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UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
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 Section 240.14a-11(c) or Section 240.14a-12
Knape & Vogt Manufacturing Company
--------------------------------------------------------------------------------
(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)(4) and 0-11.
(1) Title of each class of securities to which transaction applies:
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(2) Aggregate number of securities to which transaction applies:
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(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):
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(4) Proposed maximum aggregate value of transaction:
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(5) Total fee paid:
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[ ] 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:
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(2) Form, Schedule or Registration Statement No.:
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(3) Filing Party:
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(4) Date Filed:
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Notes:
<PAGE>
---------------------------------------------------------
Knape & Vogt Manufacturing Company
[logo of Knape & Vogt] 2700 Oak Industrial Drive, N.E.
Grand Rapids, Michigan 49505
---------------------------------------------------------
NOTICE OF ANNUAL MEETING OF SHAREHOLDERS
October 13, 2000
The Annual Meeting of Shareholders of Knape & Vogt Manufacturing Company
will be held at Donnelly Conference Center, Aquinas College, 157 Woodward
Lane, S.E., Grand Rapids, Michigan, on Friday, October 13, 2000, at 11:30
a.m., local time, for the following purposes:
1.To elect two persons to the Board of Directors for terms expiring in
2003.
2. To transact such other business as may properly come before the meeting.
Shareholders of record at the close of business August 25, 2000, will be
entitled to vote at the meeting.
Whether or not you expect to be present at this meeting, you are urged to
sign the enclosed proxy and return it promptly in the enclosed envelope. If
you do attend the meeting and wish to vote in person, you may do so even
though you have submitted a proxy.
Dated: September 15, 2000
Grand Rapids, Michigan
/s/ William R. Dutmers
William R. Dutmers
Chairman, President and Chief
Executive Officer
<PAGE>
Dated: September 15, 2000
KNAPE & VOGT MANUFACTURING COMPANY
2700 Oak Industrial Drive, N.E., Grand Rapids, MI 49505
PROXY STATEMENT
For Annual Meeting of Shareholders
To Be Held October 13, 2000
SOLICITATION OF PROXIES FOR ANNUAL MEETING
This Proxy Statement is furnished to the shareholders of Knape & Vogt
Manufacturing Company in connection with the solicitation by the Board of
Directors of proxies to be used at the Annual Meeting of Shareholders which
will be held at Donnelly Conference Center, Aquinas College, 157 Woodward
Lane, S.E., Grand Rapids, Michigan, on Friday, October 13, 2000, at 11:30
a.m., local time. The Annual Meeting is being held for the purpose of electing
two directors.
If a proxy in the form distributed by the Company's Board of Directors is
properly executed and returned to the Company, the shares represented by the
proxy will be voted at the Annual Meeting of Shareholders and at any
adjournment of that meeting. Where shareholders specify a choice, the proxy
will be voted as specified. If no choice is specified, the shares represented
by the proxy will be voted for the election of the nominees named by the Board
of Directors.
A proxy may be revoked prior to its exercise by delivering a written notice
of revocation to the Secretary of the Company, executing and delivering a
proxy of a later date or attending the meeting and voting in person.
Attendance at the meeting does not, however, automatically serve to revoke a
proxy.
Holders of the Company's Common Stock should complete an accompanying white
proxy, and holders of the Company's Class B Common Stock should complete an
accompanying blue proxy.
<PAGE>
VOTING SECURITIES AND PRINCIPAL SHAREHOLDERS
On August 25, 2000, the record date for determination of the shareholders
entitled to vote at the Annual Meeting, there were outstanding 2,227,216
shares of Common Stock of the Company, each having one vote per share and
2,388,095 shares of Class B Common Stock, each having ten votes per share. The
shares of Class B Common Stock are limited in their transferability but are
convertible on a share-for-share basis into Common Stock. The Common Stock is
entitled to elect, as a class, one quarter (rounded up) of the directors to be
elected at each election of directors. The Common Stock and the Class B Common
Stock vote together in the election of the remaining director nominees. Shares
cannot be voted unless the shareholder is present at the meeting or
represented by proxy.
The following table sets forth, as of July 31, 2000, information concerning
persons known to management who may be deemed to be the beneficial owners of
more than five percent of either class of the Company's stock.
