<PAGE> 1
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:
<TABLE>
<S> <C>
/ / 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 sec.240.14a-11(c) or sec.240.14a-12
</TABLE>
Nature's Sunshine Products, 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/ $125 per Exchange Act Rules 0-11(c)(1)(ii), or 14a-6(i)(1), or 14a-6(i)(2)
or Item 22(a)(2) of Schedule 14A.
/ / $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 (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
NATURE'S SUNSHINE PRODUCTS, INC.
NOTICE OF ANNUAL MEETING OF SHAREHOLDERS
TO BE HELD MAY 15, 1995
To the Shareholders:
Notice is hereby given that the 1995 Annual Meeting of Shareholders of
Nature's Sunshine Products, Inc. ("the Company") will be held at the Company's
corporate offices at 75 East 1700 South, Provo, Utah 84606, on Monday, May 15,
1995, at 10:00 a.m., local time, for the following purposes:
1. To elect one director, to serve a term of three years, and until his
successor is elected and shall qualify; and
2. To transact such other business as may properly come before the meeting
or any adjournment thereof.
The Board of Directors has fixed the close of business on April 3, 1995 as
the record date for the determination of shareholders entitled to notice of, and
to vote at, the Annual Meeting of Shareholders, and only shareholders of record
at such date will be so entitled to notice and to vote.
YOUR VOTE IS IMPORTANT. PLEASE SIGN AND DATE THE ENCLOSED PROXY AND RETURN IT
PROMPTLY IN THE ENCLOSED RETURN ENVELOPE WHETHER OR NOT YOU EXPECT TO ATTEND THE
MEETING. YOU MAY REVOKE YOUR PROXY AND VOTE IN PERSON SHOULD YOU DECIDE TO
ATTEND THE MEETING.
By Order of the Board of Directors,
/s/ BRENT F. ASHWORTH
--------------------------------------
Brent F. Ashworth, Secretary
Provo, Utah
April 7, 1995
PLEASE FILL IN, DATE, SIGN, AND RETURN THE ENCLOSED PROXY WHICH REQUIRES NO
POSTAGE IF MAILED IN THE UNITED STATES. A PROXY IS REVOCABLE AT ANY TIME PRIOR
TO THE VOTING OF THE PROXY, BY WRITTEN NOTICE TO THE SECRETARY OF THE COMPANY OR
BY VOTING IN PERSON AT THE MEETING.
<PAGE> 3
PROXY STATEMENT
ANNUAL MEETING OF SHAREHOLDERS
OF
NATURE'S SUNSHINE PRODUCTS, INC.
------------------------
GENERAL
This Proxy Statement is furnished in connection with the solicitation of
Proxies by the Board of Directors of Nature's Sunshine Products, Inc. ("the
Company") for the Annual Meeting of Shareholders of the Company to be held on
May 15, 1995. The Shareholders of the Company will consider and vote upon the
proposals described herein and referred to in the Notice of the Meeting
accompanying this Proxy Statement.
The close of business on April 3, 1995, has been fixed as the record date
for the determination of the shareholders entitled to notice of, and to vote at,
the Annual Meeting. On such date there were 12,158,166 shares of Common Stock
outstanding and entitled to vote. Each share of Common Stock is entitled to one
vote on each matter to be considered at the meeting. For a description of the
principal holders of such stock, see "PRINCIPAL HOLDERS OF COMMON STOCK" below.
Shares represented by Proxies will be voted in accordance with the
specifications made thereon by the shareholders. Any Proxy not specifying the
contrary will be voted in favor of the Board of Directors' nominee for director
of the Company.
The Proxies being solicited by the Board of Directors may be revoked by any
shareholder giving the Proxy at any time prior to the Annual Meeting by giving
notice of such revocation to the Company, in writing, at the address of the
Company provided below. The Proxy may also be revoked by any shareholder giving
such Proxy who appears in person at the Annual Meeting and advises the
Chairperson of the Meeting of his intent to revoke the Proxy.
The principal executive offices of the Company are located at 75 East 1700
South, Provo, Utah 84606. This Proxy Statement and the enclosed Proxy are being
furnished to shareholders on or about April 13, 1995.
<PAGE> 4
PRINCIPAL HOLDERS OF COMMON STOCK
The following table sets forth information as of March 15, 1995, with
respect to the beneficial ownership of the Company's Common Stock by the
principal shareholders, all directors, and all officers and directors of the
Company as a group.
<TABLE>
<CAPTION>
NUMBER OF SHARES
NAME AND ADDRESS OF BENEFICIALLY
BENEFICIAL OWNER OWNED(1) PERCENT OF CLASS(2)
- -------------------------------------------------------- -------------------- -------------------
<S> <C> <C>
Pauline T. Hughes....................................... 1,545,025(3) 12.7%
311 East Canal Road
Salem, UT 84653
Kristine F. Hughes...................................... 1,050,890(4) 8.6%
Eugene L. Hughes
75 East 1700 South
Provo, UT 84606
Alan D. Kennedy......................................... 277,009(5) 2.2%
75 East 1700 South
Provo, UT 84606
Merrill Gappmayer....................................... 63,208(6) .5%
1855 South Alta Vista Drive
Orem, UT 84057
All officers and directors as a group (14 persons)...... 3,423,430(7) 26.9%
</TABLE>
- ---------------
(1) Except as otherwise indicated, all shares are directly owned with voting and
investment power held by the person named.
