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 Section 240.14a-12
Nature's Sunshine Products, Inc.
- --------------------------------------------------------------------------------
(Name of Registrant as Specified In Its Charter)
- --------------------------------------------------------------------------------
(Name of Person(s) Filing Proxy Statement, if other than the Registrant)
Payment of Filing Fee (Check the appropriate box):
/X/ No fee required.
/ / Fee computed on table below per Exchange Act Rules 14a-6(i)(1)
and 0-11.
(1) Title of each class of securities to which transaction applies:
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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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/ / 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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NOTICE OF ANNUAL MEETING OF SHAREHOLDERS
TO BE HELD MAY 22, 2001
NATURE'S SUNSHINE PRODUCTS, INC.
To the Shareholders:
Notice is hereby given that the 2001 Annual Meeting of Shareholders
of Nature's Sunshine Products, Inc. (the "Company") will be held at the
Company's corporate offices at 75 East 1700 South, Provo, Utah 84606, on
Tuesday, May 22, 2001, at 10:00 a.m., local time, for the following purposes:
1. To elect two directors, each to serve a term of three years, and
until each of their successors is elected and shall qualify; and
2. To transact such other business as may properly come before the
meeting or any adjournment thereof.
The Board of Directors has fixed the close of business on April 12,
2001 as the record date for the determination of shareholders entitled to
notice of, and to vote at, the Annual Meeting of Shareholders, and only
shareholders of record at such date will be so entitled to notice and to vote.
YOUR VOTE IS IMPORTANT. PLEASE SIGN AND DATE THE ENCLOSED PROXY AND RETURN IT
PROMPTLY IN THE ENCLOSED RETURN ENVELOPE WHETHER OR NOT YOU EXPECT TO ATTEND
THE MEETING. YOU MAY REVOKE YOUR PROXY AND VOTE IN PERSON SHOULD YOU DECIDE
TO ATTEND THE MEETING.
Dated: April 12, 2001 BY ORDER OF THE BOARD OF DIRECTORS
BRENT F. ASHWORTH
SECRETARY
PLEASE FILL IN, DATE, SIGN, AND RETURN THE ENCLOSED PROXY WHICH REQUIRES NO
POSTAGE IF MAILED IN THE UNITED STATES. A PROXY IS REVOCABLE AT ANY TIME
PRIOR TO THE VOTING OF THE PROXY, BY WRITTEN NOTICE TO THE SECRETARY OF THE
COMPANY OR BY VOTING IN PERSON AT THE MEETING.
1
PROXY STATEMENT
ANNUAL MEETING OF SHAREHOLDERS
OF
NATURE'S SUNSHINE PRODUCTS, INC.
--------------------------------------
GENERAL
This Proxy Statement is furnished in connection with the
solicitation of Proxies by the Board of Directors of Nature's Sunshine
Products, Inc. ("the Company") for the Annual Meeting of Shareholders of the
Company to be held at the Company's corporate offices at 75 East 1700 South,
Provo, Utah 84606 on May 22, 2001, at 10:00 a.m., local time. The
Shareholders of the Company will consider and vote upon the proposals
described herein and referred to in the Notice of the Meeting accompanying
this Proxy Statement.
The close of business on April 12, 2001 has been fixed as the record
date for the determination of the shareholders entitled to notice of, and to
vote at, the Annual Meeting. On such date there were 16,266,586 shares of
Common Stock outstanding and entitled to vote. Each share of Common Stock is
entitled to one vote on each matter to be considered at the meeting. For a
description of the principal holders of the Company's Common Stock, see
"PRINCIPAL HOLDERS OF COMMON STOCK" below.
Shares represented by Proxies will be voted in accordance with the
specifications made thereon by the shareholders. Any Proxy not specifying the
contrary will be voted in favor of the Board of Directors' nominees for
directors of the Company.
The Proxies being solicited by the Board of Directors may be revoked
by any shareholder giving the Proxy at any time prior to the Annual Meeting
by giving notice of such revocation to the Company, in writing, at the
address of the Company provided below. The Proxy may also be revoked by any
shareholder giving such Proxy who appears in person at the Annual Meeting and
advises the Chairman of the Meeting of his intent to revoke the Proxy.
The principal executive offices of the Company are located at 75
East 1700 South, Provo, Utah 84606. This Proxy Statement and the enclosed
Proxy are being furnished to shareholders on or about April 17, 2001.
2
PRINCIPAL HOLDERS OF COMMON STOCK
The following table sets forth information as of March 31, 2001,
with respect to the beneficial ownership of the Company's Common Stock by (i)
each person who, to the knowledge of the Company, is the beneficial owner of
more than 5% of the Company's outstanding Common Stock, (ii) each director
and nominee for director, (iii) each of the executive officers named in the
Summary Compensation Table under "Executive Compensation", and all officers
and directors of the Company as a group.
NUMBER OF SHARES
BENEFICIAL OWNER BENEFICIALLY OWNED(1) PERCENT OF CLASS(2)
- -------------------------------------------------------------------------------------------------------------------
Pauline T. Hughes 2,293,649(3) 14.1%
311 East Canal Road
Salem, UT 84653
Kristine F. Hughes 1,769,938(4) 10.9%
Eugene L. Hughes
75 East 1700 South
Provo, UT 84606
FMR Corp. 1,707,400(5) 10.5%
82 Devonshire Street
Boston, MA 02109
Wellington Management Company, LLP 1,402,800(6) 8.6%
75 State Street
Boston, MA 02109
Daniel P. Howells 59,000(7) .4%
75 East 1700 South
Provo, UT 84606
Douglas Faggioli 92,994(8) .6%
75 East 1700 South
Provo, UT 84606
Daren G. Hogge 28,923(9) .2%
75 East 1700 South
Provo, UT 84606
Jerry L. McLaughlin 26,300(10) .2%
1655 N. Main
Spanish Fork, UT 84660
Richard G. Hinckley 5,000(11) 0%
75 East 1700 South
Provo, UT 84606
John R. DeWyze 45,078(12) .2%
1655 N. Main
Spanish Fork, UT 84660
All officers and 4,685,796(13) 28.8%
directors as a group
(13 persons)
- ----------------------------
(1) Except as otherwise indicated, all shares are directly owned with voting
and investment power held by the person named. Amounts shown include, where
applicable, shares subject to presently exercisable options.
