<PAGE> 1
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
TRENDWEST RESORTS, 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:
<PAGE> 2
TRENDWEST RESORTS, INC.
9805 WILLOWS ROAD
REDMOND, WASHINGTON 98052
April 28, 2000
Dear Shareholder:
You are cordially invited to attend the Annual Meeting of Shareholders of
Trendwest Resorts, Inc., (the "Company") which will be held at our headquarters,
9805 Willows Road, Redmond, Washington, at 1:00 p.m., Thursday, June 8, 2000. I
look forward to greeting as many of our shareholders as possible.
At the annual meeting, holders of the Company's common stock will be asked
to vote to elect two directors to the Board of Directors and to ratify the
selection of KPMG LLP as independent auditors. Information about the nominees
for election to the Board of Directors and the other matters is included in the
accompanying Notice of Annual Meeting of Shareholders and the Proxy Statement.
Your Board of Directors recommends that you vote "FOR" the Board of Director
nominees and the selection of KPMG LLP.
In addition to the specific matters to be acted upon, there will be a
report on the progress of the Company and an opportunity to ask questions of
general interest to Shareholders.
Whether or not you attend the annual meeting it is important that your
shares be represented and voted. Therefore, I urge you to sign, date and
promptly return the enclosed proxy in the enclosed postage-paid envelope. If you
decide to attend the annual meeting and vote in person, you will, of course,
have that opportunity.
Sincerely,
/s/ WILLIAM F. PEARE
William F. Peare
President and Chief Executive Officer
<PAGE> 3
TRENDWEST RESORTS, INC.
------------------------
NOTICE OF ANNUAL MEETING OF SHAREHOLDERS
APRIL 28, 2000
------------------------
The Annual Meeting of Shareholders of Trendwest Resorts, Inc., (the
"Company") will be held at our headquarters, 9805 Willows Road, Redmond,
Washington, at 1:00 p.m., Thursday, June 8, 2000, for the following purposes:
1. To elect two directors to hold office until the 2003 Annual Meeting
of Shareholders and until their successors are elected and qualified;
2. The ratification of KPMG LLP as independent auditors; and
3. To transact such other business as may properly come before the
meeting or any adjournments thereof.
The above matters are more fully described in the Proxy Statement, which
follows. Only holders of shares of the Company common stock of record at the
close of business on April 10, 2000, are entitled to notice of, and to vote at,
this annual meeting and any and all adjournments thereof.
By Order of the Board of Directors,
/s/ WILLIAM F. PEARE
William F. Peare
President and Chief Executive Officer
Redmond, Washington
April 28, 2000
IMPORTANT
Whether or not you expect to attend in person, we urge you to sign, date, and
return the enclosed proxy at your earliest convenience. This will ensure the
presence of a quorum at the meeting. PROMPTLY SIGNING, DATING, AND RETURNING THE
PROXY WILL SAVE THE COMPANY THE EXPENSE AND EXTRA WORK OF ADDITIONAL
SOLICITATION. An addressed envelope for which no postage is required if mailed
in the United States is enclosed for that purpose. Sending in your proxy will
not prevent you from voting your stock at the meeting if you desire to do so, as
your proxy is revocable at your option in the manner described in the Proxy
Statement.
<PAGE> 4
TRENDWEST RESORTS, INC.
------------------------
PROXY STATEMENT
------------------------
FOR ANNUAL MEETING OF SHAREHOLDERS
TO BE HELD JUNE 8, 2000
------------------------
INFORMATION CONCERNING SOLICITATION AND VOTING
The enclosed proxy is solicited by the Board of Directors of Trendwest
Resorts, Inc., (the "Company") to be voted at the Annual Meeting of Shareholders
to be held at 1:00 p.m. on June 8, 2000, and any adjournments thereof (the
"Annual Meeting"). The persons named as proxies are William F. Peare and Jeffery
P. Sites. The accompanying notice of meeting, this Proxy Statement and the
accompanying proxy are being first sent to Shareholders on or about April 28,
2000.
At the Annual Meeting, holders of the Company's common stock, no par value
per share (the "Common Stock"), will be asked to elect two directors, each to
hold office until the 2003 Annual Meeting of Shareholders and, in each case,
until his or her successor is elected and qualified and to ratify KPMG LLP as
independent auditors.
All shares represented by proxies that are properly executed and returned
will be voted in accordance with the instructions noted thereon. In the absence
of voting instructions, the shares of Common Stock will be voted for the
nominees for director listed herein and on the proxy and for the ratification of
KPMG LLP as independent auditors. A Shareholder giving a proxy has the power to
revoke it at any time before it is voted. The proxy may be revoked by written
notice to the Secretary of the Company received at the Company's offices at 9805
Willows Road, Washington, 98052, on or before May 31, 2000 or by written notice
delivered in person at the Annual Meeting to the Secretary prior to the
commencement of the Annual Meeting. Attendance at the Annual Meeting will not,
in itself, constitute revocation of a previously granted proxy.
Only Shareholders of record at the close of business on April 10, 2000 (the
"Record Date") will be entitled to vote at the Annual Meeting. At the close of
business on the Record Date, there were 16,940,834 shares of Common Stock
outstanding, which represent all of the voting securities of the Company. Each
share of Common Stock is entitled to one vote. Shareholders do not have
cumulative voting rights in the election of directors.
The holders of a majority of the Common Stock issued and outstanding and
entitled to vote at the Annual Meeting, if present in person or represented by
proxy, constitute a quorum for purposes of acting on the election of directors.
