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SCHEDULE 14A INFORMATION
PROXY STATEMENT PURSUANT TO SECTION 14(A) OF THE SECURITIES
EXCHANGE ACT OF 1934 (AMENDMENT NO. )
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 (as permitted by Rule 14a-6(e)(2))
/x/ Definitive Proxy Statement
/ / Definitive Additional Materials
/ / Soliciting Material Pursuant to sec.240.14a-11(c) or sec.240.14a-12
LINDAL CEDAR HOMES
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(Name of Registrant as Specified In Its Charter)
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(Name of Person(s) Filing Proxy Statement, if other than the Registrant)
Payment of Filing Fee (Check the appropriate box):
/ / $125 per Exchange Act Rules 0-11(c)(1)(ii), or 14a-6(i)(1), or 14a-6(i)(2)
or Item 22(a)(2) of Schedule 14A.
/ / $500 per each party to the controversy pursuant to Exchange Act Rule
14a-6(i)(3).
/ / Fee computed on table below per Exchange Act Rules 14a-6(i)(4) and 0-11.
(1) Title of each class of securities to which transaction applies:
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(2) Aggregate number of securities to which transaction applies:
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(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):
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(4) Proposed maximum aggregate value of transaction:
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(5) Total fee paid:
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/x/ 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:
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(2) Form, Schedule or Registration Statement No.:
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(3) Filing Party:
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(4) Date Filed:
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[Lindal Cedar Homes, Inc. logo]
4300 South 104th Place
Seattle, Washington 98178
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NOTICE OF ANNUAL MEETING OF SHAREHOLDERS
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Notice is hereby given that the Annual Meeting of the Shareholders of
Lindal Cedar Homes, Inc. will be held at the Washington Athletic Club, 1325
Sixth Avenue, Seattle, Washington on May 25, 1995 at 3:00 p.m., pursuant to a
resolution of the Board of Directors for the following purposes:
1. To amend the Company's bylaws to provide for two classes of directors.
2. To elect a Board of Directors, five to hold office for one year, and
five to hold office for two years, or until their successors are elected
and qualified.
3. To amend the Company's Directors and Distributors Stock Option Plan to
increase the number of options to be granted to non-employee Directors
and to increase the number of shares that may be issued under the Plan.
4. To elect independent auditors to examine the consolidated financial
statements of the Company for the year ending December 31, 1995.
5. To transact such other business as may properly come before the meeting
or any adjournment thereof.
Only shareholders of record at the close of business on April 10, 1995 will
be entitled to vote. 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. Any
shareholder who later finds that he can be present at the meeting, or for any
reason desires to do so, may revoke this proxy at any time before it is voted.
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 1, 1995
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LINDAL CEDAR HOMES, INC.
4300 SOUTH 104TH PLACE
SEATTLE, WASHINGTON 98178
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PROXY STATEMENT
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For Annual Meeting of Shareholders To Be Held May 25, 1995.
Proxies in the form enclosed are solicited by and on behalf of the Board of
Directors of the Company. 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 and directors and by
other employees of the Company. All costs of solicitation of proxies will be
borne by the Company.
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.
VOTING SECURITIES AND PRINCIPAL HOLDERS THEREOF
At the close of business on April 3, 1995 there were 4,039,522 shares of
common stock outstanding, which represent all of the voting securities of the
Company. Each share of common stock is entitled to one vote. Only shareholders
of record at the close of business on April 10, 1995 will be entitled to vote at
the meeting. Shareholders have cumulative voting rights with respect to the
election of directors and may exercise these rights without giving any notice or
taking any other prior action. The existence of cumulative voting rights means
that a shareholder may cast a total number of votes in the election of directors
which is equal to the number of directors to be elected multiplied by the number
of such shareholder's shares. Such votes may be cast entirely for one candidate
or may be distributed equally or disproportionately among as many candidates as
the shareholder may consider appropriate.
A shareholder may vote in person or by proxy. A proxy must be in writing
and dated and signed by the shareholder. A shareholder giving a proxy has the
power to revoke it at any time before it is voted.
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The following table sets forth as of April 3, 1995 certain information as
to the number of shares of common stock beneficially owned by each person who is
known to the Company to own beneficially more than 5% of its outstanding common
stock or who is a Company director or nominee for director, and by all officers
and directors of the Company as a group:
BENEFICIAL OWNERSHIP OF COMMON STOCK
NUMBER PERCENTAGE OF
NAME OF SHARES(1)(5) OUTSTANDING SHARES
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Sir Walter Lindal(2) 937,908(3) 22.10%
Robert W. Lindal(2) 433,389(4) 10.21
Douglas F. Lindal(2) 382,118(4) 9.00
Bonnie G. McLennaghan(2) 377,943(4) 8.91
Martin J. Lindal(2) 358,863(4) 8.46
Robert M. McLennaghan(2) 708 *
Everett G. Martin 44,074 1.04
Harry A. Pryde -- --
Rick L. Stanley 146 *
Daniel B. Ward 708 *
Charles R. Widman 708 *
William M. Weisfield -- --
All officers and directors
as a group (16 persons) 2,602,805 61.34
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* less than one percent
(1) Beneficial ownership includes both voting power and investment power.
(2) Robert W. Lindal, Martin J. Lindal and Douglas F. Lindal are sons, and
Bonnie G. McLennaghan is the daughter, of Sir Walter Lindal. Robert M.
McLennaghan is the husband of Bonnie G. McLennaghan. The address of each of
the individuals listed is the address of the Company's headquarters at 4300
South 104th Place, Seattle, Washington 98178.
(3) 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.
(4) Does not include 772,898 shares owned by Lindal, Inc.