(2) The percentage includes shown for each beneficial owner is calculated based
upon the outstanding Common Stock, including shares of Common Stock subject
to presently exercisable options held by such beneficial owner which are
deemed to be outstanding.
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(3) Includes 1,624,373 shares held by Pauline Hughes in trust for the benefit
of herself and her children, 433,110 shares held by a family limited
partnership, 114,286 shares held by an annuity trust, and 121,880 shares
subject to presently exercisable options.
(4) Includes 16,335 shares held directly, 1,384,285 shares held by Kristine and
Eugene Hughes as trustees for the benefit of themselves and their children,
97,613 shares allocated to Mr. Hughes' account in a 401(k) Plan, and
271,705 shares subject to presently exercisable options.
(5) In an Amendment No. 1 to a Schedule 13G dated February 14, 2001, FMR Corp.
("FMR") reported that its wholly owned subsidiary, Fidelity Management &
Research Company ("Fidelity"), is the beneficial owner of 1,707,400 shares
of the Company's Common Stock. Fidelity acts as an investment adviser to
Fidelity Low-Priced Stock Fund (the "Fund") which holds 1,659,900 of the
shares. Edward C. Johnson 3d and Abigail P. Johnson, by virtue of their
stock ownership and certain voting agreements, are controlling shareholders
of FMR. Mr. Johnson, FMR and the Fund each have the sole power to dispose
of the shares owned by the Fund. The sole power to vote or direct the
voting of the shares is held by the Fund's Board of Trustees.
(6) In a Schedule 13G dated February 12, 2001, Wellington Management Company,
LLP. ("WMC") reported that it in its capacity as investment adviser it may
be deemed to beneficially own 1,402,800 shares of the Company's Common
Stock. WMC has shared power to dispose of or to direct the disposition of
1,402,800 of the shares, and shared power to vote or direct the voting of
877,400 of the shares.
(7) Includes 4,000 shares held directly, and 55,000 shares subject to presently
exercisable options.
(8) Includes 29,696 shares held directly, and 26,065 shares allocated in a
401(k) Plan, and 37,233 shares subject to presently exercisable options.
(9) Includes 1,000 shares held directly, and 1,530 shares allocated in a 401(k)
Plan, and 27,393 shares subject to presently exercisable options.
(10) Includes 26,300 shares subject to presently exercisable options.
(11) Includes 5,000 shares subject to presently exercisable options.
(12) Includes 2,000 shares held directly, and 1,425 shares allocated in a 401(k)
Plan, and 41,653 shares subject to presently exercisable options.
(13) Includes 283,542 shares allocated to executive officers in the 401(k) Plan,
and 774,604 shares subject to presently exercisable options.
PROPOSAL NO. 1--ELECTION OF DIRECTORS
In accordance with the Bylaws of the Company, the Board of Directors
has fixed its number at six members. Richard G. Hinckley was appointed by the
Board of Directors to fill a vacancy on the Board. The other directors were
elected for staggered terms at the last three annual meetings.
Under the Company's Restated Articles of Incorporation, directors
are divided into three classes, each class to consist, as nearly as may be
possible, of one-third of the number of directors then constituting the
entire Board of Directors. Each year one class of directors is elected, each
director to serve a term of three years.
At the Annual Meeting, two directors, Richard G. Hinckley and Eugene
L. Hughes, will stand for election to serve three years and thereafter until
each of their successors are elected and shall qualify.
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In the absence of instructions to the contrary, the persons named in
the Proxy will vote the Proxies for the election of the nominees listed
below, unless otherwise specified in the Proxy. The Board of Directors has no
reason to believe that the nominees will be unable to serve, but if either
nominee should become unable to serve, the Proxies will be voted for such
other person as the Board of Directors shall recommend.
Certain information concerning the two nominees to the Board of
Directors, and directors whose terms will continue after the Annual Meeting
is set forth below.
NOMINEES
SERVED AS
DIRECTOR CLASS AND YEAR TERM
NAME OF NOMINEE AGE COMPANY POSITION HELD SINCE WILL EXPIRE
- -----------------------------------------------------------------------------------------------------------------------------
Richard G. Hinckley 59 Director 1999 Class II 2004 (if re-elected)
Eugene L. Hughes 69 Senior Vice President and Director 1980 Class II 2004 (if re-elected)
DIRECTORS WHOSE TERMS ARE CONTINUING
Kristine F. Hughes 62 Chairperson of the Board and 1980 Class III 2002
Director
Daniel P. Howells 60 President, CEO and Director 1997 Class III 2002
Pauline T. Hughes 59 Director 1988 Class I 2003
Douglas Faggioli 46 Executive Vice President, COO 1997 Class I 2003
and Director
- -----------------------------------------------------------------------------------------------------------------------------
COMPENSATION OF DIRECTORS
Board members who are also employees of the Company do not receive
any director's fees. The Company pays its non-employee Board members
directors' fees of $20,000 to $43,000 and its Chairman of the Board, $120,000
per year, as well as the cost of health and life insurance coverage. The
Company does not pay any fees for attendance at committee meetings. One
non-employee Board member received six-year options to purchase 15,000 shares
of the Company's Common Stock in 2000. The options were granted at market
value as of the date of grant.