Abstentions and shares held by brokers that are present but not voted because
brokers were prohibited from exercising discretionary authority will be counted
as present for the purposes of determining if a quorum is present.
Under applicable law and the Company's articles of incorporation and
bylaws, and assuming that a quorum is present, in the election of the two
directors for terms ending in 2003, the persons elected will be the two persons
receiving the largest number of votes cast at the Annual Meeting by shares
present in person or by proxy. Approval of the other proposal requires that more
votes favor the proposal than oppose it. In determining whether a voting matter
has received the requisite number of affirmative votes, abstentions and broker
non-votes will have no effect on the election of directors or on either
proposal.
All proxy soliciting expenses will be paid by the Company in connection
with the solicitation of votes for the Annual Meeting. In addition to mailing
this material to Shareholders, the Company has asked banks and brokers to
forward copies to persons for whom they hold shares of the Company and request
authority for execution of the proxies. The Company will reimburse the banks and
brokers for their reasonable out-of-pocket expenses in doing so. Officers and
regular employees of the Company may also, without being additionally
compensated, solicit proxies by mail, telephone, telegram, facsimile or personal
contact.
<PAGE> 5
PRINCIPAL SHAREHOLDERS
The following table sets forth information regarding ownership of the
Common Stock by each person known to the Company to own more than 5% of the
outstanding shares of the Common Stock on April 10, 2000.
<TABLE>
<CAPTION>
SHARES OF
COMMON STOCK
NAME AND ADDRESS OF BENEFICIAL OWNER BENEFICIALLY OWNED PERCENT OF CLASS
------------------------------------ ------------------ ----------------
<S> <C> <C>
JELD-WEN, inc...................................... 13,725,821 81.06%
3250 Lakeport Blvd
Klamath Falls, Oregon 97601
</TABLE>
The following table sets forth information regarding the beneficial
ownership of Common Stock on April 10, 2000 by (i) each director and nominee for
director, (ii) the Company's Chief Executive Officer and the other executive
officers named in the executive compensation table set forth herein and (iii)
all directors and executive officers as a group. The following is based on
information furnished by such owners. Each of the persons named below has sole
voting and investment power with respect to the shares shown, except as noted
below.
<TABLE>
<CAPTION>
SHARES OF
COMMON STOCK
NAME AND ADDRESS OF BENEFICIAL OWNER BENEFICIALLY OWNED PERCENT OF CLASS
------------------------------------ ------------------ ----------------
<S> <C> <C>
William F. Peare..................................... 327,860(1) 1.9%
Jeffery P. Sites..................................... 78,612(1) *
Gene F. Hensely...................................... 9,000(1) *
Alan B. Schriber..................................... 10,650(1) *
Gary A. Florence..................................... 17,800(1) *
Jerol E. Andres...................................... 6,000 *
Douglas P. Kintzinger................................ 5,584(2)(6) *
Roderick C. Wendt.................................... 630,015(3)(6) 3.7%
Michael Hollern...................................... 6,000(4) *
Harry Demorest....................................... 23,000(5) *
Linda M. Tubbs....................................... 2,000 *
All directors and executive officers as a group (19
persons)........................................... 1,280,935(7) 7.6%
</TABLE>
- ---------------
* Less than 1%
(1) Includes 8,800 exercisable options.
(2) Includes 1,200 shares held by Mr. Kintzinger's wife.
(3) Includes 4,117 shares held by Mr. Wendt's minor children and 612,008 shares
held by R&R Vista, an Oregon general partnership of which Mr. Wendt is a 50%
owner.
(4) Includes 6,000 shares held by Hollybrook & Co., a nominee partnership
holding shares in a trust of which Mr. Hollern is a beneficiary.
(5) Includes 23,000 shares held by Mr. Demorest's wife.
(6) Messrs. Kintzinger and Wendt are executive officers and directors of
JELD-WEN, inc. and disclaim any beneficial ownership in the shares of the
Company owned by JELD-WEN, inc.
(7) Includes 112,200 exercisable options.
2
<PAGE> 6
PROPOSAL 1
ELECTION OF DIRECTORS
The Board of Directors of the Company currently consists of eight directors
who are divided into three classes, as nearly equal in number as possible. The
members of each class serve three-year terms, with one class elected annually.
The term of office of the directors in Class III expires at the 2000 Annual
Meeting. The Board of Directors has nominated Mr. Peare and Mr. Demorest for
election as directors to serve a term of three years ending at the Company's
Annual Meeting of Shareholders in 2003 and until their successors have been duly
elected and qualified.
Mr. Peare and Mr. Demorest have indicated that they are willing and able to
serve as directors. If either Mr. Peare or Mr. Demorest are unable or unwilling
to serve, the accompanying proxy may be voted for the election of such other
person as shall be designated by the Board of Directors. The two directors will
be elected by a plurality of the votes cast, in person or by proxy, at the
Annual Meeting, assuming a quorum is present. Unless instructions to the
contrary are specified in a properly signed and returned proxy, the proxies will
be voted in favor of Messrs. Peare and Demorest.
THE BOARD OF DIRECTORS RECOMMENDS THAT SHAREHOLDERS
VOTE "FOR" THE NOMINEES.
DIRECTORS
The following table sets forth information regarding each nominee for
election as a director and each director whose term of office will continue
after the Annual Meeting. Except as otherwise indicated, each director has been
engaged in the principal occupation described below for at least five years.