(2) Percentage includes, where applicable, shares subject to presently
exercisable options.
(3) Includes 1,405,948 shares held by Pauline Hughes in trust for the benefit of
herself and her children, 88,000 shares held by a family limited partnership
and 51,077 shares subject to presently exercisable options.
(4) Includes 935,141 shares held by Kristine and Eugene Hughes as trustees for
the benefit of themselves and their children, 51,179 shares allocated to Mr.
Hughes' account in a 401(k) Plan and 64,570 shares subject to presently
exercisable options.
(5) Includes 9,860 shares allocated to Alan Kennedy's account in a 401(k) Plan
and 205,626 shares subject to presently exercisable options.
(6) Includes 440 shares held by a minor child and 51,077 shares subject to
presently exercisable options.
(7) Includes 166,620 shares allocated to officers in the 401(k) Plan and 576,985
shares subject to presently exercisable options.
2
<PAGE> 5
PROPOSAL NO. 1 -- ELECTION OF DIRECTORS
In accordance with the By-Laws of the Company, the Board of Directors has
fixed its number at five members. The incumbent directors were elected for
staggered terms at the last three annual meetings.
Under the Company's Restated Articles of Incorporation, directors are
divided into three classes, each class to consist, as nearly as may be possible,
of one-third of the number of directors then constituting the entire Board of
Directors. Each year one class of directors is elected, each director to serve a
term of three years.
At the Annual Meeting, one director, Eugene L. Hughes, will stand for
election to serve three years and thereafter until his successor is elected and
shall qualify.
In the absence of instructions to the contrary, the persons named in the
Proxy will vote the Proxies for the election of the nominee listed below, unless
otherwise specified in the Proxy. The Board of Directors has no reason to
believe that the nominee will be unable to serve, but if the nominee should
become unable to serve, the Proxies will be voted for such other person as the
Board of Directors shall recommend.
Certain information concerning the nominee to the Board of Directors, and
directors whose terms will continue after the Annual Meeting is set forth below.
<TABLE>
<CAPTION>
SERVED AS CLASS AND YEAR TERM
NAME OF NOMINEE AGE COMPANY POSITION HELD DIRECTOR SINCE WILL EXPIRE
- ------------------------------ --- ----------------------------- -------------- -------------------
<S> <C> <C> <C> <C>
NOMINEES
Eugene L. Hughes.............. 64 Senior Vice President and 1980 Class II 1998 (if
Director re-elected)
DIRECTORS WHOSE TERMS ARE CONTINUING
Kristine F. Hughes............ 56 Chairperson of the Board and 1980 Class III 1996
Director
Alan D. Kennedy............... 64 President, Chief Executive 1989 Class III 1996
Officer and Director
Merrill Gappmayer............. 53 Director 1980 Class I 1997
Pauline T. Hughes............. 53 Director 1988 Class I 1997
</TABLE>
COMPENSATION OF DIRECTORS
Board members who are also employees of the Company do not receive any
directors fees. The Company pays its non-employee Board members directors' fees
ranging from $34,832 to $39,326 per year, as well as the cost of health and life
insurance coverage. The Company does not pay any fees for attendance at
committee meetings. Under the 1993 Stock Option Plan, each non-employee director
of the Company annually receives an option to purchase 22,000 shares of the
Company's Common Stock at an exercise price equal to the fair market value on
the date of grant.
BOARD AND COMMITTEE MEETINGS AND ATTENDANCE
There were ten meetings of the Board of Directors held during the last
fiscal year. All of the directors attended at least 75 percent of the meetings.
3
<PAGE> 6
The Board of Directors has a Compensation Committee which consists of
Merrill Gappmayer, Kristine F. Hughes and Pauline T. Hughes. The Compensation
Committee recommends to the Board of Directors the compensation to be paid to
the Company's officers and other key employees. There were nine meetings of the
Compensation Committee during the last fiscal year.
The Board of Directors also has an Audit Committee which consists of
Merrill Gappmayer, Kristine F. Hughes and Pauline T. Hughes. The function of the
Audit Committee is generally to approve the engagement of the Company's
independent auditors and to review audit and non-audit services provided by such
auditors. There was were two meetings of the Audit Committee during the last
fiscal year.
The Board of Directors has also established a Nominating Committee
consisting of Pauline T. Hughes, Kristine F. Hughes and Merrill Gappmayer. The
Nominating Committee considers and recommends nominations for election to the
full Board of Directors. The Nominating Committee will consider recommendations
of shareholders, but there are no specific procedures to be followed by
shareholders in submitting nominations for directors. There were two meetings of
the Nominating Committee during the last fiscal year.