BOARD AND COMMITTEE MEETINGS AND ATTENDANCE
There were seven meetings of the Board of Directors held during the
last fiscal year. All of the directors attended at least 75 percent of the
meetings of the Board and Committees of the Board on which they served.
The Board of Directors has a Compensation Committee, which consists
of Kristine F. Hughes, Pauline T. Hughes and Richard G. Hinckley. The
Compensation Committee recommends to the Board of Directors the compensation
to be paid to the Company's chief executive and chief operating officers.
There was one meeting of the Compensation Committee during the last fiscal
year.
5
The Board of Directors also has an Audit Committee, which consists
of Kristine F. Hughes, Pauline T. Hughes and Richard G. Hinckley. The
function of the Audit Committee is generally to approve the engagement of the
Company's independent public accountants and to review audit and non-audit
services provided by such accountants. There were four meetings of the Audit
Committee during the last fiscal year.
The Board of Directors has also established a Nominating Committee
consisting of Kristine F. Hughes, Pauline T. Hughes and Richard G. Hinckley.
The Nominating Committee considers and recommends nominations for election to
the full Board of Directors. The Nominating Committee will consider
recommendations of shareholders, and recommendations should be submitted to
the Nominating Committee c/o the Secretary of the Company in accordance with
the time period in "Shareholder Proposals" below. There was one meeting of
the Nominating Committee during the last fiscal year.
OFFICERS AND DIRECTORS
The officers and directors of the Company are:
NAME POSITION AGE
- ------------------------- -------------------------------------------------- -----
Daniel P. Howells President, Chief Executive Officer 60
and Director
Kristine F. Hughes Chairperson of the Board and Director 62
Eugene L. Hughes Senior Vice President and Director 70
Pauline T. Hughes Director 59
Richard G. Hinckley Director 59
Douglas Faggioli Executive Vice President, Chief Operating 46
Officer and Director
Dale G. Lee Executive Vice President, 55
President - U.S.A. Sales Division
Daren G. Hogge President - International Division 38
Brent F. Ashworth Vice President - Legal Affairs, Secretary 52
and General Counsel
Craig D. Huff Chief Financial Officer 45
Vice President - Finance, Treasurer
Joseph A. Speirs Vice President-Marketing 48
John R. DeWyze Vice President - Operations 44
Jerry L. McLaughlin Vice President - Research and Development,
Quality Assurance 61
Certain information regarding the business experience of the
officers and directors is set forth below.
DANIEL P. HOWELLS. Mr. Howells is the President, Chief Executive
Officer and a Director of the Company. He began his employment with the
Company in 1997. From 1991-1997 Mr. Howells served as President and CEO of
Resorts USA, Bushkill, PA Division of Rank Group, London, England. From
1985-1990, he served as Executive Vice President and General Manager of the
Marriott Management Service Division, Marriott Corporation. From 1972-1985,
Mr. Howells was employed by Six Flags Corporation, serving as President and
CEO from 1982-1985.
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KRISTINE F. HUGHES. Mrs. Hughes is the Chairperson of the Board of
Directors of the Company. Mrs. Hughes was a co-founder in 1972 of Hughes
Development Corporation, a predecessor of the Company, and has served as an
officer or director of the Company and/or its predecessors since 1972. Mrs.
Hughes serves on several civic and community boards and has been recognized
for her business achievements, including the 1998 Utah Entrepreneur of the
Year award. She is the wife of Eugene L. Hughes.
EUGENE L. HUGHES. Mr. Hughes is Senior Vice President and a Director
of the Company. Mr. Hughes was a co-founder and appointed president in 1972
of Hughes Development Corporation, a predecessor of the Company. He has
served as an officer or director of the Company and/or its predecessors since
1972. Mr. Hughes serves on several community boards. He is the husband of
Kristine F. Hughes.
PAULINE T. HUGHES. Mrs. Hughes has been a Director of the Company
since 1988. Mrs. Hughes was a co-founder in 1972 of Hughes Development
Corporation, a predecessor of the Company, and has acted as a consultant from
time to time to the Company and its predecessors.
RICHARD G. HINCKLEY. Mr. Hinckley has served as a Director of the
Company since 1999. Mr. Hinckley is a partner of Interior Space Systems,
Inc., as well as Horizon Paint Company. From 1996, Mr. Hinckley served as
Director of Corporate Development - Western Region, Nextlink Communications.
From 1991 to 1996, he served as a Vice President of Beehive Travel until its
merger with Morris Travel where he became the Director of Meetings and
Incentives. He also served as president, director and part owner of Park `n
Jet, Utah's largest off-airport parking facility. Mr. Hinckley received his
MBA degree from Stanford University.
DOUGLAS FAGGIOLI. Mr. Faggioli is Executive Vice President, Chief
Operating Officer and a Director of the Company. He began his employment with
the Company in 1983 and has served as an officer of the Company since 1989.
He is a Certified Public Accountant.
DALE G. LEE. Mr. Lee is Executive Vice President, President of U. S.
Sales of the Company. He began his employment with the Company in 1978 and
has served as an officer of the Company since 1989.
DAREN G. HOGGE. Mr. Hogge is President of the International
Division. He began his employment with the Company in 1993, and has served as
an officer of the Company since 1997. He is a Certified Public Accountant.
