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 (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 Under Rule 14a-12
WEST MARINE, INC.
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(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.
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[WEST MARINE, INC. LOGO]
500 Westridge Drive
Watsonville, California 95076-4100
__________________
NOTICE OF THE 2001 ANNUAL MEETING OF STOCKHOLDERS
Thursday, May 10, 2001, 10:30 A.M.
__________________
TO THE STOCKHOLDERS:
Notice is hereby given that the 2001 Annual Meeting of Stockholders of West
Marine, Inc. (the ''Company'') will be held at the office of the Company, 500
Westridge Drive, Watsonville, California, on Thursday, May 10, 2001, at 10:30
A.M. for the following purposes:
(1) To elect eight directors.
(2) To transact such other business as may properly come before the Annual
Meeting.
Only stockholders of record on the books of the Company as of the close of
business on March 23, 2001, will be entitled to vote at the meeting and any
adjournment thereof.
Dated: April 9, 2001
By Order of the Board of Directors
Russell Solt, Secretary
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STOCKHOLDERS ARE REQUESTED TO MARK, DATE, SIGN AND RETURN THE
ENCLOSED PROXY AS PROMPTLY AS POSSIBLE.
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[WEST MARINE, INC. LOGO]
500 Westridge Drive
Watsonville, California 95076-4100
PROXY STATEMENT
The enclosed proxy is solicited by the Board of Directors of West Marine,
Inc. (the "Company") to be used at the Annual Meeting of Stockholders on May 10,
2001 (the "Annual Meeting"), for the purposes set forth in the foregoing notice.
This Proxy Statement and the enclosed form of proxy were first sent to
stockholders on or about April 9, 2001.
If the enclosed form of proxy is properly signed and returned, the shares
represented thereby will be voted at the Annual Meeting in accordance with the
instructions specified thereon. If the proxy does not specify how the shares
represented thereby are to be voted, the proxy will be voted as recommended by
the Board of Directors. Any stockholder signing a proxy in the form accompanying
this Proxy Statement has the power to revoke it prior to or at the Annual
Meeting. A proxy may be revoked by a writing delivered to the Secretary of the
Company stating that the proxy is revoked, by a subsequent proxy signed by the
person who signed the earlier proxy and presented at the Annual Meeting, or by
attendance at the Annual Meeting and voting in person.
VOTING SECURITIES
Only stockholders of record on the books of the Company as of the close of
business on March 23, 2001, will be entitled to vote at the Annual Meeting.
As of the close of business on March 23, 2001, there were outstanding
17,585,876 shares of Common Stock of the Company, each share of which is
entitled to one vote. The holders of a majority of the outstanding shares of
Common Stock of the Company, present in person or by proxy, will constitute a
quorum for the transaction of business at the Annual Meeting or any adjournment
thereof. Directors shall be elected by a plurality of the votes of the shares
present in person or represented by proxy at the Annual Meeting and entitled to
votes on the election of directors.
Votes cast by proxy or in person at the Annual Meeting will be tabulated by
the election inspectors appointed for the Annual Meeting and will determine
whether or not a quorum is present. The election inspectors will treat
abstentions and broker non-votes as shares that are present and entitled to vote
for purposes of determining the presence of a quorum. With regard to Item 1
(election of directors), votes may be cast "For" or "Withhold Authority" for
each nominee; votes that are withheld will be excluded entirely from the vote
and will have no effect. If a broker indicates on the proxy that it does not
have discretionary authority as to certain shares to vote on a particular
matter, those shares will not be considered as present and entitled to vote with
respect to that matter. A broker non-vote will have no effect with respect to
any item of this Proxy Statement.
2
ITEM 1--ELECTION OF DIRECTORS
The persons named below are nominees for director to serve until the next
Annual Meeting of Stockholders and until their successors shall have been
elected. Except for Messrs. Roy and Sweeney, each of the nominees is currently
a member of the Board of Directors.
In the absence of instructions to the contrary, shares represented by the
proxy will be voted and the proxies will vote for the election of all such
nominees to the Board of Directors. If any of such persons is unable or
unwilling to be a candidate for the office of director at the date of the Annual
Meeting, or any adjournment thereof, the proxies will vote for such substitute
nominee as shall be designated by the proxies. The management has no reason to
believe that any of such nominees will be unable or unwilling to serve if
elected a director. Set forth below is certain information concerning the
nominees which is based on data furnished by them.
Served as
Business Experience During Past Director
Nominees for Director Age Five Years and Other Information Since
- ------------------------------------------------------------------------------------------------------------------------------------
Randolph K. Repass.......... 57 Mr. Repass has served as the Company's Chairman of the Board since founding the 1968
company in 1968. Mr. Repass served as Chief Executive Officer of the Company from
1968 to April 1995 and from July 1998 to November 1998. He also served as President
of the Company from 1968 to 1990 and from August 1993 to March 1994. Mr. Repass also
serves as a director of Sail America, a sailing industry association, National Marine
Manufacturers Association and Specialized Bicycle Components, Inc. He also serves as
Chairman of the Board of New England Ropes, Inc.