(5) With respect to each such individual and to all officers and directors as a
group, the beneficial ownership data includes options to purchase common
stock exercisable within 60 days as follows: (i) options to purchase 27,375
shares held by each of Sir Walter Lindal, Robert W. Lindal, Douglas F.
Lindal, Martin J. Lindal and Bonnie G. McLennaghan, (ii) options to purchase
14,094 shares held by Everett G. Martin, (iii) options to purchase 708
shares held by each Robert M. McLennaghan, Daniel B. Ward and Charles R.
Widman, (iv) options to purchase 146 shares held by Rick L. Stanley, and (v)
options to purchase 203,961 shares held by all officers and directors as a
group.
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PROPOSAL 1: AMENDMENT TO THE BYLAWS --
CLASSIFICATION OF DIRECTORS
The Board of Directors has unanimously approved and recommends to the
shareholders the adoption of an amendment to the Company's Bylaws providing for
the classification of the Board of Directors. The amendment would divide the
Board into two classes with staggered two-year terms. The Board classification
is intended to encourage continuity in the management of the business and
affairs of the corporation, especially the retention of non-employee directors
by increasing the period that each agrees to serve as a member of the Board.
The amendment may have the effect of increasing the amount of time
necessary for a substantial shareholder to gain control of the Board of
Directors. Adoption of the amendment may discourage takeover attempts or
accumulation of stock by outsiders.
The amendment is not recommended in response to any effort of which Company
management or the Board of Directors is aware to obtain control of the Company
or to change the Board. The Board has no present intention of soliciting
shareholder approval of any other proposals that would affect the ability of
third parties to change control of the Board of Directors.
The Articles and Bylaws do not presently contain any provisions intended by
the Company to have an anti-takeover effect. However, there are, as of April 3,
1995, 5,960,478 shares of authorized but unissued common stock and 3,000,000
shares of authorized but unissued preferred stock. The Board has power to issue
authorized but unissued shares and to determine, subject to the provisions of
the Articles of Incorporation and applicable law, the rights, including voting
rights, preferences and limitations of the authorized but unissued preferred
stock.
As of April 3, 1995, the present members of the Board hold approximately
2,158,622 shares of common stock (including stock options) which is
approximately 50.9% of the outstanding common stock. The members of the Lindal
family (Sir Walter Lindal, Robert W. Lindal, Douglas F. Lindal, Bonnie G.
McLennaghan and Martin J. Lindal) hold approximately 58.7% of the outstanding
common stock. See "Voting Securities and Principal Holders Thereof" above. In
view of these ownership percentages, the Board does not believe that third
parties are likely to seek control of the Company by accumulations of the
Company's stock in market transactions or by means of a proxy contest.
The Board classification amendment may have the effect of encouraging
persons seeking to acquire control of the Company to initiate such an
acquisition through arms-length negotiations with the Company's management and
Board of Directors who would then be in a position to negotiate a transaction
which is fair to all stockholders.
DESCRIPTION OF THE AMENDMENT
Pursuant to the Board classification amendment, the Board would be divided
into two classes as nearly equal in number as possible, with initial terms of
office for the first and second classes expiring at the annual meetings of
Shareholders in 1996 and 1997, respectively. Starting with the 1996 Annual
Meeting, one class of directors would be elected each year for a two-year term.
Information regarding the current nominees for election at the 1995 Annual
Meeting and the terms for which each would initially serve is set forth under
"Election of Directors" below.
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The classification of directors will have the effect of making it more
difficult to change the composition of the Board. At least two annual
shareholders meetings instead of one will be required to effect a change in the
entire Board. In the event of vacancies, the remaining directors may fill the
vacancy. Under the existing Bylaws of the Company, a director may only be
removed for cause. The Company's Articles of Incorporation provide for
cumulative voting.
Although continuity and stability of the Board has not presented a serious
problem in the past, the Board believes that a classified Board will help to
promote continuity and stability of Company management. In particular, it is
intended that this amendment encourage non-employee directors to remain on the
Board for longer periods.
THE BOARD HAS UNANIMOUSLY APPROVED THE ADOPTION OF THE AMENDMENT TO THE
BYLAWS PROVIDING FOR THE CLASSIFICATION OF DIRECTORS AND RECOMMENDS THAT
SHAREHOLDERS VOTE FOR PROPOSAL 1. THE ADOPTION OF THE AMENDMENT WILL REQUIRE THE
AFFIRMATIVE VOTE OF A MAJORITY OF THE SHARES REPRESENTED AT THE 1995 ANNUAL
MEETING.
PROPOSAL 2: ELECTION OF DIRECTORS
The Board of Directors presently consists of eleven members but effective
at the 1995 Annual Meeting, the Board will be reduced to ten members. All ten
members of the Board of Directors will be elected at the meeting. If the
Amendment to the Bylaws providing for classification of the Board is approved by
the shareholders (See "Amendment to the Bylaws - Classification of Directors"),
then Robert W. Lindal, Martin J. Lindal, Charles R. Widman, Everett G. Martin
and Daniel B. Ward will be elected for initial terms expiring at the 1996 Annual
Meeting and William M. Weisfield, Harry A. Pryde, Rick L. Stanley, Douglas F.
Lindal and Sir Walter Lindal will be elected for initial terms expiring at the
1997 Annual Meeting; in all cases until their respective successors have been
elected and qualified. If the Amendment is not approved, all nominees elected as
directors will serve until the 1996 Annual Meeting and their respective
successors are elected and qualified. The directors will be elected by a
plurality vote of the shares represented, in person or by proxy, at the meeting.
Each year 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. The Board of Directors has selected Rick L.
Stanley from among its distributors as a nominee for election as a director at
the 1995 Annual Meeting. Mr. Stanley was elected to the Board in January 1995 to
fill a vacancy created by the resignation of Charles T. Kollerer.
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.
