SCHEDULE 14A
(RULE 14a-101)
INFORMATION REQUIRED IN PROXY STATEMENT
SCHEDULE 14A INFORMATION
PROXY STATEMENT PURSUANT TO SECTION 14(a) OF THE SECURITIES
EXCHANGE ACT OF 1934
Filed by the Registrant [X]
Filed by a Party other than the Registrant [ ]
Check the appropriate box:
[ ] Preliminary Proxy Statement
[X] Definitive Proxy Statement
[ ] Definitive Additional Materials
[ ] Soliciting Material pursuant to Rule 14a-11(c) or Rule
14a-12
[ ] Confidential, for Use of the Commission Only (as Permitted
by Rule 14a-6(e)(2))
THE COLONEL'S INTERNATIONAL, INC.
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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):
[X] No fee required.
[ ] 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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[ ] 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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(4) Date filed:
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[THE COLONEL'S INTERNATIONAL, INC. LOGO]
620 SOUTH PLATT ROAD
MILAN, MICHIGAN 48160
NOTICE OF ANNUAL MEETING OF SHAREHOLDERS
- ---------------------------------------------------------------------------
The annual meeting of shareholders of The Colonel's International,
Inc. (the "Company") will be held at the Company's offices at 620 South
Platt Road, Milan, Michigan 48160, on Friday, May 29, 1998, at 10:00 a.m.
local time, for the following purposes:
1. To elect four Directors to the Board of Directors.
2. To transact any other business that may properly come before the
meeting.
Shareholders of record at the close of business on April 30, 1998 are
entitled to notice of and to vote at the meeting and any adjournment of the
meeting. The following Proxy Statement and enclosed form of proxy are
being furnished to holders of the Company's Common Stock on and after May
15, 1998.
By Order of the Board of Directors,
/s/ Mark D. Stevens
Mark D. Stevens
President and Chief Executive Officer
May 15, 1998
It is important that your shares be represented at the
meeting. Even if you expect to attend the meeting,
PLEASE SIGN, DATE AND RETURN YOUR PROXY PROMPTLY.
ANNUAL MEETING OF SHAREHOLDERS
MAY 29, 1998
PROXY STATEMENT
This Proxy Statement and the enclosed proxy are being furnished to the
holders of Common Stock, $0.01 par value, of The Colonel's International,
Inc. (the "Company") on and after May 15, 1998 in connection with the
solicitation by the Company's Board of Directors of proxies for use at the
annual meeting of shareholders to be held on May 29, 1998, and at any
adjournment of that meeting. The annual meeting will be held at the
Company's offices at 620 South Platt Road, Milan, Michigan 48160, at 10:00
a.m. local time.
The purpose of the annual meeting is to consider and vote upon: (1)
the election of four Directors to the Board of Directors; and (2) such
other business as may properly come before the meeting.
If a proxy in the form distributed by the Company is properly executed
and returned to the Company, the shares represented by that proxy will be
voted at the annual meeting of shareholders and at any adjournment of that
meeting. If a shareholder specifies a choice, the proxy will be voted as
specified. If no choice is specified, the shares represented by the proxy
will be voted for the election of all nominees of the Board of Directors
named in this Proxy Statement. The Company's management does not know of
any other matter to be presented at the annual meeting. If other matters
are presented, all shares represented by the proxy will be voted in
accordance with the judgment of the persons named as proxies with respect
to those other matters.
A proxy may be revoked at any time prior to its exercise by written
notice delivered to the Secretary of the Company. A proxy may also be
revoked by attending and voting at the annual meeting.
Solicitation of proxies will be made initially by mail. Directors,
officers and employees of the Company may also solicit proxies in person or
by telephone without additional compensation. In addition, proxies may be
solicited by nominees and other fiduciaries who may mail material to or
otherwise communicate with the beneficial owners of shares held by them.
All expenses of solicitation of proxies will be paid by the Company.
ELECTION OF DIRECTORS
The Board of Directors has nominated the following four persons for
election to the Company's Board of Directors:
NOMINEES
Donald J. Williamson
Donald R. Gorman
Ted M. Gans
Mark German
It is the intent of the persons named in the accompanying proxy to
vote for the election of the four nominees listed above. The proposed
nominees are willing to be elected and to serve. In the event that any
nominee is unable to serve or is otherwise unavailable for election, which
is not contemplated, the incumbent Directors may or may not select a
substitute nominee. If a substitute nominee is selected, all proxies will
be voted for the person so selected. If a substitute nominee is not
selected, all proxies will be voted for the election of the remaining
nominees. Proxies will not be voted for a greater number of persons than
the number of nominees named.
A plurality of the shares represented in person or by proxy and voting
at the meeting is required to elect Directors. For the purpose of counting
votes on the election of Directors, abstentions, broker non-votes and other
shares not voted will not be counted as shares voted, and the number of
shares for which a plurality is required will be reduced by the number of
shares not voted.
The shares represented by proxies received from the Company's
shareholders will be voted FOR election of the Board's nominees for
Directors unless instructions to withhold a vote for any nominee are
specified in the proxy. The Company has been informed by the holders of
approximately 95.4% of the shares entitled to vote that they intend to vote
in favor of the Board's nominees.
Certain biographical information concerning the nominees listed above
is set forth below under the heading "Board of Directors."
THE BOARD OF DIRECTORS RECOMMENDS A
VOTE FOR THE ELECTION OF ALL NOMINEES AS DIRECTORS
VOTING SECURITIES
Holders of record of Common Stock, at the close of business on April
30, 1998, will be entitled to notice of and to vote at the annual meeting
and any adjournment of the meeting. As of April 30, 1998, there were
24,631,832 shares of Common Stock outstanding, each having one vote on each
matter presented for shareholder action. Shares cannot be voted unless the
shareholder is present at the meeting or represented by proxy.