OFFICERS AND DIRECTORS
The officers and directors of the Company are:
<TABLE>
<CAPTION>
NAME POSITION AGE
- ------------------------------ -------------------------------------------------------- ---
<S> <C> <C>
Kristine F. Hughes............ Chairperson of the Board and Director 56
Alan D. Kennedy............... President, Chief Executive Officer and Director 64
Eugene L. Hughes.............. Senior Vice President and Director 64
Merrill Gappmayer............. Director 53
Pauline T. Hughes............. Director 53
William E. Spears............. Executive Vice President and Chief Operating Officer 49
Douglas Faggioli.............. Vice President -- Finance, Chief Financial Officer and
Treasurer 40
Brent F. Ashworth............. Vice President -- Legal, Secretary and General Counsel 46
Joseph A. Speirs.............. Vice President -- Marketing 42
Dale G. Lee................... Vice President -- U.S. Sales 49
Dr. Alvin B. Segelman......... Vice President -- Health Sciences 63
David K. Shunick.............. Vice President -- Operations 57
Bruno Vassel III.............. Vice President -- Human Resources 51
Dr. Dilip G. Bhatia........... Vice President -- Research and Development 59
</TABLE>
Certain information regarding the business experience of the officers and
directors is set forth below.
KRISTINE F. HUGHES. Mrs. Hughes is Chairperson of the Board of Directors
and a Director of the Company. Mrs. Hughes was a co-founder in 1972 of Hughes
Development Corporation, a predecessor of the Company, and has served as a
Director of the Company since 1980. In 1984 she was appointed Chairperson of the
Board of Directors. Mrs. Hughes serves on several civic and community boards and
has been recognized for her business achievements. She is the wife of Eugene L.
Hughes.
4
<PAGE> 7
ALAN D. KENNEDY. Mr. Kennedy is President, Chief Executive Officer and a
Director of the Company. He began his employment with the Company in 1989. From
1986 to 1989, he served as a sales and marketing consultant to several direct
sales companies. He previously served as Vice President -- Sales Development of
Avon Products, Inc. (1982 to 1986), a consultant to Shaklee Corporation and Avon
Products, Inc. (1979 to 1982), and Senior Vice President of Shaklee Corporation
(1974 to 1979) and director of Marketing for Avon Products, Inc. (1965 to 1974).
Mr. Kennedy graduated with honors from Colgate University in 1956. He serves as
the Vice Chairman of the Board of Directors of the Direct Selling Association.
EUGENE L. HUGHES. Mr. Hughes is Senior Vice President and a Director of
the Company. Mr. Hughes was a co-founder and appointed president in 1972 of
Hughes Development Corporation, a predecessor of the Company. He has served as
an officer or director of the Company and/or its predecessors since 1972. Mr.
Hughes received a BS degree from Brigham Young University in 1961. He serves on
several community boards. He is the husband of Kristine F. Hughes.
MERRILL GAPPMAYER. Mr. Gappmayer has been a Director of the Company since
1980. He received a BS degree from Brigham Young University and an MBA degree
from the Marriott School of Management at Brigham Young University. He is owner,
president and CEO of Vista Enterprises, a commercial, residential and industrial
land development company located in Orem, Utah. Mr. Gappmayer currently serves
as chairman or as a member of the board of six local and national community
service organizations.
PAULINE T. HUGHES. Mrs. Hughes has been a Director of the Company since
1988. Mrs. Hughes was a cofounder in 1972 of Hughes Development Corporation, a
predecessor of the Company, and has acted as a consultant from time to time to
the Company and its predecessors. She is presently self-employed. Mrs. Hughes
continues her education at Brigham Young University.
WILLIAM E. SPEARS. Mr. Spears is Executive Vice President and Chief
Operating Officer of the Company. He began his employment with the Company in
February 1994. From 1972 to 1993 he was employed by Avon Products, Inc. in
various capacities, including Vice President of Strategic Operations, North
America in 1993 and Southeast Region Vice President from 1989 to 1993. Mr.
Spears received a BS degree in accounting from California State University at
Northridge in 1968 and is a Certified Public Accountant.
DOUGLAS FAGGIOLI. Mr. Faggioli is Vice President -- Finance, Chief
Financial Officer and Treasurer of the Company. He began his employment with the
Company in 1983 and has served as an officer of the Company since 1989. He
obtained a BA degree in accounting from the University of Utah in 1979 and is a
Certified Public Accountant.
BRENT F. ASHWORTH. Mr. Ashworth is Vice President -- Legal, Secretary and
General Counsel for the Company. He obtained a JD degree from the University of
Utah College of Law in 1975. Mr. Ashworth began his employment with the Company
in 1977 when he was appointed Secretary and General Counsel. He was appointed
Vice President -- Legal in 1979.
JOSEPH A. SPEIRS. Mr. Speirs is Vice President -- Marketing of the
Company. He began his employment with the Company in 1977 and since 1983 has
served as an officer of the Company. He received a BS degree from Brigham Young
University in 1976.
5
<PAGE> 8
DALE G. LEE. Mr. Lee is Vice President -- U.S. Sales of the Company. He
began his employment with the Company in 1978, and has been an officer of the
Company since 1989. Mr. Lee received a BS degree from Southern Utah State
College in 1970.
