WOLOHAN LUMBER CO.
NOTICE OF ANNUAL MEETING OF STOCKHOLDERS
MAY 3, 2001
To The Stockholders Of
Wolohan Lumber Co.:
NOTICE IS HEREBY GIVEN that the Annual Meeting of Stockholders of
Wolohan Lumber Co. will be held on Thursday, the 3rd day of May, 2001, at 2:00
P.M., Local Time, at the Citizens Bank Building, 101 North Washington Avenue,
Saginaw, Michigan for the following purposes:
1. To elect a Board of six Directors of the Company to hold
office until the next Annual Meeting of Stockholders or
until their successors are elected and qualified;
2. To approve a proposal to amend the Company's Long-Term
Incentive Plan to increase the number of shares of the
Company's Common Stock which may be issued thereunder; and
3. To transact such other business as may properly come before
the meeting or any adjournments thereof.
Stockholders of record at the close of business on March 6, 2001 are
entitled to vote at the meeting or any adjournments thereof. Stockholders are
requested to date, sign and mail the enclosed Proxy Card promptly in the
enclosed addressed envelope.
By Order of the Board of Directors
DAVID G. HONAMAN, Secretary
March 30, 2001
WOLOHAN LUMBER CO.
1740 Midland Road
Saginaw, Michigan 48603
PROXY STATEMENT
-------------------------
March 30, 2001
This Proxy Statement contains information related to the Annual Meeting
of Stockholders of Wolohan Lumber Co., a Michigan corporation, to be held on
Thursday, May 3, 2001, beginning at 2:00 p.m., local time, at the Citizens Bank
Building, 101 North Washington Avenue, Saginaw, Michigan, and at any
adjournments of the meeting. The Proxy Statement and the accompanying Proxy Card
are first being mailed to stockholders on or about the above date.
ABOUT THE MEETING
WHAT IS THE PURPOSE OF THE ANNUAL MEETING
At the Company's Annual Meeting, stockholders will elect directors to
serve for the ensuing year and vote on a proposal to amend the Company's
Long-Term Incentive Plan to increase the number of shares of the Company's
Common Stock which may be issued thereunder. In addition, the Company's
management will report on the performance of the Company during 2000 and respond
to questions from stockholders.
WHO IS ENTITLED TO VOTE?
Only stockholders of record of the Company's Common Stock at the close
of business on the record date, March 6, 2001, are entitled to receive notice of
the Annual Meeting and to vote the shares of Common Stock that they held on that
date at the meeting or any adjournment of the meeting. Each outstanding share
entitles its holder to cast one vote on each matter to be voted on.
WHAT CONSTITUTES A QUORUM?
The presence at the meeting, in person or by proxy, of the holders of a
majority of the shares of Common Stock outstanding on the record date will
constitute a quorum, permitting the meeting to conduct business. As of the
record date, 3,381,598 shares of Common Stock of the Company were outstanding.
Abstentions and broker non-votes are each included in the determination of the
number of shares present for purposes of a quorum.
HOW DO I VOTE?
If you are a registered stockholder, (that is, if you hold your stock
in your own name), and you complete and properly sign the accompanying Proxy
Card and return it to the
1
Company's stock transfer agent, Registrar and Transfer Company, it will be voted
as you direct. If you attend the meeting, you may deliver your completed Proxy
Card in person.
If your shares are held in "street name" and you complete and properly
sign the Proxy Card provided to you by your broker or other nominee, the broker
or other nominee is required to vote your shares as you direct pursuant to a
duly executed Proxy Card.
CAN I CHANGE MY VOTE AFTER I SUBMIT MY PROXY?
Yes. Even after you have submitted your proxy, you may change your vote
at any time prior to the close of voting at the meeting by filing with the
Secretary of the Company either a notice of revocation or a duly executed proxy
bearing a later date.
WHAT VOTE IS REQUIRED TO APPROVE EACH MATTER?
The affirmative vote of a plurality of the votes cast at the meeting is
required for the election of directors. A properly executed proxy marked
"Withhold Authority" with respect to the election of one or more directors will
not be voted with respect to the director or directors indicated, but will be
counted for purposes of determining whether there is a quorum.
The affirmative vote of a majority of the shares represented in person
or by proxy will be required to approve the amendment to the Long-Term Incentive
Plan. A properly executed proxy marked "Abstain" with respect to the proposal
will not be voted, but will be counted for purposes of determining whether there
is a quorum. Accordingly, an abstention will have the effect of a negative vote.
STOCK OWNERSHIP
HOW MUCH COMMON STOCK DO THE COMPANY'S DIRECTORS AND EXECUTIVE OFFICERS OWN?
The following table sets forth, as of March 6, 2001, the number of
shares of the Company's Common Stock beneficially owned by each director, each
executive officer named in the Summary Compensation Table who is currently
employed by the Company and all directors and executive officers as a group.
2
Name of Individual Number Percent
or Group of Shares(1) of Class
-------- ------------ --------
Hugo E. Braun, Jr.................................... 13,470(3) *
Leo B. Corwin........................................ 6,000(2) *
David G. Honaman..................................... 58,364(3) 1.7
Daniel P. Rogers..................................... 7,000(3) *
Lee A. Shobe......................................... 7,500(2) *
John A. Sieggreen.................................... 29,020(3) *
Charles R. Weeks..................................... 6,000(2) *
James L. Wolohan..................................... 1,570,850(4) 46.5
All Directors and Executive Officers as a Group (8
persons)............................................. 1,698,204(5) 50.2
* Less than one percent
(1) The number of shares shown in the table does not include 9,498 shares owned
by spouses and children where beneficial ownership is disclaimed and does
not include any shares held in the Long-Term Incentive Plans.
