SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
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
Filed by the registrant [X]
Filed by a party other than the registrant [ ]
Check the appropriate box:
[X] Preliminary proxy statement
[ ] Definitive proxy statement
[ ] Definitive additional materials
[ ] Soliciting material pursuant to Rule 14a-11(c) or Rule 14a-12
GENTEX CORPORATION
(Name of registrant as specified in its charter)
GENTEX CORPORATION
(Name of person(s) filing Proxy Statement)
Payment of filing fee (Check appropriate box):
[X] $125 per Exchange Act Rules 0-11(c)(1)(ii), 14a-6(i)(1), or 14a-6(j)(3)
[ ] $500 per each party to the controversy pursuant to Exchange Act
Rule 14a-6(i)(3)
[ ] Fee computed on table below per Exchange Act Rules 14a-6(i)(4) and 0-11
(1) Title of each class of securities to which transaction applies:
(2) Aggregate number of securities to which transaction applies:
(3) Per unit price or other underlying value of transaction computed
pursuant to Exchange Act Rule 0-11:
(4) Propsed maximum aggregate value of transaction:
[ ] 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:
GENTEX CORPORATION
600 N. Centennial Street
Zeeland, Michigan 49464
NOTICE OF 1996 ANNUAL MEETING
The Annual Meeting of the Shareholders of Gentex Corporation, a Michigan
corporation, will be held at the Amway Grand Plaza Hotel, Pearl at Monroe,
Grand Rapids, Michigan, on Thursday, May 9, 1996, at 4:30 p.m. E.S.T., for
the following purposes:
1. To elect three directors as set forth in the Proxy Statement.
2. To act upon a proposal to amend the Articles of Incorporation to
increase the authorized shares of common stock.
3. To transact any other business that may properly come before the
meeting.
Shareholders of record as of the close of business on March 22, 1996, are
entitled to notice of, and to vote at the meeting. You are requested to sign,
date, and return the accompanying Proxy in the enclosed, self-addressed
envelope, regardless of whether you expect to attend the meeting in person.
You may withdraw your Proxy at the meeting if you are present and desire to
vote your shares in person.
BY ORDER OF THE BOARD OF DIRECTORS
Connie Hamblin
Secretary
March 29, 1996
GENTEX CORPORATION
600 N. Centennial Street
Zeeland, Michigan 49464
PROXY STATEMENT FOR ANNUAL MEETING
OF SHAREHOLDERS TO BE HELD MAY 9, 1996
SOLICITATION OF PROXIES
This Proxy Statement is being furnished on or about March 29, 1996, to
the shareholders of Gentex Corporation in connection with the solicitation
by the Board of Directors of the Corporation of Proxies to be used at the
Annual Meeting of Shareholders to be held on Thursday, May 9, 1996, at
4:30 p.m. E.S.T. at the Amway Grand Plaza Hotel, Pearl at Monroe, Grand
Rapids, Michigan.
If the form of Proxy accompanying this Proxy Statement is properly
executed and returned to the Company, the shares represented by the Proxy
will be voted at the Annual Meeting of Shareholders in accordance with the
directions given in the Proxy, unless the Proxy is revoked. Any shareholder
executing and returning the form of Proxy which accompanies this Proxy
Statement may revoke the Proxy, at any time before it has been exercised,
by delivering a written notice of revocation to the Secretary of the Company,
executing a subsequent proxy or attending the meeting and voting in person.
The cost of the solicitation of Proxies will be borne by the Company. In
addition to the use of the mails, Proxies may be solicited personally or by
telephone or facsimile by a few regular employees of the Company without
additional compensation. The Company does not intend to pay any compensation
for the solicitation of Proxies, except that brokers, nominees, custodians,
and other fiduciaries will be reimbursed by the Company for their expenses
in connection with sending proxy materials to beneficial owners and obtaining
their Proxies.
VOTING SECURITIES AND RECORD DATE
March 22, 1996, has been fixed by the Board of Directors as the record
date for determining shareholders entitled to vote at the Annual Meeting. On
that date, 17,xxx,xxx shares of the Company's common stock, par value $.06
per share, were issued and outstanding. Shareholders are entitled to one
vote for each share of the Company's common stock registered in their names
at the close of business on the record date.
