SEILER POLLUTION CONTROL SYSTEMS, INC.
Proxy for 1996 Annual Meeting
This Proxy is Solicited by the Board of Directors
KNOW ALL MEN BY THESE PRESENTS that I (we), the
undersigned Stockholder(s) of Seiler Pollution Control
Systems, Inc. (the "Company"), do hereby nominate,
constitute and appoint Werner Heim and Alan B. Sarko or
either of them (with full power to act alone), my true and
lawful attorney(s) with full power of substitution, for me
and in my name, place and stead to vote all the Common
Stock of said Company, standing in my name on its books on
the record date, November 7, 1996, at the Annual Meeting of
its Stockholders to be held at Columbus Marriott North
located at 6500 Doubletree Avenue, Columbus, Ohio, on
December 12, 1996, at 10:00 a.m., local time, or at any
postponement or adjournments thereof, with all the powers
the undersigned would possess if personally present.
This Proxy, when properly executed, will be voted as
directed below. In the absence of any direction, the
shares represented hereby will be voted for the election of
the nominees listed and for ratification of the appointment
of the auditors.
_ Please mark your votes as in this example.
1. Election of Directors. Election of the three
nominees, Werner Heim, Niklaus Seiler, and Alan B. Sarko.
For All Withhold From
Nominees All Nominees
_ _
The Board of Directors recommends a vote FOR the Nominees.
If you do not wish your shares voted FOR a particular
nominee, draw a line through that person's name above.
2. Approval of the appointment of Schneider Downs & Co.,
Inc. as independent auditor of the Company for the fiscal
year ending March 31, 1997.
For Against Abstain
_ _ _
The Board of Directors recommends a vote FOR approval.
3. In their discretion, the Proxies are authorized to
vote upon such other business as may properly come before
such meeting or adjournment or postponement thereof.
SIGNATURE(S) DATE
NOTE: Please sign exactly as the name(s) appears hereon.
Joint owners should sign. When signing as attorney,
executor, administrator, trustee, or guardian, please give
full title as such.
SEILER POLLUTION CONTROL SYSTEMS, INC.
555 METRO PLACE NORTH, SUITE 100
DUBLIN, OH 43017
November 14, 1996
Dear Stockholder:
You are cordially invited to attend the annual meeting of stockholders
which will be held in Columbus, Ohio on Thursday, December 12, 1996.
By attending the meeting, you will have an opportunity to hear a report
on the operations of your Company and to meet your directors and
executives.
The enclosed notice of the meeting and proxy statement describe the
matters to be acted upon at the meeting, including the election of
directors, ratification of the appointment of auditors, and transaction
of such other business as may properly come before the meeting.
Please read the proxy statement, then complete, sign, and return your
proxy in the enclosed envelope. Your vote is important.
Sincerely,
Werner Heim
Chairman of the Board and President
SEILER POLLUTION CONTROL SYSTEMS, INC.
NOTICE OF ANNUAL STOCKHOLDERS' MEETING
November 14, 1996
TO THE HOLDERS OF SHARES OF COMMON STOCK:
NOTICE IS HEREBY GIVEN that pursuant to the call by its
Directors the regular annual meeting of stockholders of
Seiler Pollution Control Systems, Inc. will be held at
Columbus Marriott North, located at 6500 Doubletree Avenue,
Columbus, Ohio, on Thursday, December 12, 1996 at 10:00
a.m., local time, for the purpose of considering and voting
upon the following matters.
1. Election of Directors. To elect the three nominees
listed in the Proxy Statement dated November 14, 1996
as directors.
2. Ratification of the Board of Directors' action of the
selection of Schneider Downs & Co., Inc. as
independent auditor for the fiscal year ending March
31, 1997.
3. Transaction of such other business as may properly
come before the Meeting or any adjournment or
postponement thereof.
By order of the Board of Directors
Werner Heim
Chairman of the Board and President
[THIS PAGE INTENTIONALLY LEFT BLANK]
PROXY STATEMENT
SEILER POLLUTION CONTROL SYSTEMS, INC.
555 Metro Place North, Suite 100
Dublin, Ohio 43017
This Proxy Statement is being furnished by Seiler
Pollution Control Systems, Inc. (the "Company"), a Delaware
corporation, to its stockholders in connection with the
solicitation by the Board of Directors of proxies to be
voted at the Annual Meeting of Stockholders to be held at
10:00 a.m., local time, on December 12, 1996 (the
"Meeting"), at Columbus Marriott North located at 6500
Doubletree Avenue, Columbus, Ohio and at any postponement
or adjournments thereof.
In the course of discussions in this Proxy Statement
of recommendations and solicitations of votes, the term
"Management" refers to the Board of Directors of the
Company, unless otherwise required by the context.