(2) The number of shares shown in the table includes shares which the
following directors have the right to acquire upon the exercise of stock
options granted under the Stock Option Plan for Non-Employee Directors:
Hugo E. Braun, Jr., Leo B. Corwin, Lee A. Shobe and Charles R. Weeks,
5,000 shares each.
(3) The number of shares shown in the table includes shares issuable upon the
exercise of stock options within 60 days of March 6, 2001 for the following
executive officers: David G. Honaman - 31,000 shares, Daniel P. Rogers -
7,000 shares, and John A. Sieggreen - 29,000 shares.
(4) The number of shares shown in the table as beneficially owned by James L.
Wolohan includes 80,506 shares which he owns in his own name, 65,000 shares
issuable upon the exercise of stock options within 60 days of March 6,
2001, 1,573 shares which he holds as custodian and 1,423,771 shares which
he holds with Michael J. Wolohan as Co-Trustee.
(5) Includes 1,425,344 shares which directors and officers (including James L.
Wolohan) hold as trustees or in other fiduciary capacities but does not
include shares held by family members in their own right or in other trusts
for the benefit of family members where beneficial ownership is disclaimed
by the director or officer.
WHO ARE THE LARGEST OWNERS OF THE COMPANY'S COMMON STOCK?
The following table sets forth certain information concerning persons
which, to the knowledge of the Company, own as of March 6, 2001 more than 5% of
the outstanding Common Stock.
3
Name of Number Percent
Beneficial Owner of Shares(1) of Class
---------------- ------------ --------
Michael J. Wolohan and James L. Wolohan as Co-Trustees............ 1,423,771(2) 42.1
Timothy W. and Georgine Wolohan................................... 266,953 7.9
6 Pinehurst Lane
Cincinnati, Ohio 45208
Dimensional Fund Advisors, Inc.................................... 209,726(3) 6.2
1299 Ocean Avenue
Santa Monica, California 90401
(1) Beneficial ownership of shares, as determined in accordance with
applicable Securities and Exchange Commission rules, includes shares as
to which a person has or shares voting power and/or investment power.
(2) In addition, 7,260 shares are held by Michael J. Wolohan's spouse as
Trustee and 1,931 shares are held by Michael J. Wolohan as Trustee;
James L. Wolohan owns 80,506 shares, is custodian of an account which
holds 1,573 shares and holds stock options exercisable within 60 days
of March 6, 2001 to purchase 65,000 shares; and James L. Wolohan's
spouse holds 9,489 shares as Trustee of five trusts.
(3) Based on information set forth in a Schedule 13G filed with the
Securities and Exchange Commission.
ELECTION OF DIRECTORS
The By-Laws of the Company provide that the number of directors shall
be determined by the Board of Directors and shall not be less than five nor more
than nine. The Board of Directors has fixed at six the number of directors to be
elected at the meeting to hold office until the next annual meeting of
stockholders or until their successors are elected and qualified. It is the
intention of the persons named in the enclosed form of proxy to vote such proxy
for the election of the nominees hereinafter named as directors.
The proposed nominees for election as directors are willing to be
elected as such. If, as a result of circumstances not now known or foreseen, any
such nominees shall be unavailable or unwilling to serve as a director, proxies
may be voted for the election of such other person or persons as the Board of
Directors may select. Directors are elected by a plurality of votes which are
present in person or represented by proxy at the meeting.
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INFORMATION ABOUT NOMINEES AS DIRECTORS
The following information is furnished with respect to each person
nominated for election as a director, each of whom is presently a director of
the Company.
Has
Served
Principal Occupation and as
Directorships in Other Director
Name and Age of Nominee Publicly Owned Companies(1) Since
----------------------- --------------------------- -----
Hugo E. Braun, Jr., 68...................... Partner, Braun Kendrick Finkbeiner, P.L.C.,
Attorneys-at-law, Director of Citizens Banking
Corporation........................................ 1984
James L. Wolohan, 49........................ Chairman of the Board, President and Chief
Executive Officer of the Company, Director of
Jacobson Stores, Inc. and Citizens Banking
Corporation........................................ 1986
Leo B. Corwin, 66........................... President, Txcor, Inc. Formerly Senior Vice
President of Merchandising for Builders Square,
Inc................................................ 1992
Charles R. Weeks, 66........................ Director of Citizens Banking Corporation, Formerly
Chairman and Chief Executive Officer , Citizens
Banking Corporation................................ 1996
Lee A. Shobe, 62............................ Formerly President and Chief Executive Officer of
Dow Brands, Inc.................................... 1996
John A. Sieggreen, 38....................... Executive Vice President and Chief Operating
Officer of the Company............................. 1999
(1) Each of the directors and nominees has had the same principal
occupation during the past five years except as follows: Mr. Sieggreen
served as Vice President of Operations from 1997 to 1999. Prior thereto
he served in various management positions with Building Materials
Holdings Corp.
The law firm of Braun Kendrick Finkbeiner, P.L.C., of which firm Hugo
E. Braun, Jr. is a partner, performs legal services for the Company.
The Company maintains banking relationships in the ordinary course of
business with Citizens Bank, a subsidiary of Citizens Banking Corporation, of
which Charles R. Weeks, Hugo E. Braun, Jr. and James L. Wolohan are directors.
5
HOW OFTEN DID THE BOARD MEET DURING 2000?
The Board of Directors held five meetings during 2000.
WHAT ARE THE COMMITTEES OF THE BOARD AND
WHAT ARE THE FUNCTIONS OF THE BOARD COMMITTEES?
The Company has a standing Audit Committee, Compensation Committee and
Management Review Committee of the Board of Directors.