During 1994, there were six meetings of the Board of Directors. No director
attended fewer than 75% of the meetings of the Board of Directors and the
various committees thereof at which he or she was entitled to vote, except that
Robert M. McLennaghan did not attend two of the five meetings of the Audit
Committee held during 1994 of which he did not receive notice.
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The following table sets forth information regarding each nominee for
election as a director and each executive officer of the Company:
DIRECTOR POSITION
NAME(1) AGE SINCE WITH COMPANY
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Sir Walter Lindal(2) 76 1966-1975 Chairman Emeritus of the
& 1978 on Board of Directors,
Secretary and Director
Robert W. Lindal(2) 47 1969-1975 Chairman of the Board of
& 1976 on Directors and Chief
Executive Officer
Douglas F. Lindal(2) 44 1971-1975 President and Director
& 1980 on
Bonnie G. McLennaghan(2) 50 1966-1981 Vice President
& 1984-1993
Martin J. Lindal(2) 41 1981 Vice President Information
Systems & Assistant
Secretary and Director
Everett G. Martin 71 1986 Vice President Midwest &
Eastern Canada and
Director
Harry A. Pryde 64 1994 Director
Rick L. Stanley 36 1995 Director
Daniel B. Ward 67 1993 Director
Charles R. Widman 69 1993 Director
William M. Weisfield 53 1994 Director
Richard C. Bendix 46 Vice President Marketing
John F. Dacy 46 Vice President Finance and
Treasurer
Gary D. Kline 46 Vice President Operations
Frank D. Knowles 54 Vice President Sales
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(1) Each of the individuals listed are nominees for director except Messrs.
Bendix, Dacy, Kline and Knowles, and Mrs. McLennaghan who serve solely in
their capacities as executive officers of the Company. Each executive
officer is elected by the Board of Directors following the Annual Meeting of
shareholders to serve for a term of one year or until a successor is elected
and qualified. The address of each of the individuals listed is the address
of the Company's headquarters at 4300 South 104th Place, Seattle, Washington
98178.
(2) Robert W. Lindal, Martin J. Lindal and Douglas F. Lindal are sons, and
Bonnie G. McLennaghan is the daughter of Sir Walter Lindal.
SIR WALTER LINDAL was Chairman of the Board from 1981 until January 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 actively managed the Company. Mr. Lindal is the
Company's founder.
ROBERT W. LINDAL 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
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1981. Mr. Lindal will continue 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 the 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.
DOUGLAS F. LINDAL was Executive Vice President from 1981 until January
1995, when he became President and Chief Operating Officer of the Company. Mr.
Lindal will continue to have the sales, marketing and administration areas
report to him as well as function as General Manager supervising most Company
activities. He has served as a Director of the Company from 1971 to 1975 and
from 1980 to the present. Prior to 1981, Mr. Lindal also was an independent
distributor for the Company's products in Hawaii and in various sales and
administrative positions for the Company.
BONNIE G. MCLENNAGHAN has been active in marketing as Publications Director
since the Company's formation in 1966 and served as an officer and director of
the Company from 1966 to 1981 and as a director from 1984 to February 1993. From
1981 to 1986, Mrs. McLennaghan was Director of Publications. In 1986, she was
elected Vice President Publications and in 1990 was elected Vice President.
MARTIN J. LINDAL has served as a director of the Company since 1981, and
was employed by the Company as Administration Manager in 1982. Mr. Lindal was
elected Assistant Secretary in 1986 and Vice President Information Systems and
Assistant Secretary in 1990.
EVERETT G. MARTIN has been employed by the Company since 1967 in a variety
of key sales and administrative positions. Mr. Martin has been associated with
this Company and its predecessors in a variety of positions since 1951. For the
past twenty-eight years he has been the Supervisor of the Company's mid-west U.
S. and eastern Canada operations. Mr. Martin was elected Vice President Midwest
and Eastern Canada in 1986. Mr. Martin has served as a Director since 1986.
HARRY A. PRYDE has been president of The Pryde Corporation, a full service
property management firm and a builder/developer of single and multi-family
housing for more than the past five years. He is also a member of the board of
directors of Enterprise Bank and several non-profit entities. Mr. Pryde is a
past president of the National Association of Home Builders, the Seattle Master
Builders Association and the Washington State Home Builders Association. He was
elected a Director of the Company in 1994.
RICK L. STANLEY has been active, since 1990, with his wife in Custom Cedars
of Idaho, a Company distributor. From 1992 to 1994, Custom Cedars of Idaho has
been the Company's fourth, second and sixth best dealership based on home
packages delivered. Mr. Stanley is the President of Custom Cedars of Idaho and
was elected a Director of the Company in January 1995.
DANIEL B. WARD has been active in financial, marketing and import-export
trade consulting since 1977. Currently, Mr. Ward is on the Board of Directors of
several non-public companies and is the chief executive officer of Future Media
Systems, a company involved in multi-media products. He was elected a Director
of the Company in 1993.
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CHARLES R. WIDMAN 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 Limited. After being purchased by
Sandwell, Inc. in 1991, Widman Management Limited continues to operate as Widman
Management Consultants. Mr. Widman was elected a Director in 1993.
WILLIAM M. WEISFIELD has been the chief operating officer of Northern
Capital Company, a privately held investment company in Seattle, Washington
since January 1994. From December 1992 to December 1993, Mr. Weisfield was the
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 he is currently Vice-Chairman of the Board of Regents of
Seattle University. Mr. Weisfield currently is also a member of the Board of
Directors of UTILX Corporation, a NASDAQ traded company, and several non-public
entities.
RICHARD C. BENDIX joined the Company in 1988 as marketing manager and in
1989 was named Vice President Marketing. Prior to joining the Company, Mr.
Bendix was employed by Monterey Domes Inc. from 1980 to 1988 where he last
served as Executive Vice President.
