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LINDAL CEDAR HOMES, INC. LOGO
4300 SOUTH 104TH PLACE
SEATTLE, WASHINGTON 98178
-------------------------
NOTICE OF ANNUAL MEETING OF SHAREHOLDERS
Notice is hereby given that the Annual Meeting of Shareholders of Lindal
Cedar Homes, Inc., a Delaware corporation (the "Company"), will be held at the
Washington Athletic Club, 1325 Sixth Avenue, Seattle, Washington on May 25, 2000
at 3:00 p.m., for the following purposes:
1. To elect four members of the Board of Directors to hold office for
two years, or until their successors are elected and qualified.
2. To ratify the appointment of KPMG LLP as the Company's independent
auditors for the year ending December 31, 2000.
3. To transact such other business as may properly come before the
meeting or any adjournment thereof.
So as far as management is aware, as of this date, no business will
properly come before the meeting other than the matters set forth above.
Only shareholders of record at the close of business on April 25, 2000 will
be entitled to notice of and to vote at the Annual Meeting and any adjournment
thereof. For the convenience of the shareholders who do not expect to attend the
meeting in person and desire to have their stock voted, a form of proxy and an
envelope, for which no postage is required, are enclosed. A shareholder may
later revoke this proxy at any time before it is voted in the manner set forth
in the accompanying proxy statement.
Please complete, sign, date and mail promptly the accompanying proxy card
in the return envelope furnished for that purpose, whether or not you plan to
attend the meeting. Your cooperation is appreciated since a majority of the
common stock must be represented, either in person or by proxy, to constitute a
quorum for the conduct of business.
By Order of the Board of Directors
SIR WALTER LINDAL
Chairman Emeritus and Secretary
Seattle, Washington
May 5, 2000
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LINDAL CEDAR HOMES, INC.
4300 SOUTH 104TH PLACE
SEATTLE, WASHINGTON 98178
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PROXY STATEMENT
This proxy statement is furnished in connection with the solicitation of
proxies by the Board of Directors of Lindal Cedar Homes, Inc., (the "Company")
for use at the Annual Meeting of Shareholders to be held May 25, 2000, at 3:00
p.m., and at any adjournment thereof (the "Annual Meeting"), for the purposes
set forth herein and in the accompanying Notice of Annual Meeting of
Shareholders. The Annual Meeting will be held at the Washington Athletic Club,
1325 Sixth Avenue, Seattle, Washington.
The approximate date on which this proxy material is first to be sent to
shareholders is May 5, 2000. The individuals named as proxies are Sir Walter
Lindal and Robert W. Lindal. Proxies may be solicited by use of the mails, by
personal interview or by telephone and may be solicited by officers, directors
and other employees of the Company. All costs of solicitation of proxies will be
borne by the Company.
A shareholder may vote in person or by proxy. A proxy must be in writing
and dated and signed by the shareholder. All shares represented by proxies
received will be voted in accordance with instructions contained therein. In the
absence of voting instructions, the shares will be voted in favor of the
proposals set forth therein. Any shareholder granting a proxy has the power to
revoke it at any time before it is exercised by (i) delivering written notice to
the Company's Secretary prior to the Annual Meeting, (ii) executing another
proxy dated as of a later date, or (iii) voting in person at the Annual Meeting.
VOTING SECURITIES AND PRINCIPAL HOLDERS THEREOF
At the close of business on March 31, 2000, there were 4,131,227 shares of
common stock outstanding, which represent all of the voting securities of the
Company. Only shareholders of record at the close of business on April 25, 2000
will be entitled to vote at the meeting. Under Delaware law and the Company's
Bylaws, the presence at the meeting, in person or by duly authorized proxy, of
the holders of a majority of the outstanding shares of stock entitled to vote
constitutes a quorum for the transaction of business. Each share of common stock
is entitled to one vote.
Shareholders do not have the right to cumulate their votes in the election
of directors. The four nominees who receive the greatest number of votes cast
for the election of directors by shares entitled to vote and present in person
or by proxy at the Annual Meeting will be elected directors. In an uncontested
plurality election such as this, abstentions will have no effect, since approval
by a specified percentage of shares present or outstanding is not required.
Because brokers have discretion to vote shares of common stock held on behalf of
beneficial owners if no instructions are received about how to vote such shares,
there will be no "broker nonvotes" in the election of directors.