ALVIN B. SEGELMAN, PH.D. Dr. Segelman is Vice President -- Health
Sciences. He began his employment with the Company in 1990. From 1971 to 1990,
Dr. Segelman was a professor at the College of Pharmacy, Rutgers University,
serving as Chairman of the Department of Pharmacognosy from 1979 to 1986. Dr.
Segelman received BS and MS degrees in pharmacy from the Massachusetts College
of Pharmacy in 1954 and 1967, respectively, and a PhD in pharmacognosy from the
University of Pittsburgh in 1971. Dr. Segelman has published numerous articles
and served on numerous national and Congressional committees.
DAVID K. SHUNICK. Mr. Shunick is Vice President -- Operations. He began
his employment with the Company in 1993. From 1992 to 1993, Mr. Shunick acted as
a management consultant for DKS Associates. From 1989 to 1992 he served as
Director of Material Management for Ares Serono Group. From 1977 to 1989, Mr.
Shunick was employed by Shaklee Corporation in various capacities, including
Vice President -- Manufacturing and Material Management. Mr. Shunick received a
BS degree in Management from the University of Illinois at Urbana in 1960 and a
MBA degree from St. Mary's College, Moraga, California in 1981.
BRUNO VASSEL III. Mr. Vassel is Vice President -- Human Resources. He
began his employment with the Company in 1993. From 1987 to 1993, Mr. Vassel was
President of HRS, Inc. From 1986 to 1987, he served as Executive Vice President
of Brite Music, Inc. From 1973 to 1986 Mr. Vassel was employed by Avon Products,
Inc. in various capacities, including Corporate Director of Human Resources. Mr.
Vassel received a BA degree from Brigham Young University in 1968.
DILIP G. BHATIA, PH.D. Dr. Bhatia is Vice President -- Research and
Development. He began his employment with the Company in July 1994. From 1988 to
1994, Dr. Bhatia was Director of Product Development at Hoffmann-La Roche. From
1986 to 1988 he was Manager of the Pharmaceutical Process and Technology Group
of G.D. Searle. From 1977 to 1986, he was employed by McNeil Consumer Products
Company where he served as Manager of Research and Development, from 1982 to
1986. Dr. Bhatia received a PhD in Pharmacy from Washington State University and
a MS in Pharmacy from St. Louis College of Pharmacy.
COMPLIANCE WITH SECTION 16(A) OF THE EXCHANGE ACT
Based solely upon a review of Forms 3, 4 and 5 and amendments thereto and
written representations provided to the Company by its officers, directors and
10% shareholders, the Company is not aware of any such persons failing to file
on a timely basis any reports required by Section 16(a) of the Exchange Act
during the most recent fiscal year or prior years.
6
<PAGE> 9
EXECUTIVE COMPENSATION
COMPENSATION SUMMARY
The following table sets forth information concerning the cash and non-cash
compensation, paid or to be paid by the Company to its chief executive officer
and to each of its executive officers named below, for the three fiscal years
ended December 31, 1994. See also "CERTAIN RELATIONSHIPS AND RELATED
TRANSACTIONS" below for compensation paid to the general manager of the
Company's Mexican subsidiary.
SUMMARY COMPENSATION TABLE
<TABLE>
<CAPTION>
LONG-TERM
ANNUAL COMPENSATION COMPENSATION
- -------------------------------------------------------------------------- -------------
(A) (B) (C) (D) (E) (G) (I)
OTHER ANNUAL ALL OTHER
NAME AND PRINCIPAL SALARY BONUS COMPENSATION STOCK OPTIONS COMPENSATION
POSITION YEAR ($)(1) ($) ($)(2) (SHARES) (3)($)
- ------------------------------- ----- -------- -------- ------------ ------------- ------------
<S> <C> <C> <C> <C> <C> <C>
Alan D. Kennedy................ 1994 257,953 202,500 13,200 8,933
Chief Executive Officer 1993 233,000 217,381 20,000 8,512
1992 207,566 193,696 140,000 10,662
William E. Spears.............. 1994 122,029 83,152 40,220(4) 11,000 1,310
Executive Vice President
Eugene L. Hughes............... 1994 130,146 83,583 11,000 4,656
Senior Vice President 1993 129,322 94,344 47,700 4,882
1992 123,672 89,868 0 4,768
Douglas Faggioli............... 1994 130,138 82,251 11,000 418
Chief Financial Officer 1993 115,000 94,710 24,000 288
1992 100,000 81,187 9,333 277
Dale G. Lee.................... 1994 121,829 58,000 11,000 1,129
Vice President -- U.S. Sales 1993 110,000 72,904 19,000 1,185
1992 100,000 65,502 8,667 1,427
</TABLE>
- ---------------
(1) Includes amounts contributed by the Company to its 401(k) defined
contribution plan.
(2) The Company provides health, disability and other perquisites to each of its
officers, but they do not exceed the lesser of $50,000 or 10% of the
officer's total annual salary and bonus.
(3) Includes excess life insurance premiums.
(4) Includes relocation and moving expenses.
EMPLOYMENT AGREEMENTS
The Company has Employment Agreements with all eleven of its officers who
receive annual salaries currently ranging from approximately $104,000 to
$267,500. The Agreements are renewable on an annual basis and generally provide
for an initial term of one year. In the event the Company terminates or does not
renew an officer's employment without cause, the officer is generally entitled
to receive the balance of his base salary for twelve months.