ELECTION OF DIRECTORS
The Company's Articles of Incorporation specify that the Board of
Directors shall consist of at least six but not more than nine members, with
the exact number to be determined by the Board. The Board has fixed the
number of directors at eight. The Articles of Incorporation also specify
that the Board of Directors be divided into three classes as nearly equal in
number as possible, with the classes to hold office for staggered terms of
three years each. Arlyn Lanting, Kenneth La Grand, and Ted Thompson,
incumbent directors previously elected by shareholders, are nominees for
re-election to a three-year term expiring in 1999.
Unless otherwise directed by a shareholder's marking on the Proxy card,
the persons named as proxy voters in the accompanying Proxy will vote for the
nominees described below. In the event any of these nominees is no longer a
candidate at the time of the Annual Meeting of Shareholders (a situation which
is not now anticipated), the Board of Directors may designate a substitute
nominee, in which case the accompanying Proxy will be voted for the
substituted nominee.
Under Michigan law, directors are elected by a plurality of the votes
cast by shareholders. Therefore, the three nominees who receive the largest
number of affirmative votes will be elected, irrespective of the
number of votes received. Broker nonvotes, votes withheld, and votes cast
against any nominee will not have a bearing on the outcome of the election.
Votes will be counted by Inspectors of Election appointed by the presiding
officer at the Annual Meeting.
The Board of Directors recommends a vote FOR the election of all the
persons nominated by the Board.
The content of the following table relating to business experience is
based upon information furnished to the Company by the nominees and directors.
Name, (Age) Business Experience
and Position Past Five Years
Nominees for Terms to Expire in 1999
Arlyn Lanting (55) Mr. Lanting is the Vice President -- Finance of
Director since 1981 Aspen Enterprises, Ltd., Grand Rapids, MI
(syndication and operation of mobile home parks),
and he has held that position for more than five
years.
Kenneth La Grand (55) Mr. La Grand is the Executive Vice President of
Director since 1987 Gentex Corporation, and he has held that position
for more than five years.
Ted Thompson (66) Mr. Thompson is the Chairman and Chief Executive
Director since 1987 Officer of X-Rite, Incorporated, Grandville, MI
(a manufacturer of light and color measuring
instruments), and he has held that position
for more than five years. Mr. Thompson is also
a director of X-Rite, Incorporated.
Directors Whose Terms Expire in 1998
Mickey E. Fouts (64) Mr. Fouts has been Chairman of the Board and
Director since 1982 interim C.E.O. of American Consolidated Growth
Capital (temporary services), Denver, CO, since
January of 1996, and Chairman of the Board,
Equity Services Company (investment services),
Denver, CO, for more than five years. In
addition, he was the Director of Corporate
Finance, Tamaron Capital Markets (investment
banking), Denver, CO from November 1993 to
May 1994. Mr. Fouts is also a director of
American Consolidated Growth Capital.
John Mulder (59) Mr. Mulder is the Vice President -- Automotive
Director since 1992 Marketing of Gentex Corporation, and he has held
that position for more than five years.
Directors Whose Terms Expire in 1997
Fred Bauer (53) Mr. Bauer is the Chairmand and Chief Executive
Director since 1981 Officer of Gentex Corporation, and he has held
that position for more than five years.
Leo L. Weber (66) Since 1990, Mr. Weber has been engaged in the
Director since 1991 consulting business as L. L. Weber & Associates,
West Bloomfield, MI. Previously, he was the
President of Robert Bosch Corporation, Farmington
Hills, MI (manufacturer of sophisticated
automotive components).
Dr. Harlan J. Byker (41) Dr. Byker has been the Vice President --
Director since 1993 Electrochemical Research of Gentex Corporation
since August of 1993. Prior to that time, he was
the Company's Director of Electrochemical
Development for more than five years.
Arlyn Lanting and Kenneth La Grand are brothers-in-law. There are no
other family relationships between the nominees, directors, and executive
officers of the Company.
The Company has an Audit Committee comprised of Messrs. Thompson and
Lanting. The Audit Committee recommends to the Board of Directors the
selection of independent public accountants and reviews the scope of their
audit, their audit report, and any recommendations made by them. This
Committee met on two occasions during the fiscal year ended December 31, 1995.
The Company has a Compensation Committee comprised of Messrs. Bauer,
Lanting, and Thompson. The Compensation Committee is responsible for
administering the Company's stock-based incentive plans and supervising
other compensation arrangements for executive officers of the Company.
The Compensation Committee met four times during the fiscal year ended
December 31, 1995.