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BENEFICIAL OWNERSHIP OF COMMON STOCK
The following table sets forth as of March 31, 2000 certain information as
to the number of shares of common stock beneficially owned by (i) each person
who is known to the Company to own beneficially more than 5% of its outstanding
common stock, (ii) each director or nominee for director, (iii) each executive
officer of the Company for whom information is given in the Summary Compensation
Table in this proxy statement, and (iv) all executive officers and directors of
the Company as a group:
NUMBER OF PERCENTAGE OF
NAME SHARES(1)(2) OUTSTANDING SHARES
---- ------------ ------------------
Sir Walter Lindal(3)........................... 945,633(4) 21.26%
Robert W. Lindal(3)............................ 437,114(5) 9.83%
Bonnie G. McLennaghan(3)....................... 395,668(5) 8.90%
Douglas F. Lindal(3)........................... 385,656(5) 8.67%
Martin J. Lindal(3)............................ 366,588(5) 8.24%
Heartland Advisors, Inc........................ 345,400 7.77%
Charles R. Widman.............................. 41,725 *
William M. Weisfield........................... 41,017 *
Charles T. Collins............................. 31,500 *
Steven G. Conley............................... 7,200 *
All executive officers and directors as a group
(11 persons)................................. 2,292,204 51.57%
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* Less than one percent
(1) Beneficial ownership includes both voting and investment power.
(2) With respect to the following individuals and to all executive officers and
directors as a group, the beneficial ownership data includes options to
purchase common stock exercisable within 60 days of March 31, 2000 as
follows: (i) options to purchase 35,100 shares held each by Sir Walter
Lindal, Robert W. Lindal, Douglas F. Lindal, and Martin J. Lindal; (ii)
options to purchase 36,725 shares held by Charles R. Widman; (iii) options
to purchase 36,017 shares held by William M. Weisfield; (iv) options to
purchase 20,000 shares held by Charles T. Collins; (v) options to purchase
5,600 shares held by Steven G. Conley and (vi) options to purchase 268,210
shares held by all directors and executive officers as a group. With respect
to Bonnie G. McLennaghan, the beneficial ownership data includes options to
purchase common stock as follows: (i) options to purchase 35,100 shares held
directly and (ii) options to purchase 10,000 shares held by Robert
McLennaghan, the husband of Bonnie McLennaghan.
(3) Robert W. Lindal, Martin J. Lindal and Douglas F. Lindal are sons, and
Bonnie McLennaghan is the daughter, of Sir Walter Lindal. The address of
each of the individuals listed is the address of the Company's headquarters
at 4300 South 104th Place, Seattle, Washington, 98178.
(4) Includes 772,898 shares held by Lindal, Inc., a private corporation
controlled by Sir Walter Lindal in which all adult members of the Lindal
family have an ownership interest.
(5) Does not include any portion of the 772,898 shares owned by Lindal, Inc.
PROPOSAL 1: ELECTION OF DIRECTORS
The Company's Amended Bylaws (the "Bylaws") divide the Board of Directors
into two classes. Each class consists of four directors, but such number may be
increased or decreased by resolution of the Board or by the shareholders
amending the Bylaws. Classes are to be as nearly equal in number as possible.
Unless a director has been appointed to fill a vacancy or to fill a position
that was created by increasing the number of directors, each director serves for
a term ending at the second annual shareholders' meeting following the annual
meeting at which elected. Each director serves until such director's successor
is elected and qualified or
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until such director's earlier death, resignation or removal. Information as to
the nominees and as to each other director whose term will continue after the
Annual Meeting is provided below.
The Board of Directors presently consists of eight members. Four members of
the Board of Directors will be elected at the meeting: Robert W. Lindal, Charles
T. Collins, Martin J. Lindal and Charles R. Widman will be elected for two-year
terms expiring at the annual meeting in 2002 and until their respective
successors have been elected and qualified. The directors will be elected by a
plurality vote of the shares represented, in person or by proxy, at the meeting.
Every two years the Board of Directors has traditionally selected a nominee
for director from among the Company's distributors. The Company believes this
improves relationships with its distributors by giving them a voice in the
decision-making process and provides the Company with an additional source of
information about its markets. In 1999, the Board of Directors selected Steven
G. Conley from among its distributors as a nominee for election as a director.
Mr. Conley was elected as a director at the annual meeting in 1999.
Each of the nominees for director has indicated that he is willing and able
to serve as a director. If any nominee becomes unable or unwilling to serve, the
accompanying proxy may be voted for the election of such other person as shall
be designated by the Board of Directors.
