<PAGE>
ZIMMERMAN SIGN COMPANY
----------------
NOTICE OF ANNUAL MEETING OF STOCKHOLDERS
TO BE HELD MAY 22, 1998
------------------------
To the Stockholders of
ZIMMERMAN SIGN COMPANY:
NOTICE IS HEREBY GIVEN that the Annual Meeting of Stockholders of Zimmerman
Sign Company (the "Company") will be held on May 22, 1998 at 10:00 A.M., central
time, at the Holiday Inn - Southeast Crossing, 3310 Troup Hwy. Tyler, Texas for
the following purposes:
1. To elect five directors of the Company;
2. To vote upon a proposal to ratify the selection of independent auditors;
and
3. To transact such other business as may properly come before the meeting
and any adjournment thereof.
Only stockholders of record at the close of business on April 16, 1998 are
entitled to notice of, and to vote at, the Annual Meeting of Stockholders.
Your attention is directed to the Proxy Statement submitted with this
notice. WHETHER OR NOT YOU PLAN TO ATTEND THE MEETING IN PERSON, PLEASE DATE AND
SIGN THE ENCLOSED FORM OF PROXY AND RETURN IT PROMPTLY IN THE ENCLOSED ENVELOPE.
IN THE EVENT A STOCKHOLDER DECIDES TO ATTEND THE MEETING, SUCH STOCKHOLDER MAY
REVOKE SUCH PROXY AND VOTE SUCH SHARES IN PERSON. No postage need be affixed to
the enclosed envelope if mailed in the United States.
By Order of the Board of Directors
/s/ Jeffrey P. Johnson
Jeffrey P. Johnson
SECRETARY
<PAGE>
ZIMMERMAN SIGN COMPANY
9846 HIGHWAY 31 EAST
TYLER, TEXAS 75705
903-535-7400
------------------------
PROXY STATEMENT
---------------------
Your Proxy is being solicited by the Board of Directors of Zimmerman Sign
Company (the "Company" or "Zimmerman") for use at the Annual Meeting of
Stockholders to be held at the Holiday Inn - Southeast Crossing, 3310 Troup Hwy.
Tyler, Texas on May 22, 1998 at 10:00 A.M., central time and at any reconvened
meeting following adjournment thereof. In addition to solicitation of Proxies by
mail, the directors, officers and employees of the Company may solicit Proxies
personally, by telephone, telefax or telegram. The expense of all such
solicitation, including the cost of preparing, printing and mailing this Proxy
Statement, will be borne by the Company. The Company will, upon request,
reimburse brokers, banks or other persons for their reasonable out-of-pocket
expenses in forwarding proxy material to beneficial owners of the Company's
shares. This Proxy Statement, the accompanying Proxy and the Company's Annual
Report to Stockholders, which contains financial statements for the year ended
December 31, 1997, will first be mailed to stockholders of the Company on or
about April 16, 1998.
If the enclosed form of Proxy is executed and returned, it will be voted as
directed by the stockholder. If no directions are given, Proxies will be voted
for election as directors of all of the nominees specified therein and for the
ratification of the selection of KPMG Peat Marwick LLP ("KPMG") as independent
auditors for the calendar year 1998. A stockholder who has submitted a Proxy
pursuant to this solicitation may revoke it at any time before it is voted at
the Annual Meeting of Stockholders. A Proxy may be revoked by delivery to the
Secretary of the Company, at the Company's address set forth above, a written
revocation of such Proxy or a duly executed Proxy bearing a later date that is
prior to the date of the Annual Meeting. Any stockholder present at the meeting
may vote personally on all matters brought before the meeting and, in that
event, such stockholder's Proxy will not be used at the meeting by holders of
the Proxy.
Only stockholders of record as of the close of business on April 16, 1998
will be entitled to vote at the meeting. On that date, the Company had
outstanding and entitled to one vote per share, 1,854,692 shares of Common
Stock, par value $0.01 per share ("Common Stock"). A majority of the outstanding
shares will constitute a quorum at the meeting. Abstentions and broker non-votes
are counted for purposes of determining the presence or absence of a quorum for
the transaction of business. Abstentions are counted in tabulations of the votes
cast on proposals presented to stockholders, whereas broker non-votes are not
counted for purposes of determining whether a proposal has been approved.
If no contrary instruction is indicated, shares represented by properly
executed Proxies in the accompanying form of proxy will be voted by the persons
designated in the printed portion thereof FOR the election of the nominees named
below to serve as directors for a one-year term and FOR the ratification of the
selection of KPMG as independent auditors for the calendar year 1998. Each
director must be elected by the affirmative vote of a plurality of the votes
cast at the meeting by the holders of shares of Common Stock represented in
person or by Proxy. Approval of KPMG as independent auditors requires the
affirmative vote of a majority of the shares of Common Stock present or
represented at the meeting.
