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.
The Sportsman's Guide, Inc.
- --------------------------------------------------------------------------------
(Name of Registrant as Specified in Its Charter)
- --------------------------------------------------------------------------------
(Name of Person(s) Filing Proxy Statement if Other Than the Registrant)
Payment of filing fee (check the appropriate box):
[X] No fee required.
[ ] Fee computed on table below per Exchange Act Rules 14a-6(i)(1) and
0-11.
(1) Title of each class of securities to which transaction applies:
- --------------------------------------------------------------------------------
(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):
- --------------------------------------------------------------------------------
(4) Proposed maximum aggregate value of transaction:
- --------------------------------------------------------------------------------
(5) Total fee paid:
- --------------------------------------------------------------------------------
[ ] Fee paid previously with preliminary materials.
- --------------------------------------------------------------------------------
[ ] Check box if any part of the fee is offset as provided by Exchange Act
Rule 0-11(a)(2) and identify the filing for which the offsetting fee
was paid previously. Identify the previous filing by registration
statement number, or the form or schedule and the date of its filing.
(1) Amount Previously Paid:
- --------------------------------------------------------------------------------
(2) Form, Schedule or Registration Statement No.:
- --------------------------------------------------------------------------------
(3) Filing Party:
- --------------------------------------------------------------------------------
(4) Date Filed:
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[THE SPORTSMANS GUIDE LOGO]
NOTICE OF ANNUAL MEETING OF SHAREHOLDERS
TO BE HELD ON MAY 2, 2003
To Our Shareholders:
The Annual Meeting of Shareholders of The Sportsman's Guide, Inc., a
Minnesota corporation (the "Company"), will be held at the Company's executive
offices located at 411 Farwell Avenue, South St. Paul, Minnesota on Friday, May
2, 2003, at 2:00 p.m., Minnesota time, for the following purposes:
1. Election of six directors to serve until the next Annual Meeting and
until their respective successors have been elected and qualified;
2. Ratification of the engagement of Grant Thornton LLP as independent
certified public accountants for the Company for 2003; and
3. Transaction of such other business as may properly come before the
meeting or any adjournment thereof.
Only holders of record of the Company's Common Stock at the close of
business on March 7, 2003 will be entitled to notice of and to vote at the
meeting or any adjournment thereof.
All shareholders are cordially invited to attend the Annual Meeting in
person.
By Order Of The Board Of Directors
/s/ CHARLES B. LINGEN
Charles B. Lingen, Secretary
South St. Paul, Minnesota
March 28, 2003
WHETHER OR NOT YOU PLAN TO ATTEND THE MEETING, PLEASE MARK, DATE, SIGN AND
PROMPTLY RETURN THE ENCLOSED PROXY IN THE ENVELOPE PROVIDED.
THE SPORTSMAN'S GUIDE, INC.
411 FARWELL AVENUE
SOUTH ST. PAUL, MINNESOTA 55075
-------------------------
PROXY STATEMENT
MAILING DATE
MARCH 28, 2003
-------------------------
GENERAL INFORMATION
This Proxy Statement is furnished in connection with the solicitation of
proxies by the Board of Directors of The Sportsman's Guide, Inc., a Minnesota
corporation (the "Company"), for use for the purposes set forth herein at its
Annual Meeting of Shareholders to be held on May 2, 2003 and any adjournments
thereof. All properly executed proxies will be voted as directed by the
shareholder on the proxy card. If no direction is given, proxies will be voted
in accordance with the Board of Directors' recommendations and, in the
discretion of the proxy holders, in the transaction of such other business as
may properly come before the Annual Meeting and any adjournments thereof. Any
proxy may be revoked by a shareholder by delivering written notice of revocation
to the Company or in person at the Annual Meeting at any time prior to the
voting thereof.
VOTING SECURITIES AND RECORD DATE
The Company has one class of voting securities outstanding, namely Common
Stock, par value $.01 per share. Only holders of record of the Company's Common
Stock at the close of business on March 7, 2003 are entitled to notice of and to
vote at the Annual Meeting. As of March 7, 2003, there were 4,759,010 shares of
Common Stock outstanding, and each share is entitled to one vote on all matters
to be voted upon at the Annual Meeting. Under the Company's Restated Articles of
Incorporation and Bylaws, each shareholder has the right to vote cumulatively
for the election of directors by giving written notice of his intent to cumulate
his votes to any officer of the Company before the Annual Meeting or to the
presiding officer of the Company at the Annual Meeting at any time before the
election of directors. Under cumulative voting, each shareholder has the right
to cast that number of votes per share equal to the number of directors to be
elected and may cast all of the shareholder's votes for a single candidate or
distribute those votes among any number of candidates. In the event that
directors are elected by cumulative voting and cumulated votes represented by
proxies solicited hereby are insufficient to elect all the nominees, then the
proxy holders will vote such proxies cumulatively for the election of as many of
such nominees as possible and in such order as the proxy holders may determine.
