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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 pursuant to Rule 14a-11(c) or Rule 14a-12
X-RITE, INCORPORATED
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(Name of Registrant as Specified in Its Charter)
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(Name of Person(s) Filing Proxy Statement, if other than the Registrant)
Payment of filing fee (Check the appropriate box):
[X] No fee required.
[ ] Fee computed on table below per Exchange Act Rules 14a-6(i)(4) and
0-11.
(1) Title of each class of securities to which transaction applies:
- --------------------------------------------------------------------------------
(2) Aggregate number of securities to which transaction applies:
- --------------------------------------------------------------------------------
(3) Per unit price or other underlying value of transaction computed
pursuant to Exchange Act Rule 0-11 (Set forth the amount on which the filing fee
is calculated and state how it was determined):
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(4) Proposed maximum aggregate value of transaction:
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(5) Total fee paid:
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[ ] Fee paid previously with preliminary materials.
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[ ] Check box if any part of the fee is offset as provided by Exchange Act
Rule 0-11(a)(2) and identify the filing for which the offsetting fee was paid
previously. Identify the previous filing by registration statement number, or
the form or schedule and the date of its filing.
(1) Amount previously paid:
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(2) Form, schedule or registration statement no.:
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(3) Filing party:
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(4) Date filed:
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X-RITE, INCORPORATED
3100 44TH STREET, S.W.
GRANDVILLE, MICHIGAN 49418
NOTICE OF ANNUAL MEETING TO BE HELD MAY 21, 2001
The Annual Meeting of Shareholders of X-Rite, Incorporated will be held at
the BYRON CENTER HIGH SCHOOL, VAN SINGEL FINE ARTS CENTER, 8500 BURLINGAME,
S.W., BYRON CENTER, MICHIGAN, on Monday, May 21, 2001, at 4:30 p.m., for the
following purposes:
1. To elect four directors as set forth in the accompanying Proxy
Statement.
2. To transact any other business that may properly come before the
meeting.
Shareholders of record as of the close of business on March 30, 2001, are
entitled to notice of, and to vote at the meeting. Whether or not you expect to
be present at this meeting, you are requested to sign, date, and promptly return
the accompanying Proxy in the enclosed, self-addressed envelope. If you attend
the meeting and wish to vote in person, you may do so even though you have
submitted a Proxy.
By Order of the Board of Directors
DUANE F. KLUTING
Secretary
April 9, 2001
Grandville, Michigan
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X-RITE, INCORPORATED
3100 44TH STREET, S.W.
GRANDVILLE, MICHIGAN 49418
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PROXY STATEMENT
APRIL 9, 2001
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SOLICITATION OF PROXIES
This Proxy Statement is furnished to the shareholders of X-Rite,
Incorporated on or about April 9, 2001, in connection with the solicitation by
the Board of Directors of the Company of Proxies to be used at the Annual
Meeting of Shareholders. The meeting will be held on Monday, May 21, 2001, at
4:30 p.m. at the Van Singel Fine Arts Center, 8500 Burlingame, S.W., Byron
Center, Michigan.
Each shareholder, as an owner of the Company, is entitled to vote on
matters scheduled to come before the Annual Meeting. The use of a Proxy allows a
shareholder of the Company to be represented at the Annual Meeting if he or she
is unable to attend the meeting in person. The Proxy Card accompanying this
Proxy Statement is to be used for such purpose.
If the enclosed Proxy Card is properly executed and returned, the shares
represented by the Proxy will be voted at the Annual Meeting of Shareholders or
at any adjournment of that meeting. Where shareholders specify a choice, the
Proxy will be voted as specified. If no choice is specified, the shares
represented by the Proxy will be voted for the election of the directors listed
as nominees named in the Proxy, and at the discretion of the Proxy voters on any
other matters voted upon at the meeting. A Proxy may be revoked prior to its
exercise by (1) delivering a written notice of revocation to the Secretary of
the Company, (2) executing a subsequent Proxy, or (3) attending the meeting and
voting in person.
The cost of the solicitation of Proxies will be borne by the Company. In
addition to the use of the mails, Proxies may be solicited personally or by
telephone or facsimile by a few regular employees of the Company without
additional compensation. The Company has retained D.F. King & Co., Inc., to aid
in the solicitation of proxies at an estimated cost of $4,800, plus expenses. In
addition, brokers, nominees, custodians, and other fiduciaries will be
reimbursed by the Company for their expenses in connection with sending proxy
materials to beneficial owners and obtaining their Proxies.
VOTING SECURITIES AND RECORD DATE
March 30, 2001, has been fixed by the Board of Directors as the record date
for determining shareholders entitled to vote at the Annual Meeting. On that
date 21,393,502 shares of the Company's common stock, par value $.10 per share,
were issued and outstanding. Shareholders are entitled to one vote for each
share of the Company's common stock registered in their names at the close of
business on the record date.
ELECTION OF DIRECTORS
The Company's Articles of Incorporation specify that the Board of Directors
shall consist of at least six (6), but not more than nine (9) members, with the
exact number to be fixed by the Board from time to time. The Board has fixed the
number of directors at nine (9). The Articles also specify that the Board of
Directors be divided into three classes, with the directors of the classes to
hold office for staggered terms of three (3) years each. Dr. Peter M. Banks, Ted
Thompson, and Ronald A. VandenBerg have been nominated for election to
three-year terms expiring in 2004. John E. Utley, who was appointed by the Board
of Directors during 2000 has been nominated to a one year term expiring in 2002.