John Edmondson.............. 56 Mr. Edmondson has served as President and Chief Executive Officer of the Company since 1998
November 1998. From 1992 to November 1998, Mr. Edmondson served first as Corporate
Chief Operating Officer, and then as President and Chief Executive Officer, of World
Duty Free Americas, Inc., a duty free retailer. Prior to joining World Duty Free
Americas, Inc., Mr. Edmondson was General Manager of Marriott's Host Airport
Merchandise and its Sports and Entertainment division. Mr. Edmondson began his career
with Allied Stores' Maas Bros./Jordan Marsh in 1965 and has held various senior
management positions with several retailers.
Richard E Everett........... 48 Mr. Everett has served as Chief Operating Officer of the Company since 1995 and has 1994
served as President of Stores Division since 1998. Mr. Everett joined the Company in
1980 and has served in various positions with the Company since that time. Prior to
joining the Company, Mr. Everett founded and operated a sailboat rigging company.
Geoffrey A. Eisenberg....... 48 Mr. Eisenberg has served as Chief Executive Officer of Salz Leathers, Inc., a leather 1977
manufacturer, since December 2000. Prior to joining Salz Leathers, Inc., Mr.
Eisenberg served as a senior consultant to the Company since January 1995. Mr.
Eisenberg was Senior Vice President of the Company from 1988 to 1994 and was
responsible for merchandising and marketing from 1991 to 1994.
David McComas............... 58 Mr. McComas has served as President and Chief Operating Officer of Eye Care Centers of 1996
America, Inc. responsible for 290 stores nationwide since July 1998. Prior to joining
Eye Care Centers of America, Inc., Mr. McComas was with Circuit City Stores, Inc.
since June 1991 and served as Western Region President and Corporate Vice President,
responsible for eight Western States and Hawaii and held several other senior
management positions with the company. Mr. McComas is a powerboater and has over 30
years of store management and operations experience.
Peter Roy................... 44 Mr. Roy is an entrepreneur and business advisor to companies in the healthy lifestyle Nominee
industry. From 1993 to 1998, Mr. Roy served as President of Whole Foods Market, Inc.,
a natural and organic food products retailer. For 10 years prior to that, Mr. Roy
served as the President of the West Coast Region of Whole Foods Market, Inc. Mr. Roy
is also a director of Stonyfield Farm, White Wave Soy Products, Fitness Holdings
Worldwide, Mountain Sun Organic & Natural Juices and U.S.A. Floral Products, Inc. Mr.
Roy also serves as a strategic advisor to North Castle Partners, a venture capital
fund, and is an "Entrepreneur in Residence" at Tulane University's Freeman School of
Business.
3
Daniel J. Sweeney, Ph.D. 58 Dr. Sweeney served as Vice President, Global Consulting, for IBM Global Services, a Nominee
technology services company, from June 1995 to June 2000. Prior to joining IBM Global
Services, Dr. Sweeney was Chairman of the Management Horizons Division of Price
Waterhouse LLP (now PricewaterhouseCoopers), a division providing research and
consulting services to the retailing industry. Dr. Sweeney is an author and
commentator on the retailing and consumer marketing industries and has served as an
advisor and counselor to leading firms in the retailing and consumer products
marketing industries. Dr. Sweeney serves on the Dean's Advisory Council at The Ohio
State University, the Advisory Board of the Retail Management Institute at Santa Clara
University, the National Advisory Board of the Marketing Institute at Brigham Young
University and the Advisory Board of the Institute for Retail Management at the
University of Florida.
William U. Westerfield 69 Mr. Westerfield became a director of the Company in May 2000. Mr. Westerfield serves 2000
as a director and audit committee chairman of Gymboree Corporation and Twinlab
Corporation. He also serves as an audit committee member of Meridian Health System,
Inc. and previously chaired the audit committee of World Duty Free Americas, Inc., a
subsidiary of BAA plc. Mr. Westerfield retired as an audit partner of Price
Waterhouse LLP (now PricewaterhouseCoopers) in 1992 after serving the firm as an audit
partner for 27 years. Mr. Westerfield had joined Price Waterhouse in 1956. In
addition to serving on boards of directors and audit committees, Mr. Westerfield
serves as a consultant in auditing disputes.
The Board of Directors Unanimously Recommends that Stockholders
Vote FOR These Director Nominees.
4
FURTHER INFORMATION CONCERNING
THE BOARD OF DIRECTORS
Committees of the Board
The Company has an Audit Committee and an Organization and Compensation
Committee.
The members of the Audit Committee are James P. Curley, Walter Scott and
William U. Westerfield. Among the functions performed by this committee are to
make recommendations to the Board of Directors with respect to the engagement or
discharge of independent auditors, to review with the independent auditors the
plan and results of the auditing engagement, to review the Company's internal
auditing procedures and system of internal accounting controls and to make
inquiries into matters within the scope of its functions. The Audit Committee
held eight meetings during 2000.
