at the Annual Meeting (although attending the
Annual Meeting without executing a ballot or executing a subsequent proxy will
not constitute revocation of a proxy).

OUTSTANDING VOTING SECURITIES OF THE COMPANY

On March 24, 1998, the record date for determining stockholders entitled to
vote at the Annual Meeting, there were outstanding 4,911,657 shares of Common
Stock, par value $.01 per share ("Common Stock"). The presence at the Annual
Meeting, in person or by proxy, of the holders of at least a majority of the
shares of Common Stock as of the record date is necessary to constitute a
quorum. Each share of Common Stock is entitled to one vote for each director to
be elected and upon all other matters to be brought to a vote by the
stockholders at the Annual Meeting. The affirmative vote of a plurality of the
shares of Common Stock present or represented at the Annual Meeting is required
to elect the Class II directors, and the affirmative vote of a majority of the
shares of Common Stock present or represented at the Annual Meeting is required
to ratify the appointment of Ernst & Young LLP. Abstentions and broker non-votes
are counted for purposes of determining the presence of a quorum at the Annual
Meeting and have no effect on determining the outcome of the election of
directors or on the proposal to ratify the appointment of Ernst & Young LLP.

SECURITY OWNERSHIP OF CERTAIN
BENEFICIAL OWNERS AND MANAGEMENT

The following table sets forth as of February 28, 1998 certain information
with regard to the beneficial ownership of the Common Stock by (i) all persons
known by the Company to be the beneficial owner of more than 5% of the
outstanding Common Stock; (ii) each director and nominee for director of the
Company; (iii) the Company's Chief Executive Officer, each of the Company's four
most highly compensated executive officers other than the Chief Executive
Officer who earned more than $100,000 in salaries and bonuses and who were
serving as executive officers at the end of 1997, and any person who served as
an executive officer during 1997 and would have been considered one of the four
most highly compensated executive officers had that person been serving as such
at the end of 1997, based on salary and bonus

DEF 14A 5th Page of 18 TOC 1st Previous Next Bottom Just 5th

earned during 1997 (collectively, the "Named Executive Officers"); and (iv) all
directors and executive officers of the Company as a group. Unless otherwise
indicated, all shares shown in the table below are held with sole voting and
investment power by the person or entity indicated.

· Download Table

TOTAL PERCENT
BENEFICIAL OF
NAME OF BENEFICIAL OWNER OWNERSHIP CLASS(1)
---------------------------------------- ----------- --------

Allied Investment Corporation(2)........ 307,889(3) 6.08
Allied Capital Corporation II(2)........ 253,240 5.19
Fleet Financial Group, Inc.(4).......... 305,000(5) 6.25
Hathaway Partners Investment Limited
Partnership(6)........................ 300,000 6.15
Rodney L. Armstrong, Jr.(7)............. 794,640(8) 16.20
Gary J. Austin(9)....................... 98,001(10) 2.00
Steven W. Tomson(7)..................... 47,125(11) *
Kevin W. Marsh(7)....................... 236,800(12) 4.84
Allen D. Fleener(13).................... 150,300(14) 3.07
William F. Dunbar(15)................... 6,500(16) *
David A. O'Connor(17)................... 6,000(16) *
Jane C. Walsh(18)....................... 3,500(16) *
All directors and executive officers as
a group (a total of 10 persons)....... 1,386,765(19) 27.73

------------------------

* Less than 1%

(1) Percentage of outstanding shares that the named person, entity or group
would beneficially own if such person, entity or group, and only such
person, entity or group, exercised all warrants and options held that are
exercisable within 60 days.

(2) 1666 K St. N.W., 9th Floor, Washington, D.C. 20006. Information with
respect to beneficial ownership of shares of Common Stock by Allied
Investment Corporation and Allied Capital Corporation II is based solely
upon information provided to the Company by both Allied entities. The
Company has been informed that Allied Investment Corporation and Allied
Capital Corporation II disclaim beneficial ownership of shares of Common
Stock held by each other.

(3) Includes warrants to purchase 181,654 shares of Common Stock.

(4) One Federal Street, Boston, Massachusetts 02110. Information with respect
to beneficial ownership of shares of Common Stock by Fleet Financial Group,
Inc. is based solely upon the latest report of Fleet Financial Group, Inc.
on Schedule 13G dated February 13, 1998, as filed with the Securities and
Exchange Commission.

(5) Fleet Financial Group, Inc. has sole voting power with respect to 250,000
of such shares.

(6) 119 Rowayton Avenue, Rowayton, Connecticut 06853. Information with respect
to beneficial ownership of shares of Common Stock by Hathaway Partners
Investment Limited Partnership is based solely upon the latest report of
Hathaway Partners Investment Limited Partnership on Schedule 13D dated
April 18, 1997, as filed with the Securities and Exchange Commission.

(7) 1212 East Arapaho Road, Richardson, Texas 75081.

(8) Includes options to purchase 25,200 shares of Common Stock. Mr. Armstrong
has shared voting and investment power with respect to 55,900 of the shares
beneficially owned by him.