7
<PAGE> 10
EXECUTIVE INCENTIVE PLANS
The Company has from time to time adopted incentive plans for key
management and sales personnel. The only incentive plan in effect for officers
of the Company for 1994 was the Exempt Employee Incentive Compensation Plan
("Compensation Plan") that provided for the officers to receive specified
bonuses ranging from 0% to 90% of base salary if certain sales and operating
income goals were achieved by the Company. Payments totalling $803,953, $739,410
and $660,978 were made to officers for services rendered in 1994, 1993 and 1992
for this or similar executive incentive plans. Amounts paid, if any, to the
officers participating in the Compensation Plan are included in the Summary
Compensation Table.
1993 STOCK OPTION PLAN
The 1993 Stock Option Plan (the "1993 Plan") authorizes the grant of
incentive and nonqualified stock options to officers and key employees. The 1993
Plan also provides for the automatic annual grant of nonqualified stock options
to purchase 22,000 shares to each non-employee director of the Company. The 1993
Plan covers a maximum of 880,000 shares of the Company's Common Stock, subject
to adjustment, of which options to purchase 550,000 shares may be granted to
officers and key employees and 330,000 shares to non-employee directors.
Options issued under the 1993 Plan must have an exercise price at least
equal to the fair market value on the date of grant and a term of not more than
ten years. Options are generally not transferable and are exercisable in
accordance with vesting schedules established by the Compensation Committee (the
"Committee") of the Board of Directors administering the Plan.
The Committee establishes with respect to each option granted to an
employee, and sets forth in the option agreement, the effect of the termination
of employment on the rights and benefits thereunder. If the services of a
non-employee director terminate by reason of death, disability or retirement,
options granted pursuant to the 1993 Plan become immediately exercisable and may
be exercised for up to one year after the date of termination, or until
expiration of the option, if earlier. If the services of a non-employee director
terminate for any other reason, the non-employee director may exercise any
motions which were exercisable on the date of termination for up to 90 days
after the date of termination. In the event of certain changes in control of the
Company, options generally become immediately exercisable.
As of March 31, 1995 there were 493,520 shares subject to non-qualified
options outstanding under the 1993 Plan and 386,480 shares available for further
issuance (as adjusted for a stock dividend).
1990 LONG-TERM INCENTIVE COMPENSATION PLAN
The 1990 Long-Term Incentive Compensation Plan (the "Incentive Plan")
authorizes the grant of incentive stock options, nonqualified stock options,
stock appreciation rights, restricted stock and performance bonuses or any
combination of the foregoing to key executive and management employees.
Options issued under the Incentive Plan must have an exercise price at
least equal to the fair market value on the date of grant and a term of not more
than ten years. Options may not be transferred except by will or the laws of
descent or distribution and are exercisable in accordance with vesting schedules
established by the Committee.
In the event of termination of an option holder's employment for cause, all
outstanding options lapse at the time of such termination, subject to the
discretion of the Committee. In the event of termination by reason
8
<PAGE> 11
of death, retirement or disability, the option holder may exercise options that
are exercisable through the date of termination within the earlier of one year
from the date of termination or lapse of such option. In the event of
termination not for cause, options must generally be exercised within the
earlier of three months following termination or lapse of the option. In the
event of certain changes in control, options generally become immediately
exercisable.
As of March 31, 1995 there were 708,523 shares subject to options
outstanding under the Incentive Plan and 376 shares available for further
issuance (as adjusted for all stock splits and dividends).
OPTION GRANTS IN LAST FISCAL YEAR
The following table sets forth a summary of certain nonqualified stock
options granted to the Company's named officers during 1994 as adjusted for a
stock dividend.
<TABLE>
<CAPTION>
POTENTIAL
REALIZABLE
VALUE AT ASSUMED
ANNUAL RATES OF
STOCK PRICE
APPRECIATION FOR
INDIVIDUAL GRANTS OPTION TERM
- ----------------------------------------------------------------------------------- -------------------
(A) (B) (C) (D) (E) (F) (G)
% OF 204.600
TOTAL OPTIONS
GRANTED TO EXERCISE
OPTIONS EMPLOYEES IN PRICE EXPIRATION
NAME GRANTED(#) 1994 ($/SHARE) DATE 5%($) 10%($)
- -------------------------- ---------- -------------- --------- ---------- ------- -------
<S> <C> <C> <C> <C> <C> <C>
Alan D. Kennedy............ 13,200 6.5% 12.73 12/16/04 105,677 267,800
Chief Executive Officer
William E. Spears.......... 22,000 13.18 2/24/04 182,354 462,122
Executive Vice President 11,000 16.1% 12.73 12/16/04 88,064 223,172
Eugene L. Hughes........... 11,000 5.4% 12.73 12/16/04 88,064 223,172
Senior Vice President
Douglas Faggioli........... 11,000 5.4% 12.73 12/16/04 88,064 223,172
Chief Financial Officer
Dale G. Lee................ 11,000 5.4% 12.73 12/16/04 88,064 223,172
Vice President--U.S. Sales
</TABLE>
9
<PAGE> 12
OPTION EXERCISES DURING 1994 AND 1994 YEAR-END VALUE TABLE
The following table sets forth certain information regarding the exercise
and value of nonqualified stock options held by the named officers during 1994
as adjusted for a stock dividend.