The members of the Organization and Compensation Committee are James P.
Curley, David McComas and Walter Scott. Among the functions performed by this
committee are to review and make recommendations to the Board of Directors
concerning the compensation of the key management employees of the Company and
to administer the Company's Equity Incentive Plan. The Organization and
Compensation Committee held four meetings during 2000.
Messrs. Curley, Scott and Wendt, each of whom is currently a director, have
declined to stand for reelection to the Company's Board of Directors. The
Company does not have a Nominating Committee.
Attendance at Meetings
During 2000, the Board of Directors held five meetings. There were no
members of the Board of Directors who attended fewer than 75% of the meetings of
the Board of Directors and all committees of the Board on which they served
during such year.
Compensation of Directors
In November 2000, the Board of Directors approved an amendment to the
Nonemployee Director Stock Option Plan to decrease the number of option shares
each nonemployee director would receive. The Board also approved an increase in
the amount of cash compensation each nonemployee director would receive. Both
were approved retroactively to be effective as of May 10, 2000.
Based on the increase in cash compensation approved by the Board of
Directors, nonemployee directors of the Company are paid directors fees
consisting of an annual retainer of $24,000, payable quarterly. In addition,
each member of the Organization and Compensation Committee receives an annual
fee of $4,000, each member of the Audit Committee receives an annual fee of
$6,000 and each director who is a committee chairperson receives an annual fee
of $2,500. All of such additional annual fees are payable quarterly.
Prior to amendment of the Nonemployee Director Stock Option Plan,
nonemployee directors were eligible to receive, on the date such director was
initially elected or appointed to the Board of Directors and annually thereafter
on the date of the Annual Meeting of Stockholders, an option exercisable for a
number of shares equal to a fraction, the numerator of which was $100,000 and
the denominator of which was the fair market value of the Company's Common Stock
on the date of grant. The Nonemployee Director Stock Option Plan, as amended,
provides that each nonemployee director is eligible to receive, on such
specified dates of grant, an option exercisable for 2,000 shares of the
Company's Common Stock. As a result of the amendment to the Nonemployee Director
Stock Option Plan, for 2000, each of Messrs. Curley, McComas, Scott, Wendt and
Westerfield was granted a nonqualified stock option under the Company's
Nonemployee Director Stock Option Plan to purchase 2,000 shares of the Company's
Common Stock at the fair market value of the shares on the date of grant.
5
EXECUTIVE COMPENSATION
Compensation of Executive Officers
The compensation paid to the Company's executive officers as of the last
fiscal year, including the Chief Executive Officer (collectively, the "Named
Executive Officers") for services in all capacities to the Company and its
subsidiaries during fiscal 2000, 1999 and 1998 is set forth below.
SUMMARY COMPENSATION TABLE
Long Term
Annual Compensation Compensation Awards
----------------------- ------------------------------
Restricted Securities
Stock Underlying
Name and Principal Position Year Salary ($) Bonus ($) Awards ($) Options (#)
- ------------------------------------------------------- ---- ---------- --------- ---------- -----------
John Edmondson......................................... 2000 $450,008 $ 84,375 $ -- 50,000
President and Chief Executive Officer 1999 450,009 -- -- 60,000
1998 (1) 17,308 100,000 150,913 250,000
Richard E Everett...................................... 2000 $270,194 $ 34,375 $ -- 22,800
Chief Operating Officer 1999 285,000 -- -- 41,200
1998 229,675 -- -- 45,600
Michael Edwards........................................ 2000 $302,917 $ 38,125 $ -- 22,800
Former Executive Vice President, 1999 (2) 135,017 -- -- 100,000
Merchandise Planning and Allocation
Russell Solt........................................... 2000 (3) $245,769 $ 39,540 $ -- 100,000
Executive Vice President and
Chief Financial Officer
____________________________
(1) Mr. Edmondson joined the Company as President and Chief Executive Officer
in November 1998.
(2) Mr. Edwards, who joined the Company as Executive Vice President,
Merchandise Planning and Allocation, in July 1999, resigned from the
Company effective as of March 2001.
(3) Mr. Solt joined the Company as Senior Vice President and Chief Financial
Officer in January 2000. He was named an Executive Vice President in March
2001.
6
Stock Option Grants and Exercises
The following table sets forth certain information regarding stock options
granted during fiscal 2000 to the Named Executive Officers.