The members of the Audit Committee for 2000 were Hugo E. Braun, Jr.,
Chairman, Leo B. Corwin, Lee A. Shobe and Charles R. Weeks. The Audit Committee
met five times during 2000. See "Report of the Audit Committee" herein.
The members of the Compensation Committee for 2000 were Charles R.
Weeks, Chairman and Hugo E. Braun, Jr. The Compensation Committee met four times
during 2000. The Committee reviews and recommends to the Board of Directors the
compensation of officers of the Company, examines periodically the compensation
structure of the Company and administers the Company's Long-Term Incentive
Plans.
The members of the Management Review Committee for 2000 were Lee A.
Shobe, Chairman, Hugo E. Braun, Jr., Leo B. Corwin and Charles R. Weeks. This
Committee met four times during 2000. Among its various responsibilities, the
Committee recommends nominees for election as directors at the Annual Meeting of
Stockholders and individuals to fill vacancies which may occur between annual
meetings. The Committee will consider as potential nominees persons recommended
by stockholders. Such recommendations should include a personal biography of the
suggested nominee, an indication of the background or experience that qualifies
such person for consideration, and a statement that such person has agreed to
serve if nominated and elected.
HOW ARE DIRECTORS COMPENSATED?
Directors who are not full-time employees received a fee of $16,000
($19,000 for each Chairman of a Committee) for 2000, plus reimbursement for
travel expenses to attend meetings of the Board of Directors. On May 4, 2000,
each of the then current directors with the exception of James L. Wolohan and
John A. Sieggreen, were granted an option under the Stock Option Plan for
Non-Employee Directors to purchase 1,000 shares of Common Stock at an option
price of $10.50 per share. The option price was equal to the closing market
price on the date of grant.
REPORT OF THE AUDIT COMMITTEE
The Audit Committee oversees the Company's financial reporting process
on behalf of the Board of Directors. The Committee which is composed of four
independent Directors met five times in fiscal 2000, and operates under a
written charter (Appendix A) adopted by the Board of Directors. Executive
management has the primary responsibility for the financial
6
statements and the reporting process, including the Company's systems of
internal controls. In fulfilling its oversight responsibilities, the Committee
reviewed the audited financial statements in the Annual Report on Form 10-K with
management, including a discussion of the quality and the acceptability of the
Company's financial reporting and controls.
The Committee reviewed with the independent auditors, Rehmann Robson
PC, who are responsible for expressing an opinion on the conformity of those
audited financial statements with generally accepted accounting principles,
their judgments as to the quality and the acceptability of the Company's
financial reporting and such other matters as are required to be discussed by
Statement on Auditing Standards No. 61 relating to the conduct of the audit. In
addition, the Committee has discussed with the independent auditors the
auditors' independence from management and the Company, including the matters in
the auditors' written disclosures required by the Independence Standards Board
Standard No. 1.
The Committee also discussed with the Company's internal and
independent auditors the overall scope and plans for their respective audits.
The Committee meets periodically with the internal and independent auditors,
with and without management present, to discuss the results of their
examinations, their evaluations of the Company's internal controls, and the
overall quality of the Company's financial reporting. The Committee has
considered the compatibility of the provision of non-audit services with
maintaining the auditor's independence.
In reliance on the reviews and discussions referred to above, the
Committee recommended to the Board of Directors that the audited financial
statements be included in the Annual Report on Form 10-K for the fiscal year
ended December 31, 2000 for filing with the Securities and Exchange Commission.
The Committee also evaluated and recommended to the Board the reappointment of
the Company's independent auditors for 2001.
Audit Committee
Hugo E. Braun, Jr., Chairman
Leo B. Corwin
Lee A. Shobe
Charles R. Weeks
AUDIT FEES
The aggregate fees billed or expected to be billed to the Company for
the year ended December 31, 2000 by the Company's independent auditor, Rehmann
Robson PC, are as follows:
Audit Fees $106,000
Financial Information Systems and
Implementation Fees 28,600
All Other Fees 139,400
-------
Total $274,000
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COMPENSATION COMMITTEE REPORT
The Compensation Committee of the Board of Directors (the "Committee")
is composed of two outside directors and is responsible for developing and
making recommendations to the Board of Directors, with respect to the Company's
executive compensation policies. In addition, the Compensation Committee,
pursuant to authority delegated by the Board, determines on an annual basis the
compensation to be paid to the chief executive officer and each of the other
officers of the Company.
The Committee has available to it an outside compensation consultant
and access to independent compensation data.
The Company's compensation policy for officers is designed to support
the overall objective of enhancing value for stockholders by attracting,
developing, rewarding, and retaining highly qualified and productive
individuals; relating compensation to both Company and individual performance;
and ensuring compensation levels that are externally competitive and internally
equitable.
The key elements of the Company officers' compensation consist of base
salary, potential bonus awards under the Cash Incentive Compensation Program
based on overall Company performance and the award of Performance Shares and
stock options under the Long-Term Incentive Plan which give the officers the
opportunity to earn long-term stock based incentives. The Compensation
Committee's policies with respect to each of these elements, including the
determination of the compensation awarded to Mr. Wolohan, the Company's chief
executive officer, are discussed below. In addition, while the elements of
compensation described below are considered separately, the Compensation
Committee takes into account the full compensation package afforded by the
Company to the individual.
BASE SALARY
Each officer's salary is reviewed annually. In determining appropriate
salary levels, consideration is given to the scope of responsibility,
experience, Company and individual performance as well as pay practices of other
companies relating to executives of similar responsibility.
With respect to the base salary of Mr. Wolohan in 2000, consideration
was given to a comparison of base salaries of chief executive officers of peer
companies, and an assessment of Mr. Wolohan's individual performance. Mr.