NOMINEES FOR ELECTION
(TERMS TO EXPIRE IN 2002)
ROBERT W. LINDAL, age 52, was President of the Company from 1981 to January
1995, when he became Chairman of the Board. He has been the Chief Executive
Officer of the Company since 1981. Mr. Lindal continues to have the Operations
and Finance areas of the Company report to him. Mr. Lindal has been a director
of the Company from 1969 to 1975 and 1976 to present. Prior to 1981, Mr. Lindal
was an independent distributor for the Company's products in Hawaii, and the
Canadian Production Facilities Manager for the Company. Mr. Lindal is a
structural engineer.
CHARLES T. COLLINS, age 58, served as President of Colsper Corporation, a
diversified holding company focused primarily in waste management, from 1981 to
1998. Mr. Collins' diversified experience in both government and business
includes currently serving as Chair of the Washington State Commission on
Student Learning, and member of the Washington Dental Service Board of
Directors. Earlier, Mr. Collins served as chairman, 1996 to 1997 of the
Washington Dental Service Board of Directors; member, 1981 to 1985, and chair,
1984 to 1985, of the Northwest Power Council; chairman of the State Higher
Education Coordinating Board, 1985 to 1991; Transit Director of Seattle Metro,
1976 to 1979, and County Administrator of King County, 1973 to 1976. Mr. Collins
has been a director of the Company since 1998.
MARTIN J. LINDAL, age 46, has served as a director of the Company since
1981, and was employed by the Company as Administration Manager from 1982 to
1990. Mr. Lindal was elected Assistant Secretary in 1986 and has been the Vice
President Information Systems & Assistant Secretary since 1990.
CHARLES R. WIDMAN, age 74, has been the President of Widman Associates,
Inc., forest industry analysts, since 1993. From 1991 to 1993, Mr. Widman was an
executive consultant with Sandwell, Inc., a diversified international consulting
firm specializing in engineering and the forest industry. From 1978 to 1991, he
was Chairman and CEO of Widman Management Ltd., a forest industry consulting
firm. Mr. Widman has been a director of the Company since 1993.
THE BOARD OF DIRECTORS RECOMMENDS A VOTE FOR THE NOMINEES
CONTINUING DIRECTORS
(TERMS TO EXPIRE IN 2001)
DOUGLAS F. LINDAL, age 49, was Executive Vice President of the Company from
1981 until January 1995, when he became President and Chief Operating Officer.
Mr. Lindal continues to have the Sales, Marketing and Administration areas
report to him as well as functioning as General Manager supervising most Company
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activities. He has served as a director of the Company from 1971 to 1975 and
from 1980 to present. Prior to 1981, Mr. Lindal also was an independent
distributor for the Company's products in Hawaii. It is expected that Mr. Lindal
will retire and resign as an officer of the Company in July 2000. However, Mr.
Lindal will continue as a director of the Company.
SIR WALTER LINDAL, age 81, was Chairman of the Board from 1981 until 1995,
when he became Chairman Emeritus of the Company. Mr. Lindal has been Secretary
of the Company since 1981. From 1966 to 1975, he was President of the Company
and Chairman of the Board and managed the Company. Mr. Lindal is the Company's
founder.
WILLIAM M. WEISFIELD, age 58, has been the Chief Executive Officer of UTILX
Corporation, a NASDAQ traded company, since November 1998 and Chairman of the
Board of Directors of UTILX Corporation since January 1997. From 1994 to
November 1998, Mr. Weisfield was the Chief Operating Officer of Northern Capital
Company, a privately held investment company in Seattle, Washington. From
December 1992 to December 1993, Mr. Weisfield was Chief Operating Officer of the
Robbins Company in Kent, Washington, a manufacturer of underground tunnel boring
machines. From 1988 to December 1992, Mr. Weisfield was the Chief Executive
Officer of Cornerstone Columbia Development Company, a Seattle, Washington real
estate development firm. From 1978 to 1982, Mr. Weisfield was Chairman of the
Board of the Federal Home Loan Bank of Seattle and is a past member of the Board
of Regents of Seattle University. Mr. Weisfield also serves as a director on the
boards of several non-public entities. Mr. Weisfield has been a director of the
Company since 1994.
STEVEN G. CONLEY, age 37, has been the President of CedarCraft Northwest,
an independent dealer of the Company, since 1991. In 1995, Mr. Conley was
elected to the Dealer Advisory Council. Mr. Conley has been a director of the
Company since February 1999.
COMPENSATION OF DIRECTORS
The annual retainer for each director who is not an employee of the
Company, is $4,000, payable $1,000 per quarter, and 1,000 shares of the
Company's common stock. The chairman of each committee is paid an additional
$1,000 a year. A fee of $500 is paid for each meeting of the Board of Directors
or committee of the Board of Directors attended and for significant non-Board or
committee meetings. A fee of $250 is paid for each meeting of the Board of
Directors or committee of the Board of Directors where the Board member
participates by phone.