<TABLE>
<CAPTION>
COMPANY EXPIRATION OF
NAME AGE DIRECTOR SINCE TERM AS DIRECTOR
- ---- --- -------------- ----------------
<S> <C> <C> <C>
William F. Peare................................. 61 1989 2000
Jeffery P. Sites................................. 42 1991 2002
Jerol E. Andres.................................. 55 1989 2001
Douglas P. Kintzinger............................ 38 1994 2002
Roderick C. Wendt................................ 44 1993 2001
Harry L. Demorest................................ 56 1997 2000
Michael P. Hollern............................... 60 1997 2002
Linda M. Tubbs................................... 51 1997 2001
</TABLE>
William F. Peare has served as its President and Chief Executive Officer,
and as a director, since 1989. Mr. Peare also serves as a director and, until
January, 1999, as President of WorldMark, The Club ("WorldMark"). Mr. Peare
developed the WorldMark concept and attracted key management personnel to the
Company. From 1987 to 1989, Mr. Peare served as a management consultant for
Eagle Crest Resort in Redmond, Oregon ("Eagle Crest") and for Elkhorn Resort in
Sun Valley, Idaho. From 1985 to 1987, Mr. Peare was a Senior Vice President of
Horizon Airlines. From 1983 to 1985, Mr. Peare served as Chief Executive Officer
of All Seasons Resorts, Inc. ("All Seasons"), a publicly-traded membership
campground company. From 1975 to 1982, Mr. Peare served as President of Thousand
Trails Inc. ("Thousand Trails"), the nation's largest membership campground
company.
Jeffery P. Sites has served as Executive Vice President, Chief Operating
Officer, and Secretary of the Company since 1989, and served as Treasurer from
1989 to January 1997. Mr. Sites has been a director of the Company since 1991.
Prior to 1998, Mr. Sites served as a director and as Treasurer of WorldMark. Mr.
Sites oversees the day-to-day operations of the Company. From 1987 to 1989, Mr.
Sites was Chief Financial Officer of OMT, Inc., a holding company with a variety
of businesses including an interval ownership project in Sun Valley, Idaho. From
1985 to 1987, Mr. Sites was Executive Vice President and co-founder of Venture
Out
3
<PAGE> 7
Resorts, a regional membership campground company. From 1983 to 1985, Mr. Sites
was the Controller for All Seasons.
Jerol E. Andres has served as a director of the Company since 1989. Since
1988, Mr. Andres has served as Chief Executive Officer and President of Eagle
Crest. From 1984 to 1988, Mr. Andres founded and was Chief Executive Officer and
President of Happy Trails Resort. Since 1993, Mr. Andres has served as a
director of Bank of the Cascades, a publicly-traded bank company. Mr. Andres
served on the board of ARDA for 11 years, serving as Chairman from 1984 to 1986.
From 1978 to 1984, Mr. Andres served as a Vice President of Thousand Trails.
Douglas P. Kintzinger has served as a director of the Company since 1994.
Mr. Kintzinger has been Senior Vice President of JELD-WEN since 1997 and is
responsible for the accounting, data processing, legal, employee benefits, risk
management, insurance, corporate services, treasury and corporate development of
JELD-WEN. Mr. Kintzinger was first employed by JELD-WEN in 1987 and served as
special projects manager, corporate counsel, manager of corporate development
and in 1994 vice president of administration and corporate development. He has
been a director of JELD-WEN since 1994 and JELD-WEN's corporate secretary since
1992. Mr. Kintzinger has also been an officer/director of various JELD-WEN
affiliates and subsidiaries, including JELD-WEN HOLDINGS, inc., Eagle Crest G.P.
Inc., Running Y Resort, Inc., West One Automotive Group, Inc. and Brooks
Resources Corporation. Mr. Kintzinger also has served as a director of South
Valley State Bank since 1990 and as a Regent of Luther College since 1990.
Roderick C. Wendt has served as a director of the Company since 1989. Mr.
Wendt has been President of JELD-WEN since 1992 and is responsible for the
overall day-to-day performance of JELD-WEN. Mr. Wendt was first employed by
JELD-WEN in 1980 and served as corporate counsel, Vice President and Senior Vice
President prior to becoming President. He has been a director of JELD-WEN since
1985. Mr. Wendt has also been an officer and/or director of various JELD-WEN
affiliates and subsidiaries, including Eagle Crest G.P. Inc., Running Y Resort,
Inc., Windmill Inns of America, inc., West One Automotive Group, Inc., Frank
Paxton Company and Brooks Resources Corporation. Mr. Wendt also served as a
director of South Valley State Bank from 1983 to 1994, from 1996 to present, and
has served as a director of the High Desert Museum since 1994.
Harry L. Demorest has served as Chief Executive Officer of Columbia Forest
Products, Inc. since March 1996. He served as President of Columbia Forest
Products, Inc. from March 1994 to March 1996, and as Executive Vice President
from April 1992 to February 1994. Prior to his employment by Columbia Forest
Products, Inc., Mr. Demorest was a partner with Arthur Andersen & Co., serving
as Office Managing partner for the Portland, Oregon office from 1981 to 1991 and
as Partner-in-charge of the tax division of the Portland office from 1979 to
1985.
Michael P. Hollern has served as Chairman of the Board of Directors of
Brooks Resources Corporation since 1970, and has served as President of Brooks
Resources from 1983 to 1999 and Chief Executive Officer since 1999. Mr. Hollern
served as President of Brooks-Scanlon, Inc. from 1970 until its sale to Diamond
International in June 1980. Mr. Hollern also serves on the boards of directors
of several corporate, civic and charitable organizations.