The approximate date on which this Proxy Statement is
first being sent or given to stockholders is November 14,
1996.
A COPY OF FORM 10-K (ANNUAL REPORT) FOR THE FISCAL
YEAR ENDED MARCH 31, 1996, FILED WITH THE SECURITIES AND
EXCHANGE COMMISSION BY THE COMPANY, MAY BE OBTAINED BY
STOCKHOLDERS WITHOUT CHARGE BY WRITTEN REQUEST TO ALAN B.
SARKO, VICE PRESIDENT, SEILER POLLUTION CONTROL SYSTEMS,
INC., 555 METRO PLACE NORTH, SUITE 100, DUBLIN, OHIO 43017.
Voting, Proxy Solicitation and Revocation
Your proxy is solicited by the Board of Directors of
the Company for use at the Meeting.
If the enclosed proxy is properly executed and
returned prior to or at the Meeting, and is not revoked
prior to or at the Meeting, all shares represented thereby
will be voted at the Meeting as specified in the proxy by
the persons designated therein. If a signed proxy card is
returned and the stockholder has made no specifications
with respect to voting matters, the shares will be voted
"FOR" the election of the nominees as directors and "FOR"
ratification of the auditor. Abstentions and broker
non-votes are counted only for purposes of determining
whether a quorum is present at the Meeting, but will not be
considered as votes cast with respect to any matter as to
which the abstention or non-vote is indicated. The
solicitation of proxies will be by mail, but proxies may
also be solicited by telephone, telegraph or in person by
officers and other employees of the Company. The entire
cost of this solicitation will be borne by the Company.
Should the Company, in order to solicit proxies, request
the assistance of banks, brokerage houses and other
custodians, nominees or fiduciaries, the Company will
reimburse such persons for their reasonable expenses in
forwarding the proxies and proxy material to the beneficial
owners of such shares. A stockholder may revoke his proxy
by a later proxy or by delivery of notice of revocation to
the President, in writing, at any time prior to the date
and time of meeting or in open meeting. Attendance at the
Meeting will not in and of itself revoke a proxy.
Shares Entitled to Vote
The Board of Directors has fixed the close of business
on November 7, 1996, as the record date for the
determination of stockholders entitled to notice of and to
vote at the Meeting. At the close of business on such
date, there were outstanding and entitled to vote at the
Meeting [16,425,569] shares of Common Stock, par value
$.0001 per share. Each outstanding share is entitled to
one vote at the Meeting for all items set forth in the
Notice. Cumulative voting for the nominees for director is
not permitted.
Principal Beneficial Owners of Common Stock
As of the November 7, 1996 record date, the following
person was the only person or group of persons known to the
Company to be the beneficial owner of more than five
percent of the Company's common stock. Such person has
beneficial ownership of the shares and has sole voting
power and sole investment power with respect to the number
of shares beneficially owned.
Name and Address of Amount and Nature of Percent
Beneficial Owner Beneficial Ownership of Class (1)
PTI Management AG (2) 2,270,000 13.97%
Witikoenstrasse 311B
CH-8053
Zurich, Switzerland
<F1>
(1) On the basis of [19,472,641] shares outstanding on
November 7, 1996, the record date.
(2) PTI Management AG is a Swiss corporation whose shares
are issued solely in bearer name. Werner Heim,
Chairman of the Company's Board of Directors and
President of the Company, is a "control" person of PTI
Management AG, but he disclaims beneficial ownership
of any such shares.
</F1>
In addition, the only other record holder known by the
Company to hold more than five percent of the Company's
Common Stock is Cede & Co., P.O. Box 20, Bowling Green
Station, New York, New York 10004. As of the record date
Cede & Co. held a total of [15,368,539] shares of the
Company's Common Stock, which represented [78.92%] of the
total number of shares outstanding. Cede & Co. is a
nominee of the Depository Trust Company, which held such
shares of record on behalf of various of its customers.
The names of the beneficial owners of the shares held by
those stockholders are unknown to Management.
PROPOSAL NUMBER 1
Election of Directors
The Directors are elected annually by the stockholders
of the Company. The Certificate of Incorporation of the
Company provides that the number of Directors authorized to
serve until the next annual meeting of stockholders shall
be the number established in the Company's Bylaws. The
Bylaws provide that the Board of Directors by resolution
shall fix the number of directors. In accordance with the
Bylaws, the Board has fixed the number of directors at
three. In accordance therewith, a total of three persons
have been designated by the Board as nominees for election
at the Meeting and are being presented to the stockholders
for election. The directors to be elected at the Meeting
shall be determined by a plurality vote of the shares
represented in person or by proxy, entitled to vote at the
Meeting.
The Bylaws of the Company permit the Board of
Directors by a majority vote, between annual meetings of
the stockholders, to increase the number of directors and
to appoint qualified persons to fill the vacancies created
thereby.