Pursuant to the standard policy on compensation of directors, in October
1999, each of Messrs. Collins, Widman, Conley and Weisfield were granted 1,000
shares of the Company's stock. As the stock issued was not registered, all
certificates bear the appropriate restrictive legend. The market price of the
stock on the date of issuance was $2.25.
Each director who is not an employee of the Company is eligible to
participate in the Directors' and Distributors' Stock Option Plan (the "Plan").
Under the Plan, each non-employee director receives an option to purchase 10,000
shares upon becoming a director and an option to purchase 5,000 shares as of
October 1 of each year he or she continues as a director. The exercise price of
options granted under the Plan is the market price of the Company's stock on the
date of grant. In October 1999, Messrs. Collins, Widman, Conley and Weisfield
were each granted options to purchase 5,000 shares at a price of $2.25 per
share. On February 1, 1999, upon appointment to the Board of Directors, Mr.
Conley was granted options to purchase 10,000 shares of the Company's common
stock at a price of $1.563.
Options granted to non-employee directors are non-assignable except by will
or the laws of descent and distribution. Options granted are automatically fully
vested and are exercisable six months after the date of grant. Options granted
to non-employee directors expire at the earliest of ten years from the grant
date, one year after the option holder ceases to be a director for any reason
other than death, or one year after death. However, options granted to directors
who are also Company distributors are subject to the vesting and expiration
rules described in the next paragraph.
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Non-employee directors who are also Company distributors, and other members
of the Dealer Advisory Council (the "Council"), are eligible to receive options
to purchase shares of the Company's stock each year in the amount of 100 shares
for each year during which the person was a member of the Council (without
regard to years of service as a director). Mr. Conley is a member of the
Council. In February 2000 and 1999, options to purchase 500 and 400 shares,
respectively, were granted to Mr. Conley for his participation on the Council.
Options granted to distributors under the Plan vest over a period of four years
and expire at the earliest of ten years following the date of grant or ninety
days after the option holder ceases to be a distributor (or one year after
death).
COMMITTEES OF THE BOARD OF DIRECTORS
The Company presently has an Executive Committee which, within certain
prescribed limits, exercises all the powers of the Board of Directors when the
Board of Directors is not in session. The Executive Committee presently consists
of Sir Walter Lindal, Robert W. Lindal and Douglas F. Lindal. The Executive
Committee met four times in 1999.
The Company also has an Audit Committee, a Compensation Committee, a
Research and Development Committee and a Strategic Planning Committee. The Audit
Committee is responsible for reviewing the results of the audit of the Company
performed by its independent certified public accountants. The Audit Committee
met two times in 1999. Its members currently are Messrs. Weisfield (Chairman),
Collins and Widman.
The Compensation Committee is responsible for determining salary and bonus
compensation to executive officers who also own five percent or more of the
Company's common stock and to report thereon to the Board of Directors. This
Committee also has the authority to administer the Company's employee stock
option plans. The Compensation committee met two times in 1999. The Compensation
Committee consists of Messrs. Collins, Weisfield (Chairman) and Widman.
The Company has a Research and Development Committee, which consists of Sir
Walter Lindal (Chairman), Martin J. Lindal and Charles T. Collins. The committee
met two times in 1999.
The Company also has a Strategic Planning Committee, which met twice in
1999. It members currently are Messrs. Collins (Chairman), Weisfield, and
Widman.
During 1999, there were five meetings of the Board of Directors. No
director attended fewer than 75% of the meetings of the Board of Directors or
the committees of which he or she was a member. Mr. Collins was unable to attend
one meeting of one of the Board committees of which he was a member. Martin J.
Lindal did not attend two meetings of the Board committee of which he was a
member.
RELATED PARTY TRANSACTIONS
Steven G. Conley, a director of the Company, is the President of CedarCraft
Northwest, an independent dealership of the Company. Sales to CedarCraft
Northwest were $491,045 in 1999. All sales were on normal trade terms.
In 1999, the Company made payments aggregating $9,692 to Lindal, Inc., in
connection with certain miscellaneous expenditures. Lindal, Inc. is a private
company controlled by Sir Walter Lindal.
EXECUTIVE OFFICERS
Each executive officer is elected by the Board of Directors following each
annual meeting of shareholders to serve for a term of one year or until a
successor is elected and qualified.