BRENT F. ASHWORTH. Mr. Ashworth is Vice President-Legal Affairs,
Secretary and General Counsel for the Company. Mr. Ashworth began his
employment with the Company in 1977 and has served as an officer of the
Company since 1979. He is a member of the Utah State Bar.
CRAIG D. HUFF. Mr. Huff is the Chief Financial Officer of the
Company. He began his employment with the Company in 1982 and has served as
an Officer of the Company since 1998. He is a Certified Public Accountant.
JOSEPH A. SPEIRS. Mr. Speirs is Vice President-Marketing of the
Company. He began his employment with the Company in 1977 and has served as
an officer of the Company since 1983.
JOHN R. DEWYZE. Mr. DeWyze began his employment with the Company in
1995, and has served as Vice President of Operations since 1997. From 1983 to
1994, Mr. DeWyze was employed by Bristol-Myers Squibb where he held positions
of increasing responsibility during those years within the operations group
including leading manufacturing and maintenance groups. He received his MBA
degree in 1994.
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JERRY L. MCLAUGHLIN, PH.D. Dr. McLaughlin has served as Vice
President of Research and Development/Quality Assurance since joining the
Company in 1999. From 1971 to 1999, Dr. McLaughlin was a professor at Purdue
University, serving most recently as Professor of Pharmacognosy in the
Department of Medicinal Chemistry and Molecular Pharmacology at Purdue
University's School of Pharmacy and Pharmacal Sciences. Dr. McLaughlin is
internationally recognized, is published extensively in professional journals
and is a Fellow of several pharmaceutical societies.
SECTION 16(a) BENEFICIAL OWNERSHIP REPORTING COMPLIANCE
Based solely upon a review of Forms 3, 4 and 5 and amendments
thereto and written representations provided to the Company by its officers,
directors and 10% shareholders, the Company is unaware of any such persons
failing to file on a timely basis any reports required by Section 16(a) of
the Exchange Act during the most recent fiscal year, except for Jerry
McLaughlin and Richard Hinckley who inadvertently filed their Form 3s late.
EXECUTIVE COMPENSATION
COMPENSATION SUMMARY
The following table sets forth information concerning the cash and
non-cash compensation, paid or to be paid by the Company to its chief
executive officer and to each of its executive officers named below, for the
three fiscal years ended December 31, 2000.
SUMMARY COMPENSATION TABLE
ANNUAL COMPENSATION LONG TERM COMPENSATION
- ------------------------------------------------------------------------------- --------------------------------
(a) (b) (c) (d) (e) (g) (j)
SECURITIES
OTHER ANNUAL UNDER-LYING ALL OTHER
SALARY BONUS COMPENSATION OPTIONS/SARS COMPENSATION(3)
NAME AND PRINCIPAL POSITION YEAR ($)(1) ($) ($)(2) (SHARES) ($)
- ---------------------------- -------- ------------ ------------ --------------- -------------- ---------------
Daniel P. Howells 2000 292,140 151,036 - - 2,840
Chief Executive Officer 1999 289,383 - - 319,340 7,520
1998 275,600 110,240 334 - 8,337
Douglas Faggioli 2000 220,541 92,856 - - 703
Executive Vice President, 1999 220,000 - - 209,370 1,606
Chief Operations Officer 1998 208,362 70,000 - - 1,587
Daren G. Hogge 2000 156,537 111,657 - 10,800 284
Vice President, 1999 152,763 21,714 - 115,700 590
International Division 1998 125,205 44,264 - - 561
Jerry L. McLaughlin 2000 169,411 60,132 - - 2,332
Vice President, Res. & 1999 34,904 - 28,577 73,908 426
Dev./Quality Assurance 1998 - - - - -
John R. DeWyze 2000 143,583 49,728 - 12,260 287
Vice President Operations 1999 141,131 21,614 - 75,400 768
1998 123,886 37,508 - - 809
- ----------------------------
(1) Includes amounts contributed by the Company to its 401(k) defined
contribution plan and amounts paid by the Company.
8
(2) Amount listed is for relocation and moving expenses. The Company also
provides health, disability and other perquisites to each of its officers,
but they do not exceed the lesser of $50,000 or 10% of the officer's total
annual salary and bonus.
(3) Amounts listed are for excess life insurance premiums.
EMPLOYMENT AGREEMENTS
The Company has Employment Agreements with each of its executive
officers who receive base annual salaries currently ranging from
approximately $138,000 to $292,000. The Agreements are renewable on an annual
basis and generally provide for an initial term of one year. In the event the
Company terminates or does not renew an officer's employment without cause,
the officer is generally entitled to receive the balance of his base salary
for twelve months.
EXECUTIVE INCENTIVE PLANS
The Company has from time to time adopted incentive plans for key
management and/or other employees of the Company.
In 1997, the Board of Directors adopted an Incentive Compensation
Plan ("Bonus Plan"), which provides for bonuses ranging from 0% to 90% of
base salary for all employees of the Company depending upon the employee's
position with the Company. Up to 40% of the bonus for certain key employees
is determined by how well an employee achieves certain specified individual
performance objectives, and the balance is determined by how well the Company
achieves certain sales and operating income goals. Payments totaling
$662,000, $99,000 and $463,000 were made to officers for services rendered in
2000, 1999 and 1998 for this or similar executive incentive plans. Amounts
paid, if any, to the officers participating in the Bonus Plan are included in
the Summary Compensation Table.