(9) Mr. Austin retired as an officer and director of the Company effective
February 28, 1998.

(10) Includes options to purchase 24,000 shares of Common Stock.

(11) Includes options to purchase 20,400 shares of Common Stock.

(12) Includes options to purchase 13,600 shares of Common Stock.

(13) 15301 Dallas Parkway, Suite 840, Dallas, Texas 75248.

(14) Includes options to purchase 11,100 shares of Common Stock.

(15) 4350 North Fairfax Drive, Suite 480, Arlington, Virginia 22203.

(16) Includes options to purchase 1,500 shares of Common Stock.

(17) 800 Linkhorn Drive, Virginia Beach, Virginia 23451.

(18) 89 Turnpike Street, North Andover, Massachusetts 01845-5045.

(19) Includes options to purchase 121,160 shares of Common Stock.

DEF 14A 6th Page of 18 TOC 1st Previous Next Bottom Just 6th

PROPOSAL I
ELECTION OF DIRECTORS

The Company's Certificate of Incorporation divides the Board of Directors
into three classes. The term of office of Class II directors expires at the
Annual Meeting, Class III directors will serve until the 1999 Annual Meeting of
Stockholders, and Class I directors will serve until the 2000 Annual Meeting of
Stockholders.

It is intended that the names of the nominees listed below will be placed in
nomination at the Annual Meeting to serve as Class II directors and that the
persons named in the proxy will vote for their election. All nominees listed
below are currently members of the Board of Directors. Each nominee has
consented to being named in this Proxy Statement and to serve if elected. If any
nominee becomes unavailable to serve as a director for any reason, the shares
represented by the proxies will be voted for such person, if any, as may be
designated by the Board of Directors. However, management has no reason to
believe that any nominee will be unavailable.

NOMINEES
CLASS II--TERM TO EXPIRE IN 2001

· Enlarge/Download Table

NAME AGE CURRENT POSITION
----------------------------- --- ---------------------------------------------------------

Allen D. Fleener 67 Director

William F. Dunbar 39 Director

DIRECTORS CONTINUING IN OFFICE
CLASS III--TERM TO EXPIRE IN 1999

· Enlarge/Download Table

NAME AGE CURRENT POSITION
----------------------------- --- ---------------------------------------------------------

David A. O'Connor 63 Director

Jane C. Walsh 44 Director

CLASS I--TERM TO EXPIRE IN 2000

· Enlarge/Download Table

NAME AGE CURRENT POSITION
----------------------------- --- ---------------------------------------------------------

Rodney L. Armstrong, Jr. 53 Chairman of the Board and Chief Executive Officer

Gary J. Austin, a former Class I director, resigned as an officer and
director of the Company effective February 28, 1998. The Board of Directors has
not yet filled the vacancy on the Board resulting from his resignation.

Set forth below is a description of the backgrounds of each of the directors
and director nominees of the Company.

RODNEY L. ARMSTRONG, JR. is one of the Company's founders and has been
Chairman of the Board and Chief Executive Officer since 1989. Mr. Armstrong was
the Company's President from 1994 to June 1996. Mr. Armstrong has 24 years of
experience in the information technology and financial institution marketplace.
In 1974, he joined United Virginia Bankshares (now known as Crestar Corporation)
as Corporate Planning Officer responsible for the bank holding company's
long-range strategic planning. Between 1977 and 1989, Mr. Armstrong held various
management positions with EDS, where he started and managed its electronic ATM
and point of sale networking division and was responsible for corporate

DEF 14A 7th Page of 18 TOC 1st Previous Next Bottom Just 7th

development for its Financial and Insurance Group, before initiating the buyout
of EDS's community bank division by the Company in 1989.

ALLEN D. FLEENER has been a director of the Company since its inception in
1989. Mr. Fleener has been a general partner of Seed Company Partners, L.P., a
high-technology venture capital partnership, since he co-founded the partnership
in 1992. Mr. Fleener was the President of InterVoice, Inc., a publicly-held
interactive voice response system company, from 1985 to 1991. Mr. Fleener
currently serves on the board of directors of Pavilion Technologies, Inc., a
manufacturing process control, modeling and optimization software company that
is a spin-off from Microelectronics and Computer Technology Corporation.

WILLIAM F. DUNBAR became a director of the Company in October 1996. Mr.
Dunbar is currently the President of Pebble Hill Capital, a limited liability
company that he formed in February 1997 to invest in privately-held growth
companies. Mr. Dunbar was a member of the board of directors of Allied Capital
Corporation II and several non-public companies until December 1996. Mr. Dunbar
joined Allied Capital in 1987 and until December 1996 was President of Allied
Capital Corporation II, a publicly-traded venture capital company, and Executive
Vice President of Allied Investment Corporation, Allied Capital Corporation and
several other Allied affiliates. He also served as Chairman of the National
Association of Small Business Investment Companies in 1995.