For the biographical summaries of Robert W. Lindal, Douglas F. Lindal,
Martin J. Lindal and Sir Walter Lindal, see "Election of Directors."
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DENNIS L. GREGG, age 48, joined the Company in 1997 as Chief Financial
Officer. Mr. Gregg's previous experience includes Chief Financial Officer, 1996
to 1997, for Abacus Software Inc., a public software development company and
Microrim, Inc. its wholly owned subsidiary; Chief Financial Officer, 1995 to
1996, for Media Technologies, Inc., a software manufacturing company; and Chief
Financial Officer, 1982 to 1995, for Evans Group Seattle (formerly Evans/Kraft,
Inc.), a marketing/public relations firm. Mr. Gregg was elected as Vice
President Finance in February 2000.
GARY D. KLINE, age 51, joined the Company in 1973 and has worked in several
key positions in the Scheduling and Production areas. Mr. Kline has been the
Vice President Operations since 1983.
DAVID S. NIXON, age 44, joined the Company in 1987. Mr. Nixon's previous
experience includes 10 years in management with Person and Person Homes. Mr.
Nixon has worked in several key positions in Distribution and Purchasing with
the Company. Mr. Nixon was elected Vice President in June 1999.
KENNETH R. SCHAFER, age 57, joined the Company in November 1998. Mr.
Schafer has spent much of his career as a practitioner of turnaround management.
In this capacity he has managed companies in such diverse industries as
injection moulding, metal fabrication, vacuum moulding, stair parts
manufacturing and window fabrication. Mr. Schafer was elected Vice President in
June 1999.
LOUIS CARLASCIO, age 50, joined the Company in 1999 as National Sales
Manager. Mr. Carlascio has nearly 30 years sales experience. For the past 16
years he has been involved in the system built housing industry. He was
Executive President of Lincoln Logs Ltd. in 1989. In 1990, he became President
of Real Log Homes Inc. He then joined Perma-Chink Systems, a manufacturer of
stain sealant and preservatives for the wood home industry as National Sales
Manager before joining the Company. Mr. Carlascio was elected as Vice President
Sales in February 2000.
JEFFREY CADEN, age 48, joined the Company in 1999 as Director of Marketing
and was elected as Vice President Marketing in March of 2000. Mr. Caden's
previous experience includes Vice President Marketing and Sales, 1989 to 1993,
for Nile Spice, Inc., a private food company. In 1994, Mr. Caden founded
SkyRocket Foods, Inc. which sold to Delicious Cookie Co., Inc. of Des Plaines,
IL in 1995. Between 1996 and 1999, Mr. Caden was President of SkyRocket
Marketing, a private marketing firm focused on national food industry clients.
SECTION 16(a) BENEFICIAL OWNERSHIP REPORTING COMPLIANCE
Section 16 of the Securities Exchange Act of 1934 and rules adopted
thereunder establish requirements for officers, directors and beneficial owners
of ten percent or more of the Company's outstanding common stock to report
transactions and holdings in the Company's securities to the Securities and
Exchange Commission and the NASD.
With respect to 1999, the Company believes, based on copies of reports
furnished to it and written representations that no other reports were required
to be filed, that all filings under Section 16 were made in a timely fashion
except that: Mr. Charles T. Collins filed his 1999 Form 5 approximately 7 days
late; Mr. Gary D. Kline filed his 1999 Form 5 approximately 10 days late; Mr.
David S. Nixon did not file a Form 3 upon his election as an executive officer
in June 1999 but instead reported his beneficial ownership of securities on his
1999 Form 5; Kenneth R. Schafer did not file a Form 3 upon his election as an
executive officer in June 1999 but instead reported his beneficial ownership of
securities on his 1999 Form 5; and Mr. Steven G. Conley who, upon appointment to
the Board of Directors in February 1999, filed his Form 3 approximately one
month late.
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EXECUTIVE COMPENSATION
The following table shows the compensation for the services rendered during
fiscal years 1999, 1998 and 1997 for the Chief Executive Officer and each of the
executive officers of the Company whose aggregate salary and bonus exceeded
$100,000 in the most recent fiscal year (the "Named Executive Officers").
SUMMARY COMPENSATION TABLE
LONG-TERM
ANNUAL COMPENSATION COMPENSATION
------------------- AWARDS ALL OTHER
NAME AND SALARY(1) BONUS OPTIONS COMPENSATION(2)
PRINCIPAL POSITION YEAR ($) ($) (#) ($)
------------------ ---- --------- ------ ------------ ---------------
Robert W. Lindal.................... 1999 135,457 46,200 -- 5,476
CEO/Chairman 1998 89,091 -- -- 6,128
1997 165,619 -- -- 3,109
Douglas F. Lindal(3)................ 1999 135,515 46,200 -- 5,241
President/Chief Operating 1998 76,219 -- -- 4,842
Officer 1997 142,558 -- -- 2,737
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(1) Includes base salary.