The presence in person or by proxy of holders of 40% of the shares of the
Company's Common Stock entitled to vote at the Annual Meeting will constitute a
quorum for the transaction of business.
Directors are elected by a plurality of the votes cast by the holders of
Common Stock at a meeting at which a quorum is present. Abstentions and broker
non-votes will not be counted toward a nominee's achievement of a plurality and
thus will have no effect. A broker non-vote occurs when a broker submits a proxy
that indicates the broker does not have discretionary authority to vote the
shares on a particular matter.
MATTERS TO BE ACTED UPON AT THE ANNUAL MEETING
1. ELECTION OF DIRECTORS
Six directors are to be elected at the Annual Meeting to hold office until
the next Annual Meeting of Shareholders and until their successors have been
elected and qualified. Unless otherwise directed, it is the intention of the
persons named in the accompanying proxy to vote each proxy for the election of
the nominees listed below. Each nominee is presently a director of the Company.
If at the time of the Annual Meeting any nominee is unable or declines to serve,
the proxy holders will vote for the election of such substitute nominee
2
as the Board of Directors may recommend. The Company and the Board of Directors
have no reason to believe that any substitute nominee will be required.
Vincent W. Shiel, Ph.D., will retire as a director of the Company effective
as of the date of the Annual Meeting. Dr. Shiel has been a director since 1990
and served as Chairman of the Board from 1994 to 1998. Dr. Shiel will continue
as a consultant to the Company. The Board wishes to thank Dr. Shiel for his
service, insight and commitment to the Company.
Set forth below is certain information with respect to each nominee for
director.
GARY OLEN, 60, is a co-founder of the Company. Mr. Olen served as Executive
Vice President and Secretary from its incorporation in 1977 until 1994,
President from 1994 to 1998 and Chief Executive Officer from 1994 until his
retirement in 2000. Mr. Olen has been Chairman of the Board since 1998 and a
director since its incorporation. Mr. Olen was also the sole proprietor of the
predecessor of the Company, The Olen Company, founded in 1970.
GREGORY R. BINKLEY, 54, has been a director since 1995. Mr. Binkley has
been an employee since 1994 when he was elected Vice President. Mr. Binkley
became Senior Vice President of Operations and Chief Operating Officer in 1995,
Executive Vice President in 1996, President in 1998 and Chief Executive Officer
in 2000. From 1993 to 1994, Mr. Binkley worked as an independent operations
consultant. From 1990 to 1993, Mr. Binkley was Director of Distribution of
Fingerhut Companies, Inc., a mail order catalog business and from 1988 to 1990
was Director of Distribution with Cable Value Network, Inc., a cable television
retailer. Mr. Binkley worked for Donaldsons Department Stores, a division of
Allied Stores Corporation, from 1975 to 1988, serving as Vice President of
Finance and Operations from 1987 to 1988 and Vice President of Operations from
1981 to 1987.
CHARLES B. LINGEN, 58, has been a director since 1995. Mr. Lingen has been
Chief Financial Officer, Vice President of Finance and Treasurer since 1994. Mr.
Lingen was elected Secretary in 1995, Senior Vice President of Finance in 1996
and Executive Vice President of Finance and Administration in 2000. From 1973 to
1994, Mr. Lingen worked at Fingerhut Companies, Inc., serving as Vice President
of Finance and Controller from 1989 to 1994.
LEONARD M. PALETZ, 68, is a co-founder and served as Chairman of the Board,
President, Chief Executive Officer, Treasurer and a director from 1977 until
1994. Mr. Paletz retired as an employee in 1994.
WILLIAM T. SENA, 66, has been a director since 1990. He is an investment
advisor with Sena Weller Rohs Williams, Inc., an investment advisory firm. Mr.
Sena has been associated with the investment advisory firm and its predecessor
since 1965.
JAY A. LEITCH, Ph.D., 54, has been a director since 2003. He is Dean and
Distinguished Professor of Agricultural Economics, College of Business
Administration, North Dakota State University. Dr. Leitch has been a member of
the faculty of North Dakota State University since 1981 and has served as a
consultant to numerous government and private organizations.
MEETINGS OF THE BOARD AND COMMITTEES
During 2002, the Board of Directors held two meetings. Each director
attended over 75% of the Board meetings and meetings of Board committees on
which he served held during 2002, except Mr. Olen.
The Board of Directors has three standing committees: the Audit Committee,
the Compensation Committee and the Executive Committee. The Board has no
nominating committee.
The Audit Committee consists of Leonard M. Paletz, William T. Sena and Jay
A. Leitch. All members of the Audit Committee are independent as defined by
applicable law and the listing standards of the Nasdaq Stock Market. The Audit
Committee provides independent review and oversight of the Company's financial
reporting processes, internal controls and independent public accountants. See
"Audit Committee Report." The Audit Committee met once during 2002.