DAVID A. O'CONNOR became a director of the Company in October 1996. Mr.
O'Connor is Vice Chairman of the Board of Honor Technologies, Inc., the
successor by merger to Internet, Inc., the owner of the MOST-Registered
Trademark- ATM network. From 1984 to December 1996, Mr. O'Connor was President
and Chief Executive Officer of Internet, Inc. Mr. O'Connor is also a member of
the board of a non-public company, Online Resources and Communications
Corporation, a provider of electronic banking commerce through electronic
banking facilities.

JANE C. WALSH became a director of the Company in October 1996. Mrs. Walsh
has served as President and Chief Executive Officer of Northmark Bank, a
full-service commercial bank located in North Andover, Massachusetts, since she
co-founded the bank in 1987. Mrs. Walsh currently serves on the boards of
Northmark Bank and Winchester Healthcare, both non-public companies. Mrs. Walsh
is also Chairman of the Board of Trustees of Merrimack College. See "Certain
Transactions."

VOTE REQUIRED

The affirmative vote of a plurality of the shares of Common Stock present in
person or represented by proxy at the Annual Meeting is required to elect the
nominees for director.

THE BOARD OF DIRECTORS RECOMMENDS A VOTE FOR THE ELECTION OF THE NOMINEES
FOR DIRECTOR NAMED ABOVE.

DEF 14A 8th Page of 18 TOC 1st Previous Next Bottom Just 8th

MEETINGS OF DIRECTORS AND COMMITTEES

The business of the Company is managed under the direction of the Board of
Directors. The Board meets on a regularly scheduled basis to review significant
developments affecting the Company and to act on matters requiring Board
approval. It also holds special meetings when an important matter requires Board
action between scheduled meetings. The Board of Directors met six times and
acted by unanimous written consent five times during 1997. During 1997, each
member of the Board participated in at least 75% of all Board and applicable
committee meetings held during the period for which he or she was a director.

The Board of Directors has established audit, compensation, employee stock
purchase plan and nominating committees to devote attention to specific subjects
and to assist in the discharge of its responsibilities. The functions of those
committees, their current members and the number of meetings held during 1997
are described below.

AUDIT COMMITTEE. The Board of Directors has a standing Audit Committee
which provides the opportunity for direct communications between the independent
auditors and the Board. The Audit Committee meets with the Company's independent
auditors periodically to review their effectiveness during the annual audit
program and to discuss the Company's internal control policies and procedures.
The members of the Audit Committee are Mr. Dunbar and Mrs. Walsh. The Audit
Committee met two times during 1997.

COMPENSATION COMMITTEE. The Board of Directors also has a standing
Compensation Committee that provides recommendations to the Board of Directors
regarding the compensation of executive officers of the Company. The
Compensation Committee consists of Mr. Fleener and Mr. O'Connor. The
Compensation Committee may periodically retain a consulting firm specializing in
compensation matters to advise the Compensation Committee. The Compensation
Committee met three times during 1997.

EMPLOYEE STOCK PURCHASE PLAN COMMITTEE. The Employee Stock Purchase Plan
Committee, which consists of Mr. Armstrong, Mr. Fleener and Mr. Dunbar,
administers the Employee Stock Purchase Plan. See "Executive
Compensation--Employee Stock Purchase Plan." The Employee Stock Purchase Plan
Committee did not meet during 1997.

NOMINATING COMMITTEE. The Board of Directors has appointed Mrs. Walsh and
Mr. O'Connor as the Nominating Committee to nominate persons for election as
directors. The Nominating Committee did not meet during 1997. The Company's
Certificate of Incorporation provides that a stockholder may nominate a director
if written notice is delivered to the Company 60 days in advance of an annual
meeting of the Company's stockholders, or within ten days after the date of
notice or public disclosure by the Company of a special meeting involving the
election of directors. No such nominations have been received from stockholders.

SECTION 16(a) BENEFICIAL OWNERSHIP REPORTING COMPLIANCE

Section 16(a) of the Securities Exchange Act of 1934, as amended, requires
the Company's directors, executive officers and beneficial owners of more than
10% of the Common Stock to file with the Securities and Exchange Commission
initial reports of ownership and reports of changes in ownership of Common Stock
and other equity securities of the Company. Based solely upon its review of the
copies of such forms received by it and written representations that no Form 5's
were required from reporting persons, the Company believes that all such reports
were submitted on a timely basis during the year ended December 31, 1997.

DEF 14A 9th Page of 18 TOC 1st Previous Next Bottom Just 9th

EXECUTIVE COMPENSATION

The following table sets forth certain information concerning compensation
paid during each of the last three years to the Named Executive Officers.