Linda M. Tubbs retired April 1, 1998 as an Executive Vice President of
Wells Fargo Bank, serving as its Division Manager for the Northwest Commercial
Banking Group since Wells Fargo's merger with First Interstate Bank in April
1996. Prior to the merger, Ms. Tubbs served as Senior Vice President and Manager
of First Interstate's Portland, Oregon Commercial Banking Administration and
served in various other capacities at First Interstate since 1972, including her
appointment in March 1990 as Senior Vice President and Manager of the Oregon
head office. Ms. Tubbs also serves on the boards of directors of several civic
and charitable organizations.
EXECUTIVE OFFICERS
Gene F. Hensley, age 47, has served as Executive Vice President since
January 1999 and Vice President of Operations since December 1995. His current
responsibilities include overseeing the company's day-to-day
4
<PAGE> 8
sales, marketing, operations and corporate communication. Mr. Hensley began
employment with Trendwest in January 1990 in sales. Mr. Hensley is also
President of the WorldMark, the Club Board of Directors and has overseen the
Club's operations since April 1994. Mr. Hensley began his career in vacation
ownership in 1979.
Alan B. Schriber, age 48, has served as Executive Vice President of
Trendwest since January 1999, and served as Vice President -- Administration and
Finance from September 1994 to January 1997. Mr. Schriber is responsible for the
accounts receivable, data processing, contract processing and human resources
functions for Trendwest. Between 1987 and 1994, Mr. Schriber was senior Vice
President of Gulf American Financial Services, which specialized in the
development, implementation and project management of consumer credit and
accounts receivable operations and systems. Prior to that, Mr. Schriber was Vice
President of Administration for Thousand Trails.
Gary A. Florence, age 58, has served as Vice President, Chief Financial
Officer and Treasurer of Trendwest since January 1997. Effective January 1,
1999, Mr. Florence assumed responsibility for the Acquisitions and Resort
Development activities of the Company. Prior to that time, he served as
Treasurer of JELD-WEN, a position he held since 1992. Between 1973 and 1991, Mr.
Florence served as JELD-WEN's Corporate Controller. Mr. Florence has been
responsible for establishing the finance subsidiaries of Trendwest and
structuring its sales and securitizations transactions. Effective April 30,
2000, Mr. Florence will retire as Chief Financial Officer and Treasurer of
Trendwest.
J. Michael Moyer, age 63, has served as Senior Vice President of Trendwest
since 1989. Mr. Moyer also serves as a Board member of WorldMark. Effective
January 1, 1999, Mr. Moyer is the project manager for the development of a 7,400
acre destination resort located near Rosyln, Washington. Prior to this, Mr.
Moyer oversaw Trendwest's Public Affairs activities, all legal matters regarding
the sales of Vacation Credits and acted as liaison with state and federal
agencies. Prior to joining Trendwest, Mr. Moyer served in the same capacity at
Thousand Trails and All Seasons Resorts.
Timothy P. O'Neil, age 37, joined Trendwest as Vice President -- Finance in
February 1999. From 1988 to January 1999, Mr. O'Neil worked for Bank One and its
predecessor companies First Chicago NBD and NBD Bank in their corporate banking
and loan syndication departments. Mr. O'Neil acted as the placement agent for
the Company's first securitization. Effective April 30, 2000, Mr. O'Neil will
assume the role of Chief Financial Officer of Trendwest.
INFORMATION REGARDING THE BOARD OF DIRECTORS AND ITS COMMITTEES
The Board of Directors has an Audit Committee and a Compensation Committee.
The Audit Committee reviews the Company's accounting practices, internal
accounting controls and financial results and oversees the engagement of the
Company's independent auditors. The current members of the Company's Audit
Committee are Messrs. Sites, Demorest and Kintzinger. The Audit Committee met
two times in 1999.
The Compensation Committee reviews and recommends to the Board of Directors
salaries, bonuses and other forms of compensation for executive officers of the
Company and administers the Company's stock option plan. The current members of
the Compensation Committee are Messrs. Hollern and Kintzinger and Ms. Tubbs. The
Compensation Committee met one time in 1999.
During 1999, the Company's Board of Directors met seven times. Each member
of the Board of Directors attended at least 75% of the aggregate number of
meetings of the Board of Directors and committees on which such director served.
DIRECTOR FEES
Directors who are not employees of the Company or JELD-WEN receive a fee of
$6,250 per quarter. All non-employee directors are reimbursed for out of pocket
expenses for each Board meeting attended.
5
<PAGE> 9
EXECUTIVE COMPENSATION
SUMMARY COMPENSATION TABLE
The following table and related notes set forth all compensation received
from the Company for the three fiscal years ended December 31, 1999 by the
Company's Chief Executive Officer ("CEO") and the four most highly paid
executive officers (other than the CEO) who were serving as executive officers
at the end of 1999 (collectively, together with the CEO, the "Named Executive
Officers").