3
The Compensation Committee consists of Vincent W. Shiel, Leonard M. Paletz
and William T. Sena. The Compensation Committee has the responsibility to review
and determine the salaries, bonuses, stock options and other compensation of the
executive officers of the Company. See "Compensation Committee Report on
Executive Compensation." The Compensation Committee met once during 2002.
The Executive Committee consists of Gregory R. Binkley, Vincent W. Shiel
and William T. Sena. The Executive Committee is empowered to exercise all of the
powers and authority of the Board of Directors between meetings of the Board.
The Executive Committee took action by unanimous written consent twice during
2002.
DIRECTOR COMPENSATION
Directors who are not employees of the Company receive $25,000 annually for
services as a director plus expenses incurred in attending board meetings.
CONSULTING AGREEMENTS
The Company has a consulting agreement with Outdoor Consulting, Inc. to
provide consulting services to the Company. Vincent W. Shiel is the sole
employee of Outdoor Consulting, Inc., the principal shareholders of which are
his family limited partnership and various family trusts. The initial term of
the agreement expires on December 31, 2003 and is automatically renewed for
additional one-year terms unless earlier terminated by either party. The
compensation payable under the agreement is $2,000 per month.
The Company had a consulting agreement with William T. Sena to provide
certain investor relation and investment advisory services as requested for a
minimum of 15 hours per quarter pursuant to which Mr. Sena was paid $3,000 per
quarter. The agreement was terminated effective October 9, 2002.
AUDIT COMMITTEE REPORT
The Audit Committee of the Board of Directors assists the Board in
fulfilling its oversight responsibilities by reviewing the audit process, the
financial information that will be provided to shareholders and others and the
systems of internal controls which management has established. The charter of
the Audit Committee was attached to the Proxy Statement for the 2001 Annual
Meeting as Appendix A.
Following the end of the 2002 fiscal year, the Audit Committee analyzed and
discussed the audited financial statements with management and Grant Thornton
LLP, the Company's independent public accountants. The Audit Committee also
discussed with Grant Thornton LLP the matters required to be discussed by
Statement on Auditing Standards No. 61 (Communication with Audit Committees) and
Statement on Auditing Standards No. 90. The Audit Committee also received the
written disclosures and a letter from Grant Thornton LLP as required by
Independence Standards Board Standard No. 1 (Independence Discussions with Audit
Committees).
Based upon the analysis and discussions referred to above, the Audit
Committee recommended to the Board of Directors that the audited consolidated
financial statements be included in the Company's Annual Report on Form 10-K for
the year ended December 31, 2002. (Jay A. Leitch joined the Board of Directors
in January 2003 and thus did not participate in the Committee's activities
during 2002.)
Leonard M. Paletz, Chairman
William T. Sena
Jay A. Leitch
2. RATIFICATION OF ENGAGEMENT OF INDEPENDENT CERTIFIED PUBLIC ACCOUNTANTS
The Company intends to request that the shareholders ratify the selection
of Grant Thornton LLP, independent certified public accountants, for 2003. The
Company has requested and expects a representative of Grant Thornton LLP to be
present at the Annual Meeting. Such representative will have the opportunity to
make a statement if he or she so desires and will be available to respond to
appropriate questions.
4
The following table sets forth the aggregate fees billed to the Company for
the year ended December 31, 2002 by Grant Thornton LLP:
<Table>
Audit fees................................................. $58,550
Financial information systems design and implementation
fees..................................................... --
All other fees............................................. 13,715
-------
Total............................................... $72,265
=======
</Table>
The amounts shown above include out-of-pocket expenses incurred by Grant
Thornton LLP in connection with providing such services. The amount shown for
"Audit fees" includes fees relating to the annual audit of the financial
statements and quarterly reviews of unaudited financial statements included in
the Form 10-Qs. The amount shown for "All other fees" includes fees relating to
preparation of tax returns and tax related services, audit of the financial
statements of an employee benefit plan and services in connection with
establishment of a retail store subsidiary. The Audit Committee of the Board of
Directors has determined that the services included under the caption "All other
fees," as provided by Grant Thornton LLP, are compatible with maintaining Grant
Thornton LLP's independence.
3. OTHER BUSINESS
The Board of Directors does not know of any matters to be presented at the
Annual Meeting other than those mentioned above. However, if other matters
should properly come before the Annual Meeting or any adjournments thereof, the
proxy holders will vote the proxies thereon in their discretion.
5
EXECUTIVE COMPENSATION
The following table sets forth the compensation paid to the Chief Executive
Officer and to each of the other four most highly compensated executive officers
of the Company (the "Named Executive Officers") for services rendered in all
capacities for each of the years indicated.