Wolohan's base salary of $222,000 for 2000 remained the same as his 1999, 1998
and 1997 base salary.
8
CASH INCENTIVE COMPENSATION PROGRAM
To emphasize the creation of value for stockholders, the Company
adopted the EVA(TM) (Economic Value Added) concept in 1997. The concept is used
to evaluate Company and individual market performance.
Incentives for operating management are based on the results of the
individual market(s) supervised. Factors which determine the amount of incentive
are: (1) net operating profit after tax, (2) return on net controllable assets,
and (3) the improvement in return on net controllable assets. Each of these
factors is consistent with the EVA (TM) concept. Incentives for middle
management corporate office staff are based on the summation of results for all
markets using the same factors as operating management as well as individual
performance objectives.
Incentives for senior management are based on total Company
performance. The Compensation Committee awarded bonuses to senior management for
2000 recognizing their significant progress in implementing key components of
the Company's strategic plan.
LONG-TERM INCENTIVE PLAN
The purpose of the Long-Term Incentive Plan of the Company is to: (i)
strengthen the commonality of interest between management and the Company's
stockholders, (ii) provide strong incentives and rewards for key employees to
accomplish the Company's long term goals and objectives, (iii) attract and
retain employees of high caliber and ability, and (iv) offer, in combination
with base salaries, other incentives and benefits, a comprehensive and
competitive total compensation program. The Plan provides for the award of
Performance Shares as well as stock options.
PERFORMANCE SHARES. The program for 2000 was composed of various tiers
with each participant assigned to a tier upon the basis of the participant's job
responsibilities. Performance Shares are based on return on investment and/or
individual performance objectives. For job responsibilities there is specified
the number of Performance Shares which will be awarded a participant if a
specified return on investment and/or individual performance objectives are
achieved.
STOCK OPTIONS. Under the Long-Term Incentive Plan, stock options may be
granted, from time to time, to officers and key employees of the Company. The
number of options granted is determined by subjective evaluation of the person's
ability to influence the Company's long-term growth and profitability. Stock
options are granted with an exercise price equal to the market price of the
Common Stock on the date of grant.
On September 22, 2000, Mr. Wolohan was granted stock options to
purchase 50,000 shares of Common Stock at an option price of $10 1/16 per share.
The options do not vest for a period of thirty-six months from date of grant or
an earlier change of control. Of the options granted, 25,000 shares are subject
to stockholder approval of an amendment to the Long-Term Incentive Plan as
discussed in this Proxy Statement.
9
The Committee believes that linking executive compensation to corporate
performance results in a better alignment of compensation with corporate goals
and stockholder interest. As performance goals are met or exceeded, resulting in
increased value to stockholders, executives are rewarded commensurately. The
Committee believes that compensation levels during 2000 adequately reflect the
Company's compensation goals and policies
Compensation Committee
CHARLES R. WEEKS, Chairman
HUGO E. BRAUN, JR.
EXECUTIVE COMPENSATION
The following summary compensation table sets forth information with
respect to the compensation of the Chief Executive Officer and the named
executive officers of the Company.
SUMMARY COMPENSATION TABLE
Long-Term
Compensation
Annual Compensation(1) Awards
---------------------- -------------
Number of
Securities
Name and Underlying
Principal Options/ All Other
Position Year Salary Bonus Granted(2) Compensation(3)
---------- ---- ------ ----- ---------- ---------------
James L. Wolohan 2000 $222,000 $ -0- 50,000 $14,269
Chairman of the Board, 1999 222,000 75,000 -0- 10,804
President and Chief Executive Officer 1998 222,000 -0- 75,000 7,586
John A. Sieggreen 2000 155,000 50,000 50,000 6,500
Executive Vice President and 1999 138,042 40,000 15,000 4,841
Chief Operating Officer 1998 125,000 -0- 35,000 2,525
David G. Honaman 2000 127,000 -0- -0- 7,456
Senior Vice President, 1999 122,576 20,000 -0- 6,124
Secretary and Chief Financial Officer 1998 120,000 -0- 25,000 4,441
Daniel P. Rogers (4) 2000 135,000 30,000 50,000 5,545
Senior Vice President - 1999 121,731 30,000 15,000 4,942
General Merchandise Manager 1998 62,287 36,000 10,000 4,023
Curtis J. LeMaster (5) 2000 113,000 -0- -0- 1,855
Senior Vice President - 1999 120,000 17,500 -0- 4,755
Chief Information Officer 1998 120,000 -0- 25,000 2,092
(1) The aggregate amount of perquisites and other personal benefits for any
named executive officer does not exceed $50,000 or 10% of the total of
annual salary and bonus for any such named executive officer, and is
therefore, not reflected in the table.
10
(2) Represents the number of stock options granted under the Company's
Long-Term Incentive Plan. Of the options granted to Messrs. Wolohan,
Sieggreen and Rogers, 25,000 shares as to each officer are subject to
stockholder approval of an amendment to the Long-Term Incentive Plan as
discussed in this Proxy Statement.
(3) This column includes the Company's contributions to the Deferred Profit
Sharing Plan and Supplemental Executive Retirement Program as well as
dividends paid on outstanding Performance Shares under the Company's
Long-Term Incentive Plans. The Company's 2000 contribution to the
Deferred Profit Sharing Plan and Supplemental Executive Retirement
Program was as follows: Mr. Wolohan - $8,910; Mr. Sieggreen - $5,100;
Mr. Honaman - $4,410; and Mr. Rogers - $4,950. It also includes
dividends paid on outstanding Performance Shares during 2000 under the
Company's Long-Term Incentive Plans as follows: Mr. Wolohan - $5,359;
Mr. Sieggreen - $1,400; Mr. Honaman - $3,046; Mr. Rogers - $595; and
Mr. LeMaster - $1,855.