SUMMARY COMPENSATION TABLE

· Enlarge/Download Table

LONG-TERM COMPENSATION
AWARDS
----------------------------
ANNUAL COMPENSATION RESTRICTED SECURITIES
----------------------------------- STOCK UNDERLYING ALL OTHER
NAME AND PRINCIPAL POSITION YEAR SALARY ($) BONUS ($) AWARD(S) ($)(1) OPTIONS (#) COMPENSATION ($)
------------------------------------ --------- ----------- ----------- --------------- ----------- -------------------

Rodney L. Armstrong, Jr. ........... 1997 147,680 -- -- 10,000 4,073
Chairman and Chief Executive 1996 132,025 78,000 -- 10,000 2,896
Officer 1995 117,975 81,431 -- 24,000 2,636

Gary J. Austin(2) .................. 1997 124,800 -- -- 10,000 624
Vice Chairman 1996 111,000 78,000 -- 10,000 4,440
1995 115,625 40,000 61,500 24,000 1,530

Steven W. Tomson ................... 1997 142,512(3) -- -- 10,000 4,238
President 1996 164,561(3) 76,300 90,300 34,000 4,235
1995 99,292(3) 39,900 18,450 -- --

Kevin W. Marsh ..................... 1997 183,716(3) -- -- 10,000 4,460
Executive Vice President-- 1996 197,523(3) 45,027 -- 5,000 4,480
Sales(4) 1995 153,013(3) 37,929 -- 12,000 2,030

------------------------

(1) In 1995, the Company awarded Mr. Austin and Mr. Tomson 24,000 and 7,200
shares of restricted Common Stock, respectively. During 1996, the number of
shares of restricted Common Stock granted to Mr. Tomson was 16,800. Mr.
Austin's restricted stock awards are vested. The other restricted stock
awards vest on the fourth anniversary of the date of award.

(2) Mr. Austin retired as an officer and director of the Company effective
February 28, 1998.

(3) Includes the payment of sales commissions.

(4) Effective July 1997, Mr. Marsh became Executive Vice President responsible
for all Company sales. Previously, Mr. Marsh was Vice President responsible
for sales of outsourcing services.

EMPLOYMENT CONTRACTS

The Company has not entered into employment agreements with any of its
executive officers or key employees that would obligate any executive officer or
key employee to remain employed by the Company for a certain period of time. All
employees of the Company are required to enter into a standard associate
agreement with the Company. Such agreement states that either party may
terminate the employment relationship at any time and contains standard
employment terms, non-compete clauses, restrictions on disclosing confidential
information and an assignment to the Company of all rights in any inventions of
the employee.

STOCK OPTIONS

The Board of Directors and the stockholders of the Company approved the
Company's 1997 Stock Option Plan effective February 18, 1997 (the "1997 Plan").
The maximum number of shares of Common Stock authorized for issuance under the
1997 Plan is 450,000, subject to adjustment for stock splits and similar events.
The Compensation Committee of the Board of Directors administers and interprets
the

DEF 14A 10th Page of 18 TOC 1st Previous Next Bottom Just 10th

1997 Plan and has discretion to select the individuals who receive grants of
stock options under the 1997 Plan and terms of those awards. Key employees,
directors and advisors of the Company may receive grants under the 1997 Plan.

The 1997 Plan provides that in the event of a "Change of Control" of the
Company, all unmatured installments of Options will become fully accelerated and
exercisable in full. "Change of Control" is defined as the occurrence of any of
the following events: (i) a consolidation or merger in which the stockholders of
the Company receive less than 40% of the voting securities of the surviving
entity, (ii) a sale, lease, exchange or other transfer of more than 50% of the
Company's assets, (iii) a tender offer or exchange offer is made and consummated
for 20% or more of the outstanding voting securities of the Company, (iv) the
termination of control of the Company by directors in office as of the date of
stockholder approval of the 1997 Plan and their successors approved in
accordance with the terms of the 1997 Plan ("Continuing Directors"), by virtue
of their ceasing to constitute a majority of the entire Board, (v) the
acquisition of beneficial ownership of 20% of the voting power of the Company's
outstanding voting securities by any person or group who beneficially owned less
than 15% of such voting power on the date the 1997 Plan was approved by the
Board or the acquisition of beneficial ownership of an additional 5% of the
voting power of the Company's outstanding voting securities by any person or
group who beneficially owned at least 15% of such voting power as of such date,
except for Rodney L. Armstrong, Jr. or any other person approved in advance by
the Continuing Directors, or (vi) the appointment of a trustee in a bankruptcy
proceeding involving the Company.

The following table provides information on option grants in 1997 to the
Named Executive Officers.

OPTION GRANTS IN 1997

· Enlarge/Download Table

INDIVIDUAL GRANTS POTENTIAL REALIZABLE
---------------------------------------------------------- VALUE AT ASSUMED
NUMBER OF ANNUAL RATES OF STOCK
SECURITIES PERCENT OF TOTAL PRICE APPRECIATION FOR
UNDERLYING OPTIONS GRANTED EXERCISE OR OPTION TERM(1)
OPTIONS TO EMPLOYEES IN BASE PRICE EXPIRATION ----------------------
NAME GRANTED(2) 1997 ($/SH)(3) DATE 5% ($) 10% ($)
---------------------------------------- ----------- ----------------- ------------- ----------- ----------- ---------

Rodney L. Armstrong, Jr................. 10,000 6% 8.80 7/22/2002 -- 12,688
Gary J. Austin.......................... 10,000 6% 8.00 7/22/2002 -- 20,688
Steven W. Tomson........................ 10,000 6% 8.00 7/22/2002 -- 20,688
Kevin W. Marsh.......................... 10,000 6% 8.00 7/22/2002 -- 20,688

------------------------

(1) Potential realizable value illustrates value that would be realized upon
exercise of the options immediately prior to the expiration of their
respective terms, assuming the specified compounded rates of appreciation on
the Common Stock over the term of the options. These numbers do not take
into account provisions of certain options providing for termination of the
option following termination of employment, nontransferability or vesting,
and are not intended to forecast possible future appreciation of the Common
Stock or amounts that may ultimately be realized upon exercise.