Unless otherwise specifically directed by a marking on a shareholder's
Proxy, the persons named as proxy voters in the accompanying Proxy will vote for
the nominees described below. In the event any of these nominees is no longer a
candidate at the time of the Annual Meeting of Shareholders (a situation which
is not now anticipated), the Board of Directors may designate a substitute
nominee, in which case the accompanying
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Proxy will be voted for the substituted nominee. Proxies cannot be voted for a
greater number of persons than the number of nominees named.
Directors are elected by a plurality of the votes cast by shareholders.
Therefore, the nominees receiving the most affirmative votes cast will be
elected, irrespective of the number of votes received. Shares not voted at the
meeting, whether by abstention, broker nonvote, or otherwise will not have a
bearing on the outcome of the election. Votes will be counted by Inspectors of
Election appointed by the presiding officer at the stockholder meeting.
The Board of Directors recommends a vote FOR the election of all the
persons nominated by the Board.
The content of the following table relating to age and business experience
is based upon information furnished to the Company by the nominees and
directors.
NAMES, (AGES), POSITIONS AND BACKGROUNDS
OF NOMINEES AND DIRECTORS SERVICE AS A DIRECTOR
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Nominees for Terms to Expire in 2004
Dr. Peter M. Banks (63) retired in 2000 from ERIM Director since 1998
International, Inc., a high technology research and Member of the Nominating &
development defense systems company headquartered in Ann Resource Committee
Arbor, Michigan, following it's purchase by the Veridian
Corporation of Washington, D.C. He continues with Veridian
as a part-time consultant. From 1995 to 1999 he held the
position of President, Chief Executive Officer and Chairman
of the Board of ERIM International, Inc. Prior to 1995, Dr.
Banks served as the Dean of the College of Engineering at
the University of Michigan. He is a manager and member of XR
Ventures, LLC. He serves as a director of Tecumseh Products,
Inc., as well as of several privately held companies.
Ted Thompson (71) is the Chairman of the Board of X-Rite, Director since 1958
Incorporated. In 2000, he retired as CEO of X-Rite, Chairman of the Board
Incorporated, a position he held for more than five years. of Directors
Mr. Thompson also serves as a director of Gentex
Corporation.
Ronald A. VandenBerg (61) is a general business consultant. Director since 1989
He served in several senior management positions for more Chairman of the Compensation
than five years, including Senior Vice President at Donnelly Committee
Corporation until his retirement in 1999. Donnelly
Corporation is a manufacturer of glass related products for
the automotive and electronics industries, headquartered in
Holland, Michigan. Mr. VandenBerg also serves as a director
of several privately held companies.
Nominee for Term to Expire in 2002
John E. Utley (60) retired in 1999 as Acting Deputy Appointed Director Since 2000
President of Lucas Varity Automotive. Lucas Varity was Chairman of the Audit
headquartered in London, England prior to being sold to TRW, Committee
Inc. Prior to that, he served in several senior management
positions for more than five years, including Senior Vice
President Strategic Marketing for Varity Corporation and
served as Chairman of the Board of both Kelsey Hayes Co. and
Walbro Corporation.
Directors Whose Terms Expire in 2002
Stanley W. Cheff (59) is Chairman of the Board of Wolverine Director since 1996
Building Group, a construction firm headquartered in Grand Chairman of Nominating &
Rapids, Michigan. Previously, Mr. Cheff served as President Resource Committee and
and Chief Executive Officer of Wolverine Building Group, Member of the
holding that position for more than five years. Compensation Committee
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NAMES, (AGES), POSITIONS AND BACKGROUNDS
OF NOMINEES AND DIRECTORS SERVICE AS A DIRECTOR
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James A. Knister (63) served in several senior management Director since 1996
positions for more than five years, including Chief Member of the Nominating &
Financial Officer, for Donnelly Corporation until his Resource Committee
retirement in 1999. Donnelly Corporation is a manufacturer
of glass related products for the automotive and electronics
industries, headquartered in Holland, Michigan. Mr. Knister
is a manager and member of XR Ventures, LLC and also serves
as a director of several privately held companies.
Directors Whose Terms Expire in 2003
Richard E. Cook (55) is the President and CEO of X-Rite, Director since 1997
Incorporated. Previously, he was the President of Cascade
Engineering, a developer and producer of plastic mold
injection technology headquartered in Grand Rapids,
Michigan, and he held that position for more than five
years.
Rufus S. Teesdale (80) has been retired for more than five Director since 1958
years. Prior to retirement he was a Partner in Loan Services Member of the Audit
and Systems, a software supplier to financial institutions, Committee
in Glen Ellyn, Illinois.
Charles Van Namen (75) has been retired for more than five Director since 1958
years. Prior to retirement he was a Senior Engineer with the Member of the Audit
Instrument Division of Lear Siegler, Inc., a manufacturer of Committee and the
aerospace instruments, in Grand Rapids, Michigan. Compensation Committee
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The Company has an Audit Committee to assist the Board of Directors in
monitoring (1) the integrity of the Company's financial statements, (2)
compliance by the Company with legal and regulatory requirements, (3) the
independence and performance of the Company's independent auditors, and (4)
other matters. Each member of the Audit Committee qualifies as an "independent
director" under the current rules of the National Association of Securities
Dealers. This Committee met on four (4) occasions during the fiscal year ended
December 30, 2000. A report from this Committee appears infra under the caption
Report of the Audit Committee.
The Company has a Compensation Committee that makes recommendations to the
Board regarding annual remuneration of the Company's executive officers, and
which is responsible for administering the Company's various incentive plans
involving the Company's common stock. This Committee met on five (5) occasions
during the fiscal year ended December 30, 2000. A report from this Committee
appears infra under the caption Report on Executive Compensation.