AGGREGATED OPTION EXERCISES IN 1994 AND 1994 YEAR-END OPTION VALUE
<TABLE>
<CAPTION>
(A) (B) (C) (D) (E)
NUMBER OF UNEXERCISED VALUE OF UNEXERCISED
OPTIONS AT FISCAL IN-THE-MONEY OPTIONS
SHARES ACQUIRED VALUE YEAR-END AT FISCAL YEAR-END
NAME ON EXERCISE REALIZED EXERCISABLE/UNEXERCISABLE EXERCISABLE/UNEXERCISABLE
- ----------------------------- --------------- -------------- ------------------------- -------------------------
<S> <C> <C> <C> <C>
Alan D. Kennedy.............. 10,000 $100,400 234,960/71,867 $1,315,962/$719,830
Chief Executive Officer
William E. Spears............ 0 0 0/33,000 0/0
Executive Vice President
Eugene L. Hughes............. 0 0 31,680/63,470 249,571/119,107
Senior Vice President
Douglas Faggioli............. 0 0 51,297/37,400 349,137/59,928
Chief Financial Officer
Dale G. Lee.................. 0 0 39,893/31,900 257,227/47,443
Vice President -- U.S. Sales
</TABLE>
401(K) PLAN
The Company sponsors a qualified deferred compensation plan ("401(k) Plan")
under Section 401(k) of the Internal Revenue Code, pursuant to which full-time
employees may reduce their salaries by up to 10% of their compensation limited
to a maximum of $9,240 and have the salary reduction amounts contributed to the
401(k) Plan. Such contributions are 100% matched by the Company, up to a maximum
of 5% of the employee's compensation. Participants are fully vested at all times
in their salary reduction and matching contributions. Participants are eligible
to receive distribution of vested amounts upon retirement, death or disability,
or termination of employment. Contributions by the Company to the 401(k) Plan
were approximately $284,000, $314,000 and $175,000 for 1994, 1993 and 1992,
respectively. Amounts contributed for officers participating in the 401(k) Plan
are included in the Summary Compensation Table above.
COMPENSATION COMMITTEE INTERLOCKS AND INSIDER PARTICIPATION
The Board of Directors' Compensation Committee is composed of Merrill
Gappmayer, Kristine F. Hughes and Pauline T. Hughes. Kristine F. Hughes,
Chairperson of the Board of Directors, is married to Eugene L. Hughes, an
officer and director of the Company. See "PROPOSAL NO. 1 -- ELECTION OF
DIRECTORS."
THE FOLLOWING REPORT OF THE COMPENSATION COMMITTEE AND THE PERFORMANCE GRAPH
THAT APPEARS IMMEDIATELY AFTER SUCH REPORT SHALL NOT BE DEEMED TO BE SOLICITING
MATERIAL OR TO BE FILED WITH THE SECURITIES AND EXCHANGE COMMISSION UNDER THE
SECURITIES ACT OF 1933 OR THE SECURITIES EXCHANGE ACT OF 1934 OR INCORPORATED BY
REFERENCE IN ANY DOCUMENT SO FILED.
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<PAGE> 13
REPORT OF THE COMPENSATION COMMITTEE
To: The Board of Directors
As members of the Compensation Committee (the "Committee"), it is our duty
to administer various stock option and incentive compensation plans of the
Company. In addition, the Committee recommends to the Board of Directors the
compensation to be paid to the Company's officers and key employees. The
Committee also reviews compensation policies applicable to officers and
considers the relationship of corporate performance to that compensation.
The Committee submits a report to the Board concerning the compensation
policies followed by the Committee in recommending compensation for the
Company's chief executive and other officers. In establishing such compensation
for 1994, the Committee considered a number of factors, including what it
believed to be the competitive level of compensation that is necessary to
attract, retain and motivate qualified officers. The Committee also considered
(i) an officer's contribution to the Company's operating performance, as
measured by increases in sales revenues, profitability and return on assets,
(ii) the officer's contribution to helping the Company meet its other
objectives, such as providing a high level of service to the Company's customers
and in maximizing shareholder value, and (iii) the Chief Executive Officer's
evaluation of each of the officers. For the Chief Executive Officer, the
Committee also took into consideration the Company's overall stock performance
as measured against the stock market and his success in opening new overseas
markets for the Company's products. In 1992, the Committee engaged an outside
consultant to advise it regarding appropriate officer salary levels and
comparable salaries in similar industries. The consultant's recommendations
together with salary surveys obtained by the Committee in 1993 were considered
in evaluating the above-referenced factors in setting 1994 compensation.