(2) The options become exercisable in annual increments of 20% of the total
number of shares subject to the option, beginning on the date of grant, and
are exercisable within 30 days after termination of employment.

(3) The exercise price of each option is at least equal to the fair market value
of the Common Stock on the date of grant. The option exercise price may be
paid in cash or in shares of Common Stock owned by the Named Executive
Officer, by means of a "cashless" exercise procedure with a broker or by any
other means acceptable to the Compensation Committee of the Board of
Directors.

The following table shows for each of the Named Executive Officers the
number of shares covered by both exercisable and non-exercisable stock options
as of December 31, 1997, and the values for "in-the-

DEF 14A 11th Page of 18 TOC 1st Previous Next Bottom Just 11th

money" options, based on the positive spread between the year-end value of the
Common Stock and the exercise price of any such existing stock options.

AGGREGATED OPTION EXERCISES IN 1997
AND YEAR-END OPTION VALUES

· Enlarge/Download Table

NUMBER OF SHARES
UNDERLYING UNEXERCISED VALUE OF UNEXERCISED
SHARES OPTIONS AT DECEMBER 31, IN-THE-MONEY OPTIONS AT
ACQUIRED ON VALUE 1997 (#) DECEMBER 31, 1997 ($)(1)
EXERCISE REALIZED -------------------------- --------------------------
NAME (#) ($) EXERCISABLE UNEXERCISABLE EXERCISABLE UNEXERCISABLE
-------------------------------- ----------- ----------- ----------- ------------- ----------- -------------

Rodney L. Armstrong, Jr......... 48,000 234,000 20,400 23,600 23,520 15,680
Gary J. Austin.................. 24,000 120,000 25,200 24,800 36,400 20,475
Steven W. Tomson................ -- -- 15,600 28,400 -- --
Kevin W. Marsh.................. 24,000 120,000 11,200 15,800 13,650 9,100

------------------------

(1) Represented by aggregate market value (based on closing sale price of $4.50
per share as reported by the Nasdaq National Market on December 31, 1997) of
the shares covered by the options, less aggregate exercise price payable by
the Named Executive Officer.

EMPLOYEE STOCK PURCHASE PLAN

Employees of the Company satisfying certain length of service requirements
are able to make semi-annual purchases of shares of Common Stock pursuant to an
Employee Stock Purchase Plan under Section 423 of the Internal Revenue Code of
1986, as amended, at a price equal to 85% of the market value of the Common
Stock on certain specified dates. The Company has reserved 250,000 shares of
Common Stock for issuance under the Employee Stock Purchase Plan. The Employee
Stock Purchase Plan is administered by the Employee Stock Purchase Plan
Committee.

ANNUAL INCENTIVE PROGRAM

Based on the recommendation of the Compensation Committee, the Board of
Directors has established an incentive bonus program under which annual cash
bonuses and/or stock option grants may be awarded to the Company's executive
officers if a certain specified earnings per share target is achieved in 1998.
See "Report on Executive Compensation."

COMPENSATION OF DIRECTORS

Each non-employee director of the Company is paid $500 for each day of Board
of Director meetings attended. For each additional meeting day, non-employee
directors who serve on a Board committee receive $500 for committee meetings
attended. Directors who are also employees of the Company receive no additional
compensation for serving as directors. Directors have been and will continue to
be reimbursed for certain expenses incurred in connection with attendance at
Board and committee meetings. In addition, non-employee directors will be
eligible to receive grants of options to purchase Common Stock under the 1997
Plan. During 1997 and early 1998, each non-employee director was granted an
option to purchase 2,500 shares of Common Stock with an exercise price of $4.50
per share, which was equal to the fair market value of the Common Stock on the
date of grant.

DEF 14A 12th Page of 18 TOC 1st Previous Next Bottom Just 12th

REPORT ON EXECUTIVE COMPENSATION

The Board has based its decisions regarding compensation matters of the
Company's executives on the recommendations of the Compensation Committee of the
Board of Directors. The Compensation Committee is comprised of two non-employee
directors, Allen D. Fleener and David A. O'Connor. The objective of the
Compensation Committee is to provide assistance to the Company's directors to
ensure that the Company's officers, key executives, and Board members are
compensated in accordance with the Company's total compensation objectives and
executive compensation policy.