The Company has a Nominating & Resource Committee that is responsible for
overseeing executive career development and succession, Board development and
recommending to the Board annually a slate of nominees for election as directors
to be submitted to the shareholders of the Company at the Annual Meeting. The
Committee is also responsible for recommending nominees to fill vacancies that
may occur at other times. The Committee will consider persons suggested as
nominees by shareholders, and suggestions should be sent to the Nominating
Committee c/o the Company's Secretary at its headquarters. This Committee met on
five (5) occasions during the fiscal year ended, December 30, 2000.
The Board of Directors met seven (7) times during the past fiscal year, and
all directors attended at least seventy-five percent (75%) of the aggregate
number of meetings of the Board and meetings of committees on which they served,
except Mr. Thompson who, due to family health problems, was unable to attend two
(2) of the meetings.
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SECURITIES OWNERSHIP OF MANAGEMENT
The following table contains information regarding ownership of the
Company's common stock by each director and nominee for election as a director,
each executive officer named in the tables under the caption Executive
Compensation, and all directors and executive officers as a group. The content
of this table is based upon information supplied by the persons identified in
the table and represents the Company's understanding of circumstances in
existence as of March 1, 2001.
AMOUNT AND NATURE OF OWNERSHIP
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SHARES
NAME AND ADDRESS OF BENEFICIALLY EXERCISABLE PERCENT OF
BENEFICIAL OWNER OWNED(1) OPTIONS(2) TOTAL CLASS
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Rufus S. Teesdale 1,399,787 60,000 1,459,787 6.4
3152 E. Gatehouse, S.E.
Grand Rapids, MI 49546
Ted Thompson 1,528,300(3) 170,000 1,698,300 7.5
3100 44th Street
Grandville, MI 49418
Joan Mariani Andrew 15,037 75,000 90,037 *
Dr. Peter M. Banks 1,000 30,000 31,000 *
Bernard J. Berg 24,176 112,000 136,176 *
Stanley W. Cheff 3,000 50,000 53,000 *
Richard E. Cook 40,601 62,500 103,101 *
Duane F. Kluting 36,633(4) 112,000 148,633 *
James A. Knister 2,000 50,000 52,000 *
Jeffrey L. Smolinski 10,867 80,000 90,867 *
John E. Utley 0 10,000 10,000 *
Ronald A. VandenBerg 8,000 80,000 88,000 *
Charles Van Namen 667,000(5) 70,000 737,000 3.2
All Directors and Executive Officers as a Group
(15 persons) 3,742,687 974,000 4,716,687 20.7
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* Less than one percent
(1) Except as disclosed in the footnotes below, each person named in the table
has sole voting and investment power with respect to the issued shares
listed in this column.
(2) This column reflects shares subject to options exercisable within 60 days.
(3) Includes 160,000 shares issued to a trust established by Mr. Thompson's
wife, and he disclaims beneficial ownership of those shares.
(4) Includes 13,469 shares issued to a trust established by Mr. Kluting's wife,
and he disclaims beneficial ownership of those shares.
(5) Includes 265,900 shares issued to a trust established by Mr. Van Namen's
wife, and he disclaims beneficial ownership of those shares.
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SECURITIES OWNERSHIP OF CERTAIN BENEFICIAL OWNERS
The following table contains information regarding ownership of the
Company's common stock by persons or entities beneficially owning more than five
percent (5%) of the Company's common stock, other than directors as previously
disclosed. The content of this table is based upon information contained in
Schedules 13G furnished to the Company. The individuals listed on this table are
founders and former directors of the Company, with the exception of Putnam
Investments, Inc.
AMOUNT AND NATURE OF PERCENT OF
NAME AND ADDRESS OF BENEFICIAL OWNER BENEFICIAL OWNERSHIP CLASS
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Putnam Investments, Inc. 2,422,554 10.6
One Post Office Square
Boston, MA 02109
Leonard C. Blanding 1,457,132(1) 6.4
6600 Tanglewood, S.E.
Grand Rapids, MI 49546
Lawrence E. Fleming 1,541,500(2) 6.8
6200 Hall St., S.E.
Grand Rapids, MI 49546
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(1) Includes 20,000 shares subject to options exercisable within 60 days.
(2) Includes 30,000 shares subject to options exercisable within 60 days, and
500,000 shares issued to a trust established by Mr. Fleming's wife, and he
disclaims beneficial ownership of those shares.
EXECUTIVE COMPENSATION
The following table contains information regarding compensation paid by the
Company with respect to the preceding fiscal year to its chief executive officer
and to the four other most highly compensated executive officers.
SUMMARY COMPENSATION TABLE
LONG TERM
COMPENSATION
ANNUAL ------------------------
COMPENSATION RESTRICTED SECURITIES
--------------------- STOCK UNDERLYING ALL OTHER
SALARY BONUS AWARD(S) OPTIONS COMPENSATION
YEAR ($) ($)(1) ($)(1)(2) (#) ($)(3)
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Richard E. Cook 2000 308,846 184,914 -- 17,500 3,652
President and Chief 1999 250,000 50,013 77,175 17,500 4,455
Executive Officer 1998 144,231(4) 20,641 37,692 17,500 3,553
Bernard J. Berg 2000 197,153 68,543 -- 15,000 5,154
Senior Vice President -- 1999 187,000 51,129 17,500 15,000 7,290
Engineering 1998 180,211 24,779 -- 15,000 6,730
Duane F. Kluting 2000 198,269 77,318 -- 15,000 3,978
Vice President -- 1999 185,000 31,415 40,180 15,000 4,559
Chief Financial Officer 1998 175,577 15,261 7,125 15,000 4,136
Joan Mariani Andrew 2000 181,538 62,550 -- 15,000 3,213
Vice President -- 1999 180,000 29,195 39,025 15,000 3,286
Sales & Marketing 1998 170,480 20,032 -- 15,000 3,449
Jeffrey L. Smolinski 2000 180,000 64,488 -- 15,000 3,151
Vice President -- 1999 155,000 24,427 34,318 15,000 3,020
Operations 1998 140,672 19,343 -- 15,000 2,995
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(1) Bonuses paid to the executive officers of the parent company may be
converted into common stock of the Company, at the election of the
executive, pursuant to the Company's Cash Bonus Conversion Plan.