<TABLE>
<CAPTION>
Amount and
Nature of Percent of
Beneficial Each
Ownership Class Stock Percent of
Name and Address ------------------ -------------- Common
of Beneficial Owner Common Class B Common Class B Equity
------------------- ------- ------- ------ ------- ----------
<S> <C> <C> <C> <C> <C>
Knape & Vogt Manufacturing
Company Profit
Sharing Plan and Knape & Vogt
Manufacturing
Company Pension Plan
2700 Oak Industrial Drive,
N.E.
Grand Rapidss, MI 49505-6083.. -- 284,637(1) -- 11.92% 6.17%
Dimensional Fund Advisors, Inc.
1299 Ocean Avenue
Santa Monica, CA 9040l........ 217,404(2) -- 9.76% -- 4.71%
Marvin Schwartz
c/o Neuberger & Berman, LLC
605 Third Avenue
New York, NY 10158-3698....... 173,360(3) -- 7.80% -- 3.76%
</TABLE>
--------
(1) 284,637 shares of Class B Common Stock are held by Old Kent Bank, as
trustee of the Company's pension and profit sharing plans, of which
William R. Dutmers, Robert J. Knape and John E. Fallon, as the members of
the Profit Sharing and Pension Committee, share voting and dispositive
power.
(2) Information provided by Dimensional Fund Advisors, Inc. ("Dimensional")
on the Form 13F filed in March 2000 indicates that Dimensional has sole
voting and dispositive power as to 217,404 shares of Common Stock.
(3) Information provided by Marvin Schwartz on the Form 13D filed in November
1998 indicates that Mr. Schwartz has sole voting and dispositive power as
to 72,050 shares and shared dispositive power on 101,310 shares. No
amendments to the Form 13D filing were made during fiscal 1999 or 2000.
Six of the Company's directors, William R. Dutmers, John E. Fallon, Raymond
E. Knape, Richard S. Knape, Robert J. Knape and Michael J. Kregor are related.
They are grandchildren or great grandchildren of the Company's founder, John
Knape (1863-1914). John Knape had seven children and these individuals, their
families and their descendants (the "Knape Family") at July 31, 2000, owned
approximately 2,064,594 shares (86.5%) of the outstanding Class B Common Stock
and 103,897 shares (4.7%) of the outstanding Common Stock, for approximately
79.5% of the total voting power of the Company. The Company believes Knape
Family members owning at least a majority of the Company's outstanding Class B
Common Stock have an understanding that before taking any significant action
with regard to their Company stock, they will consult with one or more of the
directors of the Company and inform such director or directors of their
proposed action and reasons for such action. This understanding among Knape
Family members, coupled with the fact that five of the seven branches of the
Knape Family are represented on the Board of Directors, could result in the
Knape Family members taking a united position in response to attempts to
acquire control of the Company through tender offers or proxy contests and,
accordingly, could result in the Knape Family members effectively blocking any
such attempts. However, there is no assurance that such united action would be
taken.
2
<PAGE>
SECURITY OWNERSHIP OF MANAGEMENT
The following table shows, as of July 31, 2000, the number of shares
beneficially owned by each of the named executives in the executive
compensation tables of this proxy statement and by all executive officers and
directors of the Company as a group.
<TABLE>
<CAPTION>
Amount and Nature of Percent of Each
Beneficial Ownership Class of Stock Percent of
Name of -------------------- --------------- Common
Beneficial Owner Common(1) Class B(1) Commmon Class B Equity
---------------- --------- ---------- ------- ------- ----------
<S> <C> <C> <C> <C> <C>
William R. Dutmers............ 11,779 39,498 * 1.65% 1.09%
James S. Dahlke............... 2,031 -- * * *
Michael G. Van Rooy........... 17,270 -- * * *
* * *
All executive officers and
directors as a group
(10 persons)................. 92,662 292,808 3.69% 12.59% 8.22%
</TABLE>
--------
*Denotes ownership of less than one percent.
(1) This table includes the following shares of Common Stock subject to
acquisition within sixty (60) days pursuant to the exercise of outstanding
stock options: William R. Dutmers--0 shares; James S. Dahlke--0 shares;
Michael G. Van Rooy--17,270 shares. This table does not include 284,637
shares of Class B Common Stock held by Old Kent Bank referenced in Note
(1) under "Voting Securities and Principal Shareholders."