In addition, the Company has an Executive Committee comprised of Messrs.
Bauer, Lanting, and La Grand which is authorized to act on behalf of the
Board between full Board meetings, to the extent permitted by law. This
Committee did not meet during the fiscal year ended December 31, 1995.
The Company does not have a standing nominating committee.
During 1995, the Board of Directors met on four occasions. All directors
attended at least 75 percent of the aggregate number of meetings of the Board
and Board committees on which they served.
PROPOSAL TO APPROVE INCREASE IN AUTHORIZED SHARES OF COMMON STOCK
Article III of the Company's Articles of Incorporation currently provides
for authorized capital stock of 30,000,000 shares, consisting of 25,000,000
shares of common stock, par value $.06 per share, and 5,000,000 shares of
preferred stock, no par value. No preferred stock is presently outstanding.
There are 17,xxx,xxx shares of common stock presently outstanding, and
x,xxx,xxx shares have been reserved for issuance under the Company's various
incentive stock option and purchase plans.
At a meeting held on March 8, 1996, the Board of Directors unanimously
resolved to amend Article III of the Articles of Incorporation to increase
the authorized shares of common stock from 25,000,000 to 50,000,000, and
recommend the amendment for approval by the Company's shareholders. The
Board believes that the authorization of an additional 25,000,000 shares of
common stock will provide increased flexibility for future growth and provide
the opportunity for enhanced marketability of the Company's common stock,
although the Board has no present intention of issuing those shares for any
particular purpose at the present time.
From time to time, the Company has considered potential acquisitions and
management expects to continue to consider acquisition opportunities in the
future. The Company's common stock could be used as a means for accomplishing
an acquisition. The increase in authorized common stock would also enhance
the ability of the Board of Directors to consider the possibility of declaring
a stock dividend to existing shareholders and/or provide for the reservation
of additional shares for potential issuance under the Company's various stock
plans as a means of retaining key personnel and attracting new personnel. It
is also possible that the additional shares of common stock could be utilized
by the Company as a part of a defensive strategy to counter any hostile
takeover attempts. Shares of the Company's common stock do not carry
preemptive rights to purchase additional shares of the Company's stock.
The Board recommends that Article III of the Company's Articles of
Incorporation be amended to read as stated on Appendix A to this Proxy
Statement. The only change in the Articles is the increase in the number
of shares of common stock from 25,000,000 to 50,000,000.
The affirmative vote of a majority of the outstanding shares of common
stock, in person or by proxy, on the proposed amendment to Article III is
required for approval. Since an absolute majority of outstanding shares is
required, any ballot or proxy marked "abstain" will have the same effect as
a negative vote. Votes will be counted by Inspectors of Election appointed
by the preceding officer at the Annual Meeting.
The Board of Directors recommends a vote FOR adoption of the proposed
increase in authorized common stock.
SECURITIES OWNERSHIP OF MANAGEMENT
The following table contains information with respect to ownership of the
Company's common stock by all directors, nominees for election as directors,
executive officers named in the tables under the caption Executive
Compensation, and all executive officers and directors as a group.
The content of this table is based upon information supplied by the Company's
officers, directors, and nominees for election as directors, and represents
the Company's understanding of circumstances in existence as of March 1, 1996.
Amount and Nature of Ownership
Name of Shares Beneficially Exercisable Percent
Beneficial Owner Owned (1) Options (2) of Class
Fred Bauer 1,201,116 (3) 3,000 7.1
Dr. Harlan J. Byker 98,899 2,000 *
Mickey E. Fouts 20,000 20,000 *
Enoch Jen 35,300 18,200 *
Arlyn Lanting 138,000 (4) 38,000 *
Kenneth La Grand 167,400 60,400 *
John Mulder 53,700 15,700 *
Ted Thompson 53,000 52,000 *
Leo L. Weber 12,000 10,000 *
All directors and 1,779,415 219,300 10.5%
executive officers
as a group (9 persons)
* Less than one percent.
(1) Except as otherwise indicated by footnote, each named person claims sole
voting and investment power with respect to the shares indicated.
(2) This column reflects shares subject to options exercisable within 60
days, and these shares are included in the column captioned "Shares
Beneficially Owned."
(3) Includes 8,000 shares held by Mr. Bauer's minor child living with him.
(4) Includes 100,000 shares owned of record by Aspen Enterprises, Ltd., of
which Mr. Lanting is a director, officer, and substantial shareholder,
and Mr. Lanting disclaims beneficial ownership of those shares.