SUMMARY COMPENSATION TABLE
<Table>
<Caption>
LONG-TERM
ANNUAL COMPENSATION COMPENSATION ALL OTHER
--------------------- ------------ COMPENSATION(1)
SALARY BONUS OPTIONS ---------------
NAME AND PRINCIPAL POSITION YEAR ($) ($) (#) ($)
--------------------------- ---- ------ ----- ------- ---
Gregory R. Binkley................. 2002 219,231 393,500 50,000 2,981
President and 2001 204,346 150,000 50,000 2,550
Chief Executive Officer 2000 189,375 -- -- --
Charles B. Lingen.................. 2002 165,846 225,000 35,000 1,192
Executive Vice President of
Finance 2001 153,477 103,000 35,000 --
and Administration, 2000 141,089 -- -- --
Chief Financial Officer and
Secretary/Treasurer
John M. Casler..................... 2002 165,846 225,000 35,000 2,981
Executive Vice President 2001 153,477 103,000 35,000 2,463
of Merchandising, Marketing 2000 140,613 -- -- --
and Creative Services
Gary Olen.......................... 2002 164,423 -- -- 5,400
Chairman 2001 262,500 -- -- 5,000
2000 262,500 -- -- 69,911
</Table>
- -------------------------
(1) Amounts in the All Other Compensation column for the Named Executive
Officers, other than Mr. Olen, reflect employer matching contributions under
the Company's 401(k) plan. Amounts shown for Mr. Olen reflect directors fees
and for 2000 includes $66,911 of accrued vacation paid in connection with
his retirement as CEO.
The following table sets forth information with respect to the Named
Executive Officers concerning the grant of options during 2002.
OPTION GRANTS IN LAST FISCAL YEAR
<Table>
<Caption>
INDIVIDUAL GRANTS POTENTIAL REALIZABLE
------------------------------------------------------- VALUE AT ASSUMED
NUMBER OF % OF TOTAL ANNUAL RATES OF STOCK
SECURITIES OPTIONS EXERCISE PRICE APPRECIATION FOR
UNDERLYING GRANTED TO OR BASE OPTION TERM(1)
OPTIONS EMPLOYEES IN PRICE EXPIRATION ----------------------
NAME GRANTED(#)(2) FISCAL YEAR ($/SH) DATE 5%($) 10%($)
---- ------------- ------------ -------- ---------- ----- ------
Gregory R. Binkley............ 50,000 20.0 6.75 12/20/12 212,252 537,888
Charles B. Lingen............. 35,000 14.0 6.75 12/20/12 148,576 376,522
John M. Casler................ 35,000 14.0 6.75 12/20/12 148,576 376,522
Gary Olen..................... -- -- -- -- -- --
</Table>
- -------------------------
(1) The compounding assumes a ten-year exercise period for all option grants.
The 5% and 10% assumed annual rates of compounded stock price appreciation
are mandated by rules of the Securities and Exchange Commission and do not
represent the Company's estimate or projection of the Company's future
Common Stock prices. These amounts represent certain assumed rates of
appreciation only. Actual gains, if any, on stock option exercises are
dependent on the future performance of the Common
6
Stock and overall stock market conditions. The amounts reflected in this
table may not necessarily be achieved.
(2) Incentive stock options granted pursuant to the Company's 1999 Stock Option
Plan. These options become exercisable in three cumulative installments of
33 1/3% on the first three anniversary dates of grant. The grant date was
December 20, 2002.
The following table sets forth information with respect to the Named
Executive Officers concerning options held at year end 2002.
AGGREGATED OPTION EXERCISES IN LAST FISCAL YEAR
AND FY-END OPTION VALUES
<Table>
<Caption>
NUMBER OF UNEXERCISED VALUE OF UNEXERCISED
SHARES OPTIONS AT FISCAL YEAR-END IN-THE-MONEY OPTIONS AT
ACQUIRED VALUE (#) FISCAL YEAR-END($)(1)
ON EXERCISE REALIZED ---------------------------- ----------------------------
NAME (#) ($) EXERCISABLE UNEXERCISABLE EXERCISABLE UNEXERCISABLE
---- ----------- -------- ----------- ------------- ----------- -------------
Gregory R. Binkley........... -- -- 148,930 83,333 264,994 136,665
Charles B. Lingen............ -- -- 95,132 58,333 189,709 95,665
John M. Casler............... -- -- 76,167 58,333 120,612 95,665
Gary Olen.................... -- -- 214,615 -- 346,295 --
</Table>
- -------------------------
(1) Unexercised options were in-the-money if the fair market value of the
underlying shares exceeded the exercise price of the option at December 31,
2002.
