DREW INDUSTRIES INCORPORATED
200 MAMARONECK AVENUE
WHITE PLAINS, NEW YORK 10601
---------------
NOTICE OF ANNUAL MEETING OF STOCKHOLDERS
TO BE HELD MAY 16, 2001
---------------
NOTICE IS HEREBY GIVEN that the Annual Meeting of Stockholders of DREW
INDUSTRIES INCORPORATED (the "Company") will be held at The Crescent Club, 17th
Floor, 200 Crescent Court, Dallas, Texas 75201 on May 16, 2001 at 9:30 A.M., for
the following purposes:
(1) To elect a Board of seven Directors;
(2) To ratify the selection of KPMG LLP as independent auditors for
the Company for the year ending December 31, 2001; and
(3) To transact such other business as may properly come before the
meeting or any adjournment or postponement thereof.
Holders of record of the Company's Common Stock at the close of business on
the 2nd day of April, 2001 shall be entitled to vote on all matters to be
considered at the meeting or any adjournment or postponement thereof.
A list of all stockholders entitled to vote at the meeting will be
available for inspection for the ten days prior to the meeting at the office of
the Company and will be available for inspection at the time of the meeting, at
the place thereof.
By Order of the Board of Directors
EDWARD W. ROSE, III
CHAIRMAN OF THE BOARD OF DIRECTORS
Dated: April 10, 2001
White Plains, N.Y.
- --------------------------------------------------------------------------------
NOTICE TO HOLDERS OF COMMON STOCK
IF YOU DO NOT EXPECT TO ATTEND THE MEETING,
PLEASE SIGN AND RETURN THE ENCLOSED PROXY SO THAT YOU WILL BE REPRESENTED. A
POST-PAID ENVELOPE IS ENCLOSED FOR YOUR CONVENIENCE.
- --------------------------------------------------------------------------------
DREW INDUSTRIES INCORPORATED
200 MAMARONECK AVENUE
WHITE PLAINS, NEW YORK 10601
---------------
PROXY STATEMENT
---------------
The accompanying Proxy is solicited by the Board of Directors of Drew
Industries Incorporated, a Delaware corporation (the "Company"), for use at the
Annual Meeting of Stockholders to be held at The Crescent Club, 17th Floor, 200
Crescent Court, Dallas, Texas 75201 on May 16, 2001 at 9:30 A.M., or any
adjournment or postponement thereof, at which holders of record of the Company's
Common Stock, par value $0.01 per share (the "Common Stock"), at the close of
business on April 2, 2001 shall be entitled to vote on all matters considered at
the meeting.
The cost of solicitation by the Company, including postage, printing and
handling, and the expenses incurred by brokerage firms, custodians, nominees and
fiduciaries in forwarding proxy material to beneficial owners will be borne by
the Company. The solicitation is to be made primarily by mail, but may be
supplemented by telephone calls, telegrams and personal solicitation. Management
may also use the services of directors and employees of the Company to solicit
Proxies, without additional compensation.
Each Proxy executed and returned by holders of the Common Stock may be
revoked at any time thereafter, except as to matters upon which, prior to such
revocation, a vote shall have been cast pursuant to the authority conferred by
such Proxy. A Proxy may be revoked by giving written notice of revocation to the
Secretary of the Company or to any of the other persons named as proxies, or by
giving a Proxy with a later date. The Proxies will be voted at the meeting for
the Directors set forth herein in the manner indicated (see "ELECTION OF
DIRECTORS"), and if no contrary instructions are indicated, in favor of the
other matters set forth herein; if specific instructions are indicated, the
Proxies will be voted in accordance therewith. This Statement and the form of
Proxy solicited from holders of the Common Stock are expected to be sent or
given to stockholders on or about April 10, 2001.
The Annual Report to Stockholders of the Company for the year ended
December 31, 2000 is being mailed herewith to each stockholder of record.
THE COMPANY'S ANNUAL REPORT ON FORM 10-K FOR THE YEAR ENDED DECEMBER 31,
2000, AS FILED WITH THE SECURITIES AND EXCHANGE COMMISSION (INCLUDING THE
CONSOLIDATED FINANCIAL STATEMENTS AND THE SCHEDULE THERETO) WILL BE FURNISHED TO
ANY STOCKHOLDER WITHOUT CHARGE UPON REQUEST TO THE COMPANY AT 200 MAMARONECK
AVENUE, WHITE PLAINS, NEW YORK 10601, TELEPHONE (914) 428-9098.
THE COMPANY
The Company was incorporated under the laws of Delaware on March 20, 1984.
The Company's principal executive and administrative offices are located at 200
Mamaroneck Avenue, White Plains, New York 10601; telephone number (914)
428-9098; e-mail: Drew@drewindustries.com.
VOTING SECURITIES
The Company had outstanding on the record date 9,656,429 shares of Common
Stock. Each holder of Common Stock is entitled to one vote for each share of
stock held.
PRINCIPAL HOLDERS OF VOTING SECURITIES
Set forth below is information with respect to each person known to the
Company on March 22, 2001 to be the beneficial owner of more than five percent
of any class of the Company's voting securities, which consists of Common Stock
only (including options):
AMOUNT AND
NATURE OF APPROXIMATE
NAME AND ADDRESS BENEFICIAL PERCENT OF
OF BENEFICIAL OWNER OWNERSHIP CLASS
------------------ ----------- ------------
Edward W. Rose, III(1) ............... 1,993,380(2) 18.9%
500 Crescent Court
Dallas, Texas 75201
L. Douglas Lippert(1) ................ 2,072,111(2) 19.6%
2375 Tamiami Trail
Suite 110
Naples, Florida 34103
FMR Corp. ............................ 900,000(3) 8.5%
82 Devonshire Street
Boston, Massachusetts 02108
- --------------
(1) The person named has sole voting and investment power with respect
to such shares.
(2) See "VOTING SECURITIES--Security Ownership of Management."
(3) As of December 31, 2000.
To the knowledge of the Company, other than persons acting as nominees or
custodians for various stock brokerage firms and banks, which persons do not
have beneficial ownership of the Common Stock, no other person owns of record or
beneficially more than five percent of the voting securities of the Company.
SECURITY OWNERSHIP OF MANAGEMENT
Set forth below is information with respect to beneficial ownership at
March 22, 2001 of the Common Stock (including options) by each Director and
nominee and by all Directors, nominees and Executive Officers of the Company as
a group.