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Bonuses are converted at a discount of 50 percent from the market value of
the stock at the time the bonus is determined, but the shares received are
subject to certain restrictions on transfer and risks of forfeiture. Bonuses
shown are net of such conversions and restricted stock awards shown above
are the result of such bonus conversions.
(2) The values shown in this column represent the aggregate market value at the
date of grant for shares of restricted stock acquired pursuant to the
Company's Cash Bonus Conversion Plan, net of purchase price paid.
Restrictions lapse as to 20 percent of the shares six months after grant and
as to 20 percent on each of the first four anniversaries of the grant date,
or as to all shares in the event of death, disability, retirement, or change
in control of the Company. Dividends will be paid on these shares to the
same extent paid on the Company's common stock generally. Restricted shares
held at the close of the Company's fiscal year were Mr. Berg 4,377 shares,
Ms. Andrew 9,313 shares, Mr. Cook 23,988 shares, Mr. Smolinski 7,844 shares,
and Mr. Kluting 11,145 shares. Corresponding market values net of purchase
price paid as of that same date were Mr. Berg $17,323, Ms. Andrew $38,545,
Mr. Cook $103,063, Mr. Smolinski $33,831, and Mr. Kluting $46,479.
(3) These amounts represent "matching" contributions by the Company pursuant to
its 401(k) Plan and annual premiums for term life insurance attributable to
each named executive officer.
(4) Represents partial year.
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The following table contains information regarding stock options granted to
the above-named executive officers during the preceding fiscal year.
OPTION GRANTS IN LAST FISCAL YEAR
INDIVIDUAL GRANTS
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GRANT DATE
OPTIONS PERCENT OF OPTIONS EXERCISE PRESENT
GRANTED GRANTED TO PRICE EXPIRATION VALUE
(1) ALL EMPLOYEES ($/SH)(2) DATE ($)(3)
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Richard E. Cook 17,500 7.1 6.50 1/18/10 58,100
Bernard J. Berg 15,000 6.1 6.50 1/18/10 49,800
Duane F. Kluting 15,000 6.1 6.50 1/18/10 49,800
Joan Mariani Andrew 15,000 6.1 6.50 1/18/10 49,800
Jeffrey L. Smolinski 15,000 6.1 6.50 1/18/10 49,800
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(1) Options become exercisable one year after the date of grant.
(2) The exercise price equals the prevailing market price of the Company's stock
on the date of grant. The price may be paid in cash or by the surrender of
outstanding shares.
(3) Present value calculated under the Black-Scholes Valuation Model, assuming a
risk-free rate of return of 6.65 percent, 0.89 percent dividend yield, 54
percent volatility, and exercise in 5 years. This model is an alternative
suggested by the Securities and Exchange Commission, and the Company neither
endorses this particular model nor necessarily agrees with the method for
valuing options. The future performance of the Company and the price of its
shares will ultimately determine the value of these options.
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The following table contains information regarding the exercise of options
during the preceding fiscal year by the above-named executives, as well as
unexercised options held by them at fiscal year-end.
AGGREGATED OPTION EXERCISES IN LAST FISCAL YEAR AND YEAR-END VALUES
NUMBER OF SECURITIES
UNDERLYING UNEXERCISED VALUE OF UNEXERCISED
OPTIONS AT FISCAL IN-THE-MONEY OPTIONS AT
SHARES VALUE YEAR-END( #) FISCAL YEAR-END($)
ACQUIRED ON REALIZED ---------------------------- ----------------------------
EXERCISE(#) ($) EXERCISABLE UNEXERCISABLE EXERCISABLE UNEXERCISABLE
- -----------------------------------------------------------------------------------------------------------------------
Richard E. Cook -- -- 45,000 17,500 5,478 22,978
Bernard J. Berg -- -- 97,000 15,000 20,201 19,695
Duane F. Kluting -- -- 97,000 15,000 20,330 19,695
Joan Mariani Andrew -- -- 60,000 15,000 4,695 19,695
Jeffrey L. Smolinski -- -- 65,000 15,000 4,695 19,695
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REPORT ON EXECUTIVE COMPENSATION
The Compensation Committee is currently comprised of three (3) members, and
all members are outside directors; i.e., none is an employee of the Company. The
Committee provides an ongoing review of the executive compensation program to
ensure it is structured and administered to support the Company's goals and
strategy. The Committee makes recommendations to the Board of Directors with
respect to all executive compensation except for the award of stock-based
incentives, which are the exclusive prerogative of the Committee.
The Compensation policies established for executive officers are designed
to assure the Company's ability to attract, motivate, and retain competent and
dedicated senior management. In constructing and applying these policies, a
conscious effort is made to identify and evaluate the executive compensation
programs for comparable employers, considering such factors as geographic and
industry influences, relative sizes, growth stages, and market capitalizations.