(2) For Robert W. Lindal other compensation in 1999 consists of matching
contributions to Mr. Lindal's contributions to the Company's 401(k) Plan of
$2,375, group term life insurance premiums of $620 and payment in lieu of
time off in the amount of $2,481. For Douglas F. Lindal other compensation
in 1999 consists of matching contributions to Mr. Lindal's contributions to
the Company's 401(k) Plan of $2,375, group term life insurance premiums of
$385 and payment in lieu of time off in the amount of $2,481.
(3) It is expected that Douglas F. Lindal will retire and resign as an officer
of the Company in July 2000. However, Mr. Lindal will continue as a director
of the Company.
FISCAL YEAR-END OPTION VALUES
The following table shows the year-end values of unexercised options held
by the Named Executive Officers. No options were granted in 1999 to the Named
Executive Officers and no shares were acquired on exercise of options in 1999 by
the Named Executive Officers.
NUMBER OF SHARES VALUE OF UNEXERCISED
UNDERLYING UNEXERCISED IN-THE-MONEY OPTIONS
OPTIONS AT YEAR-END AT YEAR-END(1)
---------------------------- ----------------------------
EXERCISABLE UNEXERCISABLE EXERCISABLE UNEXERCISABLE
NAME (#) (#) ($) ($)
---- ----------- ------------- ----------- -------------
Robert W. Lindal............................ 35,100 -- -- --
Douglas F. Lindal........................... 35,100 -- -- --
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(1) Values are based on the difference between the option exercise price and the
fair market value at fiscal year-end of $2.25, which was less then the
exercise price of Messrs. Robert W. Lindal's and Douglas F. Lindal's
options. There is no assurance that any value will be realized from the
unexercised options.
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COMPENSATION COMMITTEE REPORT ON EXECUTIVE COMPENSATION
COMPENSATION COMMITTEE
The Compensation Committee (the "Committee") is composed of three of the
Company's non-employee directors, William M. Weisfield (Chairman), Charles R.
Widman and Charles T. Collins. The Committee is responsible for establishing and
administering policies that govern compensation for the Chief Executive Officer
and other executive officers who own 5% or more of the Company's outstanding
common stock ("Owner/Officers") and reporting thereon to the Board of Directors.
The Committee also administers the Company's stock option plans and reviews the
compensation of other executive officers that is set by the Executive Committee.
COMPENSATION POLICIES
The Committee bases executive officer compensation on the same guiding
principals used to determine compensation programs for all employees. The
Company seeks to offer pay and benefits that allow the Company to:
(a) Attract and retain people with the skills critical to achieve the
long-term success of the Company,
(b) Maintain compensation that is competitive, and
(c) Pay for performance to both motivate and reward individual and
team performance in attaining business objectives and maximizing
shareholder value.
FORMS OF COMPENSATION
Compensation for the Owner/Officers is based on the above policies and
consists of the following components: competitive base pay, bonuses, stock
options and benefits.
Base Salary. The Committee reviews and approves all salary changes for
Owner/Officers. The Committee bases its approval of individual salary levels on
the compensation budget for the Company, performance-based evaluations,
recommendations by the Executive Committee and comparisons to published
compensation levels for manufacturing companies of similar size and
profitability. The Committee does not set executive compensation at specific
target ranges of any particular survey.
Bonus. The Committee has devised a bonus plan for Owner/Officers and other
executive officers that is based on selected performance criteria, emphasizing
the pre-tax profitability of the Company. For the Chief Executive Officer, the
amount of any bonus payment is based solely on the pre-tax earnings of the
Company.
The bonus plan, among other things, defines the bonus pool that is to be
available for distribution to the Owner/Officers and other executive officers.
For pre-tax earnings up to $1,000,000, 8.25% of pre-tax earnings is the bonus
pool. For pre-tax earnings from $1,000,000 to a maximum of $3,000,000, 16.5% of
pre-tax earnings is added to the bonus pool. The available bonus pool is then
divided among the Owner/Officers and other executive officers according to a
predetermined percentage.
Stock Options. Non-qualified or incentive options are periodically granted
to all Owner/Officers. Incentive stock options are periodically granted to other
executive officers and certain other employees by the Compensation Committee. No
stock options were granted to Owner/Officers in 1999.