2
SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS
The following persons beneficially owned more than five percent of
the outstanding shares of Common Stock as of April 30, 1998:
NAME AND ADDRESS AMOUNT OF NATURE OF
OF BENEFICIAL BENEFICIAL BENEFICIAL PERCENT OF
OWNER OF COMMON STOCK OWNERSHIP OWNERSHIP CLASS<F1>
- --------------------- --------- --------- ---------
Donald J. Williamson<F2> 11,934,580 shares Sole voting and investment power 48.32%
620 South Platt Road 11,639,235 shares Shared voting and investment power 47.13%
Milan, MI 48160
Patsy L. Williamson<F2> 11,639,235 shares Sole voting and investment power 47.13%
620 South Platt Road 11,934,580 shares Shared voting and investment power 48.32%
Milan, MI 48160
<FN>
- ---------------------------------------
<F1> See note 1 to the following table.
<F2> See note 2 to the following table.
</FN>
SECURITY OWNERSHIP OF MANAGEMENT
The following table shows the beneficial ownership of shares of
Common Stock, held as of April 30, 1998, by each director, each nominee for
election as director, each of the named executive officers (as defined in
the Summary Compensation Table) and by all directors and executive officers
of the Company as a group:
AMOUNT OF
NAME OF BENEFICIAL NATURE OF PERCENT OF
BENEFICIAL OWNER OWNERSHIP BENEFICIAL OWNERSHIP CLASS<F1>
- ---------------- --------- -------------------- ---------
Donald J. Williamson<F2><F3> 11,934,580 Sole voting and investment power 48.32%
11,639,235 Shared voting and investment power 47.13%
Patsy L. Williamson<F2><F3><F4> 11,639,235 Sole voting and investment power 47.13%
11,934,580 Shared voting and investment power 48.32%
Mark D. Stevens<F3> 5,700 Sole voting and investment power <F*>
0 Shared voting and investment power <F*>
3
Michael J. McCloskey<F4> 0 Sole voting and investment power <F*>
0 Shared voting and investment power <F*>
Ben C. Parr<F3><F5> 6,735 Sole voting and investment power <F*>
0 Shared voting and investment power <F*>
AMOUNT OF
NAME OF BENEFICIAL NATURE OF PERCENT OF
BENEFICIAL OWNER OWNERSHIP BENEFICIAL OWNERSHIP CLASS<F1>
- ---------------- --------- -------------------- ---------
Donald R. Gorman<F3><F5> 6,735 Sole voting and investment power <F*>
0 Shared voting and investment power <F*>
J. Daniel Frisina<F3><F5> 7,260 Sole voting and investment power <F*>
0 Shared voting and investment power <F*>
Ted M. Gans<F3><F5> 7,260 Sole voting and investment power <F*>
0 Shared voting and investment power <F*>
Mark German<F6> 413,167 Sole voting and investment power 1.67%
0 Shared voting and investment power <F*>
William Singleterry<F7> 5,000 Sole voting and investment power <F*>
0 Shared voting and investment power <F*>
John Carpenter<F7> 0 Sole voting and investment power <F*>
0 Shared voting and investment power <F*>
Directors and Officers 24,025,672 Sole voting and investment power 97.28%
as a group 0 Shared voting and investment power 0.00%
<FN>
- ------------------------------------------
<F*> Does not exceed 1%.
<F1> PERCENTAGES: The percentages set forth in this column were calculated
on the basis of (i) 24,631,832 shares of Common Stock outstanding as
of April 30, 1998 plus (ii) 66,175 shares of Common Stock subject to
options that were exercisable on April 30, 1998 or that will become
exercisable within 60 days after April 30, 1998. Shares subject to
such options are deemed to be outstanding for purposes of this chart.
<F2> THE WILLIAMSONS: In the mergers by which Brainerd International,
Inc., the Company's predecessor, merged with and into the Company and
by which The Colonel's, Inc. became a wholly owned subsidiary of the
Company, a total of 23,500,000 shares of Common Stock in the Company
4
were issued to Donald J. Williamson and Patsy L. Williamson,
proportionate to their ownership of shares of common stock of The
Colonel's, Inc. Because they are married, each is deemed to be the
beneficial owner of all of the stock owned by both of them. In
addition, Mrs. Williamson also has options to acquire 6,735 shares of
Common Stock that were exercisable as of April 30, 1998.
<F3> STOCK OPTION GRANTS TO DIRECTORS: Pursuant to the Company's 1995 Long-
Term Incentive Plan (the "LTIP"), the Company's Board of Directors in
February 1997 granted each non-employee Director of the Company (Mrs.
Williamson, Mr. Parr, Mr. Gorman, Mr. Darcy, Mr. Frisina and Mr. Gans)
options to acquire up to 5,000 shares of Common Stock. These stock
options were exercisable as of April 30, 1998 and thus the shares
subject to the options were considered "beneficially owned" by these
persons on that date. The Board of Directors also granted Mr. Stevens
options to acquire 5,000 shares of Common Stock, which options were
exercisable as of April 30, 1998.
<F4> MICHAEL J. MCCLOSKEY: Mr. McCloskey resigned as Chief Executive
Officer as of June 30, 1997. Mr. McCloskey had been granted certain
options to acquire Common Stock. However, these options were canceled
upon Mr. McCloskey's resignation. See "Summary Compensation Table."
<F5> AUTOMATIC STOCK OPTION GRANTS TO NON-EMPLOYEE DIRECTORS: Under the
LTIP, each non-employee director of the Company receives an automatic
grant of options in March and September of each year. The number of
options granted started at 500 per grant when the LTIP was inaugurated
in 1996. For each grant after that time, the number of options
granted increases by five percent from the previous grant.
Furthermore, when a new non-employee Director is elected or appointed
to the Board, he or she will immediately receive options in an amount
equal to the last grant. Messrs. Frisina and Gans each received
options to purchase a total of 1,185 shares of Common Stock pursuant
to these automatic grant provisions during 1997. Messrs. Parr and
Gorman and Mrs. Williamson each received options to purchase a total
of 1,735 shares pursuant to these provisions in 1997, import due to
the fact that each of them received options to purchase 550 shares
upon their appointment to the Board of Directors in February 1997.
All of the foregoing options are currently exercisable. Messrs.