<TABLE>
<CAPTION>
OTHER ANNUAL OPTIONS
NAME AND PRINCIPAL POSITION YEAR SALARY BONUS COMPENSATION(1) GRANTED
--------------------------- ---- -------- -------- --------------- -------
<S> <C> <C> <C> <C> <C>
William F. Peare......................... 1999 $115,000 $195,522 $12,276 4,000
President and Chief 1998 105,000 225,778 14,474 4,000
Executive Officer 1997 100,000 197,340 12,055 20,000
Jeffery P. Sites......................... 1999 90,000 159,359 18,560 4,000
Chief Operating Officer 1998 80,000 166,615 13,779 4,000
1997 75,000 159,145 15,919 20,000
Gene F. Hensley.......................... 1999 80,000 136,183 19,597 4,000
Executive Vice President 1998 72,000 120,650 19,322 4,000
1997 70,000 108,840 12,342 20,000
Alan B. Schriber......................... 1999 80,000 136,183 17,545 4,000
Executive Vice President 1998 70,000 120,650 11,893 4,000
1997 60,000 87,196 11,225 20,000
Gary A. Florence......................... 1999 80,500 142,915 20,876 4,000
Vice President, 1998 77,500 120,650 26,668 4,000
Chief Financial Officer and Treasurer 1997 75,000 114,955 33,422 20,000
</TABLE>
- ---------------
(1) Other annual compensation is comprised of various items such as Company
401(k) contributions and auto allowance.
EMPLOYMENT, TERMINATION AND CHANGE OF CONTROL AGREEMENTS
Messrs. Peare and Sites have entered into employment agreements with the
Company. Under the employment agreements, Mr. Peare will receive a base annual
salary of $115,000 and Mr. Sites will receive a base annual salary of $90,000;
each will have the opportunity to receive performance bonuses. The agreements
contain a covenant not to compete for a period of two years in the event of
termination of employment for any reason. If employment is terminated by the
Company without cause, the employee will receive his base salary for a period of
one year following the date of termination plus the amount of bonus earned
during the preceding twelve months.
6
<PAGE> 10
GRANTS OF STOCK OPTIONS
The following table sets forth information on stock option grants during
fiscal 1999 to the Named Executive Officers. The options set forth in the table
below were granted on November 4, 1999, as part of recipient's 1999
compensation.
<TABLE>
<CAPTION>
POTENTIAL REALIZABLE
VALUE AT ASSUMED
ANNUAL RATES OF
STOCK PRICE
NUMBER OF PERCENT OF APPRECIATION FOR
SECURITIES TOTAL OPTIONS EIGHT YEAR OPTION
UNDERLYING GRANTED TO EXERCISE TERM(2)
OPTIONS EMPLOYEES IN PRICE EXPIRATION ---------------------
NAME GRANTED(1) FISCAL YEAR ($/SHARE) DATE 5% ($) 10% ($)
- ---- ---------- ------------- --------- ---------- -------- ---------
<S> <C> <C> <C> <C> <C> <C>
William F. Peare........... 4,000 2.58% 21.5157 11/4/07 41,100 98,400
Jeffery P. Sites........... 4,000 2.58% 21.5157 11/4/07 41,100 98,400
Gene F. Hensley............ 4,000 2.58% 21.5157 11/4/07 41,100 98,400
Alan B. Schriber........... 4,000 2.58% 21.5157 11/4/07 41,100 98,400
Gary A. Florence........... 4,000 2.58% 21.5157 11/4/07 41,100 98,400
</TABLE>
- ---------------
(1) Each of the options reflected in this table was granted to the respective
Named Executive Officer pursuant to the Company's 1997 Option Plan. The
exercise price of each option is equal to the fair market value of the
Common Stock on the date of grant. The options vest ratably over five years
beginning on the first anniversary of the date of grant.
(2) These assumed rates of appreciation are provided in order to comply with the
requirements of the Securities and Exchange Commission (the "SEC") and do
not represent the Company's expectation or projection as to the actual rate
of appreciation of the Common Stock. These gains are based on assumed rates
of annual compound stock price appreciation of 5% and 10% from the date the
options were granted over the full option term. The actual value of the
options will depend on the performance of the Common Stock and may be
greater or less than the amounts shown.
EXERCISE OF STOCK OPTIONS
The following table sets forth information on the exercise of stock options
during fiscal year 1999 by each of the Named Executive Officers and the value of
unexercised options at December 31, 1999.
AGGREGATED OPTION/SAR EXERCISES IN LAST FISCAL YEAR AND
FISCAL YEAR-END OPTION/SAR VALUES
<TABLE>
<CAPTION>
NUMBER OF VALUE OF UNEXERCISED
UNEXERCISED OPTIONS IN-THE-MONEY OPTIONS
SHARES AT FISCAL YEAR-END (#) AT FISCAL YEAR-END ($)
ACQUIRED VALUE --------------------------- ---------------------------
NAME ON EXERCISE REALIZED($) EXERCISABLE UNEXERCISABLE EXERCISABLE UNEXERCISABLE
- ---- ----------- ----------- ----------- ------------- ----------- -------------
<S> <C> <C> <C> <C> <C> <C>
William F. Peare............ -- -- 8,800 19,200 8,900 39,538
Jeffery P. Sites............ -- -- 8,800 19,200 8,900 39,538
Gene F. Hensley............. -- -- 8,800 19,200 8,900 39,538
Alan B. Schriber............ -- -- 8,800 19,200 8,900 39,538
Gary A. Florence............ -- -- 8,800 19,200 8,900 39,538
</TABLE>
7
<PAGE> 11
REPORT OF THE COMPENSATION COMMITTEE
The Compensation Committee of the Board of Directors is responsible for
establishing policies and programs which govern compensation for executive
officers and for administering these programs to determine bonus amounts and
option awards.
COMPENSATION POLICY
The Company's executive compensation policy is designed to attract, reward
and retain management who will achieve the business objectives of the Company.