DIRECTORS AND NOMINEES
The Company's Articles of Incorporation provide for the division of the
Board of Directors into three classes of nearly equal size with staggered
three-year terms of office. Two persons have been nominated for election to
the Board to serve three-year terms expiring at the 2003 Annual Meeting of
Shareholders. The Board of Directors has nominated the following persons for
election to the Company's Board of Directors: John E. Fallon, to be elected by
the Class B Common Stock and Common Stock voting together as a class; and
Gregory Lambert, to be elected by the Common Stock voting as a class.
Holders of Common Stock should complete the accompanying white proxy, and
holders of Class B Common Stock should complete the accompanying blue proxy.
Unless otherwise directed by a shareholder's proxy, it is intended that the
votes cast upon exercise of proxies in the form accompanying this statement
will be in favor of electing the nominees as directors. The following pages of
this Proxy Statement contain more information about the nominees.
A plurality of the votes cast at the Annual Meeting is required to elect the
nominees as directors of the Company. As such, the individual who receives the
greatest number of votes cast by the holders of the Company's Common Stock,
voting as a class, will be elected as a director, and the individual who
receives the greatest number of votes cast by the holders of Common Stock and
Class B Common Stock, voting together, will be elected as a director. Shares
not voted at the meeting, whether by abstention, broker nonvote, or otherwise,
will not be treated as votes cast at the meeting. The Company will tabulate
votes cast at the meeting and submitted by proxy.
If any nominee becomes unavailable for election due to circumstances not now
known, the accompanying proxy will be voted for such other person to become a
director as the Board of Directors selects. The Board of Directors recommends
a vote FOR the election of the persons nominated by the Board.
3
<PAGE>
INFORMATION ABOUT DIRECTORS AND DIRECTOR NOMINEES
The content of the following table is based upon information furnished to
the Company by the directors and nominees as of July 31, 2000.
<TABLE>
<CAPTION>
Year Amount and Nature of
Principal Occupation First Beneficial Ownership Percent of Class Percent of
(for more than 5 years Became ------------------------- ------------------- Common
Name Age unless otherwise noted) Director Common Class B(1) Common Class B Equity
---- --- --------------------------- -------- --------- ------------ -------- -------- ----------
<S> <C> <C> <C> <C> <C> <C> <C> <C>
Nominees for Election as
Directors for Terms
Expiring in 2003
Nominee for Election by
Holders of Common
Stock
Gregory Lambert 53 Vice President of 1999 550 -- * -- *
(B),(D) Administration and Chief
Financial Officer, National
Heritage Academies (2)
Nominee for Election by
Holders of Common
Stock and Class B
Stock
John E. Fallon 77 Private Investor 1969 -- 107,475 * 4.50% 2.29%
(A),(B),(C),(E),(F) Spring Lake, MI
Directors Whose Terms
Expire in 2002
William R. Dutmers 44 Chairman of the Board of 1996 11,779 39,498 * 1.65% 1.09%
(A),(C),(E) Directors, President and
Chief Executive Officer of
the Company (3)
Richard S. Knape 74 Private Investor 1986 2,395 50,186(4) * 2.10% 1.12%
(A),(C),(D),(F),(G) Grand Rapids, MI
Michael J. Kregor 48 Vice President, National 1996 15,522 12,912 * * *
(G) Sales, Griffith
Laboratories, Alsip, IL (5)
Directors Whose Terms
Expire in 2001
Thomas A. Hillborn 46 Vice President, 1999 26,983 28,017 1.17% 1.17% 1.17%
(D) Continental Structural
Plastics (6)
Raymond E. Knape 68 Former Chairman and 1964 4,585(7) 54,720 * 2.29% 1.27%
(B),(F) Chief Executive Officer of
the Company (7)
Robert J. Knape 41 Senior Project Manager 1999 3,642(8) 7,905 * * *
(E),(F),(G) of the Company (8)
</TABLE>
--------
*Denotes ownership of less than one percent.