AMOUNT AND
NATURE OF APPROXIMATE
NAME AND ADDRESS BENEFICIAL PERCENT OF
OF BENEFICIAL OWNER OWNERSHIP CLASS
------------------ ----------- ------------
Leigh J. Abrams(1) ..................... 289,290(2) 2.7%
200 Mamaroneck Avenue
White Plains, New York 10601
Edward W. Rose, III(1) ................. 1,993,380(3) 18.9%
500 Crescent Court
Dallas, Texas 75201
David L. Webster(1) .................... 272,840(4) 2.6%
4381 Green Oaks Blvd.
Arlington, Texas 76016
L. Douglas Lippert ..................... 2,072,111(5) 19.6%
2375 Tamiami Trail
Suite 110
Naples, Florida 34103
2
AMOUNT AND
NATURE OF APPROXIMATE
NAME AND ADDRESS BENEFICIAL PERCENT OF
OF BENEFICIAL OWNER OWNERSHIP CLASS
------------------ ----------- ------------
James F. Gero(1) ....................... 109,160(6) 1.0%
11900 North Anna Cade Road
Rockwall, Texas 75087
Gene H. Bishop(1) ...................... 118,600(7) 1.1%
1601 Elm Street, 47th Floor
Dallas, Texas 75201
J. Thomas Schieffer .................... 0 0
500 Crescent Court
Dallas, Texas 75201
All Directors, Nominees, and
Executive Officers as a
group (9 persons including
the above-named) ..................... 4,948,268(8) 46.8%
- ----------
(1) Pursuant to Rules 13-1 (f)(1)-(2) of Regulation 13-D of the General Rules
and Regulations under the Securities Exchange Act of 1934, as amended (the
"Exchange Act") on May 31, 1989, the persons indicated, together with
certain other persons, jointly filed a single Schedule 13-D Statement (as
amended) with respect to the securities listed in the foregoing table. Such
persons made the single, joint filing because they may be deemed to
constitute a group" within the meaning of Section 13(d)(3) of the Exchange
Act, although neither the fact of the filing nor anything contained therein
shall be deemed to be an admission by such persons that a group exists.
(2) Mr. Abrams has sole voting and investment power with respect to the shares
owned by him. Includes 8,004 shares of Common Stock held by Mr. Abrams as
Custodian under the New York Uniform Gifts to Minors Act for the benefit of
his children. Mr. Abrams disclaims any beneficial interest in the shares
held as Custodian. In January 1997 and November 1999, Mr. Abrams was
granted options pursuant to the Company's Stock Option Plan to purchase,
respectively, 10,000 shares of Common Stock at $12.125 per share, and
50,000 shares of Common Stock at $9.3125 per share. Although no part of
such options has been exercised, all shares subject to such options are
included in the above table as beneficially owned.
(3) Mr. Rose has sole voting and investment power with respect to the shares
owned by him. Includes 84,000 shares owned by each of Cardinal Investment
Company, Inc. Pension Plan and Cardinal Investment Company, Inc. Profit
Sharing Plan, of each of which Mr. Rose is Trustee. Also includes 100,700
shares owned by Cardinal Partners, L.P., of which Cardinal Investment
Company, Inc. is the general partner. Mr. Rose is the sole stockholder of
Cardinal Investment Company, Inc. Excludes 100,000 shares of Common Stock
held in trusts for the benefit of members of Mr. Rose's immediate family.
Mr. Rose's wife has sole voting and investment power with respect to an
additional 13,920 shares owned by her of record. Mr. Rose disclaims any
beneficial interest in such shares. As a member of the Stock Option
Committee, Mr. Rose was automatically awarded the following options each of
which is to purchase 5,000 shares of Common Stock: on December 31, 1996 at
$10.75 per share; on December 31, 1997 at $12.475 per share; on December
31, 1998 at $11.792 per share; on December 31, 1999 at $9.204 per share;
and on December 31, 2000 at $5.679 per share. Although no part of such
options has been exercised, all shares subject to such options are included
in the above table as beneficially owned.
(4) Mr. Webster has sole voting and investment power with respect to such
shares. In May 1997 and November 1999, Mr. Webster was granted options
pursuant to the Company's Stock Option Plan to purchase, respectively,
15,000 shares of Common Stock at $12.125 per share, and 50,000 shares
(FOOTNOTES CONTINUED ON NEXT PAGE)
3
(FOOTNOTES CONTINUED FROM PREVIOUS PAGE)
of Common Stock at $9.3125 per share. Although no part of such options has
been exercised, all shares subject to such options are included in the
above table as beneficially owned.
(5) Includes 614,721 shares held by L. Douglas Lippert as Trustee for trusts
for the benefit of members of Mr. Lippert's immediate family, over which
Mr. Lippert has sole voting and dispositive power. Mr. Lippert disclaims
beneficial ownership of such shares. Pursuant to Rules 13-1(f)(1)-(2) of
Regulation 13-D of the General Rules and Regulations under the Exchange
Act, on October 17, 1997, Mr. Lippert, together with certain other persons,
jointly filed a single Schedule 13-D Statement (as amended) with respect to
the securities listed in the foregoing table. Such persons made the single,
joint filing because they may be deemed to constitute a group" within the
meaning of Section 13(d)(3) of the Exchange Act, although neither the fact
of the filing nor anything contained therein shall be deemed to be an
admission by such persons that a group exists. In November 1999, Mr.
Lippert was granted an option pursuant to the Company's Stock Option Plan
to purchase 50,000 shares of Common Stock at $9.3125 per share. Although no
part of such option has been exercised, all shares subject to such option
are included in the above table as beneficially owned.
(6) Mr. Gero shares voting and investment power with respect to such shares
with his wife. As a member of the Stock Option Committee, Mr. Gero was
automatically awarded the following options each of which is to purchase
5,000 shares of Common Stock: on December 31, 1996 at $10.75 per share; on
December 31, 1997 at $12.475 per share; on December 31, 1998 at $11.792 per
share; on December 31, 1999 at $9.204 per share; and on December 31, 2000
at $5.679 per share. Although no part of such options has been exercised,
all shares subject to such options are included in the above table as
beneficially owned.
(7) Mr. Bishop as sole voting and investment power with respect to such shares.
As a member of the Stock Option Committee, Mr. Bishop was automatically
awarded the following options each of which is to purchase 5,000 shares of
Common Stock: on December 31, 1996 at $10.75 per share; on December 31,
1997 at $12.475 per share; on December 31, 1998 at $11.792 per share; on
December 31, 1999 at $9.204 per share; and on December 31, 2000 at $5.679
per share. Although no part of such options has been exercised, all shares
subject to such options are included in the above table as beneficially
owned.