OPTION GRANTS IN LAST FISCAL YEAR
Individual Grants
------------------------------------------------------------------- Potential Realizable Value at
Number of Percent of Assumed Annual Rates of Stock
Securities Total Options Price Appreciation for Option
Underlying Granted to Exercise or Term(4)
Name Options Employees in Base Price Expiration -----------------------------
Granted(1) Fiscal Year ($/Sh)(2) Date(3) 5% 10%
---------- ------------- ----------- ---------- -------- ------------
John Edmondson............ 50,000 5.59% $8.47 03/02/2010 $266,299 $ 674,854
Richard E Everett......... 22,800 2.55% $8.47 03/02/2010 $121,432 $ 307,734
Michael Edwards........... 22,800 2.55% $8.47 03/02/2010 $121,432 $ 307,734
Russell Solt.............. 100,000 11.19% $8.94 01/24/2010 $562,075 $1,424,407
- ------------------
(1) These options are exercisable in annual increments of 20%, commencing one
year from date of grant. Under the terms of the Equity Incentive Plan, the
Committee retains discretion, subject to plan limits, to modify the terms
of outstanding options.
(2) All options were granted at fair market value at date of grant, as
determined by the Board of Directors.
(3) All options granted in fiscal 2000 were granted for a term of ten years.
(4) Potential realizable values are reported net of the option exercise price.
The dollar amounts under these columns are the result of calculations at
the 5% and 10% rates (determined from the price at the date of grant, not
the current market value of the Company's Common Stock) set by the
Securities and Exchange Commission and therefore are not intended to
forecast possible future appreciation, if any, of the Company's stock
price. Actual gains, if any, on stock option exercises are dependent on the
future performance of the Company's Common Stock as well as the
optionholder's continued employment through the vesting period. The
potential realizable value calculation assumes that the optionholder waits
until the end of the option term to exercise the option.
The following table sets forth certain information with respect to option
exercises during fiscal 2000 and stock options held by each of the Company's
Named Executive Officers as of December 30, 2000.
AGGREGATED OPTION EXERCISES IN 2000
AND FISCAL YEAR END OPTION VALUES
Value of Unexercised
Number of Unexercised In-the-Money Options at
Shares Options at FY-End (#) FY-End ($)(1)
Acquired Value --------------------------- --------------------------
Name on Exercise(#) Realized($) Exercisable Unexercisable Exercisable Unexercisable
- ---- -------------- ----------- ----------- ------------- ----------- -------------
John Edmondson................ 0 0 112,000 248,000 $ -- --
Richard E Everett............. 0 0 290,573 95,736 $5,130 --
Michael Edwards............... 0 0 20,000 102,800 $ -- --
Russell Solt.................. 0 0 -- 100,000 $ -- --
- ------------------
(1) Based on a price per share of $4.125, which was the price of a share of
Common Stock on the Nasdaq National Market at the close of business on
December 29, 2000.
Organization and Compensation Committee Interlocks and Insider Participation
The Organization and Compensation Committee during fiscal 2000 consisted of
Messrs. Curley, McComas and Scott. No director, executive officer or member of
the Organization and Compensation Committee had any interlocking relationship
with any other company that would require disclosure in this Proxy Statement.
7
Employment Arrangements
In August 1999, the Company entered into an Executive Termination
Compensation Agreement with Mr. Everett. The agreement provides that, if Mr.
Everett is terminated without cause, he will receive severance pay equal to his
base salary until the earlier to occur of the expiration of 18 months after the
date of termination or the date he accepts other employment. In addition, the
Company has agreed to retain Mr. Everett as a consultant for a period of time
after his termination, with or without cause.
In January 2000, the Company entered into an Executive Termination
Compensation Agreement with Mr. Solt. The agreement, which expires in January
2002, provides that, if Mr. Solt is terminated without cause, he will receive
severance pay equal to his base salary and target bonus until the earlier to
occur of the expiration of 12 months after the date of termination or the date
he accepts other employment.
In January 2001, the Company entered into an agreement with Mr. Edwards
whereby Mr. Edwards agreed to resign from the Company, with such resignation to
be effective as of March 2001. The agreement provides that Mr. Edwards will
receive severance pay equal to his salary for a period of 12 months beginning
March 2001.
Certain Transactions
The Company leases its Palo Alto, California, store from Randolph K.
Repass. In addition, the Company leases the Company's corporate headquarters and
the Santa Cruz, California, and Braintree, Massachusetts, stores from three
partnerships, of which Mr. Repass is a general partner. Pursuant to these
leases, the Company paid rent to Mr. Repass or such partnerships in the
aggregate amount of $1,323,023 in fiscal 2000.
Mr. Repass is Chairman of the board of directors and a stockholder of New
England Ropes, Inc., a major supplier of the Company. Mr. Repass' brother is
the President and his father is a member of the board of directors and a major
stockholder of New England Ropes, Inc. In fiscal 2000, the Company paid
$7,718,403 to New England Ropes, Inc. for purchased products.
8
ORGANIZATION AND COMPENSATION COMMITTEE REPORT ON EXECUTIVE
COMPENSATION TO THE BOARD OF DIRECTORS
As members of the Organization and Compensation Committee, we are
responsible for reviewing and approving the Company's compensation policies and
the levels of compensation paid to executive officers.