JOHN F. DACY joined the Company in 1976 and has been the Company's Chief
Financial Officer since 1981.
GARY D. KLINE joined the Company in 1973 and has worked in several key
positions in the scheduling and production areas. Mr. Kline was elected Vice
President Operations in 1983.
FRANK D. KNOWLES joined the Company in 1993 as Vice President Dealer
Development and was appointed Vice President Sales in April 1995. Mr. Knowles
was Vice-President Franchising for Mid-Continent Restaurants from 1991 to 1993,
Director of Development for WSMP, Inc. (Western Steer Restaurants) from 1989 to
1991, and Franchise Manager for I Can't Believe It's Yogurt from 1987 to 1989.
COMPENSATION OF DIRECTORS
Each Director who is not an employee of the Company is paid $2,000 a year,
payable $500 per quarter and an additional $250 for each meeting of the Board of
Directors attended. The chairman of each committee is paid $1,000 per year,
payable $250 per quarter. Each committee member, including the chairman, is paid
$250 for each meeting of the committee attended. In addition, the Company may
pay a fee of $250 for significant non-Board or committee meetings, such as
meetings with accountants, counsel or Company executives to review or discuss
matters relating to Board or committee matters.
Each Director who is not an employee of the Company is eligible to
participate in the Directors' and Distributors' Stock Option Plan ("Plan"). The
Plan provides for an annual grant of options to purchase one share of common
stock to each non-employee Director for each $1,000 of net annual after-tax
earnings of the Company during the year. The exercise price of the options is
the market price as of the first business day of October preceding the year in
which the options are
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granted. However, if the Amendment to the Plan described below is approved by
the shareholders, each non-employee Director would receive options to purchase
10,000 shares upon becoming a Director and options to purchase 5,000 shares as
of October 1 of each year he or she continues as a Director and the exercise
price would be the market price on the date of grant.
As of the end of 1993, each of Messrs. Ward, Kollerer, Widman and
McLennaghan received options to purchase 708 shares at a price of $6.36 per
share (adjusted for the 10% stock dividend paid May 12, 1993). As of the end of
1994, each of Messrs. Ward, Kollerer, Widman, McLennaghan, Pryde and Weisfield
received options to purchase 1,017 shares at $6.00 per share. Options granted to
non-employee Directors are nonassignable except by will or the laws of dissent
and distribution. Options granted are automatically fully vested and are
exercisable six (6) months after the date of grant. Options granted to
non-employee Directors expire at the earlier of ten (10) years from the grant
date, ninety (90) days after the option holder ceases to be a Director for any
reason other than death, or one (1) 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 for options granted to
distributors.
Non-employee Directors who are also Company distributors and members of the
Top Distributor Advisory 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. Stanley is a member of the Council and is
eligible for options granted under the Plan. Options granted to distributors
under the Plan vest over a period of four (4) years and expire at the earliest
of ten (10) years following the date of grant or ninety (90) days after the
option holder ceases to be a distributor (or one year after death).
COMPLIANCE WITH SECTION 16 OF THE SECURITIES EXCHANGE ACT OF 1934
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.
With respect to 1994, Mr. Gary D. Kline filed an incomplete Form 5. An
amended Form 5 has been filed to correct this omission. The Company believes,
based upon copies of reports furnished to it and written representations that no
other reports were required, that all filings under Section 16 have now been
made.
COMMITTEES OF THE BOARD OF DIRECTORS
The Company presently has an Executive Committee which exercises all the
powers of the Board of Directors when the Board of Directors is not in session,
except the authority to (1) amend the Certificate of Incorporation; (2) adopt an
agreement of merger or consolidation under Section 251 or 252 of the Delaware
Corporation Law; (3) recommend to the stockholders the sale, lease or exchange
of all or substantially all of the Company's property and assets; (4) recommend
to the stockholders a dissolution of the corporation or a revocation of
dissolution; or (5) amend the bylaws of the Company. The Executive Committee
presently consists of Sir Walter Lindal, Robert W. Lindal and Douglas F. Lindal.
The Executive Committee met five times in 1994.
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The Company also has an Audit Committee, a Compensation Committee, a Stock
Option Committee and a Research and Development Committee. The Audit Committee
is responsible for reviewing the results of the audit of the Company performed
by its independent public accountants. The Audit Committee met five times in
1994. Its members were Daniel B. Ward, William M. Weisfield and Robert M.
McLennaghan.
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. The
Compensation Committee, which consisted of William M. Weisfield and Daniel B.
Ward, met nine times in 1994.
The Stock Option Committee has the authority to grant stock options under
the Company's 1984 Incentive Stock Option Plan and the 1988 Combined Incentive
Stock Option Plan and Nonqualified Stock Option Plan. The Stock Option Committee
consisted of William M. Weisfield and Daniel B. Ward. The Stock Option Committee
met one time in 1994.
The Company has a Research and Development Committee, which consisted of
Sir Walter Lindal, Daniel B. Ward and Everett G. Martin. The committee did not
meet formally in 1994.
RELATED PARTY TRANSACTIONS
Mr. Rick Stanley is the President of Custom Cedars of Idaho, a Company
distributor since 1990. Sales to Custom Cedars of Idaho, all of which were on
normal trade terms, were $559,000 in 1994.
In 1994, the Company made payments aggregating $57,886 to Lindal family
members under a variety of agreements. Of this amount, $34,000 was paid to
Lindal, Inc. in connection with certain royalty agreements; $2,886 was paid to
Lindal, Inc. to reimburse it for research and development expenses; $6,750 was
paid to each of Robert W. Lindal and Douglas F. Lindal for rental payments on
property owned by them which is leased by the Company; and $7,500 was paid to
Robert M. McLennaghan, the husband of Bonnie G. McLennaghan, for consulting
services in connection with sales and marketing by the Company.