(A)Member Executive Committee
(B)Member Audit Committee
(C)Member Nominating Committee
(D)Member Executive Compensation Committee
(E)Member Profit Sharing and Pension Committee
(F)Member Charitable Contributions Committee
(G)Member Long Range Planning Committee
4
<PAGE>
(1) This table does not include 284,637 shares of Class B Common Stock
referenced in Note (1) under "Voting Securities and Principal
Shareholders."
(2) Gregory Lambert has served as the Vice President of Administration and
Chief Financial Officer of National Heritage Academies from January 1999
to the present. From 1989 to 1998, Mr. Lambert held various vice
presidential positions at H.H. Cutler Company.
(3) William R. Dutmers was named President and CEO on May 31, 1999. He was
elected to the Board of Directors on April 19, 1996, and elected Chairman
of the Board on January 16, 1998. Mr. Dutmers was president of G & L,
Inc., a business-consulting firm, from 1991 to 1997. Mr. Dutmers was also
president and owner of G & L Restaurants from 1986 until 1995, when he
sold the company.
(4) Richard S. Knape's shares include 27,740 shares of Class B Common Stock
owned by members of the Richard S. Knape family as to which he disclaims
beneficial ownership.
(5) Michael J. Kregor was elected to the Board of Directors on April 19, 1996.
Mr. Kregor is Vice President-National Sales of Griffith Laboratories, a
position he accepted in 1996. From 1987 to 1996, Mr. Kregor held various
vice presidential positions in the marketing and sales area at Nestle.
(6) Thomas A. Hilborn has served as the Vice President of Continental
Structural Plastics since April 1990.
(7) Raymond E. Knape retired from Knape & Vogt Manufacturing Company in fiscal
1997 after 32 years as an officer and director and had held the position
as Chairman and CEO since 1985. The beneficial ownership shown for Mr.
Knape includes 4,585 shares of Common Stock with respect to which Mr.
Knape holds exclusive voting and dispositive power under trust and power
of attorney, but in which Mr. Knape has no financial interest.
(8) Robert J. Knape has held various positions with Knape & Vogt Manufacturing
Company since June 1991. Mr. Knape's shares include 2,700 shares of Common
Stock subject to acquisition within 60 days by the exercise of outstanding
stock options.
The Board of Directors, which had five meetings in the last fiscal year, has
a standing Audit Committee, Nominating Committee and an Executive Compensation
Committee. The responsibilities of the Audit Committee, which met three times
in the last fiscal year, include making recommendations on the choice of
independent public accountants and reviewing financial matters with such
accountants, internal auditors, and management. The Nominating Committee,
which met once during the last fiscal year, selects and presents to the Board
of Directors candidates for election to fill vacancies on the Board. The
Committee will consider nominees recommended by shareholders, provided
recommendations are submitted in writing, including a description of the
proposed nominee's qualifications and other relevant biographical data, to the
Corporate Secretary at 2700 Oak Industrial Drive, N.E., Grand Rapids, Michigan
49505. The Executive Compensation Committee met three times during the last
fiscal year. The Committee makes recommendations to the Board of Directors
relating to compensation matters and fringe benefits for officers and
participants under the supplemental executive retirement, bonus, and stock
option plans.
DIRECTORS' COMPENSATION AND CERTAIN TRANSACTIONS
Directors, who are not employees of the Company, are compensated at the rate
of $3,000 for each Board meeting attended and $1,500 for each Committee
meeting held at times other than immediately preceding or subsequent to a
Board meeting. Directors are also reimbursed for out-of-pocket expenses
incurred in attending meetings.
All directors attended at least three-fourths of the aggregate number of
meetings of the Board and Board committees of which they were eligible to
attend.
EXECUTIVE COMPENSATION COMMITTEE REPORT
The Company's Executive Compensation Committee (the "Committee"), which is
comprised of three non-employee directors of the Company, is responsible for
considering and approving compensation arrangements for senior management of
the Company, including the Company's executive officers. The goals of the
Committee in establishing annual compensation for senior management are as
follows: (i) to attract and retain key executives who will assure real growth
of the Company and its operating subsidiaries; and (ii) to provide strong
financial incentives, at a reasonable cost to the Company's shareholders, for
senior management to enhance long-term value of the shareholders' investment
in the Company.
5
<PAGE>
Executive compensation consists of the following components:
. Base salary compensation;
. Short-term incentive compensation (the Economic Value Added Incentive
Plan); and
. Long-term incentive compensation (the 1997 Stock Incentive Plan).