With the assistance of a consulting firm, the Committee has established a peer
group of corporations that it uses for compensation comparison purposes.
In general, compensation packages for executive officers are composed of
three elements: base salary, annual bonus, and stock-based incentives. Base
salary for an executive is determined by the executive's responsibility and the
Company's need to be competitive in the market for executive services. Bonus
compensation is based on achievement of corporate goals. Stock-based incentives
are intended to strengthen the alignment of interests between shareholders and
senior management and to address long-term performance. The Company believes
that stock ownership by management is of critical importance to the ongoing
success of the Company.
In the early part of 2000, the Compensation Committee reviewed the annual
salary plan with the Chief Executive Officer for all other executive officers,
and made such adjustments as the Committee thought appropriate, based upon
salary survey data for comparable employers, economic conditions in general, and
individual evaluations by the Chief Executive Officer. Annual salary for the
Chief Executive Officer was reviewed independently by the Committee and adjusted
based upon the same considerations for other executive salaries, plus input from
the Nominating and Resource Committee evaluation on his performance as corporate
leader.
At the same time, the Committee established an annual bonus program for
fiscal 2000 that is applicable to all executive officers of the parent Company.
The program has three components. One component is based on individual
performance as determined by the Compensation Committee, in conjunction with the
Chief Executive Officer with respect to other officers. A second component is
based upon Company-wide economic performance defined to be roughly the return on
average assets. The third component is based on increased
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sales where performance is measured against prior year sales. The bonuses for
the Company's most highly compensated officers are reported in the Summary
Compensation Table contained in this Proxy Statement.
The Committee also awarded stock options to seven (7) executives during
2000 under the Employee Stock Option Plan, including the grants to the named
executives detailed in the foregoing table captioned Option Grants in Last
Fiscal Year. The options awarded to the executives, other than the Chief
Executive Officer, were awarded based upon recommendations from the Chief
Executive Officer, taking into account for each executive his or her
contribution to success in prior periods by achieving agreed upon goals, and his
or her ability and willingness to influence success in the future by striving to
achieve individual and corporate goals. The Chief Executive Officer Richard E.
Cook was awarded an option based primarily on the Committee's judgment that it
is in the best interest of shareholders to provide incentive for the Chief
Executive Officer in the form of stock options, in an amount that is appropriate
relative to the options granted other executives, considering their abilities to
influence corporate performance.
COMPENSATION COMMITTEE
Ronald A. VandenBerg, Chairman
Stanley W. Cheff
Charles Van Namen
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STOCK PERFORMANCE GRAPH
The following graph depicts the cumulative total return on the Company's
common stock compared to the cumulative total return on the indices for NASDAQ
Stock Market (U.S. and foreign) and NASDAQ nonfinancial stocks. The graph
assumes an investment of $100 on the last trading day of 1995, and reinvestment
of dividends in all cases.
COMPARISON OF FIVE-YEAR CUMULATIVE TOTAL RETURNS
PERFORMANCE REPORT FOR
X-RITE, INCORPORATED
[LINE GRAPH]
NASDAQ STOCK MARKET NASDAQ NON-FINANCIAL
X-RITE, INCORPORATED (US & FOREIGN) STOCKS
-------------------- ------------------- --------------------
1995 100.00 100.00 100.00
1996 117.50 122.40 121.50
1997 130.70 149.40 142.20
1998 56.00 207.00 208.70
1999 45.80 385.90 408.70
2000 58.00 233.00 238.50
OTHER ARRANGEMENTS
The Company has not adopted any long-term incentive plan or any defined
benefit or actuarial plan, as those terms are defined in the applicable
regulations promulgated by the Securities and Exchange Commission.
Effective as of a change in control of the Company, the Company has made
available to its executive officers contracts assuring them of continued
employment for a period of three years. In the event the executive's employment
is terminated by the Company during the three-year employment term without good
cause, either actually or constructively, the executive is entitled to receive
continued compensation and employee benefits for the remainder of the term.
CEO/President Cook has an Employment Agreement with the Company for an
initial term of three years, ending May 31, 2001, renewable annually thereafter
for successive one-year periods unless terminated by either party as of the end
of the initial term or any renewal term. During its continuation, either party
may terminate the Agreement for specified reasons. Mr. Cook is entitled to
receive cash compensation and certain perquisites for the unexpired portion of
the then current term if his employment is terminated for any reason other than
death, disability, voluntary quit, or discharge for good cause. Mr. Cook is
obligated not to compete with the Company or solicit its employees for a period
of two years after termination of his employment. Mr. Cook's Agreement has been
coordinated with the above-described change in control arrangement in the event
a change in control of the Company occurs.
Members of the Company's Board of Directors received an annual retainer of
$13,000, plus a meeting fee of $750 ($1,500 for chairpersons) for each meeting
of the Board or a committee attended. In addition, each
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person who is a nonemployee director immediately following each Annual Meeting
of Shareholders is entitled to receive an option to purchase 10,000 shares of
the Company's common stock at a price per share equal to the fair market value
on the previous day. Each option has a term of ten years.
At the time Chairman Ted Thompson retired from his position as the
Company's Chief Executive Officer and retired from day-to-day management of the
Company's affairs, the Company entered into a Chairman's Agreement with Chairman
Thompson for the purpose of defining an ongoing relationship with the Company
and its management. In addition to specifying his responsibilities,
compensation, and benefits during his tenure as Chairman, the Agreement provides
for compensation and insurance benefits for a period of five years after
conclusion of his service as Chairman and for stock options as long as he is a
member of the Board of Directors. Mr. Thompson is obligated not to compete with
the Company for a period ending two years after termination of the Agreement.