The Company's compensation policy seeks to align executive compensation with
corporate performance, both on a short-term and long-term basis. In this regard,
the base salaries of executives are established at levels which are considered
lower than might otherwise be warranted in light of the duties and scope of
responsibilities of each officer's position. Executive officers are afforded the
opportunity to substantially increase their income through a bonus system that
is based primarily on the Company's annual sales. A smaller portion of the bonus
of executive officers is based on the Company's net income exceeding a 20%
annual return on equity.
The Compensation Committee also awarded stock options to various executive
officers following the Company's initial public offering. The purpose of these
awards was to provide key officers with an equity incentive in the Company to
reinforce management's commitment to enhancement of profitability and
Shareholder value. These options granted were based primarily on the executive
officer's level of responsibility within the Company and the length of time such
officer had been employed by the Company.
COMPENSATION OF THE CHIEF EXECUTIVE OFFICER
Mr. William Peare, the Company's Chief Executive Officer, is a party to an
employment agreement with the Company and his compensation for 1999 was
determined in accordance with the employment agreement. Mr. Peare's base
compensation is set at $115,000 and he is eligible to receive a performance
bonus, based primarily on the Company's annual sales, up to approximately two
times his base salary. For 1999, Mr. Peare's bonus was $195,522. The
Compensation Committee also awarded Mr. Peare a grant of options to acquire
4,000 shares of Common Stock. As with the other grants to executive officers,
Mr. Peare's grant was based on his position as chief executive officer and his
length of service with the Company.
COMPENSATION COMMITTEE
Michael P. Hollern
Douglas P. Kintzinger
Linda M. Tubbs
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<PAGE> 12
PERFORMANCE GRAPH
The following graph compares the cumulative total Shareholder return (stock
price appreciation plus dividends) on the Common Stock with the cumulative total
return of the S&P 500 Index and the group of peer companies set forth below
(based on weighted market capitalization) selected by the Company.
COMPARED CUMULATIVE TOTAL RETURN AMONG
TRENDWEST RESORTS, INC., S&P 500 INDEX AND PEER GROUP INDEX
[PERFORMANCE GRAPH]
<TABLE>
<CAPTION>
TRENDWEST RESORTS,
INC. S & P 500 PEER GROUP PEERS + YOUR COMPANY
------------------ --------- ---------- --------------------
<S> <C> <C> <C> <C>
8/97 100.00 100.00 100.00 100.00
12/97 127.08 102.43 94.07 94.83
12/98 69.44 131.70 60.52 60.73
12/99 125.00 159.42 56.43 57.87
</TABLE>
PEER GROUP DETAIL
<TABLE>
<S> <C>
AMERICAN SKIING LODGIAN, INC
BRISTOL HOTEL CO PROMUS HOTEL CO
CHOICE HOTELS CO SHOLODGE INC
EXECUSTAY CORP SUNTERRA CORP
FAIRFIELD COMMUNITIES SILVERLEAF RESORTS
FOUR SEASON SUBURBAN LODGES HOTELS
HOST MARRIOTT CORP SUNBURST HOSPITALITY CORP
INTRAWEST CORP SUPERTEL HOSPITALITY INC
</TABLE>
9
<PAGE> 13
CERTAIN RELATIONSHIPS AND TRANSACTIONS
RELATIONSHIP WITH JELD-WEN, INC.
Background. JELD-WEN, inc. ("Parent" or "JELD-WEN") owns 81.06% of the
outstanding shares of the Company's Common Stock. Roderick Wendt and Douglas
Kintzinger are directors of the Company and Richard Wendt was a director of the
Company until March 1997. Richard Wendt, Roderick Wendt and Douglas Kintzinger
are all directors of JELD-WEN. In addition, Richard Wendt, Roderick Wendt and
Douglas Kintzinger own 38.7%, 2.1% and .5%, respectively, of the outstanding
shares of JELD-WEN. Eagle Crest, Inc. ("Eagle Crest"), a wholly-owned subsidiary
of JELD-WEN, is developing the Eagle Crest Resort. Running Y Resort, Inc.
("Running Y"), a wholly-owned subsidiary of Eagle Crest, is developing the
Running Y Resort.
The Company is developing a resort in central Washington known as
MountainStar in conjunction with JELD-WEN. JELD-WEN owns the land and the
Company is acting as the developer. On behalf of its Parent, the Company has
incurred costs of approximately $10,898,000 in 1999 related to the project. All
costs incurred to date will be reimbursed by the Parent.
Administrative Services. JELD-WEN provides a self-insured health, life and
disability benefits plan to its employees, in which the Company participated.
The Company paid JELD-WEN approximately $3,207,000 in 1999 to include the
Company's employees within the JELD-WEN plan. JELD-WEN also self-insures its
worker's compensation liability and the Company also participates in that plan.
The Company paid JELD-WEN approximately $720,000 in 1999 to include the
Company's employees within the JELD-WEN plan.
Credit Facility. The Company maintains an unsecured, open, revolving credit
line with JELD-WEN of $10 million which is payable on demand. The Company pays
JELD-WEN interest at prime plus one percent. The maximum month-end balance of
the line outstanding to JELD-WEN during 1999 was $0. To the extent the Company
has excess funds available to loan JELD-WEN, such loans earn interest at prime
minus two percent. The maximum month-end outstanding lending to JELD-WEN during
the year was $4,417,000. The terms of the line of credit are the same as
JELD-WEN provides to its other subsidiaries and divisions. The Company believes
that the terms of the line of credit as a whole are no less favorable than could
be obtained from an unaffiliated third party.