The persons named below are being proposed as nominees
for election as directors for the term expiring at the next
annual meeting to be held in 1997, and until their
successors are elected and qualify. Each person is
currently a director of the Company. The persons named in
the enclosed proxy intend to vote for such nominees for
election as directors, but if the nominees should be unable
to serve, proxies will be voted for such substitute
nominees as shall be designated by the Board of Directors
to replace such nominees. It is believed that each nominee
will be available for election. The names of the nominees
for election and certain information as to each of them are
as follows:
Name Date Principal Director Number of Percent
of Occupation During Since Common of
Birth Past Five Years and Shares Shares
Other Directorships(a) Beneficially Outstanding
Owned on
[11/7/96](b)
Werner 10/6/33 Chairman of the 1993 615,500(1) 3.16%
Heim(c) Company since June
1993, President
since March 1995,
and Secretary from
1994 until May
. 1996; president of
SEPC AG, a
subsidiary of the
Company, since its
inception in
November 1993; from
1991 to 1993, he
served as
industrial
consultant/business
development for (a)
Clearwater Ltd., a
firm engaged in
biological clean-up
of oil spills, (b)
Seiler SHT, a firm
engaged in high
temperature waste
vitrification, (c)
Set AG, a firm
specializing in
insulating,
security, and high
temperature glass
production, and (d)
Odessa, Inc., a
firm engaged in
food production and
distribution in
Odessa, Ukraine;
from 1988 to 1991
Mr. Heim served as
chairman of
Biopore, Ltd., a
U.S. based company
then engaged in a
joint venture with
the French
government and
others with respect
to microfiltration
research and
development
Niklaus Vice President- 1994 300,000 (1) 1.54%
Seiler 7/23/37 Systems Research
Development of the
Company since
January 1996;
president and chief
executive officer
of Seiler Patent AG
since 1995, a
company engaged in
vitrification
systems development
and operations for
waste processing.
Mr. Seiler has also
been associated
with (a) Seiler HT
AG, founder (since
1993) and director,
engaged in the
manufacture,
fabrication, and
engineering of high
temperature
vitrification
systems, (b) N&H
Seiler Pumpenbau,
founder (1974-
1993), engaged in
the manufacture,
fabrication, and
engineering of
pumps, and (c)
Seiler
Montageunternehmon,
founder (1969-
1974), engaged in
the fabrication
business. Mr.
Seiler is the
holder of the Swiss
patent for the High
Temperature
Vitrification
System, which is
the basis for the
Company's
proprietary system.
Alan B. 2/20/48 Vice President of 1995 300,000 (1) 1.54%
Sarko the Company since
March 1995;
Secretary,
Treasurer, and
Chief Financial
Officer since May
1996; from February
1994 until March
1995, Mr. Sarko was
employed by the
Company as director
of marketing and
environmental
affairs. Prior
thereto from June
1984 to February
1994 Mr. Sarko
served as director
of marketing and
environmental
compliance for
Inorganic Recycling
Corporation.
<F2>
(a) The business experience of each director during
the past five years was that typical to a person
engaged in the principal occupation listed for each.
(b) The information under this caption regarding
ownership of securities is based upon statements by
the individual nominees, directors, and officers.
(c) PTI Management AG, of which Mr. Heim is a
"control" person, owns 2,270,000 shares or
approximately 13.97% of the Company's outstanding
common stock. Mr. Heim disclaims beneficial ownership
of any such shares.
(1) Except for 500 shares owned by Mr. Heim,
represents shares under option from the Company's
stock option plan which are exercisable within sixty
days.
</F2>
Executive Officer of Seiler
The following presents information regarding Dr.
Gerold Weser, Vice President-European Operations of the
Company and president of the Company's subsidiary, Seiler
TSB. As an executive officer, Dr. Weser serves at the
pleasure of the Company's board of directors. Dr. Weser,
age 50, has been vice president of the Company in charge of
its European operations since January 1996. His employment
with Seiler began in January 1995. From 1993 until he
joined the Company, Dr. Weser served as chief executive
officer and administrator of Dr. Weser & Partner. From
August 1990 until July 1993, Dr. Weser was managing
director of Centralsug, Hamburg/Stockholm, Sweden. Dr.
Weser received Vordiploma (B.A.) in Chemistry and Physics
from Technical University of Karlsruhe in 1969.
Subsequently, he attended the University of Oxford,
England, and the University of Marburg, Germany, where he
received Diplomas in Chemistry and Physics, respectively.
In 1978, he received his Dr. Rer. natl. (Ph.D.) from the
Institute for Physical Chemistry, University of Marburg.