Frisina, Gans, Parr and Gorman and Ms. Williamson were each granted
options to purchase 635 shares of Common Stock on March 1, 1998.
However, these options are not yet exercisable.
<F6> MARK GERMAN: Mr. German, a nominee for Director at the Company's 1998
Annual Meeting of Shareholders, is the former majority shareholder of
Rugged Liner, Inc., Triad Management Group, Inc., Aerocover, Inc., and
Ground Force, Inc., four Pennsylvania corporations acquired by the
Company in April 1998. In this acquisition, Mr. German was issued a
total of 413,167 shares of the Company's Common Stock. Mr. German's
5
father, mother and sister each were issued 13,620 shares of Common
Stock. Mr. German disclaims beneficial ownership of the shares owned
by his family members.
<F7> STOCK OPTION GRANTS TO OFFICERS: In February 1997, Mr. Singleterry was
granted options to acquire up to 5,000 shares of Common Stock. These
stock options are currently exercisable and are considered
beneficially owned by Mr. Singleterry. In February 1997, Mr.
Carpenter was granted options to acquire up to 600 shares of Common
Stock. However, Mr. Carpenter declined these options.
</FN>
BOARD OF DIRECTORS
The Company's Board of Directors currently consists of six members,
two of which are standing for reelection. The members of the Company's
Board of Directors are (in alphabetical order): J. Daniel Frisina, Ted M.
Gans, Donald R. Gorman, Ben C. Parr, Mark D. Stevens and Patsy L.
Williamson. During 1997, Michael J. McCloskey and John M. Darcy resigned
from the Board of Directors. No successors were appointed for Messrs.
McCloskey or Darcy. In addition, Mrs. Williamson, whose term as a Director
ends at the Annual Meeting, has declined to stand for reelection.
The Company's Board of Directors is classified into three groups, only
one of which stands for reelection at each annual meeting of shareholders.
The terms of the current Directors are as follows:
DIRECTOR YEAR TERM EXPIRES
-------- -----------------
Mark D. Stevens 2000
J. Daniel Frisina 1999
Ben C. Parr 1999
Patsy L. Williamson 1998
Donald R. Gorman 1998
Ted M. Gans 1998
Because the Company's Bylaws require each of the three classes of
Directors to be as nearly equal in number as possible, the Board of
Directors has determined that Mr. German, if elected as a Director, would
be placed in the class of Directors whose terms expire in the year 2000.
Mr. Williamson, if elected as a Director, would be placed in the class of
Directors whose terms expire in the year 2001.
6
NOMINEES FOR DIRECTORS -- TERMS EXPIRING IN 2001
DONALD J. WILLIAMSON (65). Mr. Williamson was Chairman of the Board,
President, Chief Executive Officer and a Director of the Company, which
positions he held from November 21, 1995 until February 1997. Since
February 1997, Mr. Williamson has been serving as a consultant to the
Company. He is also the Founder of The Colonel's.
DONALD R. GORMAN (66). On February 20, 1997, Mr. Gorman was appointed
as a Director of the Company. Mr. Gorman is the owner and President of
P.G. Products, Inc., of Cincinnati, Ohio, which is one of the Company's
major customers. Mr. Gorman serves on the Compensation Committee and the
Nominating Committee.
TED M. GANS (62). Mr. Gans is a Director of the Company. He serves
on the Executive Committee, the Compensation Committee, the Audit Committee
and the Nominating Committee. Mr. Gans' principal occupation since 1965
has been as the President and Director of Ted M. Gans, P.C., a law firm in
Bloomfield Hills, Michigan, of which he is the sole owner. Mr. Gans also
serves as a Director of Williamson Lincoln Mercury, Inc.; Patsy Lou
Williamson Buick-GMC, Inc.; Williamson Chevrolet-Geo Cadillac, Inc.; and
Williamson Chrysler Plymouth Jeep, Inc. All four of these companies are
wholly owned by Patsy L. Williamson, a Director.
NOMINEE FOR DIRECTOR -- TERM EXPIRING IN 2000
MARK GERMAN (42). Mark German is the former president and majority
shareholder of Rugged Liner, Inc., Triad Management Group, Inc., Aerocover,
Inc., and Ground Force, Inc., four Pennsylvania corporations engaged in the
truck accessory business that were acquired by the Company in April 1998.
Mr. German currently serves as President of The Colonel's Rugged Liner,
Inc. (now renamed Rugged Liner, Inc.), a subsidiary of the Company and the
successor to the acquired corporations.
INCUMBENT DIRECTOR -- TERM EXPIRING IN 2000
MARK D. STEVENS (55). On February 20, 1997, Mark D. Stevens was
appointed a Director and the President of the Company. Upon
Mr. McCloskey's resignation, Mr. Stevens became the Company's Chief
Executive Officer. Mr. Stevens is currently the General Manager of Patsy
L. Williamson Buick-GMC, Inc., an automotive dealership company wholly
owned by Patsy L. Williamson (a Director), a position he has held since
1993. From 1986 to 1996, Mr. Stevens served as the Sales Manager for Blain
Buick-GMC Truck, Inc. Mr. Stevens also serves as the Secretary of various
automotive dealerships owned by Patsy L. Williamson. Mr. Stevens serves on
the Executive Committee of the Board of Directors. He is also a Director
of The Colonel's.
7
INCUMBENT DIRECTORS--TERMS EXPIRING IN 1999
J. DANIEL FRISINA (49). Mr. Frisina is a Director of the Company and
a Director of BIR. Mr. Frisina's principal occupation is Director of
Global Development for Shyi Tan Enterprises, a Taiwanese manufacturer of
autobody parts. He has previously served as a consultant for Cheng Hong
Legion Co., Ltd. (from 1992 to 1996). He was also the Chairman of the
Board of the Autobody Parts Association, an association that represents the
interests of the distributors, suppliers and manufacturers of alternative
collision replacement parts. He served as President of The Colonel's from
1988 through 1991. He served as Treasurer and Chief Financial Officer of
Brainerd International, Inc., the Company's predecessor, during 1995. Mr.
Frisina serves on the Company's Audit Committee and Nominating Committee.