(4) Mr. Rogers joined the Company on June 29, 1998 upon the Company's
acquisition of Central Michigan Lumber Company.
(5) Mr. LeMaster retired from the Company effective December 1, 2000.
LONG-TERM INCENTIVE PLAN - AWARDS IN 2000
The following table sets forth information with respect to awards of
Performance Shares under the Long-Term Incentive Plan during 2000 to the
following executive officers named in the Summary Compensation Table.
Performance or
Number of Other Period Until Estimated
Performance Maturation Future Payouts
----------------------------------
Name Shares Awarded Or Payout(1) Threshold Target Maximum
---- -------------- ------------ --------- ------ -------
James L. Wolohan.................... 3,000 1/1/2011 3,000 3,000 3,000
John A. Sieggreen................... 2,000 1/1/2011 2,000 2,000 2,000
David G. Honaman.................... 1,500 1/1/2011 1,500 1,500 1,500
Daniel P. Rogers.................... 2,000 1/1/2011 2,000 2,000 2,000
Curtis J. LeMaster.................. 1,500 1/1/2011 1,500 1,500 1,500
(1) These Performance Shares may be fully earned by January 1, 2006 and
shall be deliverable to the participant on January 1, 2011.
Performance Shares when awarded are earned by a participant based on
the achievement of performance goals and/or individual performance objectives at
the end of the stated performance period and the participant's continued
employment after such period. Such shares as to which performance goals and/or
individual performance objectives have been met shall be deemed earned by the
participant in increments of twenty percent per year for each year after the end
of the stated performance period, so that by the end of the fifth year after the
end of the stated performance period, the participant will have fully earned the
Performance Shares.
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Performance Shares shall be distributed to participants in the form of
one share of the Company's Common Stock for each Performance Share earned. In
lieu of immediate issuance of shares of Common Stock upon being earned, the
Compensation Committee shall defer the delivery of such shares for a period of
five years after the date all of the Performance Shares become 100% earned;
provided, however, in the event of termination of employment by the participant
during such five year period, all such shares not yet distributed shall be
delivered to or on behalf of the participant.
Under the Long-Term Incentive Plan the following executive officers
named in the Summary Compensation Table are vested and nonvested with the
following number of Performance Shares having the following aggregate values
based on the last sales price of the Common Stock of the Company on the NASDAQ
National Market System on December 31, 2000:
Performance Shares Performance Shares
Vested Nonvested
------------------------------------- ----------------------------------
Name Number Value Number Value
---- ------ ----- ------ -----
James L. Wolohan....... 12,940 $139,105 9,000 $96,750
John A. Sieggreen....... 2,200 23,650 5,300 56,975
David G. Honaman...... 7,622 81,437 4,500 48,375
Daniel P. Rogers......... 700 7,525 3,800 40,850
Curtis J. LeMaster....... 8,500 91,375 -0- -0-
Shares of the Company's Common Stock as to which performance goals
and/or individual performance objectives have not been met have full dividend
rights with respect to dividends declared after such goals and/or objectives
have been met, with such dividends being paid directly to the participant.
OPTIONS/SAR GRANTS DURING 2000
The following table sets forth information on stock options granted
during 2000 under the Company's Long-Term Incentive Plan to the executive
officers named in the Summary Compensation Table.
Individual Grants
--------------------------------------------------
Potential Realizable
Value at Assumed
Percent of Ranges
Total of Stock Price
Number of Options Appreciation for
Securities Granted to Exercise Option
Name Underlying Employees Price Term(5)
---- Options/SARS During Per Expiration ---------------------
Granted(1)(2) 2000(3) Share(4) Date 5% 10%
------------- ------- -------- ---- -- ---
James L. Wolohan...... 50,000 33.3 $10 1/16 9/21/10 $16.40 $26.06
John A. Sieggreen........ 50,000 33.3 10 1/16 9/21/10 16.40 26.06
Daniel P. Rogers........ 50,000 33.3 10 1/16 9/21/10 16.40 26.06
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(1) The Long-Term Incentive Plan does not provide for the grant of SARs.
(2) Of the options granted, 25,000 shares as to each officer are subject to
stockholder approval of an amendment to the Long-Term Incentive Plan
increasing the number of shares issuable thereunder as hereinafter
described.
(3) The Company granted options aggregating 150,000 shares to officers and
key employees during 2000.
(4) The exercise price may be paid by delivery of already-owned shares.
(5) As required by rules of the Securities and Exchange Commission,
potential values stated are based on the prescribed assumption that the
Company's Common Stock will appreciate in value from the date of grant
to the end of the option term at annualized rates of 5% and 10% (total
appreciation of 63% and 159%) respectively, and therefore are not
intended to forecast possible future appreciation, if any, in the price
of the Company's Common Stock.
YEAR-END OPTION VALUES
The following table sets forth certain information on the number of
stock options remaining unexercised at December 31, 2000 by the executive
officers named in the Summary Compensation Table and the value of such options
at December 31, 2000. No options were exercised during 2000 by such executive
officers.
Number of
Shares Value Securities Underlying Value of Unexercised
Acquired Realized Unexercised Options In-the-Money Stock Options
on at at December 31, 2000 at December 31, 2000
-------------------- --------------------
Name Exercise Exercise Exercisable Unexercisable Exercisable Unexercisable
---- -------- -------- ----------- ------------- ----------- -------------
James L. Wolohan........... -0- -0- 60,000 95,000 $15,000 $34,375
John A. Sieggreen.......... -0- -0- 22,000 83,000 -0- 34,375
David G. Honaman........... -0- -0- 26,000 15,000 9,000 -0-
Daniel P. Rogers........... -0- -0- 7,000 68,000 -0- 34,375
Curtis J. LeMaster............. -0- -0- 10,000 18,000 4,500 -0-
PERFORMANCE GRAPH
The following graph compares the change in the Company's cumulative
total stockholder return on its Common Stock with the NASDAQ Stock Market (U.S.