Compensation Policy
The Company's compensation policies are intended to attract, motivate and
reward highly qualified executives for long-term strategic management and
enhancement of stockholder value. Additionally, the policies support a
performance-oriented environment directed towards specific Company goals and
serve to retain executives whose abilities are critical to the Company's long-
term success and competitiveness.
There are three main components in the Company's officer compensation
program:
. Base salary
. Annual bonus
. Stock options
The Committee approached the review and approval of officer compensation in
the following manner:
. The Committee asked the CEO to submit recommendations regarding all
three components of officer compensation.
. The Committee reviewed last year's compensation report, in addition to
an updated peer group study covering salary and bonus levels as reported by
proxy statements. The updated peer group study included a comparison of base
compensation and annual incentives programs between the peer group and the
Company. The CEO submitted a revised list of Proposed Executive Pay Ranges
including base salary and bonus levels for all officers. The Committee reviewed
and ratified the proposed ranges.
Compensation for Executive Officers
In the area of base salary, we have targeted executive officers' salaries
at a competitive level for comparable companies. When included with the other
forms of compensation available, we believe these levels are adequate to attract
and retain key executives.
Annual bonuses for executive officers are intended to reflect the Company's
and the Committee's belief that a significant portion of the annual compensation
of each executive officer should be contingent upon performance against pre-
established objectives for the Company and the individual officer. The
Committee feels that the Company's bonus program closely ties the executive
officer rewards to the Company's overall earnings per share growth, which in
turn drives the share price. The annual bonuses received by officers and other
management personnel were determined by a formula, which takes into account:
. The Company's earnings per share performance
. The individual executive's performance against internal management
objectives
The Company's fiscal 2000 sales increased 3.3% and comparable store net
sales increased 2.3%, while earnings per share ("EPS") decreased to $0.42 versus
$0.50 in 1999. Excluding the after-tax charge of $1.5 million or $0.08 per share
related to the write-off of vendor receivables, the company's EPS was $0.50,
consistent with 1999. Based on the results for 2000 and taking into account
current economic conditions, minimum bonuses were paid for 2000 to the executive
officers.
Stock options are the Company's primary long-term incentives to reward and
retain executive officers. The Committee believes that these incentives serve to
link management and stockholder interests and serve to motivate executive
officers to make long-term decisions that are in the best interests of the
stockholders. The Committee also believes that executive officers and other key
employees should have significant ownership of the Company's stock. We believe
the current philosophy of stock option grants provides West Marine executives
with an adequate level of long-term incentive to enhance stockholder value.
9
Amendments to Section 162(m) of the Internal Revenue Code have eliminated
the deductibility of most compensation over a million dollars in any given year.
The Committee believes that it is highly unlikely that any of the Company's
executive officers would be eligible at any time in the foreseeable future to
receive compensation of more than a million dollars. However, the Committee
believes that it is important to retain the flexibility to maximize the
Company's tax deductions. Accordingly, it will be the policy of this Committee
to consider the impact, if any, of Section 162(m) on the Company and to document
as necessary specific performance goals and take all other reasonable steps in
order to preserve the Company's tax deductions.
Compensation for the Chief Executive Officer
Mr. Edmondson was paid $450,008 and was granted options to purchase 50,000
shares of Common Stock in 2000. Mr. Edmondson's compensation package includes a
salary of $450,000 with a potential bonus of 75% of salary based primarily on
EPS results. The bonus has additional non-quantitative factors which focus on
management and long term strategies. The bonus is capped at three times a full
payout, and any bonus over 50% of salary is to be directed to purchasing stock
on the open market. In addition, Mr. Edmondson will be granted options to
purchase shares of Common Stock annually as recommended by the Committee. Based
upon the 2000 results, a minimum bonus was paid to Mr. Edmondson.
Compensation for the Chairman of the Board
2000 Base salary of Randy Repass was $100,000. Mr. Repass is already a
significant owner of West Marine and currently holds 7,457,658 shares or 42% of
the Company's outstanding Common Stock. Mr. Repass has not been granted any
stock options since the Company's initial public offering and receives no bonus.
February 28, 2001
2000 Organization and Compensation Committee
Walter Scott, Chairman
James P. Curley
David McComas
10
AUDIT COMMITTEE REPORT
The Audit Committee is responsible for reviewing the Company's auditing,
accounting, financial reporting and internal control functions and for selecting
the Company's independent auditors. In addition, the committee is responsible
for monitoring the quality of the Company's accounting principles and financial
reporting, the independence of the Company's independent auditors and the non-
audit services provided by such auditors. In discharging its duties, the Audit
Committee is expected to:
. Review and approve the scope of the annual audit and the independent
auditors' fees;
. Meet independently with the Company's internal auditing staff, if
employed, or any third party engaged to carry out the internal audit
function, independent auditors and senior management;
. Review the general scope of the Company's accounting, financial
reporting, annual audit and internal audit programs, matters relating
to internal control systems and results of the annual audit; and
. Review disclosures from the Company's independent auditors regarding
Independence Standards Board Standard No. 1, Independence Discussions
with Audit Committees.