BEN C. PARR (67). On February 20, 1997, Ben C. Parr was appointed a
Director of the Company. Mr. Parr is currently the President of Capstone
Bumpers, Inc. Mr. Parr was formerly the Director of Research for the State
Farm Insurance Companies (1980-1997) and was involved in the creation of
the Certified Automotive Part Association, which is a nonprofit
organization established in 1987 to develop and oversee a testing and
inspection program certifying the quality of parts used for automobile body
repairs. Mr. Parr serves on the Compensation Committee and the Audit
Committee of the Board of Directors.
INCUMBENT DIRECTOR -- TERM EXPIRING IN 1998
PATSY L. WILLIAMSON (65). On February 20, 1997, Patsy L. Williamson
was appointed a Director and the Chairwoman of the Board of the Company.
Mrs. Williamson's principal occupation is as the owner and operator of
several automobile dealerships in Michigan. Mrs. Williamson is the wife of
Donald J. Williamson, who, until February 20, 1997, was the Chairman,
President and Chief Executive Officer of the Company. Mrs. Williamson is
also a significant shareholder of the Company. She has declined to seek
reelection to the Company's Board of Directors this year.
BOARD COMMITTEES AND MEETINGS
The Company's Board of Directors has four standing committees: the
Executive Committee, the Nominating Committee, the Compensation Committee
and the Audit Committee. In February 1997, the former Stock Option
Committee was merged with the Compensation Committee. Each member of the
Committees described below is also a Director of the Company.
The Executive Committee has the full power of the Board in the
management of the business and affairs of the Company, except the power to
change the membership of or to fill vacancies in the Board of Directors or
the Executive Committee; the power to amend, add to, rescind or repeal the
Bylaws of the Company; or any other powers that, under Michigan law, may
8
not be delegated to it by the Board of Directors. The Executive Committee
exists for the purpose of acting on behalf of the Board where Board action
is required between regularly scheduled meetings or where it would be
impracticable to convene special Board meetings. Mrs. Williamson and
Messrs. Stevens and Gans serve on the Executive Committee. The Executive
Committee met three times in 1997.
The Compensation Committee is responsible for establishing the
compensation of the executive officers of the Company and its subsidiaries.
Messrs. Gans, Gorman and Parr serve on the Compensation Committee. The
Compensation Committee met one time in 1997.
The Audit Committee reviews audit plans submitted by the independent
auditors with respect to the scope of procedures that will be performed and
the fee that will be charged. The Audit Committee also reviews the results
of the independent audit each year, including any associated
recommendations on internal controls. It is additionally intended that the
Audit Committee will meet periodically with the Company's internal auditor.
Messrs. Gans, Frisina and Parr serve on the Audit Committee. The Audit
Committee met two times in 1997.
The Nominating Committee exists for the purpose of developing and
recommending to the Board of Directors criteria for the selection of
candidates for Director, seeking out and receiving suggestions concerning
possible candidates, reviewing and evaluating the qualifications of
possible candidates and recommending to the Board of Directors candidates
for vacancies occurring from time to time and for the slate of Directors to
be proposed on behalf of the Board of Directors at annual meetings of
shareholders. Messrs. Gans, Gorman and Frisina serve on the Nominating
Committee. The Nominating Committee did not meet in 1997.
The Stock Option Committee was responsible for the administration and
award of stock options and restricted stock under the Company's stock
plans, including the LTIP. In February 1997, the Board of Directors
consolidated the Stock Option Committee into the Compensation Committee.
The Company's Board of Directors met three times in 1997. Each of the
Directors of the Company attended 75% or more of the aggregate of (i) the
total number of meetings of the Board of Directors and (ii) the total
number of meetings held by all committees of the Board of Directors on
which he or she served (during the periods that he or she served).
COMPENSATION OF DIRECTORS
No compensation was paid to any Director of the Company for services
rendered in such capacity during the fiscal year ended December 31, 1997.
Directors of the Company who are not employees of the Company may be
reimbursed for expenses incurred in attending meetings of the Board of
Directors.
9
LEGAL PROCEEDINGS
The Company does not believe that any of its directors, executive
officers, promoters or control persons are involved in legal proceedings
within the meaning of Item 401(f) of SEC Regulation S-K.
EXECUTIVE OFFICERS
As mentioned above, Mr. Stevens is the President and Chief Executive
Officer of the Company. Four additional executive officers of the Company
are:
WILLIAM SINGLETERRY (53). Mr. Singleterry is the Vice President of
Development of the Company. He also serves as a Director and the President
of The Colonel's. Since 1991, Mr. Singleterry has served as the Director
of Operations for the Bumper Division of The Colonel's. Prior to that
time, he was the Regional Sales Manager. From 1982 to 1989, he served as
General Manager for Auto Body Connection, a bumper manufacturer and
distributor.
JOHN CARPENTER (59). Mr. Carpenter is the President of CTA. He
joined CTA in July 1996. Formerly the National Distributor Sales Manager
of Durakon Industries (1981 to 1986), Mr. Carpenter brings a great deal of
industry experience to the Company. Mr. Carpenter is a member of the Board
of Directors of TCAA (Truck Cap and Accessory Association). He formerly
was the National Marketing Manager for Homestead Products (1987 to 1988).
From 1988 to 1996, Mr. Carpenter was involved in the real estate business.
RICHARD S. SCHOENFELDT (42). Mr. Schoenfeldt is the Vice President-
Finance, Chief Financial Officer, Treasurer and Assistant Secretary of the
Company. Since 1994, he has served as controller and Chief Financial
Officer of The Colonel's. From 1991 through 1994, he was Controller of The
Colonel's and from 1987 through 1991 he was Operations Manager of The
Colonel's Plastics Division. From 1980 to 1986, he served as the Director
of Operations for Alcolite Products, Inc., an OEM plastic injection
molding, blow molding and thermoforming manufacturer. Mr. Schoenfeldt also
serves as a Director of The Colonel's.
GARY MOORE (48). Mr. Moore is the Secretary of the Company, a
position to which he was appointed on February 20, 1997. Mr. Moore was a
Director of the Company, but resigned from that position on the same date.