Agreement with Eagle Crest. Through June 30, 1999, the Company had an
agreement with Eagle Crest whereby the Company had assigned to Eagle Crest the
nonexclusive right to sell Upgrade Vacation Credits in WorldMark at Eagle
Crest's resort in Redmond, Oregon and to retain the gross proceeds from such
sales. Effective June 30, 1999, Eagle Crest terminated sales of Upgrades in
WorldMark. In addition, the Company purchases Notes Receivable from Eagle Crest
at face value plus accrued interest. During the year, the Company purchased
Notes Receivable in the principal amount of approximately $473,000. The terms of
the agreement with Eagle Crest were negotiated between the managements of the
Company and Eagle Crest.
Agreement with Running Y. During 1999, The Company purchased Notes
Receivable from Running Y in the principal amount of approximately $177,000. The
Company retains the full face interest on the contracts financed and sold to the
Company with full recourse to Running Y for any unpaid principal amounts. The
terms of the agreement with Running Y were negotiated between the managements of
the Company and Running Y.
RELATIONSHIP WITH WORLDMARK
WorldMark, The Club ("WorldMark") is a California nonprofit mutual benefit
corporation that was formed by Trendwest for the specific purposes of owning,
operating and maintaining the real property conveyed to it by Trendwest.
Trendwest has the exclusive, non-terminable right to contribute properties to
WorldMark. The Company contributes properties to WorldMark, free from all
monetary encumbrances, which are then added to the inventory of WorldMark Resort
units available for use by Owners. In return for the contribution of property to
WorldMark, Trendwest has the exclusive right to market and sell Vacation
Credits.
10
<PAGE> 14
WorldMark is managed by a Board of Directors elected by the Owners, who
vote in proportion to the number of Vacation Credits owned. At present, three of
WorldMark's five Board members are executive officers of Trendwest, Mr. William
F. Peare, Mr. Gene F. Hensley and Mr. J. Michael Moyer. In addition, Mr. Hensley
is the President of WorldMark.
The Company has a Management Agreement with WorldMark whereby it acts as
the exclusive manager and servicing agent of WorldMark and the vacation owner
program. The Company's responsibilities under the Management Agreement include
general management of WorldMark, overseeing the property management and service
levels of the resorts, and preparing financial forecasts and budgets for
WorldMark. The Management Agreement provides for automatic one-year renewals
unless such renewal is denied by a majority of the voting power of the Owners
(excluding Trendwest). As compensation for its services, the Company receives
the portion of total revenues received by WorldMark remaining after WorldMark
pays or reserves for its expenses plus reserves for repair and replacement of
WorldMark Resorts. This amount is subject to a ceiling equal to 15% of the
budgeted annual expenses and reserves of WorldMark (exclusive of management
fees). Management revenues from WorldMark during 1999 were approximately
$2,972,000.
RELATIONSHIP WITH SAGE SYSTEMS
Background. The Company and Sage Systems (a subsidiary of Interval Resort
and Financial Services) and Sage Escrow, a licensed escrow company, are parties
to several administrative agreements. Woodrow O'Rourke, Vice President of
Operations of Sage Systems and Co-Owner of Sage Escrow, is the brother-in-law of
William F. Peare, a director and the President and Chief Executive Officer of
the Company.
Escrow. The Company and Sage Escrow are parties to an Escrow Agreement
under which contracts for the sale of Vacation Credits by the Company, and the
funds received from such sales, must be placed in escrow with Sage. The Company
pays Sage a fee of $35 to $40 per account for which Sage holds escrowed funds.
Under the Escrow Agreement, the Company paid Sage approximately $943,000 in
1999. The Company has terminated its agreement with Sage Escrow as of March 31,
2000.
Servicing of Accounts. The Company and Sage Systems are parties to a
Service Agreement under which Sage is responsible for maintaining a data
processing system to bill and receive monthly receivable payments. The Company
pays Sage a monthly fee of $1.75 per account serviced by Sage. Under the Service
Agreement, the Company paid Sage approximately $1,165,000 in 1999.
Software. The Company, Sage Systems and James McBride, Sr., an employee of
Sage, entered into a Software Transfer Agreement in August 1994, under which
Sage and Mr. McBride granted the Company an irrevocable, royalty-free license to
use certain computer software programs. Concurrently with the Software Transfer
Agreement, the Company and Sage entered into a Software Support and Maintenance
Agreement (the "Maintenance Agreement"), under which Sage provides
modifications, improvements and customer service to the Company in connection
with the licensed computer software programs. Under the Maintenance Agreement,
the Company paid Sage an initial fee of $12,000, a retainer of $2,000 per month,
and labor charges of $50 per hour for services in excess of ten hours per month.
Under the Maintenance Agreement, the Company has paid Sage approximately $35,000
in 1999.
The terms of the various agreements with Sage were negotiated between the
managements of the Company and Sage. The Company believes that the terms of such
agreements are no less favorable than could have been obtained from an unrelated
third party.
EMPLOYMENT RELATIONSHIPS
Frederick C. Peare, the brother of Mr. William Peare, is employed by the
Company as a director of one of the Company's sales offices. During 1999,
Frederick C. Peare received a salary (based on commissions) and Company 401(k)
contributions of $223,000. Deborah Hamilton, the sister of Mr. William Peare, is
employed by the Company in an administrative role. During 1999, Ms. Hamilton
received a salary and bonus of $61,000. Scott Sites, the brother of Mr. Jeffery
Sites, is employed by the Company in a sales capacity. During 1999, Scott Sites
received a salary (based on commissions), bonus and Company 401(k) contributions
of $133,000.