SECURITIES OWNERSHIP OF CERTAIN BENEFICIAL OWNERS
The following table contains information with respect to ownership of the
Company's common stock by persons or entities who are beneficial owners of
more than five percent of the Company's voting securities. The information
contained in this table is based on information contained in Schedules 13D
and 13G furnished to the Company and represents the Company's understanding
of circumstances in existence on March 1, 1996.
Name and Address Amount and Nature of
of Beneficial Owner Beneficial Ownership Percent of Class
Dan Bauer 983,244(1) 5.8
2361 Sunset Bluff Drive
Holland, MI 49424
State Treasurer 1,006,800(2) 5.9
State of Michigan
P.O. Box 15128
Lansing, MI 48901
FMR Corp. 1,135,900(3) 6.7
82 Devonshire Street
Boston, MA 02109
Denver Investment Advisors LLC 1,024,000 6.1
1225 17th Street
Denver, CO 80202
(1) Mr. Bauer is a record owner of 559,244 shares as trustee of a trust
established by him. In addition, 424,000 shares are held of record by
Mr.Bauer's spouse as trustee of her own trust and as custodian for
their minor children, and Mr. Bauer disclaims beneficial ownership of
those shares.
(2) The State Treasurer acts as the investment fiduciary for retirement
systems sponsored by the State of Michigan for Public School Employees,
State Employees, State Police, Judges, and Probate Judges.
(3) FMR Corp. derives beneficial ownership through its wholly-owned
subsidiaries, Fidelity Management & Research Company and Fidelity
Management Trust Company.
EXECUTIVE COMPENSATION
The following table contains information regarding compensation paid by
the Company with respect to the preceding fiscal year to its chief executive
officer and to each executive officer whose salary and bonus compensation
exceeded $100,000.
Summary Compensation Table
Long-Term Compensation
Awards Payouts
Annual Compensation Restricted Securities All
Salary Bonus Other Stock Underlying LTIP Other
Executive Year ($) ($) ($) Award($) Options(#) ($) Compen-
sation
($)(1)
Fred Bauer 1995 245,143 82,749 - 15,000 3,389
Chairman and CEO 1994 230,495 76,204 - 15,000 3,339
1993 219,244 58,352 - -- 3,265
Kenneth La Grand 1995 148,083 45,827 238,750(2) 14,000 3,125
Executive Vice 1994 139,496 44,914 -- 12,000 3,094
President 1993 131,144 31,987 -- 10,000 2,585
John Mulder 1995 178,084 47,055 191,000(2) 12,000 3,654
Vice President, 1994 168,640 40,146 -- 10,000 3,188
Automotive 1993 159,052 36,579 -- 8,000 3,026
Marketing
Dr. Harlan J. 1995 114,714 20,009 -- 12,000 832
Byker
Vice President, 1994 104,219 18,636 256,250(2) 10,000 504
Electrochemical 1993 89,490 11,632 -- -- 504
Research
Enoch Jen 1995 91,885 35,334 106,875(2) 8,000 2,786
Vice President, 1994 85,885 33,665 -- 9,000 2,963
Finance & 1993 78,887 28,565 -- 16,000 1,806
Treasurer
(1) These amounts represent the sum of "matching" contributions by the
Company pursuant to its 401(k) Plan and annual premiums for term life
insurance attributed to each executive officer.
(2) Represents the aggregate market value at the date of grant for shares of
common stock awarded under the Company's Restricted Stock Plan.
Assuming continued employment with the Company, restrictions on shares
lapse upon the expiration of five years from the date of grant in the
case of Messrs. Jen and Byker, and one-third each on the 4th, 5th, and
6th anniversaries of the grant in all other cases. Dividends will be
paid on these shares if, and to the same extent paid on the Company's
common stock generally. At the close of the Company's fiscal year, the
following officers held the following number of restricted shares with
the corresponding net market values: K. La Grand 26,000 shares for
$572,000; J. Mulder 20,000 shares for $440,000; H. Byker 10,000 shares
for $220,000; and E. Jen 15,000 shares for $330,000.
The following table contains information regarding stock options granted
to the above-named executive officers during the preceding fiscal year.