Management does not know of any other matters to be brought before the
meeting at this time; however, if any other matters are brought before the
meeting, the proxy holder shall vote in his discretion with respect to the
matter. In the event a stockholder specifies a different choice on the Proxy,
such stockholder's shares will be voted or withheld in accordance with the
specifications so made. Should any nominee for director named herein become
unable or unwilling to accept nomination or election, it is
<PAGE>
intended that the persons acting under proxy will vote for the election of such
other person as the Board of Directors of the Company may recommend unless the
number of directors is reduced by the Board of Directors. The Company has no
reason to believe that any nominee will be unable or unwilling to serve if
elected to office.
PRINCIPAL STOCKHOLDERS
Listed below are the number of shares of Common Stock beneficially owned as
of March 6, 1998 by the holders of more than 5% of the Common Stock of the
Company.
<TABLE>
<CAPTION>
COMMON STOCK PERCENT
-------------- ---------
<S> <C> <C>
Geneve Holdings, Inc. ("GHI") (1).................................. 818,579 44.14%
96 Cummings Point Road
Stamford, CT. 06902
David E. Anderson.................................................. 252,423 13.61%
8350 N. Central Expressway
Suite 600
Dallas, TX 75206
Tom E. Boner....................................................... 100,462 5.31%
9846 Highway 31 East
Tyler, TX 75705
</TABLE>
- ------------------------
(1) By virtue of his ownership of capital stock of GHI, Mr. Edward Netter,
Chairman of GHI, may be deemed to be the controlling person thereof. Mr.
Netter disclaims beneficial ownership as to shares of Zimmerman Common Stock
owned by GHI.
To the best knowledge of the Company, each of GHI, Mr. Anderson and Mr.
Boner has sole investment and voting power with respect to the shares listed
above, and no other person or persons acting in concert own beneficially more
than 5% of the Common Stock.
The following table sets forth for each director of the Company, the
Chairman and the four most highly compensated executive officers of the Company
other than the chairman for the year ended December 31, 1997, and for all
directors and executive officers of the Company as a group, information
regarding beneficial ownership of Common Stock as of March 6, 1998.
<TABLE>
<CAPTION>
PERCENT OF
CLASS
SHARES OF ENTITLED TO
NAME COMMON STOCK VOTE
- ----------------------------------------------------------- ---------------- --------------
<S> <C> <C>
David E. Anderson.......................................... 252,423 13.61%
Tom E. Boner............................................... 100,462(1) 5.31%
Michael W. Coppinger....................................... 38,639(2) 2.07%
Carl A. Goldman............................................ 11,000(3) *
John T. Griggs............................................. 23,183(4) 1.24%
Jeffrey P. Johnson......................................... 30,911(5) 1.65%
Steven B. Lapin............................................ 100 *
Roy T.K. Thung............................................. 250 *
All directors and executive officers as a group (9
persons)................................................. (1)(2)(3)(4)(5) 23.53%
</TABLE>
- ------------------------
* Represents less than 1% of the outstanding Common Stock.
2
<PAGE>
(1) Includes 38,639 shares of Common Stock subject to options granted to Mr.
Boner as of January 1997 all of which options are presently exercisable.
(2) Includes 15,456 shares of Common Stock subject to options granted to Mr.
Coppinger as of January 1997 all of which options are presently exercisable.
(3) Includes 10,000 shares of Common Stock subject to options granted to Mr.
Goldman on April 15, 1997, all of which options are presently exercisable.
(4) Includes 7,728 shares of Common Stock subject to options granted Mr. Griggs
as of January 1997 all of which options are presently exercisable.
(5) Includes 15,456 shares of Common Stock subject to options granted to Mr.
Johnson as of January 1997 all of which options are presently exercisable.
The Company was a majority owned subsidiary of Independence Holding Company
("IHC") until December 31, 1996, when IHC distributed all of its investment in
the Company to holders of IHC's common stock.
PROPOSAL 1
ELECTION OF DIRECTORS
Five directors will be elected at the meeting, each to hold office until the
next Annual Meeting of Stockholders and until such director's successor shall be
elected and shall qualify or until his earlier resignation, removal from office
or death.
It is intended that shares represented by Proxies will be voted for the
election of the nominees named below. If at the time of the meeting any of the
nominees should be unwilling or unable to serve, the discretionary authority
provided in the Proxy will be exercised to vote for a substitute or substitutes,
as the Board of Directors recommends. The Board has no reason to believe that
any of the nominees will be unwilling or unable to serve as a director.
THE BOARD OF DIRECTORS RECOMMENDS THAT STOCKHOLDERS
VOTE "FOR" THE ELECTION OF ALL OF THE NOMINEES.