The Bonus Plan also provides that certain stock options will be
granted to officers and key employees if the Company and the employee meet
their performance objectives. In 2000, officers earned options to purchase
53,770 shares of the Company's Common Stock. The Options earned were granted
in February 2000 at fair market value and require three-year vesting.
In 1999, the Company adopted an Executive Loan Program. The Program
is intended to assist executive officers of the Company purchase the
Company's Common Stock. Loans are limited to $59,000 and the proceeds must be
used to purchase Common Stock of the Company. Loans are secured by the
purchased Common Stock and bear interest at the current prime rate. The notes
are due ninety days after demand or ninety days after termination of
employment.
STOCK OPTION PLANS
The 1995 Stock Option Plan, as amended (the "1995 Plan") authorizes
the grant of incentive and non-qualified stock options to officers and key
employees. The 1995 Plan currently allows maximum of 4,150,000 shares of the
Company's Common Stock (adjusted for stock splits and dividends).
9
Options issued under the 1995 Plan must have an exercise price at
least equal to the fair market value on the date of grant and a term of not
more than ten years. Options are generally not transferable and are
exercisable in accordance with vesting schedules established by the
Compensation Committee (the "Committee") of the Board of Directors
administering the Plan. The Committee establishes with respect to each option
granted to an employee, and sets forth in the option agreement, the effect of
the termination of employment on the rights and benefits thereunder. In the
event of certain changes in control of the Company, options generally become
immediately exercisable.
As of April 12, 2001 there were 3,290,170 shares subject to
non-qualified options outstanding under the 1995 Plan and 363,107 shares
available for further issuance (as adjusted for stock splits and dividends).
See "Executive Incentive Plans" above.
The Company also has 636,466 shares subject to non-qualified options
outstanding, which were granted under stock option plans or arrangements that
have been terminated.
OPTION GRANTS IN LAST FISCAL YEAR
The following table sets forth a summary of certain non-qualified stock
options granted to the Company's named officers during 2000.
POTENTIAL REALIZABLE VALUE
AT ASSUMED ANNUAL RATES OF
STOCK PRICE APPRECIATION FOR
OPTION TERM
- --------------------------- -------------- ------------------------ ----------------- ------------ ----------------- ---------------
(a) (b) (c) (d) (e) (f) (g)
% OF TOTAL OPTIONS EXERCISE
OPTIONS GRANTED TO EMPLOYEES PRICE EXPIRATION
NAME GRANTED (#) IN 2000 ($/SHARE) DATE 5% ($) 10% ($)
- --------------------------- -------------- ------------------------ ----------------- ------------ ----------------- ---------------
Daniel P. Howells - - - - - -
Douglas Faggioli - - - - - -
Daren G. Hogge 10,800 6.16% 9.00 2/23/2006 33,057 74,996
Jerry L. McLaughlin - - - - - -
John R. DeWyze 250 0.14% 8.13 1/3/2010 1,277 3,237
12,010 6.85% 9.00 2/23/2006 36,791 83,398
OPTION EXERCISES DURING 2000 AND
2000 YEAR-END VALUE TABLE
The following table sets forth certain information regarding the
exercise and value of non-qualified stock options held by the named officers
during 2000 (as adjusted for stock splits and dividends).
AGGREGATED OPTION EXERCISES IN 2000 AND 2000 YEAR-END OPTION VALUE
--------------------- ---------------- --------------------- ---------------------------- -------------------------------------
(a) (b) (c) (d) (e)
DOLLAR VALUE OF UNEXERCISED
NUMBER OF UNEXERCISED IN-THE-MONEY OPTIONS AT
SHARES ACQUIRED OPTIONS AT FISCAL YEAR-END FISCALYEAR-END
NAME ON EXERCISE (#) VALUE RECEIVED ($) EXERCISABLE/UNEXERCISABLE (#) EXERCISABLE/UNEXERCISABLE ($)
--------------------- ---------------- --------------------- -------------------------------- ---------------------------------
Daniel P. Howells - - 55,000/269,060 0/0
Douglas Faggioli - - 37,233/170,157 0/0
Daren Hogge - - 27,393/159,417 0/0
Jerry L. McLaughlin - - 26,300/86,000 0/0
John R. DeWyze - - 41,653/79,417 0/0
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401(k) PLAN
The Company sponsors a qualified deferred compensation plan ("401(k)
Plan") under Section 401(k) of the Internal Revenue Code, pursuant to which
full-time employees may reduce their salaries by up to 10% of their
compensation limited to a maximum of $10,500 and have the salary reduction
amounts contributed to the 401(k) Plan. Such contributions are 100% matched
by the Company, up to a maximum of 5% of the employee's compensation.
Participants are fully vested at all times in their salary reduction
contributions and after four years of service are fully vested in matching
Company contributions. Participants are eligible to receive distribution of
vested amounts upon retirement, death or disability, or termination of
employment. Contributions by the Company to the 401(k) Plan were
approximately $623,000, $640,000 and $545,000 for 2000, 1999 and 1998,
respectively. Amounts contributed for officers participating in the 401(k)
Plan are included in the Summary Compensation Table above.
COMPENSATION COMMITTEE INTERLOCKS AND INSIDER PARTICIPATION
The Board of Directors' Compensation Committee is composed of
Pauline T. Hughes, Kristine F. Hughes and Richard G. Hinckley.
THE FOLLOWING REPORT OF THE COMPENSATION COMMITTEE AND THE
PERFORMANCE GRAPH THAT APPEARS IMMEDIATELY AFTER SUCH REPORT SHALL NOT BE
DEEMED TO BE SOLICITING MATERIAL OR TO BE FILED WITH THE SECURITIES AND
EXCHANGE COMMISSION UNDER THE SECURITIES ACT OF 1933 OR THE SECURITIES
EXCHANGE ACT OF 1934 OR INCORPORATED BY REFERENCE IN ANY DOCUMENT SO FILED.