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EXECUTIVE COMPENSATION
The following table shows the compensation for services rendered during
fiscal years 1994, 1993 and 1992 for the Chief Executive Officer and each of the
three highest paid executive officers of the Company whose aggregate salary and
bonus exceeded $100,000 in the most recent fiscal year.
SUMMARY COMPENSATION TABLE
LONG-TERM
COMPENSATION
ANNUAL COMPENSATION AWARDS
------------
------------------- STOCK OTHER
NAME AND SALARY(1) BONUS OPTIONS(2) COMPENSATION(3)
PRINCIPAL POSITION YEAR ($) ($) (#) ($)
- ----------------------- ---- --------- ------ ------------ ---------------
Robert W. Lindal 1994 153,766 20,350 10,000 5,849
CEO/Chairman 1993 136,976 20,691 5,000 5,248
1992 132,217 75,202 5,500 8,554
Douglas F. Lindal 1994 133,424 20,589 10,000 3,721
President 1993 119,328 20,865 5,000 3,317
1992 115,183 74,034 5,500 6,068
Sir Walter Lindal 1994 139,992 14,000 10,000 2,541
Secretary 1993 124,689 14,000 5,000 2,599
1992 117,827 48,034 5,500 2,723
Bonnie G. McLennaghan 1994 90,996 10,002 10,000 2,919
Vice President 1993 80,348 10,271 5,000 2,306
1992 76,057 33,301 5,500 3,942
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(1) Includes base salary; taxable life insurance in accordance with the
Company's term life insurance plan; life insurance premiums paid for Mr.
Robert W. Lindal and Ms. Bonnie G. McLennaghan; purchase of one-half of each
named executive's unused sick leave; cash paid for business use of personal
automobile for which there is no accounting to the Company for Mr. Douglas
F. Lindal and Ms. Bonnie G. McLennaghan; and amounts paid for medical
expenses not covered by the Company's medical plan under a program available
only to executives.
(2) Adjusted as necessary for a 10% stock dividend issued May 12, 1993 and for a
5-for-4 stock split effected in the form of a 25% stock dividend on April
27, 1992.
(3) For Robert W. Lindal, Douglas F. Lindal and Bonnie G. McLennaghan, Other
Compensation consists of amounts contributed, at the discretion of the Board
of Directors, to the Company's 401(k) Plan and a 25% matching contribution
of such employees' contributions to the Plan. For Mr. Robert W. Lindal it
also includes the benefit of personal use of a Company automobile. For Sir
Walter Lindal Other Compensation consists of the benefit of personal use of
a Company automobile. For Robert W. Lindal, Douglas F. Lindal and Bonnie G.
McLennaghan, Other Compensation for 1992 also includes amounts paid to plan
participants for surrender charges incurred when the Company changed
investment options in its 401(k) Plan.
11
13
The Company has two employee stock option plans, an Incentive Stock Option
Plan effective December 21, 1984 ("1984 Plan") and a 1988 Combined Incentive and
Nonqualified Stock Option Plan adopted at the Company's 1988 Annual Meeting of
Shareholders ("1988 Plan"). Options to purchase common stock have been granted
under the plans to officers and key employees of the Company. The 1984 Plan
expired on December 21, 1994. The following tables show stock option grants and
exercises in fiscal year 1994 to and by the executive officers of the Company
and the year end values of unexercised options.
OPTION GRANTS IN LAST FISCAL YEAR
POTENTIAL
REALIZABLE
VALUE
AT ASSUMED
INDIVIDUAL GRANTS ANNUAL RATES
- ------------------------------------------------------------------------------- OF STOCK PRICE
% OF TOTAL APPRECIATION
GRANTED TO EXERCISE FOR OPTION TERM
OPTIONS EMPLOYEES IN OR BASE ---------------
GRANTED(1) FISCAL YEAR PRICE(2) EXPIRATION 5% 10%
NAME (#) (%) ($) DATE ($) ($)
(A) (B) (C) (D) (E) (F) (G)
- ---------------------------- ---------- ------------ -------- ---------- ------ ------
Robert W. Lindal 10,000 10.05% 3.50 11/11/04 22,011 55,781
Douglas F. Lindal 10,000 10.05% 3.50 11/11/04 22,011 55,781
Sir Walter Lindal 10,000 10.05% 3.50 11/11/04 22,011 55,781
Bonnie G. McLennaghan 10,000 10.05% 3.50 11/11/04 22,011 55,781
- ---------------
(1) The options are immediately exercisable and were granted for a term of 10
years.
(2) The options have an exercise price equal to the market value on the date of
grant.
AGGREGATED OPTION EXERCISES IN LAST FISCAL YEAR
AND FISCAL YEAR-END OPTION VALUES
VALUE OF UNEXERCISED
NUMBER OF UNEXERCISED IN THE MONEY OPTIONS
SHARES OPTIONS AT YEAR-END AT YEAR-END(2)
ACQUIRED ON VALUE ----------------------------- -----------------------------
EXERCISE(1) REALIZED EXERCISABLE UNEXERCISABLE EXERCISABLE UNEXERCISABLE
NAME (#) ($) (#) (#) ($) ($)
(A) (B) (C) (D) (D) (E) (E)
- ---------------------- ----------- -------- ----------- ------------- ----------- -------------
Robert W. Lindal 0 0 27,375 0 (35,469) 0
Douglas F. Lindal 0 0 27,375 0 (35,469) 0
Sir Walter Lindal 0 0 27,375 0 (35,469) 0
Bonnie G. McLennaghan 0 0 27,375 0 (35,469) 0
- ---------------
(1) Number of securities underlying options exercised.
(2) Based on a fair market value at fiscal year-end of $3.50.