EXECUTIVE COMPENSATION PRINCIPLES

The Company's executive compensation policies are designed to provide
competitive levels of compensation that:

- support the Company's overall business strategy and objectives

- attract and retain key executives

- integrate total compensation with business objectives and the Company's
performance

- provide competitive total compensation at a reasonable cost while
enhancing stockholder value

- recognize excellent individual initiatives and performance

The executive compensation plan includes three elements: (i) base salary,
(ii) annual incentive awards and (iii) long-term incentive awards. The Board and
the Compensation Committee endorse the position that stock ownership by
management and stock-based performance compensation arrangements are beneficial
in aligning management's and stockholders' interests in the maximization of
stockholder value.

Executive officer compensation levels during 1997 for all three components
were based upon the Compensation Committee's subjective judgment and took into
account both qualitative and quantitative factors. No specific weights were
assigned to such factors with respect to any compensation component. The
Compensation Committee considered the base salary and other compensation paid to
executives in 1996, the responsibilities and duties of each executive, the
historical and expected performance of the Company and various industry salary
surveys. The Compensation Committee also considered recommendations made by the
Chief Executive Officer with respect to the compensation of the Company's other
key executive officers. The Board considered and adopted the recommendations of
the Compensation Committee.

BASE SALARY

The Company's executives were paid base salaries that were established by
the Compensation Committee based on a subjective analysis of the factors
described above. The base salaries were established at levels considered
appropriate given the responsibilities and duties of each executive's position.

ANNUAL INCENTIVE AWARDS

The Board of Directors has established an annual incentive award program for
executives based on the recommendation of the Compensation Committee. Awards
under the annual incentive program are based upon an earnings per share ("EPS")
target for the Company's Common Stock. In late 1996, the Board established a
target level of EPS, and executives were not awarded bonuses in 1997 because the
EPS target was not attained. The Board considers EPS an effective financial
performance measure under the annual incentive program because it reflects the
true measure of performance of a public company. The policy of the Board of
Directors has been that no annual incentive awards will be paid to the
executives unless the targeted EPS level is achieved, and the Compensation
Committee and the Board of Directors intend to continue this policy.

DEF 14A 13th Page of 18 TOC 1st Previous Next Bottom Just 13th

LONG-TERM INCENTIVE AWARDS

The 1997 Plan provides for the grant of stock options to executives, key
employees of the Company and others at the discretion of the Compensation
Committee. See "Executive Compensation--Stock Options." Stock based awards are
generally granted to executives on an annual basis, after subjective
consideration of several factors including, but not limited to, current Common
Stock and option holdings, financial performance of the Company and individual
performance. The Compensation Committee did not assign specific weights to the
various factors. Historically, options awarded have generally vested 20% on the
date of grant and 20% each year for the following four years, and had an
exercise period of five years from the date of grant.

The grant of stock options is intended not only to encourage stock ownership
by executives and key employees and to make the risks and rewards of stock
ownership a principal determinant in the motivation and performance of
management, but also as a method to retain executives and key employees.

CHIEF EXECUTIVE OFFICER COMPENSATION AND COMPANY PERFORMANCE

The determination of the Chief Executive Officer's base salary, annual
incentive award and long-term incentive award for 1997 was made on the basis of
the various factors noted above. No specific weights were assigned to those
factors with respect to any compensation component. The total compensation paid
to the Chief Executive Officer in 1997 was adjusted from the level of
compensation paid in 1996 based on the Compensation Committee's subjective
comparison of the Company's financial performance for 1997 to the annual
operating plan for 1997 and to the Company's financial performance for 1996.
Because the Company did not attain the EPS target for 1997 as noted above, no
annual cash incentive award was awarded to the Chief Executive Officer.

POLICY ON DEDUCTIBILITY OF COMPENSATION

Section 162(m) of the Internal Revenue Code limits the tax deduction of a
company to $1,000,000 for compensation paid to any of its five most highly
compensated executive officers. The Company has not adopted a policy with
respect to executive compensation in excess of $1,000,000 a year and has not
paid such compensation. The Compensation Committee believes that it is unlikely
in the short-term that the limitation will affect the Company, but it will
continue to monitor the impact of existing limitations on the tax deductibility
of such compensation.

Compensation Committee members:

Allen D. Fleener
David A. O'Connor

CERTAIN TRANSACTIONS

The Company has sold hardware and software to Northmark Bank in the ordinary
course of business and on terms no less favorable to the Company than would be
obtainable from unaffiliated third parties. Jane C. Walsh, a director of the
Company, is the President, Chief Executive Officer and a significant stockholder
of Northmark Bank. Payments from Northmark Bank to the Company totaled
approximately $99,680 during 1997.

COMPENSATION COMMITTEE INTERLOCKS AND
INSIDER PARTICIPATION IN COMPENSATION DECISIONS

Allen D. Fleener and David A. O'Connor are the members of the Compensation
Committee, which makes recommendations to the Company's Board of Directors with
respect to the compensation of the Company's executive officers.

DEF 14A 14th Page of 18 TOC 1st Previous Next Bottom Just 14th

STOCK PERFORMANCE GRAPH

The following graph compares the cumulative total return on the Common Stock
over the period commencing October 3, 1996, the effective date of the Company's
initial public offering, and ending December 31, 1997, with the Russell 2000
Index and the Nasdaq Computer and Data Processing Services Index. Each index
assumes $100 invested at the close of trading October 3, 1996 and reinvestment
of dividends.