(8) Includes 281,000 shares subject to options.
COMPLIANCE WITH SECTION 16(a) OF THE EXCHANGE ACT
Section 16(a) of the Exchange Act requires the Company's executive officers
and directors, and persons who beneficially own more than ten percent of the
Company's equity securities, to file reports of ownership and changes in
ownership with the Securities and Exchange Commission and the exchange on which
the securities are traded. Officers, directors and greater than ten-percent
shareholders are required by SEC regulation to furnish the Company with copies
of all Section 16(a) forms they file.
Based on its review of the copies of such forms received by it, the Company
believes that during 2000 all such filing requirements applicable to its
officers and directors (the Company not being aware of any ten percent holder
other than Edward W. Rose, III and L. Douglas Lippert, directors) were complied
with.
STOCK REPURCHASE
During 2000, pursuant to authorizations of its Board of Directors, the
Company repurchased 190,600 shares of its Common Stock in the open market at an
average price of $8.80 per share for an aggregate cost of $1.7 million. In
addition, pursuant to an Offer to Purchase, dated May 1, 2000, furnished to all
stockholders of the Company, the Company repurchased 1,449,425 shares of its
Common Stock at $8.00 per share for an aggregate of $11.8 million, including
costs.
4
I. ELECTION OF DIRECTORS
It is proposed to elect a Board of seven directors to serve until the next
annual election or until their successors are elected and qualify.
Unless contrary instructions are indicated, the persons named as proxies in
the form of Proxy solicited from holders of the Common Stock will vote for the
election of the nominees indicated below. All such nominees are presently
directors of the Company. If any such nominees should be unable or unwilling to
serve, the persons named as proxies will vote for such other person or persons
as may be proposed by Management. Management has no reason to believe that any
of the named nominees will be unable or unwilling to serve. Election of
directors by holders of the Common Stock will be by a plurality of the votes
cast at the meeting, in person or by proxy, by holders of the Common Stock
entitled to vote at the meeting.
The following table lists the current directors of the Company and the
nominees proposed by Management for election by the holders of the Common Stock,
all other positions and offices with the Company presently held by them and
their principal occupations, in each case as furnished by them to the Company.
NAME AND AGE DIRECTOR
OF NOMINEE POSITION SINCE
-------------- -------- --------
Leigh J. Abrams ................... President, Chief Executive
(Age 58) Officer and Director. 1984
Edward W. Rose, III ............... Chairman of the Board of
(Age 60) Directors. 1984
David L. Webster .................. President and Chief Executive Officer
(Age 65) of Kinro, Inc. and Director. 1984
L. Douglas Lippert ................ President and Chief Executive Officer
(Age 53) Lippert Components, Inc., Lippert
Tire & Axle, Inc. (formerly Shoals
Supply, Inc.) and Coil Clip, Inc. and
Director. 1997
James F. Gero ..................... Director. 1992
(Age 56)
Gene H. Bishop .................... Director. 1995
(Age 71)
J. Thomas Schieffer ............... Director. 2000
(Age 53)
LEIGHJ. ABRAMS, since July 1994, has also been President, Chief Executive
Officer and a Director of LBP, Inc. ("LBP"). See Summary Compensation Table,
footnote 1.
EDWARD W. ROSE, III, for more than the past five years, has been President
and sole stockholder of Cardinal Investment Company, Inc., an investment firm.
Mr. Rose also serves as a director of the following public companies: Liberte
Investors Inc., engaged in real estate loans and investments; and ACE Cash
Express, Inc., engaged in check cashing services. Since July 1994, Mr. Rose has
also been Chairman of the Board of LBP.
DAVID L. WEBSTER, since November 1980, has been President of Kinro, Inc., a
subsidiary of the Company ("Kinro"), and has been Chairman of Kinro since
November 1984. Mr. Webster also served as President and Chief Executive Officer
of Shoals Supply, Inc., now known as Lippert Tire & Axle, Inc., a subsidiary of
the Company from February 1996 until August 31, 1999.
L. DOUGLAS LIPPERT, since October 1997, has been President and Chief
Executive Officer of Lippert Components, Inc., a subsidiary of the Company, and
President of the predecessor of Lippert Components, Inc. since 1978. Mr. Lippert
has also been President of Coil Clip, Inc., a
5
subsidiary of the Company, since its acquisition in December 1998, and President
of Lippert Tire & Axle, Inc., since September 1, 1999.
JAMES F. GERO, since March 1992, has been Chairman and Chief Executive
Officer of Sierra Technologies, Inc., a manufacturer of defense systems
technologies, and a director of its affiliates. From July 1987 to October 1989,
Mr. Gero was Chairman and Chief Executive Officer of Varo, Inc., a manufacturer
of aerospace technology, and from 1985 to 1987, Mr. Gero was President and Chief
Executive Officer of Varo, Inc. Since May 1995, Mr. Gero has been Chairman of
Clearwire, Inc., a provider and servicer of high-speed wireless Internet access.
Mr. Gero also serves as a director of the following public company: Orthofix
International NV, an international supplier of orthopedic devices for bone
fixation and stimulation. Since July 1994, Mr. Gero has also been a director of
LBP.
GENE H. BISHOP, from March 1975 until July 1990, was Chief Executive
Officer of MCorp, a bank holding company, and from October 1990 to November
1991, was Vice Chairman and Chief Financial Officer of Lomas Financial
Corporation, a financial services company. From November 1991 until his
retirement in October 1994, Mr. Bishop served as Chairman and Chief Executive
Officer of Life Partners Group, Inc., a life insurance holding company. Mr.
Bishop also serves as a director of the following publicly-owned companies:
Liberte Investors Inc., engaged in real estate loans and investments, and
Southwest Airlines Co.
J. THOMAS SCHIEFFER, for more than the past five years has been President
and sole stockholder of J. Thomas Schieffer Management Company, engaged in the
management of financial assets and oil and gas properties, and President and
sole stockholder of Pablo Operating Company, engaged in the operation of oil and
gas properties. From January 1991 to April 1999, Mr. Schieffer was President of
the Texas Rangers Baseball Team. Mr. Schieffer is an attorney.
FREDRIC M. ZINN, not a nominee for election as a director, has been Chief
Financial Officer of the Company for more than the past five years, and
Executive Vice President of the Company since February 2001. Mr. Zinn has also
been Chief Financial Officer of LBP since July 1994. Mr. Zinn is a Certified
Public Accountant.