Directors who have served three or more terms (nine years) are eligible to
become Directors Emeritus at such time as they no longer hold the position of a
director of the Company, if elected to that position by the Board of Directors.
Directors Emeritus are entitled to attend meetings of the Board, but they may
not vote, and they are entitled to receive the directors' annual retainer, but
no meeting fees. Director Emeritus status lasts for a period equal to the length
of service as a director or until any earlier resignation or death.
REPORT OF THE AUDIT COMMITTEE
The Audit Committee is currently comprised of three members, and all
members are "independent" within the meaning of the regulatory requirements
applicable to the Company. The Audit Committee operates under a written Charter
adopted by the Board of Directors, adopted effective November 18, 1999. A copy
of the Company's Audit Committee Charter describing the authority, functions,
and responsibilities of this Committee is appended to this Proxy Statement as
Appendix A. The following is a report of that Committee to the Company's Board
of Directors with respect to the most recently ended fiscal year.
To the Board of Directors:
We have reviewed and discussed with management the Company's audited
financial statements as of, and for the year ended December 30, 2000.
We have discussed with the independent auditors the matters required to be
discussed by Statement on Auditing Standards No. 61, Communication with Audit
Committees, as amended, by the Auditing Standards Board of the American
Institute of Certified Public Accountants.
We have received and reviewed the written disclosures and the letter from
the independent auditors required by Independence Standards Board Standard No.
1, Independence Discussions with Audit Committees, as amended, and we have
discussed with the independent auditors the independent auditors' independence.
Based upon the reviews and discussions referred to above, we recommend to
the Board of Directors that the referenced financial statements be included in
the Company's Annual Report to Shareholders and its Annual Report on Form 10-K
with respect to the most recently ended fiscal year.
AUDIT AND FINANCE COMMITTEE
John E. Utley, Chairman
Rufus S. Teesdale
Charles Van Namen
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RELATIONSHIP WITH INDEPENDENT PUBLIC ACCOUNTANTS
The consolidated financial statements of the Company and its subsidiaries
for the year ended December 30, 2000, have been audited by Arthur Andersen LLP,
independent public accountants, and the Board of Directors has selected Arthur
Andersen LLP to serve as the Company's independent accountants for the year
ending December 29, 2001. Representatives of Arthur Andersen LLP are expected to
be present at the Annual Meeting to respond to appropriate questions and will
have an opportunity to make a statement if they desire.
Aggregate fees billed to the Company for the fiscal year ended December 30,
2000, by the Company's principal accounting firm, Arthur Andersen LLP, were
$188,000 in Audit Fees, $0 for Financial Information System Design and
Implementation Fees, and an additional $9,000 for all other fees.
The Audit Committee has considered whether the provision of non-audit
services by the Company's principal auditor is compatible with maintaining
auditor independence.
SECTION 16(a) BENEFICIAL OWNERSHIP REPORTING COMPLIANCE
Based upon a review of Forms 3, 4, and 5 furnished to the Company during or
with respect to the preceding fiscal year and written representations from
certain reporting persons, the Company is not aware of any failure by any
reporting person to make timely filings of those Forms as required by Section
16(a) of the Securities Exchange Act of 1934.
CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS
XR Ventures, LLC is a joint venture between the Company and Peter M. Banks
and James A. Knister. The main focus of XR Ventures is to find, acquire,
develop, and operate interests in businesses or technologies important to the
growth of new markets for the Company. Dr. Banks and Mr. Knister are responsible
for the day-to-day operations of XR Ventures with input from Richard E. Cook.
The Company funds acquisitions made by XR Ventures and in exchange receives its
investment back in full before any distributions are made. In addition, the
Company received 80 percent of the gains on investments less any success fee
payable to Dr. Banks and Mr. Knister. In exchange for their role in XR Ventures,
Dr. Banks and Mr. Knister receive 20 percent of the gains on investments plus a
success fee depending on the level of gains, which can be as low as zero, but
can never exceed 6.67 percent of the gains. The Company reached the XR Ventures
arrangement with Dr. Banks and Mr. Knister through arms-length negotiation, in
which the Company was represented by it regular counsel and Dr. Banks and Mr.
Knister were represented by separate counsel.
SHAREHOLDER PROPOSALS -- ANNUAL MEETING
If a shareholder intends to present a proposal for action at the 2001
Annual Meeting of Shareholders, notice of that proposal must be given to the
Secretary of the Company, in accordance with the Company's bylaws, on or before
April 19, 2001. In addition, any proposal of a shareholder intended to be
presented at the 2002 Annual Meeting of the Shareholders of the Company must be
received by the Company at its headquarters, 3100 44th Street, S.W., Grandville,
Michigan 49418, no later than December 10, 2001, if the shareholder wishes the
proposal to be included in the Company's Proxy Statement relating to that
meeting.
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MISCELLANEOUS
The Company's Annual Report to Shareholders including financial statements,
is being mailed to shareholders with this Proxy Statement.
Management is not aware of any matters to be presented for action at the
Annual Meeting other than as set forth in this Proxy Statement. If other
business should come before the meeting, the persons named as proxy holders in
the accompanying Proxy intend to vote the shares in accordance with their
judgment, and discretionary authority to do so is included in the Proxy.
A COPY OF THE COMPANY'S REPORT ON FORM 10-K FILED WITH THE SECURITIES AND
EXCHANGE COMMISSION IS AVAILABLE, WITHOUT CHARGE, UPON WRITTEN REQUEST FROM
DUANE F. KLUTING, THE COMPANY'S VICE PRESIDENT/CHIEF FINANCIAL OFFICER, 3100
44TH STREET, S.W., GRANDVILLE, MICHIGAN 49418.