The committee also reviews management benefit plans and makes
recommendations regarding such plans to the Board of Directors.
Base Salary
The Company is committed to providing a competitive base pay to help attract
and retain the best people in the industry. To insure that base salaries are
competitive, local and national association annual reports, as well as special
individual position data and total compensation reports by management
consultants, are utilized annually. The goal is to ensure that the base
salaries of the Company's executives compare favorably with executives with
similar responsibilities in like companies in comparable industries.
Formal job descriptions outlining the duties, primary functions and basic
and peripheral responsibilities of each executive position are utilized in
placing each in the salary ranges, and the individuals' relative
responsibilities and annual performances are used to adjust specific base
salary.
Senior executives' salary recommendations include a review and discussion of
the executives' individual performance, and the relationship to the Company's
performance for the last fiscal year. These include meeting strategic and
business plan goals, operating profit, performance relative to competitors,
and timely new product introductions. Individual performance is evaluated
according to organizational and management development and the fostering of
teamwork and Company values.
The Economic Value Added Incentive Plan
The Economic Value Added (EVA) Plan is an incentive compensation program,
first effective at the beginning of the 1998 fiscal year, which provides
bonuses for all employees of the Company and its subsidiaries if their
performance adds value for Company shareholders. EVA is the after-tax
operating profit that remains after subtracting the cost of capital employed
to generate that profit. EVA was implemented to improve the Company's
performance under this financial measure. The EVA program replaced the
Company's short-term incentive bonus program, which was based on sales growth
and return on equity.
Under the EVA Plan, bonuses are awarded to each Plan participant based on
the improvement in EVA for the Company's consolidated results. To measure the
improvement (or deterioration) in EVA, an EVA target is set yearly based on
the average of the prior fiscal year's target and actual EVA plus the expected
improvement in EVA for the current fiscal year. If the improvement in EVA is
in excess of the targeted improvement, the bonus calculation will produce an
amount in excess of the participant's target bonus. If the improvement in EVA
is less than the targeted improvement, the bonus calculation will produce an
amount less than the individual's target bonus. Bonuses payable under the EVA
Plan are not subject to any maximum and for those employees who receive annual
payments, there is no minimum. In fiscal 2000, the Company exceeded its EVA
target resulting in Plan compensation of 132.5% of target.
For fiscal 2000, participants were divided into classifications, which had
target bonus levels ranging from 5% to 65% of base salary. It is intended that
the assignment of a particular classification correlates with a position's
relative effect on the Company's performance.
In order to encourage a long-term commitment by executive officers and other
key employees to the Company and its shareholders, the EVA Plan requires that
two-thirds of any bonus earned in a given year in excess of the target bonus
be deferred in a "bonus bank" for possible future pay-out by the Company.
Thirty-three percent of a positive bonus bank balance is paid out each year.
Consequently, the total bonus payable in
6
<PAGE>
any given period consists of the individual's target bonus, plus (or minus)
the participant's fixed share of EVA improvement and plus (or minus) a portion
of the bonus bank balance. A bonus bank account is considered "at risk" in the
sense that in any year EVA performance results in a bonus amount which is
negative, the negative bonus amount is subtracted from the outstanding bonus
bank balance. In the event that the outstanding bonus bank balance at the
beginning of the year is negative, the bonus paid for that year is limited to
the aggregate of thirty-three percent of the positive bonus earned up to the
target bonus and thirty-three percent of any positive bonus bank balance after
applying the remaining portion of the bonus earned for the year against the
negative balance in the bonus bank. The executive is not expected to repay
negative balances in the bonus bank. In the event that an executive
voluntarily terminates employment with the Company, any positive bonus bank
balance is subject to forfeiture.
The 1997 Stock Incentive Plan
The purpose of the Stock Incentive Plan is to promote the long-term success
of the Company for the benefit of its shareholders, through stock-based
compensation, by aligning the personal interests of the Company's key
employees with those of its shareholders. The Stock Incentive Plan is also
designed to allow key employees of the Company and its subsidiaries to
participate in the Company's future, as well as to enable the Company to
attract, retain, and reward such employees.