HARVEY J. KAPLAN, not a nominee for election as a director, has been
Secretary and Treasurer of the Company for more than the past five years, and
has also been Secretary and Treasurer of LBP since July 1994. Mr. Kaplan is a
Certified Public Accountant.
Directors of the Company serve until the Company's next annual meeting of
stockholders, and until their successors are elected and qualified. Executive
officers serve at the discretion of the Board of Directors. To the knowledge of
the Company, no executive officer or director is related by blood, marriage or
adoption to any other. Each of the nominees named above was elected to his
present term of office at the Annual Meeting of Stockholders held on May 17,
2000. During the year ended December 31, 2000, the Board of Directors held seven
meetings. All directors attended all meetings of the Board of Directors, except
that Messrs. Bishop, Webster and Lippert each missed one meeting.
6
-----------------------------
REPORT OF THE AUDIT COMMITTEE
-----------------------------
The Audit Committee of the Board of Directors (the "Committee") is
responsible for providing independent, objective oversight of the Company's
accounting functions and internal controls.
The Committee is composed of four independent directors and functions
pursuant to a written charter adopted by the Board of Directors on May 17, 2000
(Exhibit A attached to this Proxy Statement). The members of the Committee are
Edward W. Rose, III, James F. Gero, Gene H. Bishop and J. Thomas Schieffer. The
Committee held three meetings during the year ended December 31, 2000. The
Committee recommends to the Board of Directors, subject to stockholder
ratification, the selection of the Company's independent accountants.
Management is responsible for the Company's internal controls and the
financial reporting process. The independent accountants are responsible for
performing an independent audit of the Company's consolidated financial
statements in accordance with generally accepted auditing standards and to issue
a report thereon.
The Committee has met and held discussions with management and the
independent accountants. Management represented to the Committee that the
Company's consolidated financial statements were prepared in accordance with
generally accepted accounting principles, and the Committee has reviewed and
discussed the consolidated financial statements with management and the
independent accountants. The Committee discussed with the independent
accountants matters required to be discussed by Statement on Auditing Standards
No. 61 (Communication with Audit Committees).
The Company's independent accountants also provided to the Committee the
written disclosures required by Independence Standards Board Standard No. 1
(Independence Discussions with Audit Committees), and the Committee discussed
with the independent accountants that firm's independence.
The Committee considered whether non-audit services provided by the
independent accountants are compatible with maintaining the auditor's
independence. The Committee concluded that non-audit services provided by KPMG
LLP during the year ended December 31, 2000 were compatible with KPMG LLP's
independence.
The aggregate fees billed for professional services rendered by KPMG LLP
for the audit of the Company's annual financial statements for the year ended
December 31, 2000, and the reviews of the condensed financial statements
included in the Company's quarterly Reports on Form 10-Q for the year ended
December 31, 2000, were $253,000. The aggregate fees billed for all non-audit
services rendered by KPMG LLP during the year ended December 31, 2000, were
$75,000.
Based on the Committee's discussion with management and the independent
accountants and the Committee's review of the representation of management and
the report of the independent accountants to the Committee, the Committee
recommended that the Board of Directors include the audited consolidated
financial statements in the Company's Annual Report on Form 10-K for the year
ended December 31, 2000 filed with the Securities and Exchange Commission.
AUDIT COMMITTEE
Edward W. Rose, III
James F. Gero
Gene H. Bishop
J. Thomas Schieffer
7
OTHER COMMITTEES
The Company has a Stock Option Committee, consisting of Messrs. Rose, Gero,
Bishop and Schieffer to determine and designate employees and directors of the
Company who are to be granted options, the number of shares subject to options,
the nature and terms of the options to be granted, and to otherwise administer
the Stock Option Plan. See "ELECTION OF DIRECTORS--Executive Compensation." The
Stock Option Committee did not have any meetings during the year ended December
31, 2000.
The Company has a Compensation Committee of the Board of Directors
consisting of Messrs. Rose, Gero, Bishop and Schieffer. The functions of the
Compensation Committee are to develop compensation policies with respect to the
Company's executive officers based, in part, on performance-related criteria,
and to make recommendations to the Board of Directors regarding compensation of
executive officers in accordance with such policies. The Compensation Committee
held one meeting during the year ended December 31, 2000.
EXECUTIVE COMPENSATION
SUMMARY COMPENSATION
The following table sets forth the annual and long-term cash and noncash
compensation for each of the last three calendar years awarded to or earned by
the President and Chief Executive Officer of the Company and the Company's five
other most highly compensated executive officers (such six executive officers
collectively, the "named executive officers") during the year ended December 31,
2000.
SUMMARY COMPENSATION TABLE
LONG-TERM
ANNUAL COMPENSATION(1) COMPENSATION
---------------------------------- -----------------
NAME AND CALENDAR OTHER ANNUAL NUMBER OF STOCK ALL OTHER
PRINCIPAL POSITION YEAR SALARY BONUS(2) COMPENSATION OPTIONS AWARDED COMPENSATION
- ------------------ -------- ------- --------- -------------- ---------------- --------------
Leigh J. Abrams(3) .......... 2000 $300,000 $ 30,000 $ 7,766 $5,250
President and Chief 1999 300,000 404,775 5,675 50,000 5,000
Executive Officer 1998 300,000 323,930 5,639 5,000
David L. Webster(4) ......... 2000 $400,000 $ 829,000 $13,675 $5,250
President of Kinro, 1999 400,000 1,109,000 3,537 50,000 5,000
Inc 1998 400,000 1,088,200 2,603 5,000
L. Douglas Lippert(5) ....... 2000 $400,000 $ 0 $12,000 $7,398
President and Chief 1999 300,000 240,807 12,000 50,000 7,403
Executive Officer of 1998 300,000 0 12,000 5,875
Lippert Components,
Inc., Coil Clip, Inc.
and Lippert Tire &
Axle, Inc.