11
REPORT OF THE COMPENSATION COMMITTEE
To: The Board of Directors
As members of the Compensation Committee (the "Committee"), it is
our duty to administer or supervise various stock option and incentive
compensation plans of the Company. In addition, the Committee recommends to
the Board of Directors the compensation to be paid to the Company's chief
executive and operating officers. The Committee also reviews compensation
policies applicable to officers and key employees and considers the
relationship of corporate performance to that compensation.
The Committee submits a report to the Board concerning the
compensation policies followed by the Committee in recommending compensation
for the Company's chief executive and chief operating officers. In
establishing such compensation for 2000, the Committee considered a number of
factors, including what it believed to be the competitive level of
compensation that is necessary to attract, retain and motivate qualified
officers. In this regard, the Committee reviewed several salary reports and
surveys. The Committee also considered (i) an officer's contribution to the
Company's operating performance, as measured by increases in sales revenues,
profitability and return on assets, (ii) the officer's contribution to
helping the Company meet its other objectives, such as providing a high level
of service to the Company's customers and in maximizing shareholder value,
and (iii) the Chief Executive Officer's evaluation of the officer. For the
Chief Executive Officer, the Committee also took into consideration the
Company's overall stock performance as measured against the stock market and
success in opening new overseas markets for the Company's products. For 2000
salaries, the Committee applying the factors set forth above increased base
salaries for the chief executive and chief operating officers approximately
0% over 1999 levels on a weighted average basis. Salaries for 2001, increased
approximately 7% over 2000 levels on a weighted average basis. Other
executive officer salaries in 2000 were set by the chief executive and chief
operating officers using the same factors set forth above. The chief
executive and chief operating officers approved percentage salary increases
for the executive officers in 2001 and 2000 that were the same as those
approved by the Committee.
The compensation policy of the Company, which is endorsed by the
Committee, is that a substantial portion of the annual compensation of each
officer relate to and be contingent upon the performance of the Company, as
well as the individual contribution of each officer. As a result, much of an
officer's compensation is subject directly to annual bonus compensation
measured by the Company's achievement of certain sales and income goals.
Under the Company's Incentive Compensation Plan, bonuses are paid based on
the officer's performance and the performance of the entire Company. The
Committee believes the compensation paid to its officers is reasonable in
view of the Company's performance and the contribution of these officers to
that performance.
12
All officers and key employees participate in the Company's stock
option plans. Options granted thereunder, may provide for the acceleration of
vesting if the Company meets or exceeds certain income and/or revenue goals.
The Committee believes that stock options have been effective in attracting,
motivating and retaining executives and key employees. During 2000, the
Committee recommended stock option grants in the aggregate amount of 175,290
shares. In February 2001, the Committee approved stock option grants in the
aggregate amount of 815,990 shares because the Company and its key employees
met certain specified performance goals for the year 2000. The options were
granted in February 2001, at fair market value, and were subject to two-year
vesting.
Except for Kristine F. Hughes, no member of the Committee is a
former or current officer or employee of the Company or any of its
subsidiaries. Mrs. Hughes served as President and CEO of the Company from
September 1996 to October 1997.
COMPENSATION COMMITTEE
Dated April 12, 2001
PAULINE T. HUGHES
KRISTINE F. HUGHES
RICHARD G. HINCKLEY
CORPORATE STOCK PERFORMANCE
The following graph compares the performance (total return on
investment as measured by the change in the year-end stock price plus
reinvested dividends) of the Common Stock of the Company ("NATR") with that
of the Index for NASDAQ Stock Market (U.S. companies) and the Index for
NASDAQ Stock (SIC 2800-2899) (herbal vitamins companies) for the five years
ended December 31, 2000.
13
Comparison of Five -- Year Cumulative Total Returns
Performance Graph for
Nature's Sunshine Products, Inc.
Produced on 04/05/2001 including data to 12/29/2000
[PERFORMANCE GRAPH]
REPORT OF THE AUDIT COMMITTEE
Dated April 12, 2001
To: The Board of Directors
We have reviewed and discussed with management the Company's audited
financial statements as of and for the year ended December 31, 2000.
We have discussed with the independent auditors the matters required
to be discussed by Statement on Auditing Standards No. 61, COMMUNICATION WITH
AUDIT COMMITTEES, as amended, by the Auditing Standards Board of the American
Institute of Certified Public Accountants.
We have received and reviewed the written disclosures and the letter
from the independent auditors required by Independence Standards Board, and
have discussed with the auditors the auditor's independence.
Based on the reviews and discussions referred to above, we recommend
to the Board of Directors that the financial statements referred to above be
included in the Company's Annual Report on Form 10-K for the year ended
December 31, 2000.
AUDIT COMMITTEE
Dated April 12, 2001
RICHARD G. HINCKLEY
PAULINE T. HUGHES
KRISTINE F. HUGHES
(SEE EXHIBIT A)
15
RELATIONSHIP WITH
INDEPENDENT PUBLIC ACCOUNTANTS
The Audit Committee of the Board of Directors of the Company has
recommended to the Board of Directors that Arthur Andersen LLP be selected
again as the independent public accountants for the Company. The Board of
Directors has accepted this recommendation and has selected Arthur Andersen
LLP to be the independent public accountants for the Company for the fiscal
year ending December 31, 2001. Arthur Andersen LLP served as the Company's
independent public accountants for the fiscal year ended December 31, 2000.