Option Grants in Last Fiscal Year
Individual Grants
Number of Percent Grant Date
Securities of Option Exercise Present
Underlying to all Price Expiration Value
Executive Options Employees ($/Sh)(2) Date ($)(3)
(#)(1)
Fred Bauer 15,000 4.4 24.25 8/18/02 201,000
Kenneth La Grand 14,000 4.1 24.00 9/29/02 172,060
John Mulder 12,000 3.5 24.00 9/29/02 147,480
Dr. Harlan J.
Byker 12,000 3.5 19.25 6/29/02 125,880
Enoch Jen 8,000 2.4 20.75 3/28/02 96,880
(1) These options become exercisable, so long as employment with the Company
continues, for 20 percent of the shares on each anniversary of the grant
date commencing with the first anniversary of the grant date.
(2) The exercise price may be paid in cash, in shares of the Company's common
stock, and/or by the surrender of exercisable options valued at the
difference between the exercise price and the market value of the
underlying shares.
(3) Based on the Black-Scholes option valuation model, assuming volatility
ranging from .38 to .46, a risk-free rate of return equal to ten year
treasury bonds, a dividend yield of zero, and an exercise date of seven
years after grant. This model is an alternative suggested by the
Securities and Exchange Commission, and the Company neither endorses
this particular model, nor necessarily agrees with this method for
valuing options. The ultimate value of options will depend on the
Company's success, as reflected by an increase in the price of its
shares, which will inure to the benefit of all shareholders.
The following table contains information regarding the exercise of
options during the preceding fiscal year by the above-named executives,
as well as unexercised options held by them at fiscal year-end.
Aggregated Option Exercises in Last Fiscal Year and Year-end Values
Number of Value of
Shares Securities Unexercised
Acquired Underlying Unexercised In-the-Money
on Value Options at Fiscal Options Fiscal
Exercise Realized Year-end(#) Year-end($)
Executive (#) ($) Exercisable Exercisable
Unexercisable Unexercisable
Fred Bauer -- -- 3,000 27,000 6,000 24,000
Kenneth La Grand -- -- 80,400 42,600 1,276,893 199,287
John Mulder 15,000 256,249 15,700 34,300 167,342 157,812
Dr. Harlan J.
Byker 10,000 187,970 2,000 20,000 -- 33,000
Enoch Jen 16,500 286,281 9,800 40,200 82,249 297,185
Executive Compensation Report
The Company's executive compensation program is administered by the
Compensation Committee of the Board of Directors. This Committee is comprised
of three members: two independent outside directors and the Chief Executive
Officer (C.E.O.). The Committee makes recommendations to the Board of
Directors with respect to executive compensation matters, except for awards
made pursuant to the Company's stock-based incentive plans, which are the
exclusive prerogative of the Committee in order to meet the "disinterested
administration" requirement of Exchange Act Rule 16b-3.
The executive compensation program is composed of three elements: base
salary, annual bonus, and stock-based incentives. These elements are utilized
to accommodate several objectives:
- Provide the means to attract, motivate, and retain executive
management personnel.
- Provide for long-term success by focusing on continuing technical
development and improvement in customer satisfaction.
- Provide base salary compensation that is competitive in the market
for managerial talent.
- Provide annual bonus compensation reflective of both individual
achievement and overall Company performance.
- Provide stock-based incentive compensation that focuses on long-term
Company performance and aligning the interests of management with
the interests of shareholders.
Base salary compensation for executive officers is predicated primarily
on competitive circumstances for managerial talent and positions reflecting
comparable responsibility. These competitive circumstances are determined
from local, regional, and national surveys of employers comparable to the
Company in size, stage of development, and industry. Historically, base
salaries for executive officers have been relatively low, and stock-based
incentives have received more emphasis, reflecting the entrepreneurial, high
growth rate stage of the Company's development. Base salary decisions for
executive officers other than the C.E.O. are determined by C.E.O. F. Bauer
and reviewed annually by the Committee. The base salary for C.E.O. Bauer
for 1995 was established by the Committee (without participation by C.E.O.
Bauer) and approved by the Board of Directors. The Committee's recommendation
was made after reviewing survey information from several sources, textual
materials regarding executive compensation strategies in general, the
past and expected contributions of C.E.O. Bauer to the Company's progress,
the quality, loyalty, and performance of the management team assembled and
led by him, and the relationships between his salary and the average salary
levels for the Company's hourly paid workers, salaried employees, and
executive officers.