11
<PAGE> 15
Jessi Sites, the sister-in-law of Mr. Jeffery Sites and wife of Scott Sites, is
employed by the Company in a sales position. During 1999, Mrs. Sites received
salary, (based on commissions), bonus and Company 401(k) contributions of
$122,000. Thomas F. Sites, the brother of Mr. Jeffery Sites, is employed by the
Company in an administrative capacity. During 1999, Thomas Sites received a
salary, bonus and Company 401(k) contributions of $179,000.
SECTION 16(a) BENEFICIAL OWNERSHIP REPORTING COMPLIANCE
Under SEC rules, the Company's directors, executive officers and beneficial
owners of more than 10% of any Trendwest equity security are required to file
periodic reports of their ownership, and changes in that ownership, with the
SEC. Based solely on its review of copies of these reports and representations
of such reporting persons, the Company believes during fiscal 1999, such SEC
filing requirements were satisfied.
PROPOSAL 2
RATIFICATION OF SELECTION OF INDEPENDENT AUDITORS
The Board of Directors has appointed KPMG LLP ("KPMG") as the Company's
independent auditors for the fiscal year ending December 31, 2000.
Representatives of KPMG LLP are expected to attend the Annual Meeting and will
have an opportunity to make a statement or to respond to appropriate questions
from Shareholders. Ratification of the selection of KPMG requires the
affirmative vote of a majority of the votes cast by the holders of the Common
Stock voting in person or by proxy at the Annual Meeting.
THE BOARD OF DIRECTORS OF THE COMPANY RECOMMENDS THAT YOU VOTE "FOR" THE
PROPOSAL TO RATIFY THE SELECTION OF KPMG LLP AS INDEPENDENT AUDITORS OF THE
COMPANY FOR THE 2000 FISCAL YEAR.
ANNUAL REPORT
A copy of the Company's 1999 Annual Report to Shareholders, including the
Annual Report to the SEC on Form 10-K and the financial statements, is enclosed.
Additional copies of the Company's Annual Report may be obtained by writing to
Investor Relations, 9805 Willows Road, Redmond, Washington 98052.
SHAREHOLDER PROPOSALS FOR 2001 ANNUAL MEETING
Shareholder proposals intended to be presented at the Company's 2001 Annual
Meeting of Shareholders must be received by the Secretary of the Company no
later than December 8, 2000 for inclusion in the Company's Proxy Statement
relating to the 2001 Annual Meeting.
12
<PAGE> 16
OTHER MATTERS
As of the date of this Proxy Statement, management knows of no business
that will be presented for consideration at the Annual Meeting other than the
matters set forth in this Proxy Statement. If any other business properly comes
before the Annual Meeting, it is intended that the shares represented by proxies
will be voted in accordance with the judgment of the persons voting such
proxies.
By Order of the Board of Directors,
/s/ WILLIAM PEARE
William F. Peare
President and Chief Executive Officer
April 28, 2000
13
<PAGE> 17
TRENDWEST RESORTS, INC.
9805 WILLOWS ROAD, REDMOND WASHINGTON 98052
PROXY FOR THE JUNE 8, 2000 ANNUAL MEETING OF SHAREHOLDERS
THIS PROXY IS SOLICITED BY THE BOARD OF DIRECTORS OF TRENDWEST RESORTS, INC.
The undersigned Shareholder(s) of Trendwest Resorts, Inc. (the
"Company") hereby appoints William F. Peare and Jeffery P. Sites, and each of
them, as proxies, each with the power of substitution to represent and to vote,
as designated below, all the shares of Common Stock of the Company held of
record by the undersigned on April 10, 2000 at the Annual Meeting of
Shareholders to be held on June 8, 2000, and at any and all adjournment thereof.
1. ELECTION OF DIRECTORS
[ ] FOR the nominees listed below.
[ ] WITHHOLD AUTHORITY to vote for any of the nominees listed below
(TO WITHHOLD AUTHORITY TO VOTE FOR ANY NOMINEE, STRIKE OUT THE NAME
OF SUCH NOMINEE).
Nominees (Term Will Expire in 2003): Harry L. Demorest
William F. Peare
2. RATIFICATION OF KPMG LLP AS INDEPENDENT AUDITORS
[ ] FOR [ ] AGAINST [ ] ABSTAIN
Shares represented by properly executed proxies will be voted in
accordance with instructions appearing on the proxy and in the discretion of the
proxy holders as to any other matter that may properly come before the Annual
Meeting of Shareholders. THE BOARD OF DIRECTORS RECOMMENDS A VOTE "FOR" THE
NOMINEES LISTED IN ITEM 1. IN THE ABSENCE OF SPECIFIC INSTRUCTIONS, PROXIES WILL
BE VOTED FOR THE NOMINEES LISTED IN ITEM 1, AND IN THE DISCRETION OF THE PROXY
HOLDERS AS TO ANY OTHER MATTER THAT MAY PROPERLY COME BEFORE THE ANNUAL MEETING
OF SHAREHOLDERS.
Dated: _______________________, 2000
____________________________________
Signature(s)
____________________________________
Please sign as name(s) appears on this
proxy and date this proxy. If a joint
account, each joint owner must sign. If
signing for a corporation or partnership
or as agent, attorney or fiduciary,
indicate the capacity in which you are
signing.