Edward W. Rose, III ......... 2000 $ 30,000 $48,226(6) 5,000
Chairman of the 1999 30,000 30,688(6) 5,000
Board of Directors 1998 30,000 29,150(6) 5,000
Fredric M. Zinn ............. 2000 $155,000 $ 131,398 $14,216 $5,250
Executive Vice President 1999 145,000 175,828 11,945 15,000 5,000
and Chief Financial 1998 135,000 155,344 10,237 5,000
Officer
Harvey J. Kaplan ............ 2000 $110,000 $ 98,296 $10,202 $5,250
Secretary and 1999 107,500 103,296 8,062 7,500 5,000
Treasurer 1998 107,500 90,296 7,823 5,000
(FOOTNOTES ON NEXT PAGE)
8
- ----------
(1) In connection with the July 29, 1994 spin-off of Leslie Building Products,
Inc. (now known as LBP, Inc.) by the Company (the "Spin-off"), the Company
and LBP entered into a Shared Services Agreement. Pursuant to the Shared
Services Agreement, following the Spin-off, the Company and LBP share
certain administrative functions and employee services, such as management
overview and planning, acquisition searches, tax preparation, financial
reporting, coordination of independent audit, stockholder relations, and
regulatory matters. The Company is reimbursed by LBP for such services,
which included services provided by Messrs. Abrams, Zinn and Kaplan. The
agreement was extended to December 31, 2001. For the year ended December
31, 2000, the Company was reimbursed $194,000 by LBP for such services.
(2) Messrs. Abrams, Webster, Rose, Zinn and Kaplan, receive payments pursuant
to a discretionary retirement bonus program. These bonuses must be used to
purchase specified tax deferred annuities and/or cash value life insurance.
For 2000, Mr. Abrams received $30,000, Mr. Webster received $50,000, Mr.
Rose received $30,000, Mr. Zinn received $21,398 and Mr. Kaplan received
$13,296 pursuant to the discretionary retirement bonus program.
(3) For 2000, 1999, and 1998, Mr. Abrams received incentive compensation equal
to 21U2% of the Company's income before income taxes and extraordinary
items, subject to certain adjustments, in excess of $13,575,000 in 2000 and
1999, and $12,975,000 in 1998. Based on this formula, for 2000, Mr. Abrams
was not entitled to incentive compensation. Effective January 1, 2001, Mr.
Abrams' annual salary was increased to $400,000.
(4) Effective September 1, 1999, Kinro extended and amended its employment
agreement with Mr. Webster which provides for Mr. Webster's employment
through December 31, 2004. Commencing January 1, 1999, in addition to
annual base salary of $400,000, Mr. Webster will receive (i) for the year
ending December 31, 1999 (A) 7.3% of the amount by which the aggregate
earnings before interest and taxes (without deduction for costs of
corporated administration or amortization of goodwill) ("Operating Profit")
of Kinro and Shoals (now known as Lippert Tire & Axle, Inc.) for the eight
months ended August 31, 1999 exceeds $7,237,000, plus (B) 7.3% of the
amount by which the Operating Profit of Kinro for the four months ended
December 31, 1999 exceeds $1,946,000; (ii) for the year ending December 31,
2000, 7.3% of the amount by which the Operating Profit of Kinro exceeds
$5,837,000; and (iii) for each year commencing with the year ending
December 31, 2001 and terminating on December 31, 2004, 5% of the amount by
which the Operating Profit of Kinro exceeds $5,837,000.
(5) On October 7, 1997, Mr. Lippert entered into an Employment and
Non-Competition Agreement with Lippert Components, Inc. providing for Mr.
Lippert to serve, through December 31, 2003, as President and Chief
Executive Officer of Lippert Components, Inc. Mr. Lippert receives annual
salary of $400,000 plus, subject to certain conditions, performance-based
incentive compensation equal to 5% of the excess of operating profits of
Lippert Components, Inc. and Coil Clip, Inc. (as defined in the Agreement)
over $10.1 million. For 2000, Mr. Lippert received no incentive bonus.
(6) See "ELECTION OF DIRECTORS -- Compensation of Directors."
STOCK OPTION PLAN
On June 13, 1995, stockholders approved the amended and restated Drew
Industries Incorporated Stock Option Plan, which was amended and restated on
June 1, 1999 (the "Plan").
Under the Plan, since 1995 the Stock Option Committee has granted
non-qualified options to purchase 1,110,140 shares of Common Stock, and is
authorized to grant options to purchase up to an additional 276,166 shares. The
276,166 shares available for grant have been allocated 40,000 shares to
Non-Employee Directors and members of the Committee and 236,166 shares to
eligible employees. No grantee, whether or not now a participant in the Plan,
can be granted options to purchase more than an aggregate of 50,000 shares under
the Plan subsequent to June 1, 1999. All options granted to date are
non-qualified options.
9
The Stock Option Committee has sole and complete authority to determine the
individuals eligible to receive stock options under the Plan, and to determine
the number of stock options to be granted to eligible individuals, as well as
the terms and conditions under which grants will be made (including limitations,
restrictions or prohibitions upon the exercise of stock options), except that
Non-Employee Directors are not eligible for incentive stock options (ISOs"). The
Stock Option Committee determines the period for which each stock option may be
exercisable, but in no event may a stock option be exercisable more than 10
years from the date of grant thereof. The number of shares available under the
Plan, and the exercise price of options granted under the Plan, are subject to
adjustments that may be made by the Stock Option Committee to reflect stock
splits, stock dividends, recapitalizations, mergers, or other major corporate
action.
The exercise price for options granted under the Plan is determined by the
Stock Option Committee in its sole discretion, provided that the exercise price
is at least equal to 100% of the fair market value of the Common Stock subject
to such option on the date of grant. The exercise price may be paid in cash or
in shares of Common Stock that have been held at least six months. Options
granted under the Plan become exercisable in annual installments determined by
the Stock Option Committee and may be subject to performance criteria. An ISO
may not be granted to an individual who is treated as a 10% Shareholder" of the
Company under Section 422 of the Internal Revenue Code of 1986, as amended,
unless the exercise price is 110% of fair market value on the date of grant and
the ISO is exercisable for a period not longer than five years from the date of
grant.
The Board of Directors is authorized to terminate, suspend or amend the
Plan; provided that the amendment or termination cannot affect the validity of
any then outstanding stock option previously granted under the Plan, and
provided further that the Board of Directors cannot without stockholder
approval: (a) increase the maximum number of shares covered by the Plan or
change the class of employees eligible to receive stock options; (b) reduce the
option price below the fair market value of the Common Stock on the date of the
grant of such option; or (c) extend beyond l0 years from the date of the grant
the period within which an option may be exercised. The Plan will terminate on
December 31, 2007 and no option may be granted after such termination date.
Options granted prior to the termination date may be exercised in accordance
with their terms beyond the termination date.
Each member of the Stock Option Committee is automatically awarded an
option ("Formula Option") to purchase 5,000 shares of Common Stock on the
December 31st of each year in which such Stock Option Committee member has
served not less than twelve consecutive months as a Director of the Company.