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COMPENSATION COMMITTEE REPORT ON EXECUTIVE COMPENSATION
COMPENSATION COMMITTEE
The Compensation Committee (the "Committee") is currently composed of two
of the Company's outside directors, William M. Weisfield and Daniel B. Ward.
Robert M. McLennaghan served on the Committee, in an interim capacity, until May
1994 when Mr. Weisfield was elected to the Committee by the Board. The Committee
is responsible for setting and administering policies that govern compensation
for the Chief Executive Officer and executive officers who own 5% or more of the
Company's outstanding common stock ("Owner/Officers"). The Committee is also
involved with setting the compensation of other executive officers. The Stock
Option Committee governs the stock option programs.
COMPENSATION PHILOSOPHY
The fundamental philosophy of the Company's compensation program is to be
internally consistent basing increases on merit while maintaining externally
competitive salary levels.
FORMS OF COMPENSATION
Compensation for the Owner/Officers is based on the above philosophy and
consists of the following components: 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. Additionally, in 1994 the Committee adjusted the base salary of
the Owner/Officers to a level that would allow for a meaningful bonus program.
Bonus. The bonus portion of the compensation is based on the performance of
the Company. In the latter part of 1992, the Committee established a program
that was to base 1993 and future year's bonus compensation, for Owner/Officers
and other executives, on selected performance criteria. This program, in its
first year of operation, needed clarification and modification.
In 1994, the Committee focused on devising a workable plan that is based on
selected performance criteria, including the profitability of the Company. The
Committee consulted with independent compensation experts when devising this
plan. The time required to formulate the plan did not allow for practical
implementation in 1994. However, this plan has been implemented for 1995.
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 Stock Option Committee.
1994 COMPENSATION
The total salary and bonus for the Chief Executive Officer and all
Owner/Officers as a group, increased 10% and 11%, respectively, from 1993 to
1994. The compensation review, which is described below, resulted in base salary
increases for the Chief Executive Officer and all
13
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Owner/Officers as a group of 21% and 25%, respectively. The lack of increase in
bonus compensation for the Chief Executive Officer and the other Owner/Officers,
despite a 44% increase in the Company's net earnings, balanced the adjustments
in base salary and resulted in the relatively smaller increases in total salary
and bonus.
As part of the process of formulating a revised bonus plan, the Committee
reviewed the base salaries of the Owner/Officers. It was determined, through
consultation with independent compensation experts, that the base salary of the
Owner/Officers needed to be adjusted to arrive at a level that allowed a
workable bonus plan. Accordingly, the base salary of the Owner/Officers, as a
group, was increased by approximately 25% effective September 1, 1994. The base
salary of the Chief Executive Officer increased from approximately $142,000 per
annum to approximately $172,000 per annum, effective September 1, 1994. It is
the opinion of the Committee, based upon input from independent compensation
consultants, that the revised base salaries are consistent with base salaries
for manufacturing companies of similar size and profitability.
Since a definitive bonus plan was not in place for 1994, the bonus pools
for the Owner/Officers and other executive officers were determined by the
Committee, based on the philosophy described above, historical consistency, the
performance of the Company given general economic conditions and the economic
conditions in the housing industry in particular. The increases in base salary
were also considered when arriving at the appropriate bonuses for the
Owner/Officers. The bonus pool for the Owner/Officers was virtually unchanged
from 1993, despite a 44% increase in net earnings. The allocation of the bonus
pool for other executive officers was determined by the Executive Committee,
with consideration given to individual performance.
COMPENSATION COMMITTEE INTERLOCKS AND INSIDER PARTICIPATION.
The Committee was composed of Messrs. McLennaghan and Ward, until Mr.
Weisfield's appointment in May 1994. Mr. McLennaghan is the husband of Bonnie G.
McLennaghan, who is the daughter of Sir Walter Lindal and the sister of Robert
W. Lindal, Douglas F. Lindal and Martin J. Lindal.
COMPENSATION COMMITTEE
William M. Weisfield, Chairman
Daniel B. Ward
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STOCK PRICE PERFORMANCE GRAPH
The graph below compares for each of the last five calendar years ending
December 31, 1994 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, 1990 and reinvestment of all dividends.
COMPARE 5-YEAR CUMULATIVE TOTAL RETURN
AMONG LINDAL CEDAR HOMES, INC.,
NASDAQ MARKET INDEX AND MG GROUP INDEX
[CHARISMA GRAPH]
MEASUREMENT PERIOD LINDAL CEDAR INDUSTRY
(FISCAL YEAR COVERED) HOMES, INC. INDEX BROAD MARKET
1989 100 100 100
1990 115.01 65.17 81.12
1991 148.53 132.22 104.14
1992 199.42 149.21 105.16
1993 189.12 197.36 126.14
1994 98.34 119.43 132.44
ASSUMES $100 INVESTED ON JANUARY 1, 1990
ASSUMES DIVIDEND REINVESTED
FISCAL YEAR ENDING DECEMBER 30, 1994
15
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PROPOSAL TO SHAREHOLDERS
PROPOSAL 3: AMENDMENT TO DIRECTORS AND DISTRIBUTORS
STOCK OPTION PLAN
AMENDMENT OF DIRECTORS AND DISTRIBUTORS STOCK OPTION PLAN.
In 1993, the shareholders approved the Directors and Distributors Stock
Option Plan for grants of options to non-employee members of the Board of
Directors and to certain distributors who sell the Company's products. 110,000
shares of common stock of the Company were reserved for issuance under the Plan.
The Plan provides for an annual grant of options to purchase one share of
Common Stock to each non-employee director of the Company for each $1,000 of net
annual after-tax earnings of the Company for the year. The exercise price of the
options is the market price on the first day of October of the preceding year.