Since then, Dr. Weser has worked for companies in the field
of environmental processing and handling and has planned,
coordinated and implemented many recycling projects, such
as recycling of refrigerators (FHC) and electronic waste.
Dr. Weser has vast experience in waste water treatment and air pollution
control systems, as well. Dr. Weser owns options to purchase 200,000 shares.
All directors and executive officers as a group
beneficially owned 1,515,500 shares (except for 500 shares
owned by Mr. Heim, all in the form of stock options) as of
[November 7, 1996,] which represented 7.78% of total
shares outstanding, including options exercisable within
sixty days.
Section 16(a) Beneficial Ownership Reporting Compliance
Directors, executive officers, and any beneficial
owner of more than 10% of a company's stock must, under
Section 16(a) of the Securities Exchange Act of 1934, file
certain periodic reports of changes in beneficial ownership
of Company securities. The Company endeavors to assist
directors and executive officers in filing the required
reports. To the Company's knowledge all filing
requirements under the Securities Exchange Act during the
fiscal year ended March 31, 1996 were satisfied.
Board Meetings and Committees of the Board
During the fiscal year which ended March 31, 1996,
there were two meetings of the Board of Directors. Each
incumbent director attended at least 75% of the meetings of
the Board. The Company has no standing audit, nominating,
and compensation committees. The Board of Directors
performs all of the functions that might otherwise be
performed by such committees.
Compensation of Directors and Officers
Board of Directors Fees
For the fiscal year ended March 31, 1996, members of
the Board of Directors did not receive any fees for
attending meetings of the Board of Directors. The
Company's policy is to reimburse Board members for their
expenses incurred to attend Board meetings. Officers of
the Company, who are also Directors, do not receive any
fees.
Executive Compensation
The following table sets forth information concerning
the chief executive officer of the Company and the
Company's executive officers whose total annual salary and
bonus exceeded $100,000 for the fiscal year ended March 31,
1996.
SUMMARY COMPENSATION TABLE
Annual Compensation Long Term
Compensation Awards
Securities
Name and Other Annual Underlying All Other
Principal Position Year(1) Salary Compensation(4) Options(#) Compensation(5)
Werner Heim, Chairman, CEO, 1996 $150,000 300,000 0
President(2) 1995 121,002 0 0
1994 23,747 315,000 0
Alan B. Sarko, Vice President, 1996 105,000 200,000 5,250
Secretary(3)
<F3>
(1) For the fiscal year ended March 31 of the year listed
below.
(2) Became an executive officer in August 1994.
(3) Joined the Company in February 1994. Became an
executive officer in March 1995.
(4) Individual amounts are not material.
(5) Pension benefits.
</F3>
Option Grants Information
The following table presents information concerning
grants of stock options made during the fiscal year ended
March 31, 1996 to each executive officer named in the
Summary Compensation Table above. The amounts shown for
each of the named executive officers as potential
realizable values are based on arbitrarily assumed
annualized rates of stock price appreciation from the date
of grant of such stock options of five percent and ten
percent over the full seven-year term of the options, which
would result in stock prices of approximately $2.95 and
$4.09, respectively. No gain to the optionees is possible
without an increase in the stock price from the date of
grant of such options. These potential realizable values
are based solely on arbitrarily assumed rates of
appreciation required by applicable SEC regulations.
Actual gains, if any, on option exercises and common
stockholdings are dependent on the future performance of
Seiler Common Stock. There can be no assurance that the
potential realizable values shown in this table will be
achieved.
OPTION GRANTS IN LAST FISCAL YEAR
Potential Realizable Value
At Assumed Annual Rates
of Stock Price Appreciation
Individual Grants for Option Term (2)
# of
Securities % of Total
Underlying Options Granted Exercise
Options to Employees Price
Name Granted(1) in Fiscal Year ($/Sh) Expiration Date 5% 10%
Werner Heim 300,000 27.3% $2.10 12/31/2002 $256,473 $597,692
Alan B. Sarko 200,000 18.2% $2.10 12/31/2002 $170,982 $389,461
<F4>
(1) Non-qualified options were granted at 85% of
the fair market value on the date of grant.
(2) The potential realizable value of each grant of
options, assuming that the market price of the
underlying security appreciates in value from the date
of grant to the end of the option term, is presented at
the indicated annualized rates. The assumed growth
rates in price in the Company's stock are not
necessarily indicative of actual performance that may be
expected. The amounts are net of the cost by the
executive to exercise such options.