The persons named below have been nominated for election as directors. All
of such nominees presently serve as directors of the Company.
David E. Anderson, age 53
Chairman
David E. Anderson has been Chairman of Zimmerman since November 1996 and a
Director since 1982. Mr. Anderson was Chairman of Zimmerman Holdings, Inc.
(formerly the immediate parent company of Zimmerman) for more than five years
prior to November 1996. From 1981 until 1986, he was Executive Vice President
and a Director of IHC. Mr. Anderson is currently a director of Standard Security
Life Insurance Company of New York, a subsidiary of IHC. Previously, Mr.
Anderson was a Vice President of The Dyson-Kissner-Moran Corporation and a Vice
President of Continental Illinois National Bank and Trust Company of Chicago.
Tom E. Boner, age 59
President
Tom E. Boner has been President, Treasurer and a Director of Zimmerman since
1984, having joined Zimmerman in 1981 as Director of Sales and Marketing. From
1970 to 1975, he was in sales with American Sign and Indicator, and from 1976
until 1981, was with American Bank Equipment Company. Mr. Boner served as a
Director of the International Sign Association from 1986 until 1995 and was
Chairman thereof in 1993.
3
<PAGE>
Carl A. Goldman, age 64
Director
Carl A. Goldman is co-founder and has been President and Chief Executive
Officer of Corporate Capital Consultants, Inc. since its inception in 1974.
Prior thereto, he spent ten years in the investment banking department of three
Wall Street firms and five years as Treasurer of The Franklin Corporation, a
small business investment company. Mr. Goldman has been a consultant to
Zimmerman and IHC since February 1996. Mr. Goldman became a director of
Zimmerman as of December 31, 1996.
Steven B. Lapin, age 52
Director
Steven B. Lapin has been a Director of Zimmerman since August 1992. He has
been President and Chief Operating Officer of IHC since November 1993, and for
more than two years prior thereto, was its Executive Vice President, Operations.
Mr. Lapin has also been President and Chief Operating Officer of Geneve
Corporation (a diversified financial holding company subsidiary of GHI)
("Geneve") since October 1993, and for more than two years prior thereto, was
Executive Vice President and Chief Operating Officer of Geneve. Mr. Lapin is
also a director of IHC, Geneve, American Educational Products, Inc. (a developer
and producer of hands-on educational materials) and the Aristotle Corporation (a
holding company for a subsidiary that designs, manufactures and markets women's
intimate apparel).
Roy T.K. Thung, age 54
Director
Roy T. K. Thung has been a Director of IHC since December 1990. He has also
served as Executive Vice President and Chief Financial Officer of IHC since
November 1993, and for more than two years prior thereto was Senior Vice
President, Chief Financial Officer and Treasurer of IHC. Mr. Thung has also been
Executive Vice President and Chief Financial Officer of Geneve since November
1993, and for more than two years prior thereto was Senior Vice President and
Chief Financial Officer of Geneve. Mr. Thung became a director of Zimmerman as
of December 31, 1996.
The Company was spun-off from IHC on December 31, 1996. The Board of
Directors met four times in 1997. In addition, the Audit Committee of the Board,
which is responsible for the recommendation of the Company's independent public
auditors, the review of such auditor's audit and recommendations concerning
internal controls, met twice in 1997 and has met twice thus far in 1998. The
Audit Committee currently consists of Messrs. Goldman and Thung.
The Company also has a Compensation Committee, which is responsible for
reviewing and approving the compensation of executive officers, reviewing and
recommending for approval the compensation of directors, advising management
regarding employee benefits, and administering the Company's 1996 Stock Option
Plan. The Compensation Committee currently consists of Messrs. Anderson, Goldman
and Lapin. The committee met twice in 1997 and has met once thus far in 1998.
Directors of the Company who are not also employees of the Company or
employees of an affiliate of the Company receive an annual fee of $7,000 plus
$1,000 for each Board meeting and $500 for each Committee meeting attended.
Directors who are officers of the Company do not receive compensation for
serving as directors of the Company.
Pursuant to the Company's 1996 Stock Option Plan, directors of the Company
who are not also employees of the Company or employees of an affiliate of the
Company ("Independent Directors") are eligible to participate in the Company's
Stock Option Plan under terms and conditions approved by the Compensation
Committee.
4
<PAGE>
EXECUTIVE OFFICERS
The following table sets forth information relating to the executive
officers of the Company who are not also directors of the Company.