Options are granted to those persons serving as non-employee directors on the
last day of the year.
For the year ending December 31, 1993, options to purchase 708 shares were
issued to each of Robert M. McLennaghan, Daniel B. Ward, Charles R. Widman and
Charles T. Kollerer as non-employee directors under the Plan. As of December 31,
1994, options were issued to each of Robert M. McLennaghan, Harry A. Pryde,
Daniel B. Ward, Charles R. Widman, Charles T. Kollerer and William M. Weisfield
to purchase 1,017 shares of common stock of the Company.
PROPOSED AMENDMENT.
The Board of Directors recommends the adoption of an amendment to the
Directors and Distributors Stock Option Plan in the following respects:
1. Non-employee directors when first elected to the Board by the
shareholders would receive an initial grant of options to purchase 10,000
shares of the Company's Common Stock at the fair market value upon that
date. The non-employee directors in office when this Amendment is approved
by the shareholders (i.e. Messrs. Pryde, Stanley, Ward, Widman and
Weisfield) would receive a grant of options to purchase 10,000 shares on
the date the amendment is approved.
2. Options would be granted to non-employee members of the Board of
Directors each year on October 1, commencing in 1995, to purchase 5,000
shares of the Company's Common Stock at the fair market value on that date.
3. No options would be granted with respect to 1995 and later years
based upon earnings of the Company.
4. The number of shares reserved for issuance under the Plan would be
increased from 110,000 to 210,000 to provide enough shares to cover options
likely to be granted over the next four to five years.
All other terms and conditions of the Plan applicable to options granted to
non-employee members of the Board of Directors would remain in effect.
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PURPOSES OF AMENDMENT.
The Board of Directors is responsible for overall direction of the Company
and outside directors provide valuable services to the Company in that capacity.
The Plan was originally recommended by the Board of Directors and approved by
the shareholders in order to attract and retain the services of experienced and
knowledgeable non-employee directors and to provide an incentive for
non-employee directors to increase their proprietary interest in the Company's
Common Stock.
The Company's senior management and the Board of Directors believe that the
Plan as it applies to non-employee directors has not substantially contributed
to the objectives for which it was originally intended. It is the belief of
management and the Board that the number of shares of stock subject to options
under the Directors and Distributors Stock Option Plan is insufficient to
attract potential non-employee directors to serve on the Board. Management and
the Board recommend that the number of shares subject to options granted to
outside directors be substantially increased in order to attract candidates to
serve on the Board and to insure that all non-employee directors have a
significant potential shareholder interest in the long term success of the
Company and in the performance of its stock.
This change would only affect options granted in 1995 and subsequent years
and would not affect any options granted in 1993 or 1994 to any directors. No
further options would be granted under the provisions of the Plan based upon
earnings of the Company.
The Plan is administered by the Executive Committee of the Board of
Directors, the members of which are not eligible to participate under the Plan.
Options granted to non-employee directors are automatic under the Plan and
neither the Board nor the Executive Committee has authority to change the
determination of the price, the number of shares or other material aspects of
the options granted to eligible directors. Approval by the Company's
shareholders is required for adoption of the amendment.
THE BOARD HAS UNANIMOUSLY APPROVED THE ADOPTION OF THE AMENDMENT TO THE
DIRECTORS AND DISTRIBUTORS STOCK OPTION PLAN AND RECOMMENDS THAT SHAREHOLDERS
VOTE FOR PROPOSAL 3. ADOPTION OF THE AMENDMENT WILL REQUIRE THE AFFIRMATIVE VOTE
OF A MAJORITY OF THE SHARES REPRESENTED AT THE 1995 ANNUAL MEETING.
PROPOSAL 4: ELECTION OF AUDITORS
KPMG Peat Marwick LLP, certified public accountants, has been nominated by
the Board of Directors for election as independent auditors to examine the
consolidated financial statements of the Company for the year ending December
31, 1995. KPMG Peat Marwick 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 Peat Marwick LLP will be present
at the 1995 Annual Meeting to respond to appropriate questions.
THE BOARD OF DIRECTORS RECOMMENDS A VOTE FOR APPROVAL OF THE ELECTION OF
THE INDEPENDENT AUDITORS.
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PROPOSALS BY SHAREHOLDERS
Proposals by shareholders intended to be presented at the 1996 Annual
Meeting and to be included in the Company's Proxy or Information Statement, must
be received by the Company at its principal executive offices no later than
December 31, 1995, and must otherwise comply with the rules issued under the
Securities Exchange Act of 1934.
By Order of the Board of Directors
SIR WALTER LINDAL
Chairman Emeritus and Secretary
For a copy of the Annual Report on Form 10-K to the Securities and Exchange
Commission, please write:
Sir Walter Lindal, Secretary
Lindal Cedar Homes, Inc.
Post Office Box 24426
Seattle, Washington 98124
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APPENDIX A
AMENDMENT TO BYLAWS
OF
LINDAL CEDAR HOMES, INC.
BE IT RESOLVED, that Article IV ("Board of Directors"), Section 4.2
("Number, Tenure and Qualification") shall be amended to read in its entirety as
follows:
SECTION 4.2. Number, Tenure and Qualifications. Except as otherwise
provided in this Section, each director shall be elected at the annual meeting
of stockholders for a term of two years. The directors of the corporation shall
be divided into two classes as nearly equal in number as possible. Effective
upon adoption of this Amendment to the bylaws, the first class shall consist of
five directors and the second class shall consist of five directors. At the
meeting of shareholders at which this Amendment to the bylaws is adopted, five
persons shall be elected as directors of the first class and five persons shall
be elected as directors of the second class. The term of office of the first
class shall expire at the annual meeting next occurring following the meeting of
shareholders at which this Amendment to the bylaws is adopted; and the term of
office of the second class shall expire at the second annual meeting following
the meeting at which this Amendment to the bylaws is adopted. Thereafter, at
each annual meeting, directors shall be chosen for a full two-year term to
succeed those whose terms have expired. The number of directors of either or
both classes may be increased or decreased from time to time by resolution
adopted by the directors or by the shareholders amending these bylaws in
accordance with the provisions hereof. No decrease shall have the effect of
shortening the term of any incumbent director unless such director resigns or is
removed in accordance with the provisions of these bylaws, the Certificate of
Incorporation and applicable law. Directors need not be residents of the State
of Delaware or shareholders of the corporation. Newly created directorships and
all other vacancies may be filled at any time by a majority vote of the
directors then in office, although less than a quorum.