EQUITY COMPENSATION PLAN INFORMATION
<Table>
<Caption>
NUMBER OF SECURITIES
REMAINING AVAILABLE
FOR FUTURE ISSUANCE
NUMBER OF SECURITIES UNDER EQUITY
TO BE ISSUED UPON WEIGHTED-AVERAGE COMPENSATION PLANS
EXERCISE OF EXERCISE PRICE OF (EXCLUDING SECURITIES
OUTSTANDING OPTIONS, OUTSTANDING OPTIONS, REFLECTED IN
WARRANTS AND RIGHTS WARRANTS AND RIGHTS COLUMN (A))
PLAN CATEGORY (A) (B) (C)
- ------------- -------------------- -------------------- ---------------------
Equity compensation plans approved by
security holders(1).................... 1,018,280 $5.00 174,662
Equity compensation plans not approved by
security holders(2).................... 32,126 $6.69 --
Total.................................. 1,050,406 $5.05 174,662
</Table>
- ---------------
(1) These plans are the Company's 1991 Stock Option Plan, 1996 Stock Option Plan
and 1999 Stock Option Plan.
(2) The only equity compensation plan not approved by shareholders is the
Company's 1994 Non-Qualified Performance Option Plan. The 1994 Plan provided
for the issuance of options to purchase up to 100,000 shares of Common Stock
to certain employees, contingent upon meeting certain quarterly pre-tax
earnings levels. Options are exercisable over a ten-year period from the
date of grant.
EMPLOYMENT AGREEMENTS
The Company has entered into employment agreements with Gregory R. Binkley,
Charles B. Lingen and John M. Casler. Each agreement is automatically renewed
each December 31 for additional one year terms unless either party gives two
months' notice of nonrenewal, and terminates upon the employee's death,
disability or retirement at age 65. Upon termination of the agreement by reason
of death or disability, each of the employees or his estate is entitled to a
payment equal to 12 months of his monthly base salary, plus a pro rata portion
of the bonus that would otherwise have been payable to the employee under the
Company's bonus
7
plan then in effect. Upon termination of the agreement (i) by the employee for
good reason (as defined in the agreement) or (ii) by the Company without good
cause or upon the Company's failure to renew the agreement, the employee is
entitled to a payment equal to 24 months of his monthly base salary, plus a pro
rata portion of the bonus that would otherwise have been payable to the employee
under the Company's bonus plan then in effect. Each agreement also provides that
if the employee is terminated, or resigns for good reason or if the Company
fails to renew the agreement within two years following a substantial event
(defined as a sale of substantially all of the Company's assets, a merger or
other reorganization resulting in the incumbent directors constituting less than
a majority of the board, or a tender offer for 50% or more of the Company's
outstanding voting stock), such employee is entitled to a payment equal to three
times his annual base salary, plus a pro rata portion of the bonus otherwise
payable to the employee.
The Company has entered into an agreement with Gary Olen pursuant to which
Mr. Olen has granted the Company the exclusive right to use his name and
likeness and provides services to the Company. The agreement continues until
June 30, 2007 and is automatically renewed for additional one-year terms unless
either party gives one year's notice of non-renewal. The Company pays Mr. Olen
$50,000 per year under the agreement, subject to an annual cost of living
adjustment, plus benefits.
COMPENSATION COMMITTEE INTERLOCKS AND INSIDER PARTICIPATION
The Compensation Committee of the Board of Directors is comprised of
Vincent W. Shiel, Leonard M. Paletz and William T. Sena. Mr. Paletz is a former
Chief Executive Officer of the Company.
Outdoor Consulting, Inc., a corporation owned by Dr. Shiel, provides
certain consulting services to the Company. Mr. Sena provided certain consulting
services to the Company in 2002. See "Election of Directors -- Consulting
Agreements."
COMPENSATION COMMITTEE REPORT ON EXECUTIVE COMPENSATION
The Compensation Committee of the Board of Directors establishes policies
relating to compensation of executive officers of the Company. The Committee is
also responsible for the review and determination of salaries, bonuses and stock
options for executive officers.
Executive Compensation Policies
The Company's compensation policy seeks to provide an appropriate
relationship between executive pay and the creation of shareholder value, while
motivating and retaining key employees. To achieve this goal, the Company's
executive compensation policies integrate annual base compensation with bonuses
based upon corporate performance and stock options. Measurement of corporate
performance is primarily based on the pre-tax earnings of the Company.
Performance goals are revised annually to create an incentive for senior
management to increase sales, profit margin and earnings. The Committee feels
that stock options are an effective incentive for executives to create value for
shareholders since their value bears a direct relationship to the Company's
stock price. Annual cash compensation, together with equity-based compensation,
is designed to attract and retain qualified executives and to ensure that
executives have a continuing stake in the long-term success of the Company.
Base Salary. Base salaries for executive officers, as well as changes in
base salaries, are determined by the Committee based upon recommendations by the
Chief Executive Officer, comparable salaries for companies of similar size and
profitability, and an evaluation of subjective factors such as the individual's
position, contribution, experience and length of service.