<TABLE>
<CAPTION>
NAME AGE POSITION
- ------------------------------------- --- -----------------------------------------------------------
<S> <C> <C>
Michael W. Coppinger 51 Vice President, Sales
John T. Griggs 40 Vice President, Manufacturing
Jeffrey P. Johnson 36 Vice President, Chief Financial Officer and Secretary
Michael F. St. Onge 51 Vice President, Corporate Services
</TABLE>
Michael W. Coppinger has been Vice President, Sales of Zimmerman since 1987,
having joined Zimmerman in 1982 as a Regional Sales Manager. From 1973 to 1981,
he was with State Sign of Houston as a sales representative and was a Branch
Manager for Bajon Sign of Corpus Christi from 1981 to 1982. He is a past
president of the Texas Sign Association.
John T. Griggs has been Vice President, Manufacturing of Zimmerman since
1987. Previously, he was a National Sales Manager for Tenncon, Inc. and held
manufacturing and inventory management positions with Aladdin Industries.
Jeffrey P. Johnson has been Vice President and Chief Financial Officer of
Zimmerman since 1990 and Secretary of Zimmerman since December 1996. He joined
Zimmerman in 1985 as Controller. Previously, Mr. Johnson was employed with Price
Waterhouse. Mr. Johnson is a CPA and a member of the AICPA and the Texas Society
of CPAs. He is a Director and Officer of the Texas Sign Association and a
Director of the Southwest Sign Council of the International Sign Association.
Michael F. St. Onge has been Vice President, Corporate Services of Zimmerman
since January 1996. Mr. St. Onge was with Jim Pattison Sign Group's Pacific
Northwest Region for more than five years prior to joining Zimmerman serving
most recently as Executive Vice President and General Manager. He is a past
Chairman of the International Sign Association.
5
<PAGE>
EXECUTIVE COMPENSATION
SUMMARY COMPENSATION TABLE
The following table sets forth compensation paid by Zimmerman to its chief
executive officer and the four other most highly compensated executive officers
(collectively the "Named Executive Officers") for the years ended December 31,
1997, 1996 and 1995.
<TABLE>
<CAPTION>
LONG TERM COMPENSATION
-----------------------------------
AWARDS
ANNUAL COMPENSATION --------- PAYOUTS
---------------------------------------- RESTR. SECURITIES ---------- ALL OTHER
OTHER ANNUAL STOCK UNDERLYING LTIP COMPENSATION
NAME AND PRINCIPAL POSITION YEAR SALARY($) BONUS($) COMPENSATION($) AWARDS($) OPTIONS(2) PAYOUTS($) (3)($)
- --------------------------- ------- ----------- -------- --------------- --------- ---------- ---------- ------------
<S> <C> <C> <C> <C> <C> <C> <C> <C>
David E. Anderson 1997 125,000 0 -- -- -- -- 1,104
Chairman 1996 188,000(1) 0 -- -- -- -- 352,180
1995 188,000(1) 52,441 -- -- -- -- 3,120
Tom E. Boner 1997 200,500 0 -- -- 38,639 -- 5,004
President and 1996 155,500 40,000 -- -- -- -- 331,454
Treasurer 1995 150,500 43,410 -- -- -- -- 2,652
Michael W. Coppinger 1997 121,300 0 -- -- 15,456 -- 4,806
Vice President, 1996 104,300 20,000 -- -- -- -- 135,854
Sales 1995 100,000 25,033 -- -- -- -- 2,020
John T. Griggs 1997 115,800 0 -- -- 7,728 -- 4,642
Vice President, 1996 104,300 20,000 -- -- -- -- 70,654
Manufacturing 1995 100,000 24,534 -- -- -- -- 2,020
Jeffrey P. Johnson 1997 115,800 0 -- -- 15,456 -- 4,642
Vice President and 1996 104,300 20,000 -- -- -- -- 135,854
Chief Financial 1995 100,000 25,033 -- -- -- -- 2,020
Officer
</TABLE>
- --------------------------
(1) Mr. Anderson's compensation includes amounts received from Zimmerman
Holdings, Inc., which was formerly Zimmerman's majority shareholder.
(2) Reflects options to purchase Common Stock.
(3) Represents dollar value of premiums paid for term life insurance,
contributions made under Zimmerman's 401(k) savings plan instituted in 1995,
and other compensation. The amounts for 1997 and 1996 term life insurance
for all executive officers were $504 and $704 respectively. 1996 All Other
Compensation amounts for Messrs. Boner, Coppinger, Griggs and Johnson
include payments to them by Zimmerman in November 1996 in the amounts of
$326,000, $130,400, $65,200, and $130,400 respectively in consideration of
the termination of all of their options to acquire Zimmerman common stock;
the balance of 1997 and 1996 All Other Compensation for each executive
officer represents 401(k) contributions, except for Mr. Anderson, who in
1996 also received $350,000 as a one-time fee as consideration for services
performed in connection with the refinancing of Zimmerman's indebtedness.
6
<PAGE>
OPTION GRANTS IN 1997
The following table provides information related to options to purchase
Common Stock granted to the Named Executive Officers during 1997. The Company
has not granted stock appreciation rights.