Mr. Moore also serves as a Director of BIR, as Director of Operations for
the Raceway, and as a sales consultant for The Colonel's. From 1987 until
1996, Mr. Moore's principal occupation was the position of National Sales &
Accounts Manager for Tremco Division of B.F. Goodrich. From April through
November 1995, Mr. Moore served as Chairman of the Board and Chief
Executive Officer of Brainerd International, Inc., the Company's
predecessor.
10
EXECUTIVE COMPENSATION
COMPENSATION SUMMARY
The following Summary Compensation Table shows certain information
concerning the compensation earned during each of the three fiscal years in
the period ended December 31, 1997, of the Chief Executive Officer of the
Company and each executive officer of the Company whose salary and bonus
for 1997 exceeded $100,000. Three persons served as Chief Executive
Officer of the Company in 1997. First, Mr. Donald J. Williamson served as
Chairman of the Board, President and Chief Executive Officer of the Company
until his resignation on February 20, 1997. Mr. Williamson, however,
continues to work as an employee of the Company. On February 20, 1997,
Michael J. McCloskey was appointed as Chief Executive Officer and Mark D.
Stevens was appointed President. Mr. McCloskey resigned from this position
as of June 30, 1997, at which time Mr. Stevens became Chief Executive
Officer (in addition to his position as President of the Company).
SUMMARY COMPENSATION TABLE
LONG-TERM
COMPENSATION
------------
ANNUAL COMPENSATION AWARDS
------------------------------------------- ------------
OTHER SECURITIES
NAME AND ANNUAL UNDERLYING
PRINCIPAL POSITION YEAR SALARY BONUS COMPENSATION OPTIONS
- ------------------ ---- ------ ----- ------------ -------
Donald J. Williamson 1997 $520,000<F1> $6,000 $ 0 0
Chairman of the Board, 1996 $510,000<F1> $ 0 $6,841 0
President, Chief Executive 1995 $520,000<F1> $ 0 $3,478 0
Officer and Director
Michael J. McCloskey 1997 $ 79,000 $ 0 $ 0 0<F2>
Chief Executive
Officer and Director
Mark D. Stevens 1997 $ 0 $ 0 $ 0 5,000
President, Chief Executive
Officer and Director
William Singleterry 1997 $153,234 $6,000 $ 0 5,000
Vice President of 1996 97,369 0 100 0
Development 1995 85,600 0 0 0
11
John Carpenter 1997 $112,029 $ 0 $ 0 0
President of CTA 1996 46,629 0 0 0
<FN>
- -------------------------
<F1> Amounts reported include amounts paid by the Company for Mr.
Williamson's services as President and Chief Executive Officer as well
as by The Colonel's, Inc. for Mr. Williamson's services as Chairman of
the Board, Chief Executive Officer, Treasurer and Secretary and by
Brainerd International Raceway, Inc. for Mr. Williamson's services as
Chairman of the Board, Secretary and Treasurer.
<F2> Mr. McCloskey had been granted options to acquire 1,000,000 shares of
Common Stock, subject to certain vesting schedules. However, upon Mr.
McCloskey's resignation, these options were canceled. See "Long-Term
Incentive Awards."
</FN>
STOCK OPTIONS
The Company's Long-Term Incentive Plan (the "LTIP") permits the grant
of options to acquire shares of Common Stock. In February 1997, Mr.
McCloskey was granted options to acquire up to 1,000,000 shares of Common
Stock. These options were to vest and become exercisable in increments of
200,000 shares of Common Stock on each of the following dates: February
17, 1998; February 17, 1999; February 17, 2000; February 17, 2001; and
February 17, 2002. Upon Mr. McCloskey's resignation, which was effective
as of June 30, 1997, these options were canceled.
Also in February 1997, each Director of the Company received an option
to acquire 5,000 shares of Common Stock at an exercise price of $6.50 per
share. See "Ownership of Common Stock." Furthermore, pursuant to the
automatic grant provisions of the LTIP, Messrs. Frisina and Gans each
received options to purchase a total of 1,185 shares of Common Stock during
1997. Messrs. Parr and Gorman and Mrs. Williamson each received options to
purchase a total of 1,735 shares pursuant to these provisions, including
options to purchase 550 shares upon their appointment to the Board of
Directors in February 1997.
The table set forth below details options granted to each of the
persons set forth in the Summary Compensation Table above:
12
OPTION GRANTS IN LAST FISCAL YEAR
PERCENT OF TOTAL POTENTIAL REALIZABLE VALUE
OPTIONS GRANTED AT
NUMBER OF SECURITIES TO EMPLOYEES IN ASSUMED ANNUAL RATES OF STOCK
NAME UNDERLYING OPTIONS FISCAL YEAR<F2> EXERCISE PRICE EXPIRATION DATE PRICE APPRECIATION FOR OPTION TERM
- -------------------- -------------------- --------------- -------------- --------------- ----------------------------------
0% 5% 10%
----------------------------------
Donald J. Williamson 0 0% N/A N/A N/A N/A N/A
Michael J. McCloskey 1,000,000<F1> 0% N/A N/A N/A N/A N/A
Mark D. Stevens 5,000 15.9% $6.50 2/19/2007 $ 0 $20,439 $51,797
William Singleterry 5,000 15.9% $6.50 2/19/2007 $ 0 $20,439 $51,797
John Carpenter 0 0% $6.50 2/19/2007 N/A N/A N/A
<FN>
- -------------------------------
<F1> Upon Mr. McCloskey's resignation, these options were canceled.
<F2> The percentages in this column were calculated based on a total of
31,450 options to acquire shares of Common Stock. This figure
excludes (i) options granted to non-employee directors of the Company,
(ii) options to acquire 600 shares awarded to Mr. Carpenter, which he
declined, and (iii) the options granted to Mr. McCloskey.