</F4>
Aggregate Option Exercises in Last Fiscal Year and Fiscal
Year-End Option Values
The following table presents information concerning
the exercise of stock options during the fiscal year ended
March 31, 1996 by each executive officer named in the
Summary Compensation Table above, and the value at March
31, 1995, of unexercised options. Value of unexercised, in-
the-money options at fiscal year-end is the difference
between their exercise prices and the fair market value of
the underlying stock on March 29, 1996, which was $5.203125
per share. These values, unlike the amounts set forth in
the column headed "Value Realized," have not been realized
at the date of this proxy statement and may never be
realized. The underlying options have not been exercised
at the date of this proxy statement and may never be
exercised; and actual gains, if any, on exercise will
depend on the value of Seiler Common Stock on the date of
exercise. There can be no assurance that these values will
be realized.
AGGREGATED OPTION EXERCISES IN LAST FISCAL YEAR
AND FISCAL YEAR-END OPTION VALUES
Number of Securities Value of Unexercised
Underlying Unexercised In-the-Money Options
Options at FY-End at FY-End(2)
Shares Acquired Exercisable/ Exercisable/
Name on Exercise Value Realized(1) Unexercisable Unexercisable
Werner Heim 0 0 615,000/-0- $1,460,672/-0-
Alan B. Sarko 0 0 300,000/-0- 1,013,438/-0-
<F5>
(1) Represents the difference between the fair market
value of the securities underlying the options and the
exercise price of the options on the date of exercise.
(2) Represents the difference between the fair market
value of the securities underlying the options and the
exercise price of the options at March 31, 1996. The
average of the high and low trading prices on March
29, 1996 was $5.203125.
</F5>
Retirement Plan
On January 1, 1994 the Company adopted a Simplified
Employee Pension Plan ("SEP") for the benefit of eligible
employees. The SEP enables the employees to contribute up
to a maximum of 10% of base salary through salary reduction
and requires the Company to make a contribution equal to 5%
of the employee's base salary. See the Summary
Compensation Table above for amounts contributed by the
Company to officers of the Company under the SEP.
Employment Contracts, Termination of Employment, and Change
in Control Agreements
On June 29, 1996 the Company entered into five-year
employment agreements with Messrs. Heim, Sarko, Seiler, and
Weser. The agreements are effective as of January 1, 1996
and terminate on January 1, 2001. Each of the officers
will be compensated at a base salary of $150,000 per year.
The agreements provide for the base salary to be increased
on an annual basis equal to the greater of 5% or the annual
inflation percentage of the consumer price index. Each
agreement includes a bonus feature whereby each respective
executive officer will receive a cash bonus based upon the
Company's annual operating profit, as defined, ranging from
1% if such operating profit is between $3 million and $5
million to .25% if the operating profit is more than $50
million. The agreements also provide change-in-control,
confidentiality, and covenant-not-to-compete provisions.
The change-in-control provisions with each of the
Company's executive officers provide in general that, in
the event that the Company is acquired by another company
or any of certain other changes in control of the Company
should occur and results in the executive officer's
employment with the Company being terminated without cause
or his salary being reduced or his duties or
responsibilities being changed (except by promotion), he
will be entitled to receive severance pay equal to three
times a base amount. An executive's "base amount" for
these purposes is his annual compensation includible in his
gross income for federal income tax purposes, as of the
date of termination or as of the date immediately preceding
the change in control, whichever is higher and will include
his base salary, non-deferred amounts under annual
incentive benefits, long-term performance benefits, profit
sharing plan benefits, retirement plan benefits, stock
option plan benefits, the value of all perquisites, and the
value of distributions for all previously deferred amounts
for such executive under any benefit plan during the term
of the agreement.
Compensation Committee Interlocks and Insider Participation
The Company has no compensation committee; rather the
Company's Board of Directors performs the functions that
would otherwise be performed by a compensation committee.
Mr. Heim, chairman of the board and president of the
Company, Mr. Sarko, vice president, secretary, treasurer
and chief financial officer of the Company, and Mr. Seiler,
vice president of the Company, serve on the Company's Board
of Directors. As members of the Company's Board of
Directors and in view of the fact that the Company does not
have a compensation committee, Messrs. Heim, Sarko, and
Seiler participate in deliberations concerning executive
officer compensation.
PTI Management AG, a principal stockholder of the
Company and a firm in which Mr. Heim is a control person,
has from time to time loaned the Company sums of money on
an interest-free basis. The principal sum due and
outstanding, as of September 30, 1996 was $89,085. These
monies are due and payable December 31, 1997. Mr. Heim has
loaned the Company, as of September 30, 1996, the sum of
$1,755,825 on an interest-free basis with the understanding that such amounts
are to be repaid on a mutually agreeable future date. The Company has paid
during the year ended March 31, 1996 to its sole supplier, Seiler HT AG, a
total of $9,720,132 towards the purchase of its initial High Temperature
Vitrification System. Seiler HT on behalf of the Company constructs System
plants, tests the System, and performs research and development services
on an ongoing basis. Mr. Seiler is the founder and a
director of Seiler HT AG.