<TABLE>
<CAPTION>
POTENTIAL REALIZABLE
INDIVIDUAL GRANTS (1) VALUE AT ASSUMED
-------------------------------------------------------------- ANNUAL RATES OF
NUMBER OF PERCENTAGE OF STOCK PRICE
SECURITIES TOTAL OPTIONS APPRECIATION FOR
UNDERLYING GRANTED TO EXERCISE OPTION TERM(2)
OPTIONS EMPLOYEES IN PRICE PER --------------------
NAME GRANTED FISCAL 1997 SHARE EXPIRATION DATE 5% 10%
- ------------------------------ ------------- ------------- ------------- ----------------- --------- ---------
<S> <C> <C> <C> <C> <C> <C>
Tom E. Boner.................. 38,639 44.27% $ 3.42 December 31, 2004 $ 63,094 $ 151,120
Michael W. Coppinger.......... 15,456 17.71% 3.42 December 31, 2004 25,238 60,450
John T. Griggs................ 7,728 8.85% 3.42 December 31, 2004 12,619 30,225
Jeffrey P. Johnson............ 15,456 17.71% 3.42 December 31, 2004 25,238 60,450
</TABLE>
- ------------------------
(1) The agreements underlying such options (the "Option Agreements") provide
that the options are immediately exercisable. All such options have an
eight year term and are transferable by the option holder.
(2) The potential realizable value columns of the table above illustrate the
value that might be realized upon exercise of the options immediately prior
to the expiration of their terms, assuming the specified compounded rates of
appreciation of the price of the Common Stock over the terms of the options.
The use of the assumed 5% and 10% returns is established by the SEC and is
not intended by the Company to forecast possible future appreciation of the
price of the Common Stock.
OPTION EXERCISES IN 1997 AND YEAR-END OPTION VALUES
The following table provides information related to options to purchase
Common Stock exercised by the Named Executive Officers during 1997 and the
number and value of such options held at December 31, 1997. The Company does not
have any outstanding appreciation rights.
<TABLE>
<CAPTION>
NUMBER OF SECURITIES
UNDERLYING UNEXERCISED OPTIONS VALUE OF UNEXERCISED
AT IN-THE-MONEY OPTIONS AT
DECEMBER 31, 1997 DECEMBER 31, 1997(1)
SHARES ACQUIRED VALUE ------------------------------ ------------------------------
NAME ON EXERCISE REALIZED EXERCISABLE UNEXERCISABLE EXERCISABLE UNEXERCISABLE
- ---------------------------------- ----------------- ----------- ----------- ----------------- ----------- -----------------
<S> <C> <C> <C> <C> <C> <C>
Tom E. Boner...................... 0 $ 0 38,639 0 $ 17,581 $ 0
Michael W. Coppinger.............. 0 0 15,456 0 7,032 0
John T. Griggs.................... 0 0 7,728 0 3,516 0
Jeffrey P. Johnson................ 0 0 15,456 0 7,032 0
</TABLE>
- ------------------------
(1) The closing price of the Common Stock as reported by Nasdaq Trading and
Market Services on December 31, 1997 was $3.875. In accordance with SEC
regulations, value is calculated based on the difference between the option
exercise price and $3.875 multiplied by the number of shares of Common Stock
underlying the options.
EMPLOYMENT AGREEMENTS
Mr. Anderson entered into an amendment and restatement of his existing
employment agreement with Zimmerman for a term of four years commencing January
1, 1997 which, at the end of such initial four-year term, is automatically
renewable for continuous one-year periods unless earlier terminated in
accordance with the terms of the agreement. Pursuant to such agreement, Mr.
Anderson's annual base salary is not less than $125,000, as fixed by Zimmerman's
Board of Directors from time to time. Mr. Anderson is eligible also for a bonus
of up to 60% of his base salary, the amount of such bonus earned to be based
upon quantitative and qualitative benchmarks. Prior to December 31, 1999, under
certain circumstances after (a) a change of control of Zimmerman, (b) the
termination of Mr. Anderson's employment without cause or (c) his death or
disability, Mr. Anderson is entitled to a severance payment
7
<PAGE>
in the amount of four years then-base salary plus the maximum earnable bonus. If
such events occur on or after December 31, 1999, Mr. Anderson is entitled to a
severance payment in the amount of three years' then-base salary plus three
times the greater of 50% of the maximum earnable bonus and the most recent bonus
earned.