Chief Executive Officer Compensation
In establishing the Chief Executive Officer's compensation package, the
Committee pursues the same objectives and policies applicable for the Company's
other executive officers. On November 29, 1997, due to the performance of the
Company in 1997, all Owner/Officers voluntarily reduced their base salary by
50%. These reductions continued throughout 1998. The amount of the reduction in
base salary was discretionary by the Owner/Officers. On January 22, 1999, the
Compensation Committee approved increases in the salaries of
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Robert W. Lindal and Douglas F. Lindal to 75% and 88%, respectively, of their
pre-November 29, 1997 levels. These increases were effective February 1, 1999.
On August 19, 1999, the Compensation Committee approved additional increases in
the salaries of Robert W. Lindal and Douglas F. Lindal to 90% and 105%,
respectively, of their pre-November 29, 1997 levels. These additional raises
were effective on August 28, 1999.
Section 162(m) of the Internal Revenue Code of 1986, as amended (the
"Code"), includes potential limitations on the deductibility for federal income
tax purposes of compensation in excess of $1 million paid or accrued with
respect to any of the executive officers whose compensation is required to be
reported in the Company's proxy statement. Certain performance-based
compensation that has been approved by shareholders is not subject to the
deduction limit. The Company's stock option plans are structured to qualify
options granted thereunder as performance-based compensation under Section
162(m). For 2000, the Committee does not contemplate that there will be any
nondeductible compensation.
COMPENSATION COMMITTEE
William M. Weisfield, Chairman
Charles R. Widman
Charles T. Collins
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STOCK PRICE PERFORMANCE GRAPH
The graph below compares for each of the last five calendar years ended
December 31, 1999 the cumulative total return of the Company, the NASDAQ Market
Index and the Media General Residential Construction Index. Cumulative total
return assumes $100 invested January 1, 1995 and re-investment of all dividends.
COMPARE 5-YEAR CUMULATIVE TOTAL RETURN
AMONG LINDAL CEDAR HOMES, INC.,
NASDAQ MARKET INDEX AND MG GROUP INDEX
BROAD MARKET INDUSTRY INDEX LINDAL CEDAR HOMES, INC.
------------ -------------- ------------------------
1994 100.00 100.00 100.00
1995 129.71 143.91 138.46
1996 161.18 144.75 134.62
1997 197.16 213.44 111.54
1998 278.08 230.12 50.00
1999 490.46 171.52 69.23
Assumes $100 invested on January 1, 1995
Assumes dividends reinvested
Fiscal year ended December 31, 1999
Note: Stock price performance shown in the Stock Price Performance Graph for the
Common Stock is historical and not necessarily indicative of future price
performance.
CHANGE OF CONTROL ARRANGEMENTS
Under the Company's 1997 Stock Option Plan, in the event of (a) the merger
or consolidation of the Company in which it is not the surviving corporation or
pursuant to which shares of Common Stock are converted into cash, securities or
other property and the holders of the Company's stock own less than 66 2/3% of
the outstanding voting securities of the Company, (b) the sale, lease, exchange
or other transfer of all or substantially all of the Company's assets (other
than transfer to a majority-owned subsidiary); or (c) the approval by the
holders of Common Stock of any plan or proposal for the Company's liquidation or
dissolution (each, a "Corporate Transaction"), each outstanding option under the
Company's stock option plans will automatically accelerate so that it will
become 100% vested and exercisable immediately before the Corporate Transaction,
except to the extent that options are assumed by the successor corporation. The
vesting of such assumed options accelerates at the time an optionee's employment
is terminated by the Company for reasons other than "cause" or by the optionee
for "good reason" within two years after a Corporate Transaction.
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Under the Company's 1988 Combined Incentive and Nonqualified Stock Option
Plan (the "1988 Plan"), the Board has the discretion to accelerate the
exercisability of options in the event of certain events described in the 1988
Plan, such as the dissolution or liquidation of the Company or a reorganization,
merger or consolidation with one or more corporations.
PROPOSAL 2:
RATIFICATION OF APPOINTMENT OF INDEPENDENT AUDITORS
The Board of Directors has selected KPMG LLP, certified public accountants,
to continue as independent auditors to examine the consolidated financial
statements of the Company for the year ending December 31, 2000. KPMG LLP has
served as the independent auditor of the Company's United States operations
since 1968 and of the Company's Canadian operations since 1970. A representative
of KPMG LLP will be present at the 2000 Annual Meeting to respond to appropriate
questions and to make a statement if he or she so desires.