The Board of Directors has determined that each of the Audit Committee
members is an "independent" director as that term is defined in the National
Association of Securities Dealers' listing standards. The Board of Directors
adopted a written charter for the Audit Committee, which is attached to this
Proxy Statement as Appendix A.
The Audit Committee has reviewed the Company's audited consolidated
financial statements and discussed such statements with management. The Audit
Committee has discussed with Deloitte & Touche LLP, the Company's independent
auditors during 2000, the matters required to be discussed by Statement on
Auditing Standards No. 61, Communication with Audit Committees. The Audit
Committee received from Deloitte & Touche LLP, the written disclosures required
by Independence Standards Board Standard No. 1, Independence Discussions with
Audit Committees, and discussed with them their independence. Based on the
review and discussions noted above, the Audit Committee recommended to the Board
of Directors that the Company's audited consolidated financial statements be
included in the Company's Annual Report on Form 10-K for the year ended December
30, 2000, to be filed with the Securities and Exchange Commission.
March 19, 2001
2000 Audit Committee
James P. Curley, Chairman
Walter Scott
William U. Westerfield
The Organization and Compensation Committee Report and the Audit Committee
Report set forth above will not be deemed to be incorporated by reference into
any filing under the Securities Act of 1933 or under the Securities Exchange Act
of 1934, except to the extent that the Company specifically incorporates such
reports by reference, and such reports will not otherwise be deemed to be
soliciting materials or to be filed under such Acts.
11
PERFORMANCE GRAPH
The following graph compares the five-year cumulative total stockholder return
on the Company's Common Stock with the five-year cumulative total return of (i)
the Nasdaq Market Index and (ii) the MG Industry Group 745, a peer group index
consisting of 56 specialty retailers. This graph will not be deemed to be
incorporated by reference into any filing under the Securities Act of 1933 or
under the Securities Exchange Act of 1934, except to the extent that the Company
specifically incorporates it by reference, and will not otherwise be deemed to
be soliciting material or to be filed under such Acts.
[PERFORMANCE GRAPH APPEARS HERE]
Measurement Period WEST MARINE MG NASDAQ MARKET
(Fiscal Year Covered) INC. GROUP INDEX INDEX
Measurement Pt-1995 $100.00 $100.00 $100.00
FYE 1996 $172.80 $ 90.38 $124.27
FYE 1997 $147.20 $ 98.83 $152.00
FYE 1998 $ 63.20 $116.68 $214.39
FYE 1999 $ 52.80 $ 74.16 $378.12
FYE 2000 $ 26.40 $ 54.29 $237.66
12
OWNERSHIP OF MANAGEMENT AND PRINCIPAL STOCKHOLDERS
The following table indicates, as to (i) each person who is known by the
Company to own beneficially more than 5% of the outstanding shares of the
Company's Common Stock, (ii) each director and director nominee, (iii) each
Named Executive Officer and (iv) all directors and executive officers as a
group, the number of shares and percentage of the Company's Common Stock
beneficially owned as of February 28, 2001.
Amount and Nature
of Common Stock
Beneficially Owned
as of February 28, 2001(1)
--------------------------
Number of
Beneficial Owner Shares Percent
- ---------------- -------- -------
Randolph K. Repass (2)............................................................................ 7,457,658(3) 42.3%
Wellington Management Company, LLP................................................................ 1,698,800(5) 9.7%
75 State Street
Boston, Massachusetts 02109
Dimensional Fund Advisors Inc..................................................................... 1,021,920(4) 5.8%
1299 Ocean Avenue, 11th Floor
Santa Monica, California 90401
John Edmondson.................................................................................... 137,620(6) *
Richard E Everett................................................................................. 397,693(6) 2.2%
Michael Edwards................................................................................... 34,560(6) *
Russell Solt...................................................................................... 20,000(6) *
James P. Curley................................................................................... 52,483(7) *
Geoffrey A. Eisenberg............................................................................. 519,500(8) 2.9%
David McComas..................................................................................... 30,312(7) *
Peter Roy......................................................................................... 0 *
Walter Scott...................................................................................... 53,413(7) *
Daniel J. Sweeney................................................................................. 0 *
Henry Wendt....................................................................................... 26,412(7) *
William U. Westerfield............................................................................ 3,700(7) *
All directors and executive officers as a group (11 persons)...................................... 8,733,351(9) 47.8%
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* Less than one percent.
(1) Except as otherwise noted, each person has sole voting and investment power
over the Common Stock shown as beneficially owned, subject to community
property laws where applicable.
(2) The address of Mr. Repass is 500 Westridge Drive, Watsonville, California
95076-4100. Mr. Repass may be deemed to be a "control person" of the
Company within the meaning of the rules and regulations of the Securities
and Exchange Commission by reason of his stock ownership and position with
the Company.