[CHART]

· Download Table

NASDAQ COMPUTER
PEERLESS GROUP, RUSSELL AND DATA PROCESSING
MEASURED PERIOD INC. 2000 SERVICES INDEX
--------------- ------------------ ----------- -------------------

10/03/96 $ 100.00 $ 100.00 $ 100.00
12/31/96 $ 84.38 $ 104.14 $ 104.05
12/31/97 $ 56.25 $ 126.74 $ 125.42

DEF 14A 15th Page of 18 TOC 1st Previous Next Bottom Just 15th

PROPOSAL II
RATIFICATION OF APPOINTMENT OF AUDITORS

The Board of Directors, upon the recommendation of the Audit Committee, has
appointed Ernst & Young LLP as the independent auditors of the Company for the
year ending December 31, 1998, subject to stockholder ratification. A
representative of Ernst & Young LLP is expected to be present at the Annual
Meeting with the opportunity to make a statement if he so desires and to be
available to respond to appropriate questions.

The affirmative vote of a majority of the Shares of Common Stock present in
person or represented by proxy at the Annual Meeting and entitled to vote is
required to ratify the appointment of Ernst & Young LLP.

THE BOARD OF DIRECTORS RECOMMENDS A VOTE FOR THE PROPOSAL TO RATIFY THE
APPOINTMENT OF ERNST & YOUNG LLP.

GENERAL

The Annual Report to Stockholders for 1997, which includes the Annual Report
on Form 10-K for 1997, has been mailed to the stockholders with this mailing.
The Annual Report to Stockholders does not form any part of the material for the
solicitation of proxies.

Pursuant to the rules of the Securities and Exchange Commission, a proposal
to be presented by a stockholder at the Company's 1999 Annual Meeting must be
received by the Company at its principal executive offices no later than
November 23, 1998. Such proposals should be directed to Peerless Group, Inc.,
1212 East Arapaho Road, Richardson, Texas 75081, Attention: Chief Executive
Officer.

The expense of solicitation of proxies will be borne by the Company. In
addition to solicitation by mail, directors, officers and employees of the
Company may solicit proxies personally or by telephone or telegram. The Company
may request brokers, dealers or other nominees to send proxy material to and
obtain proxies from their principals, and the Company may reimburse such persons
for their reasonable expenses.

A COPY OF THE COMPANY'S ANNUAL REPORT ON FORM 10-K FOR THE YEAR ENDED
DECEMBER 31, 1997, INCLUDING THE FINANCIAL STATEMENTS AND THE FINANCIAL
STATEMENT SCHEDULES, IF ANY, BUT NOT INCLUDING EXHIBITS, WILL BE FURNISHED AT NO
CHARGE TO EACH PERSON TO WHOM A PROXY STATEMENT IS DELIVERED UPON THE WRITTEN
REQUEST OF SUCH PERSON ADDRESSED TO PEERLESS GROUP, INC. ATTN: INVESTOR
RELATIONS, 1212 EAST ARAPAHO ROAD, RICHARDSON, TEXAS 75081.

DEF 14A 16th Page of 18 TOC 1st Previous Next Bottom Just 16th

OTHER BUSINESS

Management knows of no other matter that will come before the Annual
Meeting. However, if other matters do come before the Annual Meeting, the proxy
holders will vote in accordance with their best judgment.

By Order of the Board of Directors,

[PASTE UP SIG]

Rodney L. Armstrong, Jr.
CHAIRMAN AND CHIEF EXECUTIVE OFFICER

April 3, 1998

DEF 14A 17th Page of 18 TOC 1st Previous Next Bottom Just 17th

[PEERLESS LOGO]

PEERLESS GROUP, INC.
1212 East Arapaho Road
Richardson, Texas 75081

THIS PROXY IS SOLICITED ON BEHALF OF THE BOARD OF DIRECTORS

The undersigned stockholder(s) of Peerless Group, Inc. hereby appoint(s)
Rodney L. Armstrong, Jr. and Steven W. Tomson, or either of them, as Proxies,
each with the power to appoint his substitute, and hereby authorizes them to
represent and to vote and act for the undersigned at the 1998 Annual Meeting of
Stockholders of Peerless Group, Inc. to be held on Monday, May 4, 1998 at 1:00
p.m., Central Daylight Time, in the Michelangelo Room at the Omni Richardson
Hotel, 701 East Campbell Road, Richardson, Texas, and at any adjournment,
continuation, or postponement thereof, according to the number of votes which
the undersigned is now entitled to cast, hereby revoking any proxies heretofore
executed by the undersigned for such meeting.

All powers may be exercised by a majority of said proxy holders or
substitutes voting or acting or, if only one votes and acts, then by that one.
The undersigned instructs such proxy holders or their substitutes to vote as
specified on the reverse on the proposals set forth in the Proxy Statement.