Companies), the NASDAQ Retail Trade Stocks and a Peer Group Index.
-13-
[PERFORMANCE GRAPH]
Data Sheet
31-DEC 31-DEC 31-DEC 31-DEC 31-DEC
96 97 98 99 00
----------------------------------------------------------------
Wolohan Lumber Co. 132 145 143 136 124
NASDAQ Stock Market 123 151 213 395 238
Peer Group Index 83 70 83 76 62
NASDAQ Retail Trade Stocks 119 140 171 150 92
- --------------------------------------------------------------------------------
Assuming $100 Invested on 12/31/95
with Dividends Reinvested
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The 2000 Peer Group Index is composed of the following issuers:
Wickes, Inc. and Building Materials Holding Corp. Prepared by: Research
Data Group, Inc.
SELECTION OF INDEPENDENT AUDITORS
Rehmann Robson PC has been re-appointed as independent auditors to
audit the Company's financial statements for the year 2001 by the Board of
Directors of the Company upon the recommendation of the Audit Committee of the
Board of Directors. Representatives of Rehmann Robson PC will be present at the
Annual Meeting of Stockholders, will have the opportunity to make a statement if
they desire to do so and will be available to respond to appropriate questions
by stockholders.
PROPOSAL TO AMEND THE LONG-TERM INCENTIVE PLAN
The Board of Directors of the Company has adopted, subject to
stockholder approval, an amendment to the Long-Term Incentive Plan (the "Plan"),
to make available an additional 150,000 shares of the Company's Common Stock for
issuance thereunder. The Plan was previously approved by stockholders at the
Annual Meeting in April 1991.
The Company has elected to continue issuing shares pursuant to the Plan
rather than initiating a new plan. Of the 550,000 shares authorized (adjusted
for subsequent stock
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dividends) for issuance pursuant to the Plan, only 61,471 shares remain
available for issuance. If the amendment to the Plan is not approved by
Stockholders, options for 75,000 shares awarded on September 22, 2000 shall be
deemed not to have been granted. The Plan is intended to enable key employees of
the Company to participate in the Company's future growth and profitability by
offering them long-term performance-based incentive compensation. The Plan also
provides a means through which the Company can attract and retain key employees.
The essential features of the Plan are set forth below.
ELIGIBILITY FOR PARTICIPATION. Participation in the Plan is limited to
officers and other key employees designated by the Compensation Committee of the
Board of Directors of the Company (the "Committee"), whose members are not
eligible to participate in the Plan. The Committee is empowered under the Plan
to grant Performance Share awards and stock options.
GRANT OF PERFORMANCE SHARES. The Plan provides for the grant of
Performance Shares to participants. Performance Shares are shares of the
Company's Common Stock contingently granted to participants under the Plan which
may be earned out by achievement of performance goals and/or individual
performance objectives during the performance period and by continued
employment.
The performance goals established under the Plan relate to the
Company's overall performance during the performance period (no less than one
year and no more than five years) or to the performance of a major company unit
and may be stated in terms of, but not limited to: (i) return on equity, (ii)
return on assets employed, (iii) return on sales, and/or (iv) earnings per
share. More than one performance goal may be established under the Plan. Such
goals may be changed by the Committee to reflect major unforeseen events.
The individual performance objectives established under the Plan shall
mean those objectives, as determined by the Committee, for individual
performance by a participant, the achievement of which shall determine whether
Performance Shares are earned by a participant under the Plan.
All Performance Shares are earned by a participant based on the
achievement of performance goals and/or individual performance objectives at the
end of the stated performance period and the participant's continued employment
after such period. Such shares as to which performance goals and/or individual
performance objectives have been met shall be deemed earned by the participant
in increments of twenty percent per year for each year after the end of the
stated performance period, so that by the end of the firth year after the end of
the stated performance period, the participant will have fully earned the
Performance Shares.
Except as provided in the following paragraph, if the participant's
employment with the Company terminates before the Performance Shares are earned,
no distribution shall be made with respect to such unearned shares unless the
Committee, on a case by case basis, decides otherwise.
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If the participant's employment with the Company terminates after the
applicable performance goals and/or individual performance objectives have been
met but before the date Performance Shares are 100% earned by reason of
retirement on attaining the age of 65, death or total and permanent disability
of the participant, the Performance Shares shall become 100% earned and such
shares shall be delivered to or on behalf of the participant. In the event the
participant's employment is terminated, other than by reason of retirement on
attaining the age of 65, death or total and permanent disability, before the
Performance Shares are 100% earned, the Performance Shares earned to the date of
termination shall be distributed to the participant.
Performance Shares are distributed to participants in the form of one
share of the Company's Common Stock for each Performance Share earned. In lieu
of immediate issuance of shares of Common Stock upon being earned, the Committee
shall defer the delivery of such shares for a period of five years after the
date all of the Performance Shares become 100% earned; provided, however, in the
event of termination of employment by the participant during such five year
period, all such shares not yet distributed shall be delivered to or on behalf
of the participant.
Shares of the Company's Common Stock as to which performance goals
and/or individual performance objectives have been met shall have full dividend
rights with respect to dividends declared after such goals and/or objectives
have been met, with such dividends being paid directly to the participant.
GRANT OF STOCK OPTIONS. The Committee shall select from eligible
employees participants to be granted stock options and determine the time when
each option shall be granted and the number of shares subject to each option.
Options may be either incentive stock options or non-qualified stock options.