</FN>
FISCAL YEAR-END OPTION VALUES
NUMBER OF VALUE OF UNEXERCISED
SECURITIES UNDERLYING UNEXERCISED IN-THE-MONEY OPTIONS AT
OPTIONS AT FISCAL YEAR-END FISCAL YEAR-END <F1>
-------------------------------- --------------------------------
NAME EXERCISABLE UNEXERCISABLE EXERCISABLE UNEXERCISABLE
- -------------------- ----------- ------------- ----------- -------------
Donald J. Williamson 0 0 $ 0 $ 0
Michael J. McCloskey 0 0 $ 0 $ 0
Mark D. Stevens 5,000 0 $ 1,250 $ 0
13
William Singleterry 5,000 0 $ 1,250 $ 0
John Carpenter 0 0 $ 0 $ 0
<FN>
- ------------------------
<F1> Based on the difference between the market value on February 20, 1998,
the date of grant ($6.50 per share) and the market value of $6.75 per
share on December 31, 1997.
</FN>
COMPENSATION OF DIRECTORS
No compensation was paid to any Director of the Company for services
rendered in such capacity during 1997. Directors who are not full-time
employees may be reimbursed for expenses incurred in attending meetings of
the Board of Directors and committees thereof.
PENSION PLAN
The Company does not have a pension plan, a defined benefit plan or an
actuarial plan.
EMPLOYMENT AGREEMENTS, TERMINATION OF EMPLOYMENT AND CHANGE IN CONTROL
ARRANGEMENTS
The Company does not have any employment agreements, termination-of-
employment agreements or change-in-control agreements with any executive
officer. However, The Colonel's and John Carpenter entered into an
employment agreement dated July 15, 1996. Effective January 1, 1997, this
agreement was transferred to CTA and Mr. Carpenter is now employed as CTA's
President. Under the agreement, which has a five year term, Mr. Carpenter
is paid a $100,000 annual salary in equal weekly installments. In
addition, Mr. Carpenter is paid a bonus of $0.10 for each bedliner sold by
CTA, payable monthly. The agreement may be terminated by either party for
just cause. In addition, CTA could terminate the agreement without cause,
in which case CTA would be required to pay Mr. Carpenter three months'
salary plus any accrued but unpaid salary and bonus as of the date of
termination. The agreement also contains Mr. Carpenter's covenant not to
compete for a period of two years from the date of the termination of his
employment.
COMPENSATION COMMITTEE INTERLOCKS AND INSIDER PARTICIPATION
During fiscal year 1997, Messrs. Gans and Parr were the members of the
Compensation Committee of the Board of Directors. No other Directors or
executive officers of the Company took part in deliberations concerning the
14
compensation of executive officers of the Company during fiscal 1997.
Neither Mr. Gans nor Mr. Parr has any employment relationship with the
Company or any of its subsidiaries. Mr. Gans is a Director of the Company
and practices law with Ted M. Gans, P.C. During the past year, the Company
and The Colonel's, Inc. retained Ted M. Gans, P.C. for certain legal
services and it is anticipated that the Company and/or The Colonel's, Inc.
may retain Ted M. Gans, P.C. to render certain legal services during the
current year.
COMPENSATION COMMITTEE REPORT ON EXECUTIVE COMPENSATION
In April 1996, the Board of Directors appointed Messrs. Frisina and
Gans to the Compensation Committee. However, in February 1997, the Board
appointed Messrs. Parr and Darcy to replace Mr. Frisina on the Compensation
Committee. Mr. Darcy later resigned from his position as a Director of the
Company. The Compensation Committee currently consists of Messrs. Gans,
Gorman and Parr.
The basic compensation philosophy of the Company is to provide
competitive salaries. The Company's executive compensation policies are
designed to achieve two primary objectives:
- Attract and retain well-qualified executives who will lead the
Company and achieve and inspire superior performance;
- Provide incentives for the achievement of long-term financial
goals.
Executive compensation consists primarily of two components: base
salary and benefits; and amounts paid (if any) under the Company's Long-
Term Incentive Plan (the "LTIP"). Each component of compensation is
designed to accomplish one or both of the compensation objectives.
The participation of specific executive officers and other key
employees in the Company's LTIP is recommended by the Board's Compensation
Committee and all recommendations (including the level of participation)
are reviewed, modified (to the extent appropriate) and approved by the
Board.
BASE SALARY
To attract and retain well-qualified executives, it is the
Compensation Committee's policy to establish base salaries at levels and
provide benefit packages that are considered to be competitive. Base
salaries of executive officers are determined by the Board of Directors on
an individual basis. In determining the base salary for an executive
officer, the Compensation Committee will recommend to the full Board for
approval a base salary for the officer determined by the Compensation
15
Committee taking into consideration factors including: (1) the
individual's performance, (2) the individual's contributions to the
Company's success, (3) the level and scope of the individual's
responsibilities, (4) the individual's tenure with the Company and in his
or her position and (5) pay practices for similar positions by comparable
companies.
LONG-TERM INCENTIVE PLAN
The LTIP is used primarily to grant stock options. However, the LTIP
also permits grants of restricted stock, stock awards, stock appreciation
rights and tax benefit rights if determined to be desirable to advance the
purposes of the LTIP. These grants and awards are referred to as
"Incentive Awards." By combining in a single plan many types of incentives
commonly used in long-term incentive compensation programs, the LTIP
provides significant flexibility to the Compensation Committee to tailor
specific long-term incentives that would best promote the objectives of the
LTIP and in turn promote the interests of the Company's shareholders.
Directors, executive officers and other key employees of the Company
and its subsidiaries are eligible to receive Incentive Awards under the
LTIP. A maximum of 4,000,000 shares of Common Stock (subject to certain
antidilution adjustments) are available for Incentive Awards under the
LTIP. Of the 4,000,000 shares authorized for Incentive Awards under the
LTIP, only one-half can be awarded as restricted stock.
The LTIP is administered by the Compensation Committee, which is
comprised of non-employee Directors, none of whom participates or is
eligible to participate in any long-term incentive plan of the Company or
its subsidiaries, except for nondiscretionary stock option grants based
upon a specified formula, and if the Board so determines, each of whom must
be an "outside director" as defined in the rules issued pursuant to Section
162(m) of the Internal Revenue Code. The Compensation Committee makes
determinations, subject to the terms of the LTIP, as to the persons to
receive Incentive Awards, the amount of Incentive Awards to be granted to
each person, the terms of each grant and all other determinations necessary
or advisable for administration of the LTIP.