Annual Bonus. The Company's annual bonus program provides for the payment
of cash bonuses based upon the achievement of pre-determined corporate
performance goals. For 2002, the Committee established specific levels of
Company pre-tax earnings as the performance measure for determining cash
bonuses. Bonus pool could range from $50,000 at pre-tax earnings of $1.5 million
increasing to $350,000 plus 30% of pre-tax earnings over $3.5 million. Cash
bonuses totaling $1,711,282 were earned for 2002.
Stock Options. Stock option awards to executive officers consist of annual
grants and in some years possible additional grants based on corporate
performance. The total number of annual stock option grants is
8
determined by the Committee taking into consideration the incentive potential of
the award as well as aggregate employee stock option ownership and overall
corporate performance. Individual awards are based upon recommendations by the
Chief Executive Officer. In late 2002, the Committee approved a stock option
program for 2003 consisting of the grant of options for 250,000 shares of Common
Stock to 16 employees, including three executive officers.
CEO Compensation
Gregory R. Binkley, the Company's Chief Executive Officer, was paid a base
salary of $210,000 for 2002, increased mid-year to $230,000. Mr. Binkley earned
a cash bonus of $393,500 under the 2002 bonus program based on his position and
contribution to the Company's financial performance. Mr. Binkley was also
granted a 50,000 share option under the stock option program for 2003.
Internal Revenue Code Section 162(m)
Section 162(m) of the Internal Revenue Code of 1986 limits the
deductibility of certain compensation in excess of $1 million per year paid by a
publicly traded corporation to the chief executive officer and the other named
executive officers in the company's proxy statement. Compensation which is
performance-based is exempt from the $1 million deductibility limitation. The
Committee has reviewed the application of Section 162(m) to its executive
compensation policies and does not believe that such policies are affected by
the Section 162(m) limitation at this time.
Vincent W. Shiel
Leonard M. Paletz
William T. Sena
9
PERFORMANCE GRAPH
The following graph shows a five-year comparison of the cumulative total
returns for the Company's Common Stock (*), the CRSP (**) Index for NASDAQ Stock
Market and the CRSP Index for NASDAQ Retail Trade Stocks. The graph assumes $100
invested on December 31, 1997 in the Company's Common Stock and each index with
all dividends reinvested.
COMPARISON OF FIVE YEAR-CUMULATIVE TOTAL RETURNS
AMONG THE SPORTSMAN'S GUIDE, INC., NASDAQ STOCKS AND NASDAQ RETAIL TRADE STOCKS
[PERFORMANCE GRAPH]
<Table>
<Caption>
NASDAQ
SPORTSMAN'S GUIDE STOCKS NASDAQ RETAIL TRADE
----------------- ------------- -------------------
Dec-97 $100.00 $102.13 $103.58
Mar-98 $ 99.01 $118.69 $122.42
Jun-98 $109.90 $122.52 $125.70
Sep-98 $ 61.39 $113.35 $ 92.17
Dec-98 $ 86.14 $143.99 $126.05
Mar-99 $ 98.02 $163.62 $125.53
Jun-99 $ 88.12 $173.49 $119.19
Sep-99 $ 76.24 $179.72 $106.62
Dec-99 $ 50.00 $267.06 $110.49
Mar-00 $ 56.68 $304.51 $ 97.46
Jun-00 $ 49.01 $255.04 $ 78.70
Sep-00 $ 25.74 $240.10 $ 80.83
Dec-00 $ 14.60 $160.77 $ 67.83
Mar-00 $ 15.84 $118.67 $ 68.64
Jun-01 $ 22.33 $141.41 $ 83.03
Sep-01 $ 35.33 $ 98.12 $ 70.31
Dec-01 $ 43.80 $130.03 $ 94.80
Mar-02 $ 67.88 $120.85 $ 94.04
Jun-02 $110.10 $ 96.33 $ 96.26
Sep-02 $123.25 $ 79.10 $ 79.47
Dec-02 $ 96.63 $ 89.05 $ 79.11
</Table>
Assumes $100 invested on December 31, 1997 in The Sportsman's Guide, Inc.
common stock, the NASDAQ stock index and the NASDAQ Retail Trade stock index,
with all dividends reinvested. The indices for NASDAQ stocks and NASDAQ Retail
Trade stocks were prepared by the Center for Research in Security Prices,
University of Chicago GSB.
- -------------------------
* The Company's Common Stock traded on the NASDAQ National Market under the
symbol "SGDE" from February 5, 1998 through February 26, 2001. The Company's
Common Stock was traded on the NASDAQ SmallCap Market from February 27, 2001
through June 4, 2002 and was transferred to the NASDAQ National Market
effective June 5, 2002.
** Center for Research in Security Prices, Graduate School of Business,
University of Chicago, Chicago, Illinois.