Such Formula Options vest immediately and are exercisable during the five-year
period following the date of grant. The purchase price of the Common Stock
subject to the Formula Options is not less than 100% of the fair market value
(as defined in the Plan) of the Common Stock on the date such Formula Option is
granted, subject to adjustment as provided in the Plan.
OPTION GRANTS IN 2000
The following table summarizes stock options granted during 2000 to the named
executive officers.
POTENTIAL REALIZABLE
VALUE AT ASSUMED
ANNUAL RATES OF PRICE
APPRECIATION FOR
INDIVIDUAL GRANTS OPTION TERM
------------------------------------------------------ ----------------------
NUMBER OF % OF TOTAL
SHARES OPTIONS
UNDERLYING GRANTED TO
OPTIONS EMPLOYEES EXERCISE EXPIRATION
NAME GRANTED IN 2000 PRICE DATE 5% 10%
------ ---------- ---------- -------- ----------- --- ----
Edward W. Rose, III ..... 5,000(1) 33.3% $ 5.679 12/31/05 $ 8,095 $ 17,335
- --------------------
(1) Represents a Formula Option.
10
YEAR-END OPTION VALUES
The following table presents the value of unexercised options held by the
named executive officers at December 31, 2000.
NUMBER OF VALUE OF UNEXERCISED
SECURITIES UNDERLYING IN-THE-MONEY
UNEXERCISED OPTIONS AT OPTIONS AT
DECEMBER 31, 2000 DECEMBER 31, 2000(1)
EXERCISABLE (E) EXERCISABLE (E)
NAME UNEXERCISABLE (U) UNEXERCISABLE (U)
----- ---------------------- ---------------------
Leigh J. Abrams ........... 16,000(E) $ 0(E)
44,000(U) $ 0(U)
David L. Webster .......... 19,000(E) $ 0(E)
46,000(U) $ 0(U)
L. Douglas Lippert......... 10,000(E) $ 0(E)
40,000(U) $ 0(U)
Edward W. Rose, III........ 25,000(E) $355(E)
Fredric M. Zinn ........... 6,000(E) $ 0(E)
14,000(U) $ 0(U)
Harvey J. Kaplan .......... 3,600(E) $ 0(E)
7,400(U) $ 0(U)
- -----------
(1) Market value of Common Stock at December 31, 2000 ($5.75) minus the
exercise price.
COMPENSATION OF DIRECTORS
Directors' fees were increased effective July 1, 2001. Edward W. Rose, III,
Chairman of the Board of Directors, receives an annual director's fee of
$48,000, payable $4,000 per month, plus $2,000 for attendance at each meeting of
the Board of Directors and $1,000 for attendance at each Committee meeting. In
2000, Mr. Rose received a $30,000 payment pursuant to a discretionary retirement
bonus program intended to provide retirement income. Messrs. James F. Gero and
Gene H. Bishop each receive an annual director's fee of $18,000, payable $1,500
per month, plus $1,000 for attendance at each meeting of the Board of Directors
and $500 for attendance at each Committee meeting.
EMPLOYMENT CONTRACTS
See footnotes 4 and 5 to the Summary Compensation Table for a description
of the employment agreements between (i) Kinro, a subsidiary of the Company, and
David L. Webster, President and Chief Executive Officer of Kinro and a director
of the Company, and (ii) Lippert Components, Inc., a subsidiary of the Company,
and L. Douglas Lippert, President and Chief Executive Officer of Lippert
Components, Inc., Lippert Tire & Axle, Inc. and Coil Clip, Inc., and a director
of the Company.
COMPENSATION COMMITTEE INTERLOCKS AND INSIDER PARTICIPATION
No executive officer of the Company serves on the Compensation Committee,
and there are no "interlocks," as defined by the Securities and Exchange
Commission. 11
------------------------------------
REPORT OF THE COMPENSATION COMMITTEE
------------------------------------
COMPENSATION POLICY
The Compensation Committee of the Board of Directors (the "Committee")
consists of four non-employee directors, Edward W. Rose, III, James F. Gero,
Gene H. Bishop and J. Thomas Schieffer. The Committee has the responsibility of
developing the policies which govern compensation for executive officers, and
making recommendations to the Board of Directors regarding compensation of
executive officers in accordance with such policies.
The Company's executive compensation policy is designed to enable the
Company to attract, motivate and retain senior management by providing a
competitive compensation opportunity based significantly on performance. The
objective is to provide fair and equitable compensation to senior management in
a way that rewards management for reaching and exceeding objectives. The
compensation policy links a significant portion of executive compensation to the
Company's performance, recognizes individual contribution as well as overall
business results, and aligns executive and stockholder interests. The primary
components of the Company's executive compensation are base salary,
performance-related incentive compensation, stock options and discretionary
bonuses. While the components of compensation are considered separately in this
report, the Committee takes into account the full compensation package provided
by the Company to each of its executives, including pension benefits, severance
obligations, insurance and other benefits.
Each year the Committee will review the Company's compensation policy
utilizing both internal and external sources of information and analysis
relating to corporate performance, total return to stockholders of comparable
companies, and compensation afforded to executives by competitors of the
Company. If appropriate, changes will be recommended.
COMPENSATION OF THE CHIEF EXECUTIVE OFFICER IN 2000
The compensation policy applied by the Company in establishing the
compensation for Leigh J. Abrams, the Company's President and Chief Executive
Officer, is essentially the same as for other senior executives of the
Company--to provide a competitive compensation opportunity that rewards
performance and recognizes individual contribution.
For 2000, Mr. Abrams received base compensation of $300,000. For 2000, Mr.
Abrams was entitled to receive incentive compensation equal to 2 1/2% of the
Company's income before income taxes and extraordinary items, subject to certain
adjustments, in excess of $13,575,000. No incentive compensation was earned by
Mr. Abrams for 2000 because the Company's income before income taxes and
extraordinary items did not exceed $13,575,000. Mr. Abrams receives medical and
life insurance, and certain other benefits. In 2000, Mr. Abrams was also awarded
an additional payment of $30,000 pursuant to a discretionary retirement bonus
program intended to provide retirement income. This bonus must be used to
purchase specified tax deferred annuities or cash value life insurance
contracts. Effective January 1, 2001, Mr. Abrams' annual salary was increased to
$400,000.
COMPENSATION OF EXECUTIVE OFFICERS IN 2000
As with the Chief Executive Officer, compensation of other executive
officers is intended to reward performance and recognize individual
contribution. Accordingly, the chief executive officers of the Company's
subsidiaries receive compensation based upon the results of operations of such
subsidiaries.