The LTIP was approved by the shareholders of Brainerd International,
Inc., the Company's predecessor, on November 21, 1995. During fiscal 1997,
Mr. Gans, as a non-employee Director of the Company, received automatic
stock option grants covering a total of 1,185 shares of Common Stock. Mr.
Parr received automatic stock option grants covering a total of 1,735
shares of Common Stock. In addition, in February 1997, the Company's Board
of Directors granted non-employee Directors (which are Mrs. Williamson, Mr.
Parr, Mr. Gorman, Mr. Frisina and Mr. Gans) each options to acquire up to
5,000 shares of the Company's Common Stock. The Board of Directors
believes that these grants were helpful in attracting these persons to
16
become Directors of the Company. These options vested and became
exercisable on August 20, 1997, and must be exercised (if at all) no later
than February 20, 2007. The option exercise price is $6.50 per share of
Common Stock. (See also notes 3 and 5 to "Security Ownership of
Management.")
CHIEF EXECUTIVE OFFICER
Mr. Stevens, the Company's current Chief Executive Officer, did not
draw a salary from the Company during 1997. Mr. McCloskey, who was Chief
Executive Officer of the Company during part of 1997, resigned effective
June 30, 1997. The Company is currently examining possible candidates for
this position. The Compensation of a Chief Executive Officer would
generally be based on the policies described above.
SECTION 162(M)
Section 162(m) of the Internal Revenue Code provides that publicly
held corporations may not deduct compensation paid to certain executive
officers in excess of $1 million annually, with certain exemptions. The
Company has examined its executive compensation policies in light of
Section 162(m) and the regulations adopted by the Internal Revenue Service
to implement that section. It is not expected that any portion of the
Company's deduction for employee remuneration will be disallowed in 1998 or
in future years by reason of actions expected to be taken in 1998.
Respectfully submitted,
Ted M. Gans
Donald R. Gorman
Ben C. Parr
STOCK PRICE PERFORMANCE GRAPH
The following graph compares the cumulative total stockholder return
on the Company's Common Stock to the NASDAQ Domestic Index and an index of
peer companies that produce automobile replacement parts, assuming an
investment of $100.00 at the beginning of the period indicated. Because
the Company's Common Stock has been traded on the NASDAQ SmallCap Market
only since January 2, 1996, the graph covers only the period from January
2, 1996, to the end of fiscal year 1997.
The NASDAQ Domestic Index is a broad equity market index consisting of
certain domestic companies traded on the NASDAQ Stock Market. The index of
peer companies was constructed by the Company and includes the companies
listed in the footnote to the graph below. In constructing the peer index,
the return of each peer group company was weighted according to its
respective stock market capitalization at the beginning of each period
17
indicated. Cumulative total stockholder return is measured by dividing:
(i) the sum of (a) the cumulative amount of dividends for the measurement
period, assuming dividend reinvestment, and (b) the difference between the
share price at the end and the beginning of the measurement period; by (ii)
the share price at the beginning of the measurement period.
COMPARISON OF CUMULATIVE
TOTAL STOCKHOLDER RETURN
[GRAPH]
[FN]
<F1> The index of peer companies consists of Boyds Wheels, Inc.; Deflecta-
Shield Corp.; Echlin Inc.; Edelbrock Corporation; Exide Corporation;
Federal Mogul Corp.; Genuine Parts Company; JPE, Inc.; Motorcar Parts
& Accessories, Inc.; OEA, Inc.; R & B Inc.; SPX Corp.; Standard Motor
Products, Inc.; Stant Corp.; and Thompson PBE, Inc.
</FN>
The dollar values for total stockholder return plotted in the graph above
are shown in the table below:
NASDAQ PEER
JANUARY 1, THE COMPANY DOMESTIC INDEX INDEX
---------- ----------- -------------- -----
1996 100.00 100.00 100.00
1997 69.23 123.00 108.23
1998 103.85 146.71 131.18
18
CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS
The Company and its subsidiaries are parties to certain transactions
with related parties which are summarized below.
LEASE OF MILAN, MICHIGAN FACILITY AND OWOSSO, MICHIGAN FACILITY. In
June of 1993, The Colonel's began leasing its Milan, Michigan, facility
from 620 Platt Road, LLC. Donald J. Williamson and Patsy L. Williamson,
the majority shareholders of the Company, are the sole members of 620 Platt
Road, LLC. Rent expense to The Colonel's for the Milan facility was
$1,050,000 for the year ending December 31, 1997, including three months'
worth of prepaid rent expense. CTA leases its Owosso, Michigan facility
from 620 Platt Road, LLC. Rent expense on this lease was $300,000 for the
year ending December 31, 1997, including three months' worth of prepaid
rent expense. Mr. Williamson is a nominee for election as a Director at
the forthcoming 1998 Annual Meeting of Shareholders.
WILLIAMSON BUICK-GMC, INC. Patsy L. Williamson owns all of the
outstanding capital stock of Williamson Buick-GMC, Inc. (formerly Blain
Buick-GMC Truck, Inc.) ("Buick"). Buick is an automobile dealership
located in Flint, Michigan. Mrs. Williamson is a majority shareholder and
a Director of the Company. The Colonel's engages in certain transactions
with Buick, including the purchase of automobiles, parts, and automotive
service and the lease of certain property from which rental income is
earned. During 1997, purchases of automobiles, parts and services by The
Colonel's from Buick were in the amount of $66,831. CTA sold $110,043
worth of bedliners to Buick in 1997.
PROMISSORY NOTE FROM DONALD J. WILLIAMSON. During 1997, the Company
loaned an aggregate total of $1,044,956 to Donald J. Williamson, a majority
shareholder of the Company and a nominee for election as a Director at the
forthcoming 1998 Annual Meeting of Shareholders, pursuant to two promissory
notes executed in June and September 1997, respectively. These notes bear
interest at 8% and are due in bi-annual installments beginning in September
1998.