THE BOARD OF DIRECTORS RECOMMENDS A VOTE FOR RATIFICATION
OF THE INDEPENDENT AUDITORS.
PROPOSALS BY SHAREHOLDERS
Proposals by shareholders intended to be presented at the 2001 Annual
Meeting and to be included in the Company's proxy statement must be received by
the Company at its principal executive offices no later than December 29, 2000,
and must otherwise comply with the rules issued under the Securities Exchange
Act of 1934.
Pursuant to Rule 14a-4(c) under the Securities Exchange Act of 1934, as
amended, the Company intends to retain discretionary authority to vote proxies
with respect to stockholder proposals for which the proponent does not seek
inclusion of the proposed matter in the Company's proxy statement for the
Company's 2001 Annual Meeting, except in circumstances where (i) the Company
receives notice of the proposed matter no later than March 17, 2001, and (ii)
the proponent complies with the other requirements set forth in Rule 14a-4.
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ANNUAL REPORT AND FORM 10-K
The 1999 Annual Report of the Company was mailed to shareholders with this
proxy statement. Upon request, the Company will furnish without charge a copy of
the Company's Annual Report on Form 10-K for the fiscal year ended December 31,
1999, including financial statements and schedules. The Form 10-K has been filed
with the Securities and Exchange Commission. It may be obtained by writing to:
Sir Walter Lindal, Secretary
Lindal Cedar Homes, Inc.
Post Office Box 24426
Seattle, Washington 98124
By Order of the Board of Directors
SIR WALTER LINDAL
Chairman Emeritus and Secretary
Seattle, Washington
May 5, 2000
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________________________________________________________________________________
LINDAL CEDAR HOMES, INC.
THIS PROXY IS SOLICITED ON BEHALF OF THE BOARD OF DIRECTORS
PROXY FOR THE ANNUAL MEETING OF SHAREHOLDERS MAY 25, 2000
The undersigned hereby appoints Sir Walter Lindal and Robert W. Lindal or
either of them, attorneys and proxies with full power of substitution in each
of them, in the name, place and stead of the undersigned to vote as Proxy all
the stock of the undersigned in Lindal Cedar Homes, Inc.
(TO BE SIGNED ON REVERSE SIDE)
________________________________________________________________________________
15
PLEASE DATE, SIGN AND MAIL YOUR
PROXY CARD BACK AS SOON AS POSSIBLE!
ANNUAL MEETING OF SHAREHOLDERS
LINDAL CEDAR HOMES, INC.
MAY 25, 2000
PLEASE DETACH AND MAIL IN THE ENVELOPE PROVIDED
- --------------------------------------------------------------------------------
A [X] PLEASE MARK YOUR
VOTES AS IN THIS
EXAMPLE.
WITHHOLD NOMINEES:
FOR ALL AUTHORITY TO ROBERT W. LINDAL
NOMINEES VOTE FOR ALL CHARLES T. COLLINS
1. ELECTION OF [ ] [ ] MARTIN J. LINDAL
THE CHARLES R. WIDMAN
FOLLOWING
NOMINEES, AS SET FORTH IN THE PROXY STATEMENT:
INSTRUCTIONS: TO WITHHOLD AUTHORITY TO VOTE
FOR ANY INDIVIDUAL NOMINEE, WRITE THAT
NOMINEE'S NAME IN THE SPACE PROVIDED BELOW.
-------------------------------------------
FOR AGAINST ABSTAIN
[ ] [ ] [ ]
2. TO ELECT KPMG LLP AS AUDITORS TO
EXAMINE THE FINANCIAL STATEMENTS OF
THE COMPANY FOR THE YEAR ENDING
DECEMBER 31, 2000.
3. THE TRANSACTION OF SUCH OTHER BUSINESS AS MAY PROPERLY
COME BEFORE THE MEETING.
THE SHARES REPRESENTED BY THIS PROXY WILL BE VOTED FOR
THE ELECTION OF ALL NOMINEES AND FOR PROPOSAL 2 IF NO
INSTRUCTION IS GIVEN.
PLEASE MARK, SIGN, DATE AND RETURN THIS PROXY IN THE ENCLOSED
ENVELOPE.
SIGNATURE(S)____________________ L.S._______________L.S. DATED:__________, 2000
(NOTE: Please sign exactly as your name appears hereon. Executors,
administrators, trustees, etc. should so indicate when signing, giving
full title as such. If signer is a corporation, execute in full corporate
name by authorized officer. If shares held in the name of two or more
persons, all should sign.)