Representatives of Arthur Andersen LLP are expected to attend the
2001 Annual Meeting and will have an opportunity to make a statement if they
desire to do so, and they will be available to answer appropriate questions
from shareholders.
SHAREHOLDER PROPOSALS
If a shareholder wishes to present a proposal at the 2002 Annual
Meeting of Shareholders, the proposal must be received by Nature's Sunshine
Products, Inc., 75 East 1700 South, Provo, Utah 84606, prior to December 31,
2001. The Board of Directors will review any proposal, which is received by
that date and determine whether it is a proper proposal to present to the
2002 Annual Meeting.
VOTE REQUIRED
A majority of the 16,266,586 outstanding shares of Common
Stock of the Company shall constitute a quorum at the Annual Meeting. Under
the Utah Revised Business Corporation Act, directors are elected by a
plurality of the votes cast by the shares entitled to vote in the election at
the Annual Meeting provided a quorum is present. The affirmative vote of at
least a majority of the shares represented at the meeting is required for all
other proposals to come before the meeting. The Company does not have any
specific charter or by-law provisions dealing with the method by which votes
will be counted; however, in prior years the Company has counted abstentions
and broker non-votes for quorum purposes but the votes represented by such
shares are not counted in computing the results of the election of directors
or other resolutions.
Votes cast by shareholders who attend and vote in person or by proxy
at the Annual Meeting will be counted by inspectors to be appointed by the
Company (it is anticipated that the inspectors will be employees, attorneys
or agents of the Company).
OTHER MATTERS
As of the date of this Proxy Statement, the Board of Directors of
the Company does not intend to present and has not been informed that any
other person intends to present a matter for action at the 2001 Annual
Meeting other than as set forth herein and in the Notice of Annual Meeting.
If any other matter properly comes before the meeting, it is intended that
the holders of Proxies will act in accordance with their best judgment. The
Board of Directors may read the minutes of the 2000 Annual Meeting of
Shareholders and make reports, but shareholders will not be requested to
approve or disapprove such minutes or reports.
16
In addition to the solicitation of Proxies by mail, certain of the
officers and employees of the Company, without extra compensation, may
solicit Proxies personally or by telephone. The Company will also request
brokerage houses, nominees, custodians and fiduciaries to forward soliciting
materials to the beneficial owners of Common Stock held of record and will
reimburse such persons for forwarding such material. The cost of this
solicitation of Proxies will be borne by the Company.
COPIES OF THE COMPANY'S ANNUAL REPORT ON FORM 10-K (INCLUDING
FINANCIAL STATEMENTS AND FINANCIAL STATEMENT SCHEDULES) FILED WITH THE
SECURITIES AND EXCHANGE COMMISSION MAY BE OBTAINED WITHOUT CHARGE BY WRITING
TO THE COMPANY -ATTENTION: INVESTOR RELATIONS DEPARTMENT, 75 EAST 1700 SOUTH,
PROVO, UTAH 84606. Copies of the Company's 2000 Annual Report to Shareholders
are being mailed with this Proxy Statement. Additional copies may also be
obtained by writing to the Company's Investor Relations Department, at the
above address.
The enclosed Proxy is furnished for you to specify your choices with
respect to the matters referred to in the accompanying notice and described
in this Proxy Statement. If you wish to vote in accordance with the Board's
recommendations, merely sign, date and return the Proxy in the enclosed
envelope which requires no postage if mailed in the United States. A prompt
return of your Proxy will be appreciated.
Dated: April 12, 2001 BY ORDER OF THE BOARD OF DIRECTORS
Brent F. Ashworth
SECRETARY
17
EXHIBIT A
CHARTER OF THE AUDIT COMMITTEE
OF THE BOARD OF DIRECTORS
I. PURPOSE
The primary function of the Audit Committee is to assist the Board
of Directors in fulfilling its oversight responsibilities by reviewing: the
financial reports and other financial information provided by the Corporation
to any governmental body or the public; the Corporation's systems of internal
controls regarding finance, accounting, legal compliance and ethics that
management and the Board have established; and the Corporations' auditing,
accounting and financial reporting processes generally. Consistent with this
function, the Audit Committee should encourage continuous improvement of, and
should foster adherence to, the Corporation's policies, procedures and
practices at all levels. The Audit Committee's primary duties and
responsibilities are to:
o Serve as an independent and objective party to monitor the
Corporation's financial reporting process and internal control
system.
o Review and appraise the audit efforts of the Corporation's
independent accountants and internal auditing department.
o Provide an open avenue of communication among the independent
accountants, financial and senior management, the internal
auditing department and the Board of Directors.
The Audit Committee will primarily fulfill these responsibilities by
carrying out the activities enumerated in Section IV of this Charter.
I. COMPOSITION
The Audit Committee shall be comprised of three or more directors as
determined by the Board, each of whom shall be independent directors, and
free from any relationship that, in the opinion of the Board, would interfere
with the exercise of his or her independent judgment as a member of the
Committee as defined by NASDAQ. All members of the Committee shall have a
working familiarity with basic finance and accounting practices, and at least
one member of the Committee shall have accounting or related financial
management expertise. Committee members may enhance their familiarity with
finance and accounting by participating in educational programs conducted by
the Corporation or an outside consultant.
The members of the Committee shall be elected by the Board at the
annual organizational meeting of the Board or until their successors shall be
duly elected and qualified. Unless a Chair is elected by the full Board, the
members of the Committee may designate a Chair by majority vote of the full
Committee membership.