SHAREHOLDERS ARE URGED TO PROMPTLY DATE, SIGN, AND RETURN THE ACCOMPANYING
PROXY IN THE ENCLOSED ENVELOPE.
By Order of the Board of Directors
DUANE F. KLUTING
Secretary
April 9, 2000
Grandville, Michigan
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APPENDIX A
X-RITE, INCORPORATED
AUDIT COMMITTEE CHARTER
X-RITE BOARD OF DIRECTORS
AUDIT COMMITTEE CHARTER
The Audit Committee (the "Committee") is appointed by the Board to assist
the Board in monitoring (1) the integrity of the financial statements of the
Company, (2) the compliance by the Company with legal and regulatory
requirements, (3) the independence and performance of the Company's independent
auditors, and (4) perform other responsibilities. In doing so, it is the
responsibility of the Committee to maintain free and open means of communication
between the directors, the independent auditors, and the financial management of
the Company.
MEMBERSHIP
The Committee shall be comprised of three or more directors as determined
by the Board, each of whom shall be independent directors, and free from any
relationship that, in the opinion of the Board, would interfere with the
exercise of his or her independent judgment as a member of the Committee. All
members of the Committee shall have a working familiarity with basic finance and
accounting practices ("financial literacy") and at least one member of the
Committee shall have accounting or related financial management expertise.
The Company's Chief Financial Officer will serve as a resource to the
Committee. The Committee shall have the authority to retain special legal,
accounting or other consultants to advise the Committee. The Committee may
request any officer or employee of the Company or the Company's outside counsel
or independent auditors to attend a meeting of the Committee or to meet with any
members of, or consultants to, the Committee.
COMMITTEE MEETINGS -- OPERATING PRINCIPLES
- - The Audit Committee shall hold regular meetings at least quarterly each fiscal
year, and at any additional time as either the Board or the Committee deems
necessary. Committee meetings normally will occur in conjunction with meetings
of the Board of Directors.
- - Special meetings of the Committee may be called as needed by the Committee
Chairperson or the Chief Financial Officer.
- - Pre-meeting materials are expected to be distributed to Committee members in
sufficient time prior to the meeting to permit review by members. Committee
members are expected to review those materials in advance of the meeting.
- - Meetings will focus on substantive issues of current importance and be of
duration adequate to permit full discussion of the agenda.
- - The Committee may request that members of management and/or the Company's
independent auditors be present as needed in order to execute the Committee's
responsibilities.
- - The Company's Chief Financial Officer is expected to be engaged with, and
supportive of a pro-active philosophy that anticipates and shares with the
Committee current issues and significant concerns.
- - Minutes of each meeting will be kept and distributed to all directors.
- - The Committee adopts the following principles with respect to the role of its
relationship with the Company's independent auditors:
- The Company's independent auditors shall be responsible to the Audit
Committee and the Board.
- The Chairperson of the Committee shall meet annually, outside normal
meeting times, with management and independent auditors to clearly agree
on mutual expectations, agree on an annual
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detailed plan of Committee activities and agree on the nature, extent,
and timing of Committee information needs.
- In connection with its Audit functions, the Committee shall, whenever
appropriate, meet separately with the Company's independent auditors.
- A member of the Audit Committee will attend in person or by
teleconference the meetings with respect to the closing of the Company's
books prior to the quarterly and year-end earning releases, and will
report to the Committee any issues raised at the closing meetings. The
Committee members will review with management the Company's quarterly
financial statements prior to filing the Form 10-Q.
- The Company's Chief Financial Officer shall notify the Audit Committee in
advance of any material consulting activities to be undertaken by the
Company's independent auditors so that the Committee may address whether
related consulting fees might impair their independence. The Audit
Committee is expected to raise the issue of any possible conflict between
the representation by the Company's independent auditors and any other
client of that firm where the Committee deems appropriate.
PRIMARY RESPONSIBILITIES
INDEPENDENT AUDITS
1) Recommend to the Board the appointment of the independent auditors.
2) Review the audit scope and plan, including coverage with both the independent
auditors and management, and the coordination between the two prior to the
audit.
3) Review the results of the audits by the independent auditors:
(a) Review with the independent auditors any problems or difficulties the
auditor may have encountered, including any restrictions on or changes
in the scope of activities, or access to required information.
(b) Review an analysis prepared by management of significant financial
reporting issues and judgments made in connection with the preparation
of the Company's financial statements. Discuss with the independent
auditors their judgements about the quality, not just the
acceptability, of the Company's accounting principles as applied in its
financial reporting.
(c) Discuss with the independent auditors the matters required to be
discussed by Statement on Auditing Standards No. 61 relating to the
conduct of the audit.
(d) Receive periodic reports from the independent auditors regarding the
auditor's independence, discuss such reports with the auditor, and if
so determined by the Audit Committee, recommend that the Board take
appropriate action to insure the independence of the auditor, including
a review of management consulting services and related fees provided by
the independent auditors.
(e) Prepare the report required by the rules of the Securities and Exchange
Commission to be included in the Company's annual proxy statement.
(f) Obtain from the independent auditors assurance that Section 10A of the
Private Securities Litigation Reform Act of 1995 has not be implicated.
4) Review with management and the independent auditors the Company's annual
audited financial statements and related footnotes to be included in the
Company's Annual Report on Form 10-K and Annual Report to Shareholders.
5) Review major changes to the Company's accounting principles and practices as
suggested by the independent auditors or management.