The compensation policy of the Company, which is endorsed by the Committee,
is that a substantial portion of the annual compensation of each officer relate
to and be contingent upon the performance of the Company, as well as the
individual contribution of each officer. As a result, much of an officer's
compensation is subject directly to annual bonus compensation measured by the
Company's achievement of certain sales and income goals. Under the Company's
Exempt Employee Incentive Compensation Plan, bonuses are paid based on the
officer's performance and the performance of the entire Company. The Committee
believes the compensation paid to its officers is reasonable in view of the
Company's performance and the contribution of these officers to that
performance. In this regard, the Committee in 1994 completed a comprehensive
review of the Company's compensation policies and concluded that the Company's
present policies worked well.
All officers and key employees participate in the Company's stock option
plans, under which granted options typically vest over a one or two year period.
The Committee believes that stock options have been effective in attracting,
motivating and retaining executives and key employees. During 1994, the
Committee recommended stock option grants in the aggregate amount of 204,600
shares.
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<PAGE> 14
No member of the Committee is a former or current officer or employee of
the Company or any of its subsidiaries.
Compensation Committee
Dated April 4, 1995 MERRILL GAPPMAYER
KRISTINE F. HUGHES
PAULINE T. HUGHES
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<PAGE> 15
CORPORATE STOCK PERFORMANCE
The following graph compares the performance (total return on investment as
measured by the change in the year-end stock price plus reinvested dividends) of
the Common Stock of the Company ("NATR") with that of the Index for NASDAQ Stock
Market (U.S. companies) and the Index for NASDAQ Stock (SIC 2800-2899) for the
five years ended December 31, 1994.
COMPARISON OF FIVE YEAR-CUMULATIVE TOTAL RETURNS
AMONG NATURE'S SUNSHINE PRODUCTS, INC., THE NASDAQ STOCK MARKET (US COMPANIES)
AND THE NASDAQ STOCKS (SIC 2800-2899)
<TABLE>
<CAPTION>
NASDAQ STOCKS
(SIC 2800-2899
NASDAQ US Companies)
MEASUREMENT PERIOD NATURE'S SUNSHINE STOCK MARKET Chemical and
(FISCAL YEAR COVERED PRODUCTS, INC. (US Companies) allied products
<S> <C> <C> <C>
12/29/89 100.0 100.0 100.0
12/31/90 49.5 84.9 109.1
12/31/91 144.3 136.3 250.7
12/31/92 220.0 158.6 216.6
12/31/93 200.5 180.9 193.7
12/30/94 224.0 176.9 152.5
</TABLE>
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<PAGE> 16
CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS
Maria del Carmen Cisneros, the general manager of the Company's Mexican
subsidiary, received a total of $684,228 of compensation from the Company in
1994. Of that amount, $148,914 was salary and bonus and the balance was for
commissions received as an independent distributor of the Company's products.
In 1992, the Company adopted a key officer loan program to assist certain
of its officers in purchasing Common Stock of the Company. The loans are due 90
days after demand or termination of employment. The loans are secured by the
Common Stock purchased and bear interest at 6% per annum.
From time to time, the Company has made personal loans to assist certain of
its officers and key employees. Loans made to officers are secured by Common
Stock of the Company, and are due 90 days after demand. Outstanding loans bear
interest at 6% per annum.
The following table provides certain information about each director or
officer who was indebted to the Company since January 1, 1994, in an amount in
excess of $60,000. Included in the table is the name of each such director or
officer, the amount and nature of the indebtedness and of the transaction in
which it was incurred, the largest aggregate amount of indebtedness outstanding
by each such person since January 1, 1994 and the amount thereof outstanding as
of March 31, 1995. For the nature of each such person's relationship to the
Company see "ELECTION OF DIRECTORS -- Officers and Directors" above.
<TABLE>
<CAPTION>
NATURE OF LARGEST AGGREGATE BALANCE
NAME INDEBTEDNESS AGGREGATE AMOUNT AT 3/31/95
- -------------------------------------- -------------------- ---------------- -----------------
<S> <C> <C> <C>
Alan D. Kennedy....................... Stock Purchase Loan $148,220 $ 245,619
Personal Loan 104,720
Eugene L. Hughes...................... Personal Loans 408,418 0
Douglas Faggioli...................... Stock Purchase Loan 67,777 58,332
Dale G. Lee........................... Stock Purchase Loan 66,636 65,355
Joseph A. Speirs...................... Stock Purchase Loan 69,995 65,513
</TABLE>
RELATIONSHIP WITH
INDEPENDENT PUBLIC ACCOUNTANTS
The Audit Committee of the Board of Directors of the Company has
recommended to the Board of Directors that Arthur Andersen & Co. be selected
again as the independent public accountants for the Company. The Board of
Directors has accepted this recommendation and has selected Arthur Andersen &
Co. to be the independent public accountants for the Company for the fiscal year
ending December 31, 1995. Arthur Andersen & Co. served as the Company's
independent public accountants for the fiscal year ended December 31, 1994.
Representatives of Arthur Andersen & Co. are expected to attend the 1995
Annual Meeting and will have an opportunity to make a statement if they desire
to do so, and they will be available to answer appropriate questions from
shareholders.
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<PAGE> 17
SHAREHOLDER PROPOSALS
If a shareholder wishes to present a proposal at the 1996 Annual Meeting of
Shareholders, the proposal must be received by Nature's Sunshine Products, Inc.,
75 East 1700 South, Provo, Utah 84606 prior to December 15, 1995. The Board of
Directors will review any proposal which is received by that date and determine
whether it is a proper proposal to present to the 1996 Annual Meeting.