PLEASE MARK, DATE AND SIGN THIS PROXY ON REVERSE SIDE

-FOLD AND DETACH HERE -

DEF 14A Last Page of 18 TOC 1st Previous Next Bottom Just 18th

THIS PROXY WHEN PROPERLY EXECUTED WILL BE VOTED IN THE MANNER DIRECTED
HEREIN BY THE UNDERSIGNED STOCKHOLDER. IF NO DIRECTION IS MADE, THE PROXY WILL
BE VOTED "FOR" PROPOSALS 1, 2 AND 3.

1. ELECTION OF DIRECTORS.

NOMINEES: William F. Dunbar and Allen D. Fleener

Instruction: To withhold authority to vote for any individual nominee, write
that nominee's name in the space provided below.

___________________________________________________

FOR all nominees listed WITHHOLD AUTHORITY
except as marked to the to vote for all
contrary [ ] nominees listed [ ]

2. RATIFICATION OF APPOINTMENT OF ERNST & YOUNG LLP AS INDEPENDENT
AUDITORS FOR THE YEAR ENDING DECEMBER 31, 1998.

FOR AGAINST ABSTAIN
[ ] [ ] [ ]

3. IN THEIR DISCRETION, THE PROXIES ARE AUTHORIZED TO VOTE UPON SUCH OTHER
BUSINESS AS MAY PROPERLY COME BEFORE THE MEETING.

I plan to attend the Annual Meeting - [ ]

Dated _______________________, 1998

_________________________________
Signature

_________________________________
Second Signature, If Held Jointly

When shares are held by joint tenants, both should sign. When signing as an
attorney, executor, administrator, trustee, or guardian, please give full title
as such. If a corporation, please sign in full corporate name by President or
other authorized officer. If a partnership, please sign in the partnership name
by authorized person.

PLEASE MARK, DATE, AND RETURN PROXY CARD PROMPTLY USING THE ENCLOSED ENVELOPE.

- FOLD AND DETACH HERE -

DEF 14A	1st Page of 18	TOC	Top	Previous	Next	Bottom	Just 1st

DEF 14A	2nd Page of 18	TOC	1st	Previous	Next	Bottom	Just 2nd

DEF 14A	3rd Page of 18	TOC	1st	Previous	Next	Bottom	Just 3rd

DEF 14A	4th Page of 18	TOC	1st	Previous	Next	Bottom	Just 4th

DEF 14A	5th Page of 18	TOC	1st	Previous	Next	Bottom	Just 5th

DEF 14A	6th Page of 18	TOC	1st	Previous	Next	Bottom	Just 6th

DEF 14A	7th Page of 18	TOC	1st	Previous	Next	Bottom	Just 7th

DEF 14A	8th Page of 18	TOC	1st	Previous	Next	Bottom	Just 8th

DEF 14A	9th Page of 18	TOC	1st	Previous	Next	Bottom	Just 9th

DEF 14A	10th Page of 18	TOC	1st	Previous	Next	Bottom	Just 10th

DEF 14A	11th Page of 18	TOC	1st	Previous	Next	Bottom	Just 11th

DEF 14A	12th Page of 18	TOC	1st	Previous	Next	Bottom	Just 12th

DEF 14A	13th Page of 18	TOC	1st	Previous	Next	Bottom	Just 13th

DEF 14A	14th Page of 18	TOC	1st	Previous	Next	Bottom	Just 14th

DEF 14A	15th Page of 18	TOC	1st	Previous	Next	Bottom	Just 15th

DEF 14A	16th Page of 18	TOC	1st	Previous	Next	Bottom	Just 16th

DEF 14A	17th Page of 18	TOC	1st	Previous	Next	Bottom	Just 17th

DEF 14A	Last Page of 18	TOC	1st	Previous	Next	Bottom	Just 18th

Dates Referenced Herein and Documents Incorporated By Reference

		Referenced-On Page
This DEF 14A Filing	Date	First	Last	Other Filings

	10/3/96	14
	2/18/97	9
	4/18/97	5		SC 13D
	12/31/97	8	15	10-K405
	2/13/98	5		SC 13G
	2/28/98	4	9
	3/24/98	3	4
Filed On / Filed As Of	4/3/98	2	16
	4/6/98	4
For The Period Ended	5/4/98	2	17
	11/23/98	15
	12/31/98	3	18

Top				List All Filings

Filing Submission - Alternative Formats (Word / Rich Text, HTML, Plain Text, SGML, XML, et al.)

			in		Show		and
Help...	Wildcards: ? (any letter), * (many). *Logic:* for Docs: & (and), \| (or); for Text: \| (anywhere), "(&)" (near).

Peerless Group Inc · DEF 14A · For 5/4/98

Filed On 4/3/98 · SEC File 0-21399 · Accession Number 1047469-98-13591

Definitive Proxy Solicitation Material · Schedule 14AFiling Table of Contents

Document Table of Contents

Dates Referenced Herein and Documents Incorporated By Reference

Definitive Proxy Solicitation Material · Schedule 14A
Filing Table of Contents