6) Review with management the performance of the independent auditors and fees
for audit services, as recommended by management.
7) Periodically review with management the desirability of an internal audit
function.
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INTERNAL CONTROLS
8) Meet periodically with management, the internal auditors and the independent
auditors to review the Company's major financial risk exposures and the
steps management has taken to monitor and control such exposures.
9) Review the status of internal control recommendations made by the
independent auditors.
10) Review the adequacy of the policy and practices of the Company related to:
a. Related party transactions
b. Conflicts of interest
c. Ethical conduct
d. Compliance with key regulatory issues (e.g., NASDAQ and SEC obligations,
and Foreign Corrupt Practices Act.)
OTHER RESPONSIBILITIES
11) Receive status reports on any government investigations that could involve
criminal violations or others fines with respect to the Company or any
employee in connection with the Company's business.
12) Conduct investigations and, if necessary, retain outside experts, with
respect to any alleged illegality that may be brought to the attention of
the Committee.
13) Review reports from the Company's counsel on the status of any legal
matters, such as threatened or pending litigation, which may result in a
material financial impact to the Company.
14) Perform a self-assessment every three years.
15) Review and reassess the adequacy of this Charter annually and submit any
changes to the Board of Directors for approval.
16) Review the necessary certifications prepared by the Company for the NASDAQ
regarding the Committee's membership and charter.
17) Report at the next meeting of the Board all significant items discussed at
any Audit Committee meeting.
18) Take such further action or provide such further advice as the Board of
Directors may from time to time request.
19) Other items as determined from time to time by the Committee or as assigned
by the Board of Directors.
While the Audit Committee has the responsibilities and powers set forth in
this Charter, it is not the duty of the Audit Committee to plan or conduct
audits or to determine that the Company's financial statements are complete and
accurate and are in accordance with generally accepted accounting principles.
This is the responsibility of management and the independent auditors. Nor is it
the duty of the Audit Committee to conduct investigations, to resolve
disagreements, if any, between management and the independent auditors or to
assure compliance with laws and regulations and the Company's Code of Conduct.
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XRTCM-PS-01
19
X-RITE, INCORPORATED
3100 44TH STREET, S.W.
GRANDVILLE, MICHIGAN 49418
PROXY
THIS PROXY SOLICITED ON BEHALF OF THE BOARD OF DIRECTORS
The undersigned hereby appoint(s) J. Terry Moran and Duane Kluting, and each of
them, as Proxies, each with the power to appoint a substitute, to represent
and to vote, as designated on the reverse, all shares of common stock of
X-Rite, Incorporated held of record by the undersigned on March 30, 2001, at
the Annual Meeting of Shareholders to be held on May 21, 2001, or any
adjournment thereof.
When properly executed, this proxy will be voted in the manner directed by the
undersigned shareholder(s). IF NO DIRECTION IS MADE, THIS PROXY WILL BE VOTED
FOR THE ELECTION OF THE NOMINEES LISTED ON THE REVERSE SIDE AS NOTED IN THE
PROXY STATEMENT.
- --------------------------------------------------------------------------------
PLEASE MARK, SIGN, DATE AND RETURN THIS PROXY CARD PROMPTLY IN THE ENCLOSED
ENVELOPE.
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
Please sign exactly as your name(s) appear(s) on the reverse side. Joint
owners should each sign personally. Trustees and other fiduciaries should
indicate the capacity in which they sign, and where more than one name appears,
a majority must sign. If a corporation, this signature should be that of an
authorized officer who should state his or her title.
- --------------------------------------------------------------------------------
HAS YOUR ADDRESS CHANGED? DO YOU HAVE ANY COMMENTS?
- ----------------------------------- -----------------------------------
- ----------------------------------- -----------------------------------
- ----------------------------------- -----------------------------------
20
[X] PLEASE MARK VOTES
AS IN THIS EXAMPLE
- ---------------------------------------------------------------- 1. Election of Directors.
X-RITE, INCORPORATED FOR ALL WITH- FOR ALL
- ---------------------------------------------------------------- (01) DR. PETER M. BANKS NOMINEES HOLD EXCEPT
(02) TED THOMPSON [ ] [ ] [ ]
(03) JOHN E. UTLEY
(04) RONALD A VANDENBERG
NOTE: IF YOU DO NOT WISH YOUR SHARES VOTED "FOR" A
PARTICULAR NOMINEE, MARK THE "FOR ALL EXCEPT" BOX AND STRIKE
A LINE THROUGH THE NAME(S) OF THE NOMINEE(S). YOUR SHARES
CONTROL NUMBER: WILL BE VOTED FOR THE REMAINING NOMINEE(S).
RECORD DATE SHARES:
2. In their discretion, the Proxies are authorized to vote upon
such other business as may properly come before the Meeting.
-----------------------
Please be sure to sign and date this Proxy. |Date Mark box at right if an address change or comment has
- ------------------------------------------------------------------- been noted on the reverse side of this card. [ ]
- ---Shareholder sign here--------------------Co-owner sign here-----
DETACH CARD DETACH CARD
X-RITE, INCORPORATED
Dear Shareholder,
Please take note of the important information in the Proxy Statement.
Your vote counts, and you are strongly encouraged to exercise your
right to vote your shares.
Please mark the boxes on this proxy card to indicate how your shares
will be voted. Then sign the card, detach it and return your proxy
vote in the enclosed postage paid envelope.
Your vote must be received prior to the Annual Meeting of Shareholders
scheduled for May 21, 2001.
Thank you in advance for your prompt consideration of these matters.
Sincerely,
X-RITE, INCORPORATED