More than one option may be granted to the same person. The Committee may not
grant an employee incentive stock options which in the aggregate are first
exercisable during any one calendar year with respect to Common Stock the
aggregate Fair Market Value of which (determined as of the time of grant)
exceeds $100,000.
The price at which shares may be purchased upon exercise of an option
shall be not less than 100% of the Fair Market Value of such shares on the date
such option is granted. Fair Market Value is defined as the closing price of the
Common Stock on the NASDAQ National Market System.
The period during which each option may be exercised shall be fixed by
the Committee at the time the option is granted, but such period in no event
shall expire later than ten years from the date the option is granted in the
case of incentive stock options and ten years and two days in the case of
non-qualified stock options. Each option may not be exercised for a period of
six months from the date the option is granted and then only during the
continuance of the participant's employment with the Company. Each option shall
be exercisable in whole or in part in installments at such time or times as the
Committee may prescribe and specify in the applicable option agreement.
Payment of the option price shall be made in cash or, at the discretion
of the Committee, through the delivery of shares of Common Stock of the Company
with a value equal to the total
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option price or a combination of cash and shares. Any shares so delivered shall
be valued at their Fair Market Value on the exercise date.
Except as hereinafter provided, an option may be exercised by the
participant only while such participant is employed by the Company. In the event
that the employment of a participant to whom an option has been granted shall
terminate (except as set forth below) such option may be exercised, to the
extent that the option was exercisable on the date of termination of employment,
only until the earlier of three months after such termination or the original
expiration date of the option; provided, however, that if termination of
employment results from death or total and permanent disability, such three
month period shall be extended to twelve months; and provided, further, that any
option held by a participant whose employment shall be terminated either (i) for
cause as determined by the Committee or (ii) voluntarily by the participant and
without the consent of the Company shall, to the extent not theretofore
exercised, forthwith terminate.
SHARES SUBJECT TO PLAN. Shares of Common Stock are made available from
the authorized and unissued shares of the Company. If an option or award granted
under the Plan shall expire or terminate for any reason, the shares subject to,
but not delivered, under such option or award shall be available for other
options and awards to be issued under the Plan.
The aggregate number of shares of Common Stock which may be issued
under the Plan, the number of shares covered by each outstanding option or
award, and the price per share in each option, shall all be proportionately
adjusted for any increase or decrease in the number of issued shares of Common
Stock of the Company resulting from a subdivision or consolidation of shares or
any other capital adjustment. As of March 19, 2001 the closing price of the
Common Stock of the Company on the NASDAQ National Market System was $9.563.
CHANGE IN CONTROL. In the case of Change in Control (as defined in the
Plan) of the Company, unless the Committee determines otherwise, each option
then outstanding shall immediately become exercisable in full and each
Performance Share shall immediately be fully vested and nonforfeitable and shall
thereupon be paid as soon as practicable.
AMENDMENT OR TERMINATION. The Board of Directors may amend or terminate
the Plan provided, however, that no such amendment or termination shall
adversely affect any option or award then in effect unless the prior approval of
the participant so affected is obtained and provided further that any amendment
to the Plan shall be subject to stockholder approval to the extent necessary to
satisfy the requirements of Section 16 under the Securities Exchange Act of
1934.
DURATION. It is contemplated that the Plan shall remain in effect
indefinitely, but the Board of Directors of the Company may terminate the Plan
at any time.
FEDERAL INCOME TAX CONSEQUENCES. The Company is advised by counsel that
the grant of a non-qualified option or incentive stock option has no tax
consequences for the optionee or the Company. Upon the exercise of a
non-qualified option, the optionee is deemed to realize taxable income to the
extent that the fair market value of the shares of Common Stock exceeds
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the option price. The Company is entitled to a tax deduction for such amounts at
the date of exercise. If any stock received upon the exercise of a non-qualified
option is later sold any excess of the sale price over the fair market value of
the stock at the date of exercise is taxable to the optionee.
No taxable income results to the optionee upon the exercise of an
incentive stock option if the incentive stock option is exercised during the
period of the optionee's employment or within three months thereafter, except in
the case of disability or death. However, the amount by which the fair market
value of the stock acquired pursuant to an incentive stock option exceeds the
option price is a tax preference item which may result in the imposition on the
optionee of an alternative minimum tax. If no disposition of the shares is made
within either two years from the date the incentive stock option was granted or
one year from the date of exercise any profit realized upon disposition of the
shares may be treated as a long-term capital gain by the optionee. The Company
will not be entitled to a tax deduction upon such exercise of an incentive stock
option, nor upon a subsequent disposition of the shares unless such disposition
occurs prior to the expiration of the holding periods.
There are no tax consequences to the participant or the Company upon
the grant of Performance Share awards. Common Stock of the Company issued
pursuant to the awards will constitute taxable income to the participant and be
deductible to the Company when the stock is delivered to the participant
pursuant to the terms of the Plan. The later sale of any stock received under
such an award will result in gain to the participant to the extent of any excess
of the sale price over the fair market value of the stock when it is delivered
to the participant.
OPTIONS GRANTED. On September 22, 2000, James L. Wolohan, John A.
Sieggreen and Daniel P. Rogers were each granted non-qualified stock options to
purchase 50,000 shares of Common Stock at an option price of $10 1/16 per share.
The options do not vest for a period of thirty-six months from date of grant or
an earlier Change in Control. Of the options granted, 25,000 shares as to each
officer are subject to stockholder approval of the amendment to the Plan
increasing the number of shares issuable thereunder. If the amendment to the
Plan is not approved by stockholders, options for 25,000 shares as to each
officer shall be deemed not to have been granted.
REQUIRED VOTE. The affirmative vote of a majority of the Common Stock
of the Company, present in person or by proxy at the meeting, will be necessary
to approve the amendment to the Plan.