Compensation Committee Report on Executive Compensation
Since the Company does not have a compensation
committee, the Board of Directors performs all functions
regarding the determination, establishment, and
administration of the Company's compensation and benefits
policies. In this regard the Board establishes the nature
and extent of executive compensation, including the terms
and conditions of employment agreements with executives and
the Company's executive bonus program, awards stock
options, and determines the terms of the CEO's and other
executive officers' employment. The Company's executive
compensation program is designed to motivate, reward, and
retain the management talent needed to achieve its business
objectives. Recognizing that the Company is in the early
stages of its operations, with such limitations as its
business operations have therefore imposed, the Board has
focused more on offering a greater degree of incentive
compensation to the officers for their accomplishment of
Company objectives. The Board has designed a total
compensation package that includes a base salary, an annual
incentive plan, and a stock option plan. The Board has
strived to set base salaries that are commensurate with the
individual's responsibility, experience, and contribution
to the Company, and to ensure that salaries are competitive
within the industry so as to be able to attract and retain
highly qualified executives; additionally, the Board has
adopted a pay-for-performance incentive compensation
program. The program is designed to make a substantial
component of executives' potential compensation dependent
upon increased stockholder return, by providing bonus and
option incentives to achieve short-term and long-term
objectives, by rewarding exceptional performance that
contributes to the value of the Company's business, and by
utilizing competitive base salaries that recognize a
philosophy of promoting executive stability and career
continuity. Compensation decisions for all executives,
including the chief executive officer and the other named
executives, are based on the same criteria.
The Company's executive compensation program is
comprised of both fixed (base salary) and variable
(incentive) compensation elements. Variable compensation
consists of annual cash incentives and stock option grants.
Management of the Company believes that variable
compensation should be based both on short-term and long-
term measurements and be directly and visibly tied to
Company performance, thereby introducing substantial risk
and reward elements with respect to the particular
executive in the payout level of the incentive plan. It is
expected that total compensation will vary annually, based
on Company and individual performance.
Base Salary. A competitive base salary is vital to
support the philosophy of management development and career
orientation of executives and is consistent with the long-
term nature of the Company's business. In recognizing the
early development of the Company's operations and its
modest financial resources, the Company has based its
compensation criteria for its chief executive officer on
the Company's subjective evaluation of the CEO's
performance. In this regard, the Company paid Mr. Heim,
its chief executive officer, the amounts it believed it
could afford during fiscal years ended March 31, 1994 and
1995 while at the same time taking into account the level
of compensation expressed by Mr. Heim in his discussions
with the Company. The Company raised Mr. Heim's salary for
each of the fiscal years ended March 31, 1995 and 1996 in
recognition of his efforts in establishing the Company's
operations in the U.S. and in enhancing the Company's
operations in Europe, and noted especially his start-up
efforts regarding the operations in Germany. On June 29,
1996 the Company entered into five-year employment
agreements with Messrs. Heim, Sarko, Seiler, and Weser.
The base salaries established in the employment agreements
were determined as a result of Board consideration of the
various employment and business objectives referred to
above and in direct negotiations between the Company and
the respective executive. The salaries of each executive,
including that of the chief executive officer, were
determined based upon the competitive salary framework
referred to above while taking into account the Company's
financial condition and capital resources and Management's
desire to place more emphasis at the present time upon
offering greater performance incentives. The salaries of
the chief executive officer and the other executive
officers were based upon the Board's judgment concerning
the Company's financial resources and the chief executive
officer's and the other executive officers' individual
contributions to the Company's business, Board expectation
of each officer's successful achievement of Company goals,
their respective levels of responsibility, and career
experience. Although none of these factors has a specific
weight, primary consideration was given to the Company's
finances and the respective officer's, including the chief
executive officer's, individual contributions to the
Company's business. No particular formulas or measures
were used.
Bonus Incentive Program. A major feature of the
respective employment agreements of the Company's executive
officers is the bonus incentive program. Short-term awards
to executives are granted in cash as bonuses. The bonus
provisions in the executives' employment agreements have
established objective business performance criteria, that
being the Company's annual operating profit, as defined in
the agreements. In establishing these criteria, the Board
considered the present condition and future prospects of
the Company's business and its operational objectives and
goals. The specific bonus opportunity is dependent upon
the Company's achievement of its operational goals, which
will reflect the individual performance of each executive
officer and the accomplishment of each such officer's
individual goals and responsibilities. Assessment of an
individual's relative performance is made annually. Upon
the accomplishment of such goals, the named officer would
be entitled to receive cash payments. This bonus feature
was negotiated by the parties and the Board as a part of
their respective plenary compensation packages.