On May 17, 2000, effective as of September 1, 1999, the stockholders of the
Company approved the adoption of a performance-based incentive compensation plan
applicable to David L. Webster, President of Kinro.
For calendar 2000, Mr. Webster received base salary of $400,000. In
addition, for 2000 Mr. Webster was entitled to receive 7.3% of the amount by
which the Operating Profit of Kinro exceeds $5,837,000. Such performance-based
incentive compensation was $779,000. For 2000, Mr. Webster
12
also received a payment of $50,000 pursuant to a discretionary retirement bonus
program intended to provide retirement income. This bonus must be used to
purchase specified tax deferred annuities or cash value life insurance
contracts.
On October 7, 1997, L. Douglas Lippert entered into an Employment and
Non-Competition Agreement with Lippert Components, Inc. providing for Mr.
Lippert to serve as President and Chief Executive Officer of Lippert Components,
Inc. Effective January 1, 2000, the Agreement was extended to December 2003. For
2000, Mr. Lippert received a salary of $400,000. Mr. Lippert is also entitled to
receive, subject to certain conditions, performance-based incentive compensation
equal to 5% of the excess of operating profits of Lippert Components, Inc. and
Coil Clip, Inc. (as defined in the Agreement) over $10.1 million. For 2000, Mr.
Lippert did not receive incentive compensation because the operating profits of
Lippert Components, Inc. and Coil Clip, Inc. did not exceed $10.1 million.
Other Executive Officers of the Company and its subsidiaries receive
bonuses based upon their respective levels of organizational responsibility and
the performance of the Company or the subsidiary by which they are employed.
STOCK OPTIONS
The Company's Stock Option Plan provides for the grant of options to
employees of the Company and its subsidiaries, and to directors of the Company,
to purchase the Company's Common Stock. See "Election of Directors--Stock Option
Plan." A Stock Option Committee consisting of Edward W. Rose, III, James F.
Gero, Gene H. Bishop and J. Thomas Schieffer administers the Stock Option Plan
and determines and designates employees and directors who are to be granted
options. The Stock Option Plan provides for automatic awards of options to
members of the Stock Option Committee under certain circumstances.
Because all options which have been granted under the Stock Option Plan
have been granted at fair market value, any value which is ultimately realized
by Executive Officers through stock options is based entirely on the Company's
performance, as perceived by investors in the Company's Common Stock who
establish the price for the Common Stock on the open market.
BENEFITS
The Company maintains certain broad-based employee benefit plans in which
Executive Officers participate, including an employee retirement savings plan
(401(k) Plan) and other retirement, life, disability and health insurance plans.
The Company also provides an automobile or automobile allowance to its Executive
Officers. The incremental cost to the Company of these benefits is less than 10%
of the Executive Officers' 2000 base salaries.
CONCLUSION
A significant portion of the Company's executive compensation is linked
directly to individual performance and Company earnings. The Committee intends
to continue to determine compensation based upon these factors.
COMPENSATION COMMITTEE
Edward W. Rose, III
James F. Gero
Gene H. Bishop
J. Thomas Schieffer
13
EMPLOYEE STOCK PURCHASE PLAN
A total of 500,000 shares of Common Stock of the Company may be made
available for purchase by regular full-time employees of the Company under the
1995 Employee Stock Purchase Plan. No shares have been made available for
purchase under the Stock Purchase Plan.
COMPARATIVE STOCK PERFORMANCE
The following graph compares, for the last five calendar years, the
cumulative stockholder return on the Common Stock of the Company with the
cumulative return on the common stocks of the companies included in the Russell
2000 Index and on the common stocks of a representative peer group of companies
engaged in similar businesses as the Company.
The graph assumes investment of $100 on December 31, 1995 in the Company's
Common Stock, the Russell 2000 Index, and the common stocks of the peer group
companies, and assumes that any dividends were reinvested.
COMPARISON OF 5 YEAR CUMULATIVE TOTAL RETURN*
AMONG DREW INDUSTRIES INCORPORATED, THE RUSSELL 2000 INDEX
AND A PEER GROUP
[REPRESENTATION OF LINE GRAPH IN PRINTED PIECE.]
DREW
INDUSTRIES
INCORPORATED RUSSELL 2000 PEER GROUP
------------ ------------ ----------
12/95 100 100 100
12/96 157.14 116.49 113.17
12/97 182.14 142.55 141.04
12/98 166.07 138.92 157.07
12/99 128.57 168.45 106.45
12/00 82.14 163.36 87.32
* $100 INVESTED ON 12/31/95 IN STOCK OR INDEX-
INCLUDING REINVESTMENT OF DIVIDENDS.
FISCAL YEAR ENDING DECEMBER 31.
INDEMNIFICATION
Section 145 of the Delaware General Corporation Law empowers a domestic
corporation to indemnify any of its officers, directors, employees or agents
against expenses, including reasonable attorney's fees, judgments, fines and
amounts paid in settlement which were actually and reasonably incurred by such
person in connection with any action, suit or similar proceeding brought against
them because of their status as officers, directors, employees or agents of the
Company if such
14
person acted in good faith and in a manner such person reasonably believed to be
in or not opposed to the best interests of the Company. If the claim was brought
against any such person by or in the right of the Company, the Company may
indemnify such person for such expenses if such person acted in good faith and
in a manner reasonably believed by such person to be in or not opposed to the
best interests of the Company, except no indemnity shall be paid if such person
shall be adjudged to be liable for negligence or misconduct unless a court of
competent jurisdiction, upon application, nevertheless permits such indemnity
(to all or part of such expenses) in view of all the circumstances.
The Company's Restated Certificate of Incorporation provides that the
Company may indemnify its officers, directors, employees or agents to the full
extent permitted by Section 145 of the Delaware General Corporation Law.
Accordingly, no director of the Company is liable to the Company or its
stockholders for monetary damages for breach of fiduciary duty as a director,
except for liability (i) for any breach of the director's duty of loyalty to the
corporation or its stockholders, (ii) for acts or omissions not in good faith or
which involve intentional misconduct or a knowing violation of law, (iii) under
Section 174 of the Delaware General Corporation Law, or (iv) for any transaction
from which the director derived an improper personal benefit.