TRANSACTIONS WITH DIRECTORS. Ted M. Gans is a Director of the Company
and practices law with Ted M. Gans, P.C. During the past year, The
Colonel's, Inc. retained Ted M. Gans, P.C. for certain legal services and
it is anticipated that the Company and/or The Colonel's, Inc. may retain
Ted M. Gans, P.C. to render certain legal services during the current year.
J. Daniel Frisina is Director of Global Development for Cheng Hong Legion
Co., Ltd., which sells among other products, automotive body replacement
parts to The Colonel's, Inc. as well as to other customers in the
automotive crash parts industry.
MARK GERMAN. Mark German is a nominee for election as a Director at
the forthcoming 1998 Annual Meeting of Shareholders. The Company and its
19
newly formed subsidiary The Colonel's Rugged Liner, Inc., in March 1998
entered into an agreement and plan of merger to acquire Rugged Liner, Inc.,
Triad Management Group, Inc., Aerocover, Inc., and Ground Force, Inc., four
Pennsylvania corporations (collectively, "Rugged Liner Companies"). Mr.
German was the majority shareholder of each of the Rugged Liner Companies.
In the transactions, the Company paid an aggregate of $4,250,000 in cash
and issued an aggregate of $4,250,000 worth of the Company's Common Stock
to the shareholders of the Rugged Liner Companies, prior to the adjustments
set forth in the agreement and plan of merger. After adjustments, Mr.
German received cash in the amount of $2,320,026 and 413,167 shares of the
Company's Common Stock. The terms of the transaction were arrived at
pursuant to negotiations between the Company and Mr. German. In April
1998, The Colonel's Rugged Liner, Inc. also entered into leases of two
properties owned by entities controlled by Mr. German.
SECTION 16(a) BENEFICIAL OWNERSHIP REPORTING COMPLIANCE
Section 16(a) of the Securities Exchange Act of 1934, as amended,
requires the Company's Directors, officers and persons who own more than
10% of the Company's Common Stock to file reports of ownership and changes
in ownership with the Securities and Exchange Commission and NASDAQ.
Directors, officers and greater than 10% beneficial owners are required by
Securities and Exchange Commission regulations to furnish the Company with
copies of all Section 16(a) forms they file.
To the best of the Company's knowledge, no Director, officer or
beneficial owner of more than 10% of the Company's outstanding Common Stock
failed to file on a timely basis any report required by Section 16(a) of
the Exchange Act with respect to the year ended December 31, 1997.
20
SHAREHOLDER PROPOSALS
Proposals of shareholders must be received by the Company no later
than January 15, 1999 to be considered for inclusion in the Company's proxy
statement for its 1999 annual meeting of shareholders. Shareholder
proposals should be made in accordance with Securities and Exchange
Commission Rule 14a-8 and should be addressed to the attention of the
Secretary of the Company, 620 South Platt Road, Milan, Michigan 48160.
By Order of the Board of Directors,
/S/ MARK D. STEVENS
Mark D. Stevens
President and Chief Executive Officer
May 15, 1998
21
[X] PLEASE MARK VOTES REVOCABLE PROXY
AS IN THIS EXAMPLE THE COLONEL'S INTERNATIONAL, INC.
THIS PROXY IS SOLICITED ON BEHALF OF THE BOARD OF DIRECTORS
The undersigned shareholder hereby appoints Richard S. Schoenfeldt and
Ted M. Gans, and each of them, each with full power of substitution,
proxies to represent the shareholder listed on this Proxy and to vote all
shares of Common Stock of The Colonel's International, Inc. that the
shareholder would be entitled to vote on all matters which come before the
Annual Meeting of Shareholders to be held at the offices of The Colonel's
International, Inc., 620 South Platt Road, Milan, Michigan 48160, on
Friday, May 29, 1998, at 10:00 a.m., local time, and at any adjournment of
that meeting.
With- For All
For hold Except
1. ELECTION OF DIRECTORS [ ] [ ] [ ]
(except as marked to the contrary
below)
Nominees:
DONALD J. WILLIAMSON, DONALD R. GORMAN, TED M. GANS AND MARK GERMAN
INSTRUCTION: TO WITHHOLD AUTHORITY TO VOTE FOR ANY INDIVIDUAL NOMINEE, MARK
"FOR ALL EXCEPT" AND WRITE THAT NOMINEE'S NAME IN THE SPACE PROVIDED BELOW.
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YOUR BOARD OF DIRECTORS RECOMMENDS THAT YOU VOTE FOR ALL NOMINEES.
IF THIS PROXY IS PROPERLY EXECUTED, THE SHARES REPRESENTED BY THIS
PROXY WILL BE VOTED AS SPECIFIED. IF NO SPECIFICATION IS MADE, THE SHARES
REPRESENTED BY THIS PROXY WILL BE VOTED FOR THE ELECTION OF ALL NOMINEES
NAMED ON THIS PROXY AS DIRECTORS. THE SHARES REPRESENTED BY THIS PROXY WILL
BE VOTED IN THE DISCRETION OF THE PROXIES ON ANY OTHER MATTERS THAT MAY
COME BEFORE THE MEETING.
Please sign exactly as your name(s) appears on this Proxy. When signing
on behalf of a corporation, partnership, estate or trust, indicate title or
capacity of person signing. If shares are held jointly, each holder should
sign.
-----------------------
Please be sure to sign and date Date
this Proxy in the box below.
- --------------------------------------------------------------------
- -----Shareholder sign above------Co-holder (if any) sign above------
- ---------------------------------------------------------------------------
DETACH ABOVE CARD, SIGN, DATE AND MAIL IN POSTAGE PAID ENVELOPE PROVIDED.
THE COLONEL'S INTERNATIONAL, INC.
620 SOUTH PLATT ROAD
MILAN, MICHIGAN 48160
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PLEASE ACT PROMPTLY
SIGN, DATE & MAIL YOUR PROXY CARD TODAY
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