Mr. Boner entered into an amendment and restatement of his existing
employment agreement with Zimmerman for a term of three years commencing January
1, 1997 which, at the end of such initial three-year term, is automatically
renewable for continuous one-year periods unless earlier terminated in
accordance with the agreement. Pursuant to such agreement, Mr. Boner's annual
base salary is not less than $155,000, as fixed by Zimmerman's Board of
Directors from time to time. In addition to his annual base salary under the
agreement, Mr. Boner will receive supplemental salary payments of $45,000 for
each of 1997 and 1998. Additionally, Mr. Boner is eligible to receive a bonus of
up to 60% of his base salary (exclusive of the supplemental salary payments),
the amount of such bonus earned to be based upon quantitative and qualitative
benchmarks. Under certain circumstances after (a) a change of control of
Zimmerman, (b) the termination of Mr. Boner's employment without cause or (c)
his death or disability, Mr. Boner is entitled to a severance payment equal to
three years' then-base salary (exclusive of the supplemental salary payments)
plus three times the maximum earnable bonus.
Each of Messrs. Coppinger, Johnson and Griggs entered into an amendment and
restatement of his existing employment agreement with Zimmerman for a term of
two years commencing January 1, 1997 which, at the end of such initial two-year
term, is automatically renewable for continuous one-year periods unless earlier
terminated in accordance with the agreement. Pursuant to such agreements,
Messrs. Coppinger, Johnson, and Griggs each will receive an annual base salary
of not less than $104,000, as fixed by Zimmerman's Board of Directors from time
to time. In addition to the annual base salary under his employment agreement,
each of these individuals will receive a supplemental salary payment for each of
1997 and 1998 of $17,000, $11,500, and $11,500, respectively. Additionally, each
of these officers is eligible to receive a bonus of up to 50% of his base
salary, the amount of such bonus earned to be based upon quantitative and
qualitative benchmarks. Under certain circumstances after (a) a change of
control of Zimmerman, (b) the termination of such officer's employment without
cause or (c) such officer's death or disability, such officer is entitled to a
severance payment equal to two year's then-base salary (exclusive of the
supplemental salary payments) plus two times the maximum earnable bonus.
STOCK OPTION PLAN
In November 1996, Zimmerman's Board of Directors adopted, and its
shareholders approved, the Stock Option Plan. The purpose of the Stock Option
Plan is to provide employees, officers and directors with additional incentives
by increasing their proprietary interest in Zimmerman. The aggregate number of
shares of Zimmerman Common Stock with respect to which options may be granted
may not exceed 185,000 shares.
The Stock Option Plan provides for the grant of incentive stock options
("ISOs") as defined in Section 422 of the Internal Revenue Code of 1986, as
amended, and nonqualified stock options (collectively "Awards"). The Stock
Option Plan is administered by the Compensation Committee. The Compensation
Committee has, subject to the terms of the Stock Option Plan, the sole authority
to grant Awards under the Stock Option Plan, to construe and interpret the Stock
Option Plan and to make all other determinations and take any and all actions
necessary or advisable for the administration of the Stock Option Plan.
All of Zimmerman's full-time, salaried employees and members of the Board of
Directors are eligible to receive Awards under the Stock Option Plan. Options
will be exercisable during the period specified in each option agreement and
will generally be exercisable in installments pursuant to a vesting schedule to
be designated by the Compensation Committee. The provisions of option agreements
may provide for the acceleration of the exercisability in the event of certain
events including certain reorganizations and
8
<PAGE>
changes in control of Zimmerman. No option will remain exercisable later than
ten years after the date of grant. The exercise prices for ISO's granted under
the Stock Option Plan may be no less than the fair market value of the Zimmerman
Common Stock on the date of grant. The exercise prices of nonqualified stock
options are set by the Compensation Committee.
There are no federal income tax consequences upon the grant of an option
under the Stock Option Plan. Upon exercise of a nonqualified option, the
optionee generally will recognize ordinary income in the amount equal to the
difference between the fair market value of the option shares at the time of
exercise and the exercise price, and Zimmerman is generally entitled to a
corresponding tax deduction. When an optionee sells shares issued upon the
exercise of a non-qualified stock option, the optionee realized short-term or
long-term capital gain or loss, depending on the length of the holding period,
but Zimmerman is not entitled to any tax deduction in connection with such sale.
An optionee will not be subject to federal income taxation upon the exercise
of ISO's granted under the Stock Option Plan, and Zimmerman will not be entitled
to a federal income tax deduction by reason of such exercise. A sale of shares
of Zimmerman Common Stock acquired upon exercise of an ISO that does not occur
within one year after the exercise or within two years after the grant of the
option generally will result in the recognition of long-term capital gain or
loss by the optionee in the amount of the difference between the amount realized
on the sale and the exercise price, and Zimmerman is not entitled to any tax
deduction in connection therewith. If a sale of the option or within two years
from the date of the option grant (a "disqualifying disposition"), the optionee
generally will recognize ordinary income equal to the lesser of (i) the excess
of the fair market value of the shares on the date of exercise of the options
over the exercise price or (ii) the excess of the amount realized on the sale of
the shares over the exercise price. Any amount realized on a disqualifying
disposition in excess of the amount treated as ordinary income will be long-term
or short-term capital gain, depending upon the length of time the shares were
held. Zimmerman generally will be entitled to a tax deduction on a disqualifying
disposition corresponding to the ordinary income recognized by the optionee.