Certain employees who participate in the Company's Economic Value Added
(EVA) Plan are eligible to receive Options under the Stock Incentive Plan. The
number of Options that may be granted to an employee is determined by a
formula contained in the Stock Incentive Plan. The formula is designed to
simulate a purchase of an Option by the employee at a price equal to 5% of the
current stock price of the shares covered by the Option. The employee first
elects, prior to the beginning of the fiscal year, to waive and designate a
portion of that employee's EVA target bonus for use in determining Option
grants (the "EVA Bonus Option Amount"). The Option granted may be either an
Incentive Stock Option or a Nonqualified Stock Option. At the end of the
fiscal year, if all or part of the employee's EVA target bonus is earned, the
number of shares of Common Stock subject to any Option granted to the employee
will be determined by dividing that employee's EVA Bonus Option Amount by 5%
of the fair market value of a share of Common Stock on the date of grant. The
EVA Bonus Option Amount is not paid in consideration for the Option; it is
merely a figure utilized in the formula to determine the number of shares
covered by an Option grant under the Stock Incentive Plan.
The exercise price included in both Incentive Stock Options and Nonqualified
Stock Options is a single fixed exercise price which must equal at least 100%
of the fair market value of the stock at the date of grant, increased by a
fixed percentage increase compounded annually over the term of the Option (the
"Fixed Percentage Increase") determined in the manner described below. Fair
market value, as to Incentive Stock Options, is the closing sale price per
share of the Common Stock on the relevant valuation date on the National
Association of Securities Dealers Automated Quotation System ("NASDAQ"). Fair
market value, as to Nonqualified Stock Options, is the average NASDAQ closing
sale price per share of the Common Stock during the calendar month immediately
preceding the relevant valuation date. The Fixed Percentage Increase is a
percentage equal to the yield on five-year U.S. Treasury securities plus 2%,
less the projected dividend yield on the Company's Common Stock as determined
by the Committee and the Board of Directors.
The term of each Option is five years after the date the Option is granted.
Subject to certain exceptions provided in the Stock Incentive Plan, all
Options granted under the Stock Incentive Plan vest and become exercisable
three years after the date the Option was granted. The Stock Incentive Plan
provides that all Awards will be fully vested and exercisable upon a "Change
in Control" of the Company, as defined in the Stock Incentive Plan.
The following example illustrates the calculation of the Option grant under
the Stock Incentive Plan. Assume (a) an executive of the Company has
designated an EVA Bonus Option Amount of $40,000 which is subsequently earned,
(b) the fair market value of Company stock on the date of grant is $15.00 per
share, (c) the yield on 5-year U.S. Treasury securities is 5.5%, and (d) the
projected, annual dividend yield is 3.0%.
7
<PAGE>
Example: Number of Option Shares
5% of $15.00 (the fair market value) is $0.75.
Number of shares covered by Option = 53,333 ($40,000 /$0.75)
Exercise Price
The Fixed Percentage Increase would equal 4.5% (5.5% + 2%-3.0%).
Based upon the five-year term of the Option, the exercise price
would equal $18.69 per share ($15.00 x 4.5%, compounded over
five years).
Thus, the fair market value of the Company's common stock must
exceed $18.69 per share between 3 and 5 years from the date of
the Option grant to give the Option value to the Senior
Executive, based on this example.
In general, options to purchase up to a maximum of 220,000 shares may be
granted each year. A maximum of 660,000 shares may be issued pursuant to
awards made under the 1997 Stock Incentive Plan.
Chief Executive Officer Compensation
The factors that were used to determine the annual base salary and incentive
compensation of Mr. William R. Dutmers, the Company's President and Chief
Executive Officer, are the same as those described above for all executive
officers.
Consistent with the Company's existing policies and practices, the Executive
Compensation Committee reviewed available compensation data from the Company's
peers and evaluated Mr. Dutmers' contributions to the Company as well as his
experience and expertise. The Executive Compensation Committee also took into
consideration the performance of the Company, including strategic and business
plan goals, operating profit, performance relative to competitors and timely
new product introduction.