Annual bonus compensation for executive officers is composed of two
elements: payments under the Company's Gain Sharing Bonus Plan and
performance bonuses. All employees of the Company, including executive
officers, are eligible to share in the Company's Gain Sharing Bonus Plan
after the first six months of employment. A percentage of pre-tax income,
in excess of an established threshold for shareholder return on equity, is
distributed quarterly to eligible employees. The amount to be distributed
is allocated among all eligible employees in proportion to the salary or
wages (including overtime) paid to those employees during the quarter. In
addition, performance bonuses are paid to various managerial employees,
including executive officers, based upon individual performance during the
year and the overall performance of the Company during the year. Regarding
1995, C.E.O. F. Bauer evaluated the performance of each executive officer,
sometimes in consultation with other officers, and determined performance
bonuses predicated approximately one-half on the individual's achievements
and contributions to Company success, and one-half on the overall performance
of the Company for the year. C.E.O. F. Bauer participated in the Gain
Sharing Plan along with all other eligible employees. In addition, Mr. Bauer
was awarded a performance bonus in the amount of $40,000. The award was
recommended by the Committee (without participation by Mr. Bauer) based upon
the Company's significant gains in both sales and earnings, its competitive
position in the marketplace, and the effectiveness of management despite the
demands of ongoing litigation, and the recommendation was approved by the
Board of Directors.
Stock-based incentive compensation is intended to align the interests of
shareholders and senior management by making the managers shareholders in a
significant amount, and providing them incentives to work to increase the
price of the Company's shares by granting them options to acquire additional
shares. Generally, restricted stock grants are subject to forfeiture if the
executive officer does not continue employment with the Company for the period
specified at the time of grant. Similarly, stock options become exercisable
generally for a portion of the shares after one or two years and for
additional portions each year thereafter, subject however to the requirement
that the optionee must be employed by the Company at the time of exercise.
During 1995, stock options were awarded to executive officers, other than
the C.E.O., by the Committee, based upon recommendations from C.E.O. F. Bauer,
taking into consideration for each executive the scope of responsibility,
contribution to success in prior periods, ability to influence success in
the future, and demonstrated ability to achieve agreed-upon goals. In 1995,
an amendment to the Company's Qualified Stock Option Plan was approved by
shareholders that provides for the award of an automatic annual option for
15,000 shares to C.E.O. F. Bauer. This provision was recommended by the
Committee consistent with its belief that a portion of the compensation
package for all executives should be in the form of stock options. The award
was made "automatic" in order to preserve Chairman Bauer's ability to
continue his service on the Committee as a "disinterested person" under
the applicable S.E.C. rules.
Compensation Committee Members:
Fred Bauer
Arlyn Lanting
Ted Thompson
Stock Performance Graph
The following graph depicts the cumulative total return of the Company's
common stock compared to the cumulative total return on the NASDAQ Stock
Market index (all U.S. companies) and the Dow Jones Index for Automobile
Parts and Equipment Companies (excluding tire and rubber makers). The graph
assumes an investment of $100 on the last trading day in 1990, and
reinvestment of dividends in all cases.
The Company has not adopted any long-term incentive plan or any defined
benefit or actuarial plan, as those terms are defined in the applicable
regulations promulgated by the Securities and Exchange Commission. Neither
does the Company have any contracts with its executive officers assuring them
of continued employment, nor any compensatory arrangement for executives
linked to a change in control of the Company.
Directors who are employees of the Company receive no compensation for
services as directors. Directors who are not employees of the Company
receive a director's retainer in the amount of $6,000 per year plus $800 for
each meeting of the Board attended and $500 for each committee meeting
attended. In addition, each nonemployee person who is a director immediately
following each annual meeting of shareholders is entitled to receive an option
to purchase 5,000 shares of the Company's common stock at a price per share
equal to the fair market value on that date. Each option has a term of ten
years and becomes exercisable in full six months after the date of the grant.
Compensation Committee Interlocks and Insider Participation in Compensation
Decisions.
Fred Bauer, Chairman and C.E.O., was a member of the Company's
Compensation Committee during the fiscal year ended December 31, 1995. That
Committee was responsible for supervising the Company's executive compensation
arrangements, including the making of decisions with respect to the award of
stock-based incentives for executive officers during that year. Mr. Bauer
is not eligible for any discretionary stock-based incentive awards; rather
Mr. Bauer receives an automatic annual stock option grant for 15,000 shares
under the Company's Qualified Stock Option Plan. Certain transactions
between Mr. Bauer and the Company are described below under Transactions
With Management.