(3) Includes 251,600 shares held by Mr. Repass' wife. Also includes employee
stock options, held by Mr. Repass' wife, exercisable within 60 days to
purchase 27,000 shares. Mr. Repass disclaims beneficial ownership of all of
such shares. Also includes 17,700 shares held by Mr. Repass' minor son. Mr.
Repass has sole voting and dispositive power with respect to 7,179,058
shares and has shared voting and dispositive power with respect to 278,600
shares.
(4) Based on a Schedule 13G filed with the Securities and Exchange Commission
reflecting beneficial ownership as of December 31, 2000. These shares are
beneficially owned by Dimensional Fund Advisors Inc. in its capacity as
investment adviser to its clients. According to the Schedule 13G,
Dimensional Fund Advisors Inc. has sole dispositive power and shared voting
power with respect to all such shares. The Schedule 13G indicates that no
client is known to beneficially own more than 5% of the Company's Common
Stock. Dimensional Fund Advisors Inc. disclaims beneficial ownership of all
such shares.
(5) Based on a Schedule 13G filed with the Securities and Exchange Commission
reflecting beneficial ownership as of December 31, 2000. These shares are
beneficially owned by Wellington Management Company, LLP, in its capacity
as investment adviser to its clients. According to the Schedule 13G,
Wellington Management Company, LLP, has shared dispositive power with
respect to all such shares and shared voting power with respect to
1,110,700 of such shares. The Schedule 13G indicates that no client is
known to beneficially own more than 5% of the Company's Common Stock.
(6) Includes employee stock options exercisable within 60 days to purchase
shares as follows: John Edmondson, 122,000 shares; Richard E Everett,
308,962 shares; Michael Edwards, 24,560 shares; and Russell Solt, 20,000
shares.
(7) Includes stock options exercisable within 60 days to purchase shares
granted under the Nonemployee Director Stock Option Plan as follows: James
P. Curley, 40,483 shares; David McComas, 21,812 shares; Walter Scott,
33,483 shares; Henry Wendt, 19,812 shares; and William U. Westerfield 2,000
shares.
(8) Includes employee stock options exercisable within 60 days to purchase
62,000 shares. Also includes 8,640 shares held by Mr. Eisenberg's minor
children.
(9) Includes stock options exercisable within 60 days to purchase 682,112
shares.
13
SECTION 16(a) BENEFICIAL OWNERSHIP REPORTING COMPLIANCE
Section 16(a) of the Securities Exchange Act of 1934 requires the Company's
officers and directors, and persons who own more than ten percent of a
registered class of the Company's equity securities, to file reports of
ownership and changes in ownership with the Securities and Exchange Commission.
Officers, directors and greater than ten percent stockholders are required by
SEC regulation to furnish the Company with copies of all Section 16(a) forms
they file.
Based solely on its review of the copies of such forms received by it, or
written representations from certain reporting persons that no Forms 5 were
required for those persons, the Company believes that, during the period from
January 2, 2000 to December 30, 2000 all filing requirements applicable to its
officers, directors and greater than ten percent beneficial owners were complied
with.
AUDITORS
Deloitte & Touche LLP, independent certified public accountants, serve as
the Company's principal accountants. Representatives of Deloitte & Touche LLP
will be present at the Annual Meeting with the opportunity to make a statement
if they desire to do so and will be available to respond to appropriate
questions.
Principal Accounting Firm Fees
Aggregate fees billed to the Company for the year ended December 30, 2000,
by the Company's independent auditor and principal accounting firm, Deloitte &
Touche LLP, the member firms of Deloitte Touche Tohmatsu, and their respective
affiliates, are as follows:
Audit Fees $307,000
Financial Information Systems Design and Implementation Fees $ 0
All Other Fees(1) $505,000
(1) Includes fees for tax consulting, permitted internal audit outsourcing
and other non-audit services.
The Audit Committee has considered whether the provision of the services
covered under the captions "Financial Information Systems Design and
Implementation Fees" and "All Other Fees" above, if any, is compatible with
maintaining the principal accountant's independence.
OTHER MATTERS
As of the date of this Proxy Statement, there are no other matters that
management intends to present or has reason to believe others will present to
the meeting. If other matters properly come before the meeting, those who act as
proxies will vote in accordance with their judgment.
STOCKHOLDER PROPOSALS
If any stockholder intends to present a proposal for action at the
Company's 2002 Annual Meeting of Stockholders and wishes to have such proposal
set forth in management's proxy statement, such stockholder must forward the
proposal to the Company so that it is received on or before November 30, 2001.
Proposals should be addressed to the Company at 500 Westridge Drive,
Watsonville, California 95076-4100, Attention: Corporate Secretary.
The attached proxy card grants the proxy holders discretionary authority to
vote on any matter raised at the Annual Meeting. If a stockholder intends to
submit a proposal at the 2002 Annual Meeting of Stockholders of the Company,
which proposal is not intended to be included in the Company's proxy statement
and form of proxy relating to such meeting, the stockholder should give
appropriate notice no later than February 13, 2002. If a stockholder fails to
submit the proposal by such date, the Company will not be required to provide
any information about the nature of the proposal in its proxy statement and the
proxy holders will be allowed to use their discretionary voting authority if the
proposal is raised at the 2002 Annual Meeting of Stockholders of the Company.