VOTE REQUIRED
A majority of the 12,158,166 issued and outstanding shares of Common Stock
of the Company shall constitute a quorum at the Annual Meeting. Under the Utah
Revised Business Corporation Act, directors are elected by a plurality of the
votes cast by the shares entitled to vote in the election at the Annual Meeting
provided a quorum is present. The affirmative vote of at least a majority of the
shares represented at the meeting is required for approval for all other
proposals to come before the meeting. The Company does not have any specific
charter or by-law provisions dealing with the method by which votes will be
counted. Historically, the Company has counted abstentions and broker non-votes
for quorum purposes but the votes represented by such shares are not counted in
computing the results of the election of directors or other resolutions.
Votes cast by shareholders who attend and vote in person or by proxy at the
Annual Meeting will be counted by inspectors to be appointed by the Company (it
is anticipated that the inspectors will be employees, attorneys or agents of the
Company).
OTHER MATTERS
As of the date of this Proxy Statement, the Board of Directors of the
Company does not intend to present and has not been informed that any other
person intends to present a matter for action at the 1995 Annual Meeting other
than as set forth herein and in the Notice of Annual Meeting. If any other
matter properly comes before the meeting, it is intended that the holders of
Proxies will act in accordance with their best judgment. The Board of Directors
may read the minutes of the 1994 Annual Meeting of Shareholders and make
reports, but shareholders will not be requested to approve or disapprove such
minutes or reports.
In addition to the solicitation of Proxies by mail, certain of the officers
and employees of the Company, without extra compensation, may solicit Proxies
personally or by telephone. The Company will also request brokerage houses,
nominees, custodians and fiduciaries to forward soliciting materials to the
beneficial owners of Common Stock held of record and will reimburse such persons
for forwarding such material. The cost of this solicitation of Proxies will be
borne by the Company.
COPIES OF THE COMPANY'S ANNUAL REPORT ON FORM 10-K (INCLUDING FINANCIAL
STATEMENTS AND FINANCIAL STATEMENT SCHEDULES) FILED WITH THE SECURITIES AND
EXCHANGE COMMISSION MAY BE OBTAINED WITHOUT CHARGE BY WRITING TO THE
COMPANY -- ATTENTION: INVESTOR RELATIONS DEPARTMENT, 75 EAST 1700 SOUTH, PROVO,
UTAH 84606. Copies of the Company's 1994 Annual Report to Shareholders are being
mailed with this Proxy Statement. Additional copies may also be obtained by
writing to the Company's Investor Relations Department, at the above address.
15
<PAGE> 18
The enclosed Proxy is furnished for you to specify your choices with
respect to the matters referred to in the accompanying notice and described in
this Proxy Statement. If you wish to vote in accordance with the Board's
recommendations, merely sign, date and return the Proxy in the enclosed envelope
which requires no postage if mailed in the United States. A prompt return of
your Proxy will be appreciated.
By Order of the Board of Directors
/s/ BRENT F. ASHWORTH
--------------------------------------
Brent F. Ashworth, Secretary
Provo, Utah
April 7, 1995
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<PAGE> 19
PROXY
NATURE'S SUNSHINE PRODUCTS, INC.
THIS PROXY IS SOLICITED ON BEHALF OF THE BOARD OF DIRECTORS
The undersigned hereby appoints Kristine F. Hughes and Brent F. Ashworth and
each of them as Proxies, with full power of substitution, and hereby authorizes
them to represent and vote, as designated below, all shares of Common Stock of
the Company held of record by the undersigned on April 3, 1995, at the Annual
Meeting of Shareholders to be held at the Company's corporate offices at 75
East 1700 South, Provo, Utah 84606, on Monday, May 15, 1995, at 10:00 a.m.,
local time, or at any adjournment thereof.
(To Be Signed on Reverse Side.)
/X/ Please mark your vote as in this example.
1. Election of Director.
For / / Withheld / /
Nominee: Eugene L. Hughes
(INSTRUCTION: To withhold authority to vote for any individual nominee write
that nominee's name on the space provided below.)
_________________________________________________________________
2. In their discretion, the Proxies are authorized to vote upon such other
business as may properly come before the Annual Meeting.
FOR / / AGAINST / / ABSTAIN / /
THIS PROXY WHEN PROPERLY EXECUTED WILL BE VOTED IN THE MANNER DIRECTED HEREIN
BY THE UNDERSIGNED SHAREHOLDER. IF NO DIRECTION IS MADE, THIS PROXY WILL BE
VOTED FOR PROPOSALS 1 AND 2.
Please sign and date this Proxy where shown and return it promptly.
No postage is required if this Proxy is returned in the enclosed envelope and
mailed in the United States.
Signature(s)___________________________________________ Date___________________
Note: Please sign above exactly as the shares are issued. When shares are held
by joint tenants, both should sign. When signing as attorney, executor,
administrator, trustee or guardian, please give the full title as such.
If a corporation, please sign in full corporate name by President or
other authorized officer. If a partnership, please sign in partnership
name by authorized person.