10
SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT
The following table sets forth certain information with respect to the
beneficial ownership of the Company's Common Stock as of March 7, 2003 (the
record date for the Annual Meeting) by each director and nominee for director of
the Company, each Named Executive Officer and all directors and executive
officers as a group, and those persons or groups known by the Company to own
more than 5% of the Common Stock.
<Table>
<Caption>
COMMON STOCK
BENEFICIALLY OWNED
------------------------
NAME NUMBER PERCENT(1)
---- ------ ----------
Directors and Executive Officers(2):
Vincent W. Shiel(3)......................................... 392,000 8.2%
Gary Olen(4)................................................ 214,615 4.3%
Gregory R. Binkley(5)....................................... 168,930 3.4%
Charles B. Lingen(6)........................................ 95,132 2.0%
John M. Casler(7)........................................... 76,167 1.6%
Leonard M. Paletz........................................... 158,996 3.3%
William T. Sena............................................. -- --
Jay A. Leitch............................................... -- --
All directors and executive officers as a group (8
persons)(8)............................................... 1,105,840 20.9%
Other Shareholders Owning More Than 5% of Common Stock:
David L. Babson & Company Inc.(9)........................... 498,300 10.5%
One Memorial Drive
Cambridge, MA 02142-1300
Dimensional Fund Advisors Inc.(10).......................... 317,200 6.7%
1299 Ocean Avenue
11th Floor
Santa Monica, CA 90401
Bjurman, Barry & Associates(11)............................. 299,560 6.3%
10100 Santa Monica Boulevard, Suite 1200
Los Angeles, CA 90067
Richard L. Scott(12)........................................ 279,900 5.9%
100 First Stamford Place
Stamford, CT 06902
Harvey Houtkin(13).......................................... 178,696 5.6%
160 Summit Avenue
Montvale, NJ 07645
</Table>
- -------------------------
(1) Percentages are calculated on the basis of the number of shares outstanding
on March 7, 2003 plus the number of shares issuable pursuant to options
held by the individual which are exercisable within 60 days after March 7,
2003.
(2) The address of each director and executive officer is 411 Farwell Avenue,
South St. Paul, Minnesota 55075.
(3) Includes 392,000 shares held by VWS Limited Partnership No. Two, LLLP, the
general partner of which is a limited liability company of which Dr. Shiel
is the managing member and president. Does not include 131,893 shares held
by Dr. and Mrs. Shiel's children or in trusts for the benefit of Dr. and
Mrs. Shiel and their children and grandchildren of which Dr. Shiel
expressly disclaims beneficial ownership.
(4) Includes 214,615 shares issuable upon the exercise of options.
(5) Includes 2,000 shares held in the name of Mr. Binkley's wife and 148,930
shares issuable upon the exercise of options.
11
(6) Includes 95,132 shares issuable upon the exercise of options.
(7) Includes 76,167 shares issuable upon the exercise of options.
(8) Includes 534,844 shares issuable upon the exercise of options.
(9) Based on a Schedule 13G filing dated December 5, 2002. David L. Babson &
Company Inc., a registered investment advisor, has sole power to vote
495,100 shares, shared power to vote 3,200 shares, and sole power to
dispose of 498,300 shares. David L. Babson & Company Inc. may be deemed the
beneficial owner of the shares which are owned by various investment
advisory clients.
(10) Based on a Schedule 13G filing dated February 3, 2003. Dimensional Fund
Advisors Inc., a registered investment advisor, furnishes investment advice
to four registered investment companies and serves as investment manager to
certain other commingled group trusts and separate accounts. In its role as
investment advisor or manager, Dimensional Fund Advisors Inc. has sole
power to vote and dispose of 317,200 shares owned by these funds. To the
knowledge of Dimensional Fund Advisors Inc., no one advisory client owns
more than 5% of the class. Dimensional Fund Advisors Inc. disclaims
beneficial ownership of the 317,200 shares.
(11) Based on a Schedule 13G filing dated February 5, 2003 filed by Bjurman,
Barry & Associates, George Andrew Bjurman and Owen Thomas Barry III.
Bjurman, Barry & Associates, a registered investment advisor, has sole
power to vote and dispose of 299,560 shares as of July 31, 2002. Messrs.
Bjurman and Barry disclaim beneficial ownership of any shares attributed to
Bjurman, Barry & Associates.
(12) Based on a Schedule 13D filing dated March 17, 2003. Mr. Scott has sole
power to vote and dispose of 279,900 shares. The shares were acquired by
three different entities controlled by Mr. Scott, including 217,600 shares
acquired by the Frances Annette Scott Revocable Trust of which Mr. Scott's
spouse is the trustee.
(13) Based on a Schedule 13G filing dated February 7, 2002. Does not include
88,340 shares owned by Mr. Houtkin's wife Sherry Houtkin, 2,700 shares
owned by his adult son Stuart Houtkin and 11,900 shares owned by his adult
son Michael Houtkin, as to which Mr. Houtkin disclaims beneficial
ownership. Mr. Houtkin has sole power to vote and dispose of 88,196 shares
and shared power to vote and dispose of 90,500 shares. Mr. Houtkin has
included the 88,340 shares owned by his wife in reporting his percentage
ownership.