Stock Option Plan. The Board believes that stock
ownership by the Company's executive officers will develop
a commonality of interest between the executive officers
and the Company's stockholders. Stock options have been
the primary long-term incentive vehicle granted to the
Company's executive officers. The Board believes that a
significant portion of the Company's executive officers'
compensation should be dependent upon value created for the
stockholders. Options are an excellent method to
accomplish this by tying the executives' interests directly
to the stockholders' interests. The number of options that
the Board grants is based upon individual performance and
level of responsibility.
In order to provide long-term incentives to key
employees, including executive officers, to encourage stock
ownership by key officers, and to retain and motivate key
officers to further stockholder returns, the Company has
adopted a stock option program. Management believes that
stock options, which provide value to participants only
when the Company's stockholders benefit from stock price
appreciation, are an important part of the Company's
executive compensation program. The number of options held
by an officer at any particular time is not a factor in
determining individual grants. With respect to the options
granted to Mr. Heim and the other executive officers, the
Board chose to award a substantially large number of
options that would afford the executive officers a strong
long-term incentive to advance the interests and
profitability of the Company, thereby creating additional
stockholder value resulting from the appreciation of the
Company's stock, and to become significant owners of the
Company. Options are granted at no less than 85% of the
fair market value of the Company's stock at the time of
grant. Management believes that the market price of the
Company's stock will reflect the Company's operational
performance. Since an option gives the officer only the
right to purchase the option shares at a fixed price over a
future period, the compensation value is derived by the
incentive to increase stockholder value in the future,
hence the motivation to improve the Company's performance.
The Board's long-term incentive awards reflect the Board's
judgment of the respective executive's overall contribution
as an officer. In making this determination, the Board
considered the complex and long-term nature of the
Company's business. Narrow quantitative measures are not
viewed as sufficiently comprehensive for this purpose.
Werner Heim
Alan Sarko
Niklaus Seiler
Members of the Board of Directors
Performance Graph
The following graph compares the cumulative total
shareholder return (i.e., market price change of the stock
and reinvestment of cash dividends, although the Company
has never paid a cash dividend) on the Company's Common
Stock against the cumulative total return of the NASDAQ
Stock Market (US Companies) Index and the NASDAQ Stock
Market (Non-Financial Companies) Index. The stock
performance graphs assume that $100 was invested on
December 31, 1993. The Company's stock was registered
under the Securities Exchange Act of 1934 on December 8,
1993. The Company received approval on January 31, 1994
for the listing of its Common Stock on the NASDAQ SmallCap
Market. Prior thereto, its Common Stock was traded in the
over-the-counter market and its stock prices were reflected
in the National Quotation Data Service ("pink sheets") and
in the Electronic Over-the-Counter Bulletin Board. The
graph further assumes the reinvestment of dividends into
additional shares of the same class of equity securities at
the frequency with which dividends are paid on such
securities during the relevant fiscal year. In view of the
relatively short period of time the Company's stock has
been registered under the Securities Exchange Act of 1934,
the following graph is plotted on a quarterly basis from
December 31, 1993 through June 30, 1996 as marked on the
horizontal axis. Each of the referenced indices is
calculated in the same manner. Both are
market-capitalization-weighted indices, so companies judged
by the market to be more important (i.e., more valuable)
count for more in both indices. The graph is presented in
accordance with SEC requirements. Stockholders are
cautioned against drawing any conclusions from the data
contained therein, as past results are not necessarily
indicative of future performance. The indices are included
for comparative purposes only and do not necessarily
reflect management's opinion that such indices are an
appropriate measure of performance of Seiler Common Stock.
COMPARISON OF CUMULATIVE TOTAL RETURN AMONG SEILER
POLLUTION
CONTROL SYSTEMS, INC., THE INDEX FOR NASDAQ NON-FINANCIAL
STOCKS, AND THE NASDAQ STOCK MARKET (US COMPANIES) INDEX.
Company/Index 12/31/93 3/31/94 6/30/94 9/30/94 12/31/94 3/31/95 6/30/95 9/30/95 12/31/95 3/31/96 6/30/96
Seiler $100 $78.26 $42.26 $50.00 $56.00 $ 22.78 $ 57.06 $ 34.24 $ 35.87 $ 91.30 $ 97.83
Nasdaq (U.S.) 100 95.79 91.32 98.88 97.77 106.56 121.89 136.57 138.23 144.67 166.50
Nasdaq (Non-Fin) 100 95.20 87.79 96.49 96.15 104.31 120.62 134.47 133.98 140.69 153.06
Stock Option Plans
The Board of Directors has adopted non-statutory stock
option plans (the 1993 Non-Statutory Stock Option Plan, the
1994 Non-Statutory Stock Option Plan, the 1995 Non-
Statutory Stock Option Plan and the 1996 Non-Statutory
Stock Option Plan) and has reserved 1,000,000, 500,000,
1,000,000, and 2,000,000 shares under the plans,
respectively, for issuance to key employees, directors,
advisers, and consultants. Options are nontransferable and
are exercisable during a term of not more than ten years
from the date of grant. The options are issuable in such
amounts, at such prices, and upon such terms and conditions
as determined by the Board of Directors, except that the
option price of each grant may not be less than 85% percent
of the fair market value of such shares on the date of
grant. As of the record date, all options under the 1993
plan have been granted, including a total of 315,000
options to Mr. Heim; a total of 425,000 options has been
granted pursuant to the 1994 plan, including 100,000 to Mr.