THE BOARD OF DIRECTORS RECOMMENDS APPROVAL OF THE AMENDMENT TO THE
LONG-TERM INCENTIVE PLAN.
MISCELLANEOUS
It is not expected that any other matters are likely to be brought
before the meeting. However, if any other matters be presented, it is the
intention of the persons named in the proxy to vote the proxy in accordance with
their best judgment.
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The entire cost of preparing and mailing the proxy material will be
borne by the Company. Solicitation of proxies will be made by mail, personally,
or by telephone, by officers, directors and regular employees of the Company.
The Company will request brokerage houses and other custodians, nominees and
fiduciaries to forward soliciting material to the stockholders and the Company
will reimburse such institutions for their out-of-pocket expenses incurred
thereby.
It is important that proxies be returned promptly to avoid unnecessary
expense. Therefore, whether you plan to attend or not, you are urged regardless
of the number of shares of stock owned, to date, sign and return the enclosed
Proxy Card promptly.
STOCKHOLDERS PROPOSALS Pursuant to the General Rules under the
Securities Exchange Act of 1934, proposals of stockholders intended to be
presented to the 2002 Annual Meeting of Stockholders must be received by the
Secretary of the Company at the executive offices on or before November 30,
2001.
By Order of the Board of Directors,
DAVID G. HONAMAN, Secretary
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APPENDIX A
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WOLOHAN LUMBER CO.
AUDIT COMMITTEE CHARTER
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MEMBERSHIP. The Board of Directors (the "Board") shall have an Audit Committee
composed of three or more directors who are not currently employed (or have not
been employed in the past three years) by the Company and who are independent of
the management of the corporation and free of any relationship that would
interfere with their exercise of independent judgment. Committee members,
including one who shall be appointed as chairman, will be elected by the Board.
The terms of the Committee members shall be one year. At least one Committee
member must have past employment experience in finance or accounting, a
professional certification in accounting or other comparable experience,
including employment position as a Chief Executive Officer, Chief Financial
Officer or other senior officer with financial oversight responsibilities.
AUDIT COMMITTEE PRIMARY FUNCTION. It is recognized that Wolohan Lumber Co.
executive management has the primary responsibility for financial and other
reporting, internal control, and compliance with laws, regulations and ethics.
The Audit Committee shall provide assistance to the Board in fulfilling its
responsibility relating to the adequacy and effectiveness of the Company's
internal controls and financial reporting policies and practices, the Company's
standards of business conduct and ethics, oversight of the independence of the
outside auditor and by reviewing the financial information which will be
provided to the shareholders and others.
The Committee shall be empowered to retain, at Company expense, independent
consultants to advise the Committee and to call on assistance from officers and
employees of the Company.
The Audit Committee shall facilitate free and open communication among the
Board, the independent consultants, the Company's independent auditors, the
internal auditor, and with the chief executive officer and other members of
management of the Company.
DUTIES AND RESPONSIBILITIES. The Audit Committee shall be responsible for the
following activities:
1. Recommend to the Board the appointment of the independent
accounting firm to conduct the annual audit of the Company;
together with a review of annual audit fees and related costs.
2. Review with the independent auditor the scope of the annual audit
and any reports issued in connection with the audit.
3. Prior to the public release thereof, review and discuss with
management and the independent auditor the annual audited
financial statements, relevant information regarding the annual
reports and the financial reporting process in order to determine
that the independent auditors are satisfied with the disclosure
and content of the financial statements and have advised the
Committee of all significant matters that are required by
professional auditing standards.
4. Review the annual audit and "Management Letter" comments, together
with management's plans for corrective action, with the
independent auditors.
5. Review the independent auditor's annual letter and disclosures to
the Committee regarding independence and review the non-audit
services performed by the independent auditor to ensure that
performing those services does not impair the independence of the
auditors.
6. Oversee the quarterly public reporting process.
7. Review at least annually with management and the internal auditor
the role of the internal audit department and the scope of the
work performed by the internal auditors, approve the annual
internal audit plan and periodically review the audit status,
findings and management's response thereto.
8. Review and concur in the appointment, replacement, reassignment or
dismissal of the manager of internal auditing.
9. Each quarter, communication should take place between the Audit
Committee Chairman and the independent auditors prior to the SEC
filing regarding any significant matters related to professional
auditing standards.
10. Review annually with management, the independent auditor and the
internal auditor, the adequacy and effectiveness of internal
controls and the Company's accounting principles, policies and
practices.
11. Review with management the programs and procedures to assure
compliance with laws, regulations and corporate policy.
12. Review with management the programs and procedures established to
avoid conflicts of interest, including the Company's Code of
Ethics.
13. Periodically review the status of any pending litigation which
could have a significant impact on the Company's financial
statements or seriously affect its reputation.
14. At least once annually, meet with the independent auditors without
management members being present. In addition, the Audit Committee
or its Chairman shall meet periodically with the internal auditor
without management members being present.
15. Review the annual audit for the Company's retirement plans and
other employee benefit plan.
16. Other activities deemed appropriate including the preparation of
summary reports to the Board of Directors together with any
recommendations for action.
17. Oversee special investigations.
18. Review this Charter at least annually.
MEETINGS. The Audit Committee will generally meet quarterly and at such other
times as deemed necessary. The meetings will be held as determined by the
Chairman of the Audit Committee. A meeting agenda will be prepared by the
Manager of Internal Auditing in conjunction with the Chairman and distributed
prior to each meeting. The Manager of Internal Auditing will act as Secretary of
the Audit Committee and will be responsible for transcribing minutes of each
meeting. The minutes will be approved by the Chairman prior to distribution.
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