II. MEETINGS
The Audit Committee shall meet at least four times annually, or more
frequently as circumstances dictate. As part of its job to foster open
communication, the Committee should meet at least annually with management,
the director of the internal auditing department and the independent
accountants in separate executive sessions to discuss any matters that the
Committee or each of these groups believe should be discussed privately. In
addition, the Committee or at least its Chair should meet with the
independent accountants and management quarterly to review the Corporations
financials consistent with IV.4 below).
III. RESPONSIBILITIES AND DUTIES
To fulfill its responsibilities and duties, the Audit Committee
shall:
Documents/ Reports Review
1. Review and update this Charter periodically, at least annually, as
conditions dictate.
2. Review the organization's annual financial statements and any reports
or other financial information submitted to any governmental body, or
the public, including any certification, report, opinion, or review
rendered by the independent accountants.
3. Review the regular internal reports to management prepared by the
internal auditing department and management's response.
4. Review with financial management and the independent accountants the
10-Q prior to it filing or prior to the release of earnings. The Chair
of the Committee may represent the entire Committee for purposes of
this review.
Independent Accountants
1. Recommend to the Board of Directors the selection of the independent
accountants, considering independence and effectiveness and approve the
fees and other compensation to be paid to the independent accountants.
On an annual basis, the Committee should review and discuss with the
accountants all significant relationships the accountants have with the
Corporation to determine the accountant's independence.
2. Review the performance of the independent accountants and approve any
proposed discharge of the independent accountants when circumstances
warrant.
3. Periodically consult with the independent accountants out of the
presence of management about internal controls and the fullness and
accuracy of the organization's financial statements.
Financial Reporting Processes
4. In consultation with the independent accountants and the internal
auditors, review the integrity of the organization's financial
reporting processes, both internal and external.
5. Consider the independent accountants' judgments about the quality and
appropriateness of the Corporation's accounting principles as applied
in its financial reporting.
6. Consider and approve, if appropriate, major changes to the
Corporation's auditing and accounting principles and practices as
suggested by the independent accountants, management, or the internal
auditing department.
19
Process Improvement
7. Establish regular and separate systems of reporting to the Audit
Committee by each of management, the independent accountants and the
internal auditors regarding any significant judgments made in
management's preparation of the financial statements and the view of
each as to appropriateness of such judgments.
8. Following completion of the annual audit, review separately with each
member of management, the independent accountants and the internal
auditing department any significant difficulties encountered during the
course of the audit, including any restriction son the scope of work or
access to required information.
9. Review any significant disagreement among management and the
independent accountants or the internal auditing department in
connection with the preparation of the financial statements.
10. Review with the independent accountants, the internal auditing
department and management the extent to which changes or improvements
in financial or accounting practices, as approved by the Audit
Committee, have been implemented. (This review should be conducted at
an appropriate amount of time subsequent to implementation of changes
or improvements, as decided by the Committee.)
Ethical and Legal Compliance
11. Establish, review and update periodically a Code of Ethical Conduct and
ensure that management has established a system to enforce this Code.
12. Review management's monitoring of the Corporation's compliance with the
organization's Ethical Code, and ensure that management has the proper
review system in place to ensure that Corporation's financial
statements, reports and other financial information disseminated to
governmental organizations, and the public satisfy legal requirements.
13. Review activities, organizational structure, and qualifications of the
internal audit department.
14. Review, with the organization's counsel, legal compliance matters
including corporate securities trading policies.
15. Review, with the organization's counsel, any legal matter that could
have a significant impact on the organization's financial statements.
16. Perform any other activities consistent with this Charter, the
Corporation's Bylaws and governing laws, as the Committee or the Board
deems necessary or appropriate.
20
THIS PROXY IS SOLICITED ON BEHALF OF THE BOARD OF DIRECTORS
The undersigned hereby appoints Kristine F. Hughes and Brent F. Ashworth and
each of them as Proxies, with full power of substitution, and hereby
authorizes them to represent and vote, as designated on the reverse, all
shares of Common Stock of the Company held of record by the undersigned on
April 12, 2001, at the Annual Meeting of Shareholders to be held at the
Company's corporate offices at 75 East 1700 South, Provo, Utah 84606, on
Tuesday, May 22, 2001, at 10:00 a.m., local time, or at any adjournment
thereof.
(TO BE SIGNED ON REVERSE SIDE.)
/X/ PLEASE MARK YOUR VOTES AS IN THIS EXAMPLE.
FOR WITHHELD
1. Election of Directors. / / / / NOMINEES: Richard G. Hinckley
Eugene L. Hughes
(INSTRUCTIONS: To withhold authority to vote for any individual nominee,
write that nominee's name on the space provided below.)
- -------------------------------------------------------------------------------
FOR AGAINST ABSTAIN
2. In their discretion, the Proxies are
authorized to vote upon such other / / / / / /
business as may properly come
before the Annual Meeting.
THIS PROXY WHEN PROPERLY EXECUTED WILL BE VOTED IN THE MANNER DIRECTED HEREIN
BY THE UNDERSIGNED SHAREHOLDER. IF NO DIRECTION IS MADE, THIS PROXY WILL BE
VOTED FOR PROPOSALS 1 AND 2.
Please sign and date this Proxy where shown below and return it promptly:
No postage is required if this Proxy is returned in the enclosed envelope and
mailed in the United States.
SIGNATURE(S)
----------------------------------------
DATE
-----------------------------------
NOTE: Please sign above exactly as the shares are issued. When shares are
held by joint tenants, both should sign. When signing as attorney, executor,
administrator, trustee or guardian, please give the full title as such. If a
corporation, please sign in full corporate name by President or other
authorized officer. If a partnership, please sign in partnership name by
authorized person.