As of April 15, 1997, Zimmerman granted options under the Stock Option Plan
to Mr. Goldman to purchase 10,000 shares. Zimmerman has granted, as of January
1, 1997, options under the Stock Option Plan to purchase 38,639 shares, 7,728
shares, 15,456 shares and 15,456 shares to Messrs. Boner, Griggs, Johnson and
Coppinger, respectively.
401(K) SAVINGS PLAN
Zimmerman has a defined contribution savings plan (the "Savings Plan")
covering all full-time employees who have at least one year of service and who
are not members of a collective bargaining unit. Messrs. Anderson, Boner and
Johnson are the Savings Plan trustees. Participants in the Savings Plan may make
salary-reduction contributions pursuant to Section 401(k) of the Code. Zimmerman
makes matching contributions to each participant's account (not to exceed 50% of
a participant's contribution), up to a maximum of 3% of a participant's monthly
compensation.
COMPENSATION COMMITTEE INTERLOCKS AND INSIDER PARTICIPATION
No directors have interlocking or other relationships with other boards or
Zimmerman that require disclosure under Item 402(j) or Item 404 of SEC
Regulation S-K.
BOARD OF DIRECTORS REPORT ON EXECUTIVE COMPENSATION
Prior to December 31, 1996, Zimmerman did not have a Compensation Committee,
and executive compensation was set by the Board of Directors. Under the guidance
of the Board, compensation policies have been designed which align executive
compensation to performance in areas key to Zimmerman's long-term success.
Zimmerman's compensation objective is to maximize shareholder value by
attracting, rewarding, and retaining highly qualified and productive individuals
and by motivating executives and key
9
<PAGE>
employees toward achieving Zimmerman's strategic goals and plans. The key
components of Zimmerman's executive compensation are base salary and annual
incentive awards.
The Board annually reviews and establishes base salaries, which are at
levels that the Board believes are competitive with industry and regional pay
practices and economic conditions. In determining appropriate salary levels, the
Board considers criteria including the individual's level and scope of
responsibility and performance contributions, as well as internal and market
comparisons. Zimmerman awards annual cash incentive bonuses to reward executive
officers and other key employees based upon individual performance and the
achievement of specific financial and operational goals determined for the year.
Payments of incentive bonus awards are also contingent upon the Company
attaining certain levels of annual operating profitability.
In regard to Mr. Anderson, in 1997, he participated in Zimmerman's profit
incentive plan under which he was entitled to earn a cash incentive bonus of up
to 60% of base salary. The plan had an escalating schedule under which profit
incentive awards were linked to year-to-year improvement in Zimmerman's earnings
before interest expense, taxes, depreciation and amortization. Through this
mechanism, approximately two-thirds of Mr. Anderson's achievable bonus in 1997
was directly tied to profit improvement. The remaining one-third of Mr.
Anderson's maximum earnable bonus was based upon the completion of other
specific corporate objectives established for such year.
Messrs. Boner, Coppinger, Griggs and Johnson also participate in Zimmerman's
profit incentive plan. As in the case of Mr. Anderson, the bonus awards listed
in the Summary Compensation Table for Messrs. Boner, Coppinger, Griggs and
Johnson reflect cash incentive awards under such plan.
Under the Stock Option Plan, Zimmerman's executive officers will be eligible
to receive stock option grants at the discretion of the Compensation Committee.
This report submitted by the 1997 Compensation Committee:
David E. Anderson Carl A. Goldman Steve B. Lapin
SECTION 16(a) BENEFICIAL OWNERSHIP REPORTING COMPLIANCE
The Company's directors, executive officers, and any person holding more
than ten percent of Zimmerman's Common Stock are required under the federal
securities laws to report their initial ownership of Zimmerman's Common Stock
and any subsequent changes in that ownership to the Securities and Exchange
Commission ("SEC"). Zimmerman is required to disclose in this proxy statement
any late filings of those reports. During the fiscal year ended December 31,
1997, the Company believes that no directors, executive officers or greater than
ten percent beneficial owners failed to timely file reports required by Section
16(a) of the Securities Exchange Act of 1934, except for late filed Forms 5 by
Messrs. Boner, Coppinger, Goldman, Griggs and Johnson. In making this
disclosure, the Company has relied solely on the representations of its
directors, executive officers and its ten percent holders and copies of the
reports furnished to the Company.