A-1
21
APPENDIX B
SECOND AMENDMENT TO LINDAL CEDAR HOMES, INC.
DIRECTORS AND DISTRIBUTORS STOCK OPTION PLAN
THIS AMENDMENT is to that certain Directors and Distributors Stock Option
Plan of Lindal Cedar Homes, Inc., a Delaware corporation ("Company") approved by
the shareholders of the Company at the Annual Meeting of Shareholders held on
May 27, 1993 as amended by Amendment thereto approved by the shareholders of the
Company at the Annual Meeting of Shareholders held on May 26, 1994
(collectively, the "Plan"). Capitalized terms used in this Amendment shall have
the same meaning set forth in the Plan except as otherwise specified herein.
The Plan is hereby amended as follows:
1. Grants of Options to Eligible Directors. Section 4.1 of the Plan is
hereby amended in its entirety to read as follows:
Following adoption of this Amendment by the shareholders at the Annual
Meeting of Shareholders in 1995, options shall be granted to purchase
Common Stock of the Company pursuant to this Plan as follows:
(a) Initial Grants at the time an Eligible Director is first
elected by the shareholders as a Director of the Company (or in the case
of Eligible Directors who are Directors at the time this Amendment is
approved by the shareholders, upon the date of such approval), options
to purchase 10,000 shares for each Eligible Director; and
(b) Annual Grants on October 1 of each year beginning with the year
1995, options to purchase 5,000 shares for each such Eligible Director.
Each date specified in (a) and (b) above is hereinafter referred to
as a "Grant Date." If on any Grant Date the number of shares of Common
Stock available under Section 6 of the Plan for the grant of options is
insufficient to permit options to acquire the full number of shares of
Common Stock determined in accordance with the preceding sentence to
each Eligible Director, then each Eligible Director shall instead be
granted an option to acquire a whole number of shares of Common Stock
equal to the number of shares then available divided by the number of
Eligible Directors entitled to receive options on the Grant Date. The
exercise price of each option shall be the fair market value (as defined
in Section 4.2 of the Plan) of the Common Stock on the Grant Date. All
grants of options to Eligible Directors shall occur automatically
without further action of the Board of Directors. Notwithstanding any
other provision of the Plan as amended hereby, no Director shall be
awarded more than one Initial Grant during the entire term of the Plan.
2. Shares Available for Options. Section 6 of the Plan is hereby
amended to provide that the aggregate number of shares reserved for
issuance upon exercise of options granted under the Plan shall be 210,000
shares as constituted on the day this Amendment is approved by the
shareholders of the Company.
B-1
22
3. Effect of Amendment. This Amendment is conditioned upon approval by
the affirmative vote of the holders of at least a majority of the shares of
Common Stock present, in person or by proxy, at the annual meeting of the
shareholders of the Company held for the year 1995, or any adjournment
thereof. Except as specifically amended hereby, the Plan is ratified and
approved. Pursuant to Section 4.1 of the Plan as in effect prior to this
Amendment, Options have been granted to Eligible Directors pursuant to the
Plan with respect to the years 1993 and 1994, which options are hereby
confirmed. Following approval of this Amendment by the shareholders of the
Company, options shall be granted to Eligible Directors for periods after
1994 only pursuant to Section 4.1 as awarded hereby.
B-2
23
LINDAL CEDAR HOMES, INC.
THIS PROXY IS SOLICITED ON BEHALF OF THE BOARD OF DIRECTORS
PROXY FOR THE ANNUAL MEETING OF SHAREHOLDERS MAY 25, 1995
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.
1. To amend the Bylaws to provide for the classification of directors.
/ / FOR / / AGAINST / / ABSTAIN
2. Election of the following nominees, as set forth in the Proxy Statement:
/ / FOR all nominees
Sir Walter Lindal, Robert W. Lindal, Douglas F. Lindal, Martin J. Lindal,
Everett G. Martin,
Rick L. Stanley, Harry A. Pryde, Daniel B. Ward, Charles R. Widman and William
M. Weisfield.
/ / WITHHOLD AUTHORITY to vote for all
Instructions: To withhold authority to vote for any individual nominee, write
that nominee's name in the space provided below.
- --------------------------------------------------------------------------------
3. To amend the Company's Directors and Distributors Stock Option Plan.
/ / FOR / / AGAINST / / ABSTAIN
4. To elect KPMG Peat Marwick as auditors to examine the financial statements of
the Company for the year ending December 31, 1995.
/ / FOR / / AGAINST / / ABSTAIN
5. The transaction of such other business as may properly come before the
meeting.
/ / FOR / / AGAINST / / ABSTAIN
THE SHARES REPRESENTED BY THIS PROXY WILL BE VOTED FOR THE ELECTION OF ALL
NOMINEES AND FOR PROPOSALS 1, 3, 4 AND 5 IF NO INSTRUCTION IS GIVEN.
PLEASE MARK, SIGN, DATE AND
RETURN THIS PROXY IN THE
ENCLOSED ENVELOPE
DATED: , 1995
__________________________ L.S.
__________________________ L.S.
(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.)