Sarko; all of the options have been granted under the 1995
plan, including 300,000 options to Mr. Seiler, and 200,000
options to each of Messrs. Heim, Sarko, and Weser; and a
total of 650,000 options have been granted pursuant to the
1996 Plan, none to affiliates of the Company. See the
Summary Compensation Table and the accompanying stock
option tables presented above.
Related Party Transactions
PTI Management AG, a principal stockholder of the
Company and a firm in which Mr. Heim, the Company's
Chairman of the Board of Directors and President, is a
control person, has from time to time loaned the Company
sums of money on an interest-free basis. The principal sum
due and outstanding, as of September 30, 1996 was $89,085.
These monies are due and payable December 31, 1997.
Additionally, Mr. Heim has individually loaned funds
to the Company; as of September 30, 1996 the sum of
$1,755,825 was outstanding on an interest-free basis with
the understanding that the loan is to be repaid to Mr. Heim
on a future mutually agreeable date.
The Company has paid during the year ended March 31,
1996 to its sole supplier, Seiler HT AG, a total of
$9,720,132 towards the purchase of its initial High
Temperature Vitrification System. Seiler HT on behalf of
the Company constructs System plants, tests the System, and
performs research and development services on an ongoing
basis. Mr. Niklaus Seiler, a vice president and a director
of the Company, is the founder and a director of Seiler HT
AG.
PROPOSAL NUMBER 2
Proposal to Ratify the Board of Directors Action in Selection of
Schneider Downs & Co., Inc. as Independent Auditor for the Compa
ny
The Board of Directors has appointed Schneider Downs &
Co., Inc., independent certified public accountants, as
auditor of the Company to examine the financial statements
for the fiscal year ending March 31, 1997. Schneider Downs
& Co., Inc. was retained as the Company's auditor in May
1996 and in that capacity audited the Company's financial
statements for the fiscal year ended March 31, 1996. The
firm has no relationship with the Company except the
existing professional relationship of independent auditor.
Ratification of the employment of Schneider Downs &
Co., Inc. will require the affirmative vote of the holders
of a majority of the shares represented at the Meeting in
person or by proxy and entitled to vote. The Board of
Directors recommends a vote FOR Proposal Number 2. In the
event the stockholders fail to ratify this employment, it
will be considered as a directive to the Board of Directors
to select other auditors for the current year.
Representatives of Schneider Downs & Co., Inc. are
expected to be present at the Meeting, will have the
opportunity to make a statement if they choose, and will be
expected to be available to respond to appropriate
questions.
Bederson & Company LLP, the Company's independent
auditors for its fiscal years ended March 31, 1995 and
1994, resigned as the Company's auditors on May 10, 1996.
The report of Bederson & Company LLP on the Company's
financial statements for the fiscal years ended March 31,
1995 and 1994 did not contain an adverse opinion or a
disclaimer of opinion nor were the opinions qualified or
modified as to uncertainty, audit scope, or accounting
principles. During the Company's fiscal years ended March
31, 1996 and 1995 and the interim period preceding the
resignation of Bederson & Company LLP, there were no
disagreements between the Company and Bederson & Company
LLP on any matter of accounting principles or practices,
financial statement disclosure, or auditing scope
procedure.
Stockholder Proposals
The Company anticipates that the 1997 Annual Meeting
will be held on July 10, 1997 and that the proxy materials
for the 1997 Annual Meeting will be mailed on or about June
10, 1997. If any security holder wishes a proposal to be
considered for inclusion in the 1997 Proxy Statement, this
material must be received by the Chief Executive Officer no
later than March 12, 1997.
Other Matters
Management does not know of any other matters which
may come before the Meeting. However, if any matters
properly come before the Meeting, it is the intention of
the persons named in the enclosed proxy to vote such proxy
in accordance with the recommendations of the Board of
Directors. It is important that proxies be returned
promptly. Therefore, stockholders who do not expect to
attend in person are urged to mark, date, sign and return
the enclosed proxy in the accompanying postage paid
envelope.
By Order of the Board of Directors
Werner Heim
Chairman of the Board of Directors
and President
Dated: November 14, 1996