COST OF SOLICITATION
All expenses in connection with the solicitation of this proxy, including
the charges of brokerage houses and other custodians, nominees or fiduciaries
for forwarding documents to stockholders, will be paid by the Company.
Dated: April 9, 2001.
By Order of the Board of Directors
Russell Solt, Secretary
14
Appendix A
AUDIT COMMITTEE CHARTER
I. Membership
The Audit Committee (the "Committee") of the Board of Directors (the
"Board") shall consist of at least three directors whose qualifications include
financial literacy, independence, and accounting or related financial management
expertise.
II. Purpose
The Committee serves as the representative of the Board for the general
oversight of Company affairs in the area of financial accounting and reporting
and the underlying internal control environment. Through its activities, the
Committee facilitates open communication among directors, outside auditors, the
internal auditor, if employed, or any third party engaged to carry out the
internal audit function, and management by meeting in private session regularly
with these parties.
III. Meetings
The Committee shall convene at least four times each year. It shall
endeavor to determine that auditing procedures and controls are adequate to
safeguard Company assets and to assess compliance with Company policies and
legal requirements. The Committee shall be given full access to the Company's
internal auditors, Board Chairman, Company executives and outside auditors.
IV. Responsibilities
1. Review and reassess at least annually the adequacy of this charter
and submit the charter for approval of the full board.
2. Select, evaluate and, where appropriate, replace the outside auditor,
who is ultimately accountable to the Committee and the Board.
3. Annually review and approve the proposed scope of each fiscal year's
internal and outside audit and the proposed audit fee of the outside
auditor at the beginning of each new fiscal year.
4. Review non-audit services and fees for such services provided by the
Company's outside auditor.
5. At, or shortly after the end of each fiscal year, review with the
outside auditors, the internal auditor, if employed, and Company
management, the audited financial statements and related opinion and
costs of the audit of that year. In conferring with the outside
auditor, the internal auditors and Company management, the Committee
shall consider the following:
a. Periodic written statements from the outside auditors
delineating all services between the auditors and the Company or
any other relationships that may adversely affect the
independence and objectivity of the auditors, as well as
recommending appropriate action to satisfy the Committee of the
outside auditors' independence.
b. The effectiveness of the audit and assurances that no
restrictions were placed on the scope or performance of the
examination.
c. The effectiveness and adequacy of the Company's internal
auditing plan and procedures, and quality of the control
environment.
d. Conducting open and frank discussions regarding the quality of
accounting principles and the consistency of their application
to the Company's financial statements.
6. Provide any recommendations, certifications and reports that may be
required by the NASDAQ or the SEC.
7. Review and discuss, as needed, interim financial reports with
management and the Company's outside auditors.
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PROXY
THIS PROXY IS SOLICITED ON BEHALF OF THE BOARD OF DIRECTORS
WEST MARINE, INC.
PROXY FOR ANNUAL MEETING OF STOCKHOLDERS MAY 10, 2001
The undersigned hereby appoints Randolph K. Repass, John Edmondson and
Richard E Everett, or any one of them, each with power of
substitution, as proxies of the undersigned, to attend the Annual
Meeting of Stockholders of WEST MARINE, INC. to be held at the office
of the Company, 500 Westridge Drive, Watsonville, California, on May
10, 2001, at 10:30 A.M., and any adjournment thereof, and to vote the
number of shares the undersigned would be entitled to vote if
personally present on the following:
(Continued, and to be marked, dated and signed, on the reverse side)
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(Continued from other side)
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This proxy will be voted as directed. In the absence of contrary directions, this proxy will be voted [X] Please mark
FOR the election of the directors listed below. your votes
as this
1. ELECTION OF DIRECTORS:
FOR all WITHHOLD
nominees listed authority to vote
(except as for all nominees
indicated) listed
[_] [_]
2. In their discretion, upon any and all such other matters as I plan to attend
may the meeting
properly come before the meeting or any adjournment [_]
thereof.
STOCKHOLDERS ARE URGED TO MARK, DATE, SIGN AND RETURN THIS PROXY
PROMPTLY IN THE ENVELOPE PROVIDED, WHICH REQUIRES NO POSTAGE IF
MAILED IN THE UNITED STATES.
Instruction: To withhold authority to vote for any individual nominee,
strike a line through that nominee's name in the list below.
Randolph K. Repass, John Edmondson, Richard E Everett,
Geoffrey A. Eisenberg, David McComas, Peter Roy,
Daniel J. Sweeney and William U. Westerfield
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Signature(s)___________________________________________________________________ Date ________________________
The signature should correspond exactly with the name appearing on the certificate evidencing your Common Stock. If
more than one name appears, all should sign. Joint owners should each sign personally.
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