10
<PAGE>
STOCK PERFORMANCE CHART
<TABLE>
<CAPTION>
ZIMMERMAN RUSSELL NASDAQ NON-
SIGN COMPANY 2000 INDEX FINANCIAL
------------- ----------- -------------------
<S> <C> <C> <C>
1/22/97 $ 100.00 $ 100.00 $ 100.00
3/31/97 140.00 92.97 86.57
6/30/97 145.00 108.04 102.61
9/30/97 147.52 124.10 120.21
12/31/97 150.00 119.94 108.92
</TABLE>
RELATED PARTY TRANSACTIONS
None.
PROPOSAL 2
RATIFICATION OF APPOINTMENT OF AUDITORS
The Board of Directors has selected KPMG Peat Marwick LLP ("KPMG") as the
independent auditors of the Company for the year ended December 31, 1998. It is
anticipated that representatives of KPMG, who also served as the Company's
independent auditors for the year ended December 31, 1997, will be present at
the Annual Meeting of Stockholders and will have an opportunity to make a
statement if they so desire and to answer any appropriate questions.
THE BOARD OF DIRECTORS RECOMMENDS A VOTE "FOR" PROPOSAL 2
STOCKHOLDER PROPOSALS
Any proposal which a stockholder intends to present at next year's Annual
Meeting of Stockholders must be received at the Company's principal executive
office not later than December 16, 1998 in order to be included in the proxy
material for such meeting.
11
<PAGE>
OTHER MATTERS
As of the date of this Proxy Statement, the Board of Directors knows of no
other business to be presented for action at the meeting. As to any business
which would properly come before the meeting, the Proxies confer discretionary
authority in the persons named therein and those persons will vote or act in
accordance with their best judgment with respect thereto.
By Order of the Board of Directors
/s/ Jeffrey P. Johnson
Jeffrey P. Johnson
SECRETARY
April 16, 1998
12
<PAGE>
ZMN70 3 DETACH HERE
PROXY
ZIMMERMAN SIGN COMPANY
ANNUAL MEETING OF STOCKHOLDER
The undersigned hereby appoints David E. Anderson and Jeffrey P.
Johnson, each with power to act without the other and with full power of
substitution, as Proxies to represent and to vote, as designated on the
reverse, all Common Stock of Zimmerman Sign Company owned by the undersigned,
at the Annual Meeting of Stockholders to be held at the Holiday Inn -
Southeast Crossing, 3310 Troup Hwy., Tyler, Texas 75701, on May 22, 1998 at
10:00 a.m. central time, upon such other business as may properly come before
the meeting or any adjustment thereof including the following:
- --------------- ---------------
SEE REVERSE SEE REVERSE
SIDE (Continued, and to be signed and dated on reverse side) SIDE
- --------------- ---------------
<PAGE>
ZMN70 4 DETACH HERE
<TABLE>
<S> <C>
/X/ Please mark
votes as in
this example.
This proxy when properly executed will be voted in the manner directed herein by the undersigned stockholder, if no
specific direction is given, this proxy will be voted (i) for the election of the nominees for director, (ii) for the
ratification of the selection of KPMG Peat Marwick LLP as independent public accountants to audit the Company's financial
statements for the 1998 fiscal year and (iii) at the discretion of the proxy holders with regard to any other matter that
may properly come before the meeting or any adjournment thereof.
1. Election of Directors. FOR AGAINST ABSTAIN
NOMINEES: David E. Anderson, Tom E. Boner, 2. Ratification of the selection of KPMG Peat / / / / / /
Carl A. Goldman, Steven B. Lapin, Marwick LLP as independent public
Ray T.K. Thung accountants to audit the Company's
financial statements for the 1998 fiscal
FOR WITHHELD year.
/ / / /
3. In their discretion, on any other matter
that may properly come before the meeting
MARK HERE / / or any adjournment thereof.
FOR ADDRESS
CHANGE AND
NOTE BELOW
/ /
-------------------------------------------- This proxy may be revoked prior to the exercise of the powers conferred
INSTRUCTION: To withhold authority to vote for by the proxy.
any individual nominee, write that
nominee's name in the space above. THIS PROXY IS SOLICITED ON BEHALF OF THE BOARD OF DIRECTORS.
PLEASE DATE, SIGN EXACTLY AS SHOWN HEREON AND MAIL PROMPTLY THIS PROXY
IN THE ENCLOSED ENVELOPE.
Note: When there is more than one owner, each should sign. When signing
as an attorney, administrator, executor, guardian or trustee, please
add your title as such. If executed by a corporation, the proxy should
be signed by a duly authorized officer. If executed by a partnership,
please sign in the partnership name by an authorized person.
Signature: Date: Signature: Date:
---------------------- ---------- ---------------------- ----------
</TABLE>