II. APPOINTMENT OF AUDITORS
It is proposed that the stockholders ratify the appointment by the Board of
Directors of KPMG LLP as independent auditors for the purpose of auditing and
reporting upon the consolidated financial statements of the Company for the year
ending December 31, 2001. It is expected that a representative of that firm will
be present at the Annual Meeting of Stockholders to be held on May 16, 2001 and
will be afforded the opportunity to make a statement and respond to appropriate
questions from stockholders present at the meeting.
Management recommends that you vote FOR ratification of the appointment of
KPMG LLP as independent auditors for the year ending December 31, 2001.
III. TRANSACTION OF OTHER BUSINESS
As of the date of this Proxy Statement, the only business which Management
intends to present or knows that others will present at the meeting is that set
forth herein. If any other matter or matters are properly brought before the
meeting, or any adjournment or postponement thereof, it is the intention of the
persons named in the form of Proxy solicited from holders of the Common Stock to
vote the Proxy on such matters in accordance with their judgment.
STOCKHOLDER PROPOSALS
All proposals which stockholders of the Company desire to have presented at
the Annual Meeting of Stockholders to be held in May 2002 must be received by
the Company at its principal executive offices on or before February 1, 2002.
By Order of the Board of Directors
EDWARD W. ROSE, III
CHAIRMAN OF THE BOARD OF DIRECTORS
April 10, 2001
15
EXHIBIT A
DREW INDUSTRIES INCORPORATED
CHARTER OF THE AUDIT COMMITTEE OF THE BOARD OF DIRECTORS
I. AUDIT COMMITTEE PURPOSE
The Audit Committee is appointed by the Board of Directors to assist the
Board of Directors in fulfilling its oversight responsibilities. The Audit
Committee's primary duties and responsibilities are to:
1. Monitor the integrity of the Company's financial reporting process and
systems of internal controls regarding finance, accounting, and legal
compliance.
2. Monitor the independence and performance of the Company's independent
auditors.
3. Provide an avenue of communication among the independent auditors,
management, and the Board of Directors.
The Audit Committee has the authority to conduct any investigation
appropriate to fulfilling its responsibilities, and it has direct access to the
independent auditors as well as anyone in the organization. The Audit Committee
has the ability to retain, at the Company's expense, special legal, accounting,
or other consultants or experts it deems necessary in the performance of its
duties.
II. AUDIT COMMITTEE COMPOSITION AND MEETINGS
Audit Committee members shall meet the requirements of the American Stock
Exchange, or any other national securities exchange on which the Company's stock
is listed. The Audit Committee shall be comprised of from three to five
directors as determined by the Board of Directors, each of whom shall be
independent (as determined in accordance with the rules of the American Stock
Exchange or such other exchange) nonexecutive directors, free from any
relationship that, in the opinion of the Board, would interfere with the
exercise of his or her independent judgment. All members of the Committee shall
have a basic understanding of finance and accounting and be able to read and
understand fundamental financial statements, and at least one member of the
Committee shall have accounting or related financial management expertise.
Audit Committee members shall be appointed by the Board of Directors. The
members of the Committee may designate a Chair by majority vote of the Committee
membership.
The Committee shall meet at least four times annually, or more frequently
as circumstances dictate. The Audit Committee Chair shall prepare and/or approve
an agenda in advance of each meeting. The Committee should meet privately in
executive session at least annually with management, the independent auditors,
and as a committee to discuss any matters that the Committee or each of these
groups believe should be discussed. In addition, the Committee, or at least its
Chair, should communicate with management and, when deemed necessary, the
independent auditors quarterly to review the Company's financial statements and
significant findings based upon the auditors limited review procedures.
III. AUDIT COMMITTEE RESPONSIBILITIES AND DUTIES
REVIEW PROCEDURES
1. Review and reassess the adequacy of this Charter at least annually. Submit
the charter to the Board of Directors for approval and have the document
published at least every three years in accordance with regulations of the
Securities and Exchange Commission.
2. Review the Company's annual audited financial statements prior to filing or
distribution. Review should include discussion with management and
independent auditors of significant issues regarding accounting principles,
practices, and judgments.
3. In consultation with the management and the independent auditors, consider
the integrity of the Company's financial reporting processes and controls.
Discuss significant financial risk exposures and the steps management has
taken to monitor,
16
control, and report such exposures. Review significant findings prepared by
the independent auditors together with management's responses, including
the status of previous recommendations.
4. Review with financial management and, when deemed necessary, the
independent auditors the Company's quarterly financial results prior to the
release of earnings and/or the Company's quarterly financial statements
prior to filing or distribution. Discuss any significant changes to the
Company's accounting principles and any items required to be communicated
by the independent auditors in accordance with SAS 61. The Chair of the
Committee may represent the entire Audit Committee for purposes of this
review.
INDEPENDENT AUDITORS
5. The independent auditors are ultimately accountable to the Audit Committee
and the Board of Directors. The Audit Committee shall review the
independence and performance of the auditors and annually recommend to the
Board of Directors the appointment of the independent auditors or approve
any discharge of auditors when circumstances warrant.
6. Approve the fees and other significant compensation to be paid to the
independent auditors.
7. On an annual basis, the Committee should review and discuss with the
independent auditors all significant relationships they have with the
Company that could impair the auditors' independence.
8. Review the independent auditors audit plan and engagement letter; discuss
scope, staffing, locations, reliance upon management, and general audit
approach.
9. Prior to releasing the year-end earnings, discuss the results of the audit
with the independent auditors. Discuss certain matters required to be
communicated to audit committees in accordance with AICPA SAS 61.
LEGAL COMPLIANCE
10. On at least an annual basis, review with the Company's counsel, any legal
matters that could have a significant impact on the organization's
financial statements, the Company's compliance with applicable laws and
regulations, and inquiries received from regulators or governmental
agencies, including corporate securities trading policies.
OTHER AUDIT COMMITTEE RESPONSIBILITIES
11. Annually prepare a report to shareholders as required by the Securities and
Exchange Commission. The report should be included in the Company's annual
proxy statement.
12. Perform any other activities consistent with this Charter, the Company's
by-laws, and governing law, as the Committee or the Board of Directors
deems necessary or appropriate.
13. Maintain minutes of meetings and periodically report to the Board of
Directors on significant results of the foregoing activities.
14. Establish, review, and update periodically a Code of Ethical Conduct and
ensure that management has established a system to enforce this Code.
15. Review financial and accounting personnel succession planning within the
Company.
16. Annually review policies and procedures as well as audit results associated
with directors' and officers expense accounts and perquisites. Annually
review a summary of director and officers' related party transactions and
potential conflicts of interest.
17