SECTION 16(a) BENEFICIAL OWNERSHIP REPORTING COMPLIANCE
Section 16(a) of the Securities Exchange Act of 1934 requires the Company's
directors, executive officers and ten percent beneficial owners of Common Stock
to file reports of ownership and changes of ownership of the Company's Common
Stock with the Securities and Exchange Commission. The Company believes that
during 2002 all Section 16 filing requirements applicable to its directors,
executive officers and ten percent beneficial owners were met.
12
CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS
In February 1998, the Company loaned Gary Olen $238,700 to pay the exercise
price of an option to purchase 55,000 shares of Common Stock held by Mr. Olen
(which became exercisable upon completion of the Company's public offering and
would have expired six months later) and to pay the income taxes payable by him
upon exercise of the option. The loan, approved by the Board of Directors, was
for a term of five years, bore interest at the mid-term applicable federal rate
as of the date of the loan (5.69%) and was collateralized by a pledge of the
shares acquired upon exercise. In February 2001, the Board of Directors deferred
for two years payment of the first installment due on the loan. The outstanding
loan balance of $294,841, including accrued interest, was paid in full in April
2002.
SHAREHOLDER PROPOSALS
Proposals by shareholders intended to be presented at the 2004 Annual
Meeting must be received by the Secretary of the Company on or before December
1, 2003 to be considered for inclusion in the proxy statement for that meeting.
Proposals should be directed to the Company's executive offices at 411 Farwell
Avenue, South St. Paul, Minnesota 55075, Attention: Mr. Charles B. Lingen,
Secretary/Treasurer. Shareholder proposals intended to be submitted at the 2004
Annual Meeting outside the processes of Rule 14a-8 will be considered untimely
under Rule 14a-4(c)(1) if not received by the Company at its executive offices
on or before February 12, 2004.
ADDITIONAL INFORMATION
The Company's Annual Report to Shareholders for the year ended December 31,
2002 accompanies this Notice of Annual Meeting of Shareholders and Proxy
Statement.
SOLICITATION OF PROXIES
The Company will bear the entire expense of this proxy solicitation.
Arrangements will be made with brokers and other custodians, nominees and
fiduciaries to send proxy solicitation materials to their principals and the
Company will, upon request, reimburse them for their reasonable expenses in so
doing. Officers and other regular employees of the Company may solicit proxies
by mail, in person or by telephone.
THE SPORTSMAN'S GUIDE, INC.
/s/ CHARLES B. LINGEN
Charles B. Lingen, Secretary
13
PROXY THE SPORTSMAN'S GUIDE, INC.
ANNUAL MEETING OF SHAREHOLDERS
MAY 2, 2003
The undersigned hereby appoints Gregory R. Binkley and Charles B.
Lingen and each of them, as proxies, with full power of substitution,
to vote all shares of Common Stock of The Sportsman's Guide, Inc.
(the "Company") which the undersigned is entitled to vote at the
Annual Meeting of Shareholders of the Company to be held on Friday,
May 2, 2003 at 2:00 p.m. and any adjournments thereof as follows:
THE BOARD OF DIRECTORS RECOMMENDS A VOTE FOR ITEMS 1 AND 2.
<Table>
1. ELECTION OF DIRECTORS FOR all nominees listed below WITHHOLD AUTHORITY
(except as marked to the to vote for all nominees listed
contrary below). [ ] below. [ ]
</Table>
INSTRUCTION: To withhold authority to vote for any individual nominee
strike a line through the nominee's name below.
Gary Olen, Gregory R. Binkley, Charles B. Lingen,
Leonard M. Paletz, William T. Sena, Jay A. Leitch
2. Ratification of the engagement of Grant Thornton LLP as
independent certified public accountants for the Company for 2003.
[ ] FOR [ ] AGAINST [ ] ABSTAIN
3. In their discretion to vote upon such other business as may
properly come before the meeting.
(Continued on reverse side)
(continued from other side)
IF NO DIRECTION IS MADE, THIS PROXY WILL BE VOTED FOR THE ELECTION
OF THE DIRECTOR NOMINEES NAMED HEREIN AND FOR THE RATIFICATION OF THE
ENGAGEMENT OF GRANT THORNTON LLP.
Please sign and date this Proxy below and return in the enclosed
envelope.
Dated: , 2003
----------------------------
(Signature)
----------------------------
(Signature)
Please date and sign your
name as it appears hereon.
When signing as an attorney,
executor, administrator,
guardian or in some other
representative capacity,
please give full title. All
joint owners must sign.
THIS PROXY IS SOLICITED ON BEHALF OF THE BOARD OF DIRECTORS