Arlyn Lanting, a director and member of the Company's Compensation
Committee, was an officer of the Company more than ten years ago.
TRANSACTIONS WITH MANAGEMENT
Since 1978, prior to the time the Company became a publicly-held
corporation, the Company has leased a building that previously housed its
main office, manufacturing and warehouse facilities, and currently houses
production operations for the Company's fire protection products. The lessor
for that building is G & C Associates, a general partnership, and nearly all
of the partnership interests in G & C Associates are held by persons related
to Fred Bauer. The lease is a "net" lease, obligating the Company to pay
all expenses for maintenance, taxes and insurance, in addition to rent.
During 1995, the rent paid to this partnership was for $52,153, and the rent
for the current fiscal year is the same. The Board of Directors believes
that the terms of this lease are at least as favorable to the Company as
could have been obtained from unrelated parties.
Arlyn Lanting and Kenneth La Grand are both substantial shareholders
in GTI Travel Inc., a local travel agency used by the Company to book airline
travel for its employees. During 1995, the Company booked $256,000 in
airline travel through this agency. This arrangement has been reviewed by
the Company's Board of Directors and approved on the basis that the prices
and services provided afford the best value available to the Company.
RELATIONSHIP WITH INDEPENDENT PUBLIC ACCOUNTANTS
The consolidated financial statements of the Company for the fiscal year
ended December 31, 1995, have been audited by Arthur Andersen LLP, independent
public accountants, and the Board of Directors has selected Arthur
Andersen LLP, to serve as the Company's independent accountants for the
fiscal year ending December 31, 1996. Representatives of Arthur Andersen LLP
are expected to be present at the Annual Meeting to respond to appropriate
questions, and will have an opportunity to make a statement if they desire.
COMPLIANCE WITH REPORTING REQUIREMENTS
Based upon a review of Forms 3, 4, and 5 furnished to the Company during
or with respect to the preceding fiscal year, and written representations
from certain reporting persons, the Company is not aware of any failure by
any reporting person to make timely filings of those Forms as required by
Section 16(a) of the Securities Exchange Act of 1934.
SHAREHOLDER PROPOSALS -- 1996 ANNUAL MEETING
Any proposal of a shareholder intended to be presented at the next
annual meeting of the Company must be received by the Company at its
headquarters at 600 N. Centennial Street, Zeeland, Michigan 49464, no later
than December 1, 1996, if the shareholder wishes the proposal to be included
in the Company's proxy statement relating to that meeting.
The Company's Annual Report to Shareholders, including financial
statements, is being mailed to shareholders with this Proxy Statement.
Management is not aware of any matters to be presented for action at the
Annual Meeting, other than as set forth in this Proxy Statement. If other
business should come before the meeting, the persons named as proxy holders
in the accompanying Proxy intend to vote the shares in accordance with their
judgment, and discretionary authority to do so is included in the Proxy.
A COPY OF THE COMPANY'S REPORT ON FORM 10-K FILED WITH THE SECURITIES AND
EXCHANGE COMMISSION IS AVAILABLE WITHOUT CHARGE, UPON WRITTEN REQUEST, FROM
THE SECRETARY OF THE COMPANY, 600 N. CENTENNIAL STREET, ZEELAND, MICHIGAN
49464.
Shareholders are urged to promptly date, sign, and return the
accompanying Proxy in the enclosed envelope.
By Order of the Board of Directors
Connie Hamblin
Secretary
March 29, 1996
APPENDIX A
ARTICLE III
The total number of shares of all classes of stock which the Corporation
shall have the authority to issue is 55,000,000 shares, consisting of
50,000,000 shares of Common Stock, par value $.06 per share and 5,000,000
shares of Preferred Stock, no par value.
The authorized shares of Common Stock of the par value of $.06 per share
are all of one class with equal voting power, and each such share shall be
equal to every other such share.
The shares of Preferred Stock may be divided into and issued in one or
more series. The Board of Directors is hereby authorized to cause the
Preferred Stock to be issued from time to time in one or more series with
such designations and such relative voting, dividend, liquidation and other
rights, preferences and limitations as shall be stated and expressed in the
resolution providing for the issue of such Preferred Stock adopted by the
Board of Directors. The Board of Directors by vote of a majority of the
whole Board is expressly authorized to adopt such resolution or resolutions
and issue such stock from time to time as it may deem desirable.