In fiscal 2000, Mr. Dutmers received a base salary of $275,000. Mr. Dutmers'
EVA target bonus level for fiscal 2000 was 65% of base salary. As a result of
the Company achieving EVA Plan results equaling 132.5% of target, Mr. Dutmers
earned incentive compensation of $234,179. From his earned incentive
computation, $88,344, which he had previously waived, was divided by $0.761 as
a guide to determine that Mr. Dutmers would receive 116,089 leveraged stock
options. He was also paid cash incentive compensation of $107,488 and $38,347
was added to his bonus bank.
On February 1, 2000, Mr. Dutmers was granted 6,600 shares of restricted
common stock and the option to purchase 27,500 shares of the Company's common
stock at a price of $14.43 per share. The grant and the options will vest if
the Company achieves specific financial objectives within a five-year
performance period. During the performance period, the grantee may vote and
receive dividends on the restricted shares, but the shares are subject to
transfer restrictions and are forfeited if the grantee terminates employment
or the Company does not achieve its financial objectives.
Other Compensation Issues
In addition to the foregoing components of executive compensation, the
Compensation Committee reviews, on an on-going basis, other components of
compensation, such as benefits and prerequisites. In all cases, the objective
of the Compensation Committee is to assist senior management in attracting,
motivating and retaining qualified executive personnel.
Submitted by the Executive Compensation Committee:
Thomas A. Hilborn, Chairman Richard S. Knape
Gregory Lambert
8
<PAGE>
SUMMARY COMPENSATION TABLE
The following table sets forth the compensation received by the Company's
CEO and the other two most highly compensated executive officers of the
Company (the "Named Executives") for each of the three fiscal years ended July
1, 2000, June 30, 1999, and 1998.
<TABLE>
<CAPTION>
Long-Term
Annual Compensation Compensation Awards
----------------------- --------------------------
Restricted Securities
Name & Principal Stock Underlying All Other
Position Year Salary(1) Bonus(2) Awards Options (#)(5) Compensation(6)
---------------- ---- --------- -------- ---------- -------------- --------------
<S> <C> <C> <C> <C> <C> <C>
William R. Dutmers...... 2000 $271,826 $145,835 7,546(4) 116,089 $ 490
Chairman, President and 1999 -0- 47,226 11,550(3) 62,214 -0-
Chief Executive Officer 1998 -0- -0- -0- -0- -0-
Michael G. Van Rooy..... 2000 $166,731 $ 68,810 -0- 54,774 $16,055
Senior Vice President-- 1999 160,000 24,658 -0- 31,406 16,055
Manufacturing 1998 160,000 41,225 -0- 37,931 16,055
James S. Dahlke......... 2000 $115,772 $ 47,779 -0- 38,033 $ 6,000
Vice President of 1999 -0- -0- -0- -0- -0-
Business Development 1998 -0- -0- -0- -0- -0-
</TABLE>
--------
(1) Includes amounts deferred by employees pursuant to Section 401(k) of the
Internal Revenue Code.
(2) Represents amounts earned under the Company's EVA Plan during the fiscal
year, but excludes amounts foregone at the election of the named
executives and used in determining option awards under the 1997 Stock
Incentive Plan.
(3) Represents amounts earned by Mr. Dutmers in his role as Chairman of the
Board of Directors.
(4) Represents 6,600 shares of restricted stock granted to Mr. Dutmers on
February 1, 2000 and 946 shares of restricted stock granted in lieu of a
contribution to the profit sharing plan.
(5) The options reflected as being granted in fiscal 1998, 1999 and 2000
relate to the fiscal year indicated but are awarded in the following
fiscal year.
(6) The amounts disclosed in this column include: (a) amounts contributed by
the Company to the Company's profit sharing plan for fiscal 2000, in which
substantially all salaried employees of the Company participate, in the
following amounts: Mr. Dutmers-$-0-; Mr. Van Rooy-$14,400; and Mr. Dahlke-
$-0-; (b) payments by the Company in fiscal 2000 of premiums for term-life
insurance for the benefit of the Named Executives, in the following
amounts: Mr. Dutmers-$490; Mr. Van Rooy-$1,655; and Mr. Dahlke-$-0 (c)
signing bonus paid to Mr. Dahlke-$6,000.
OPTION GRANTS IN LAST FISCAL YEAR
The following table provides information on options granted to the Named
Executives during the year ended July 1, 2000.
<TABLE>
<CAPTION>
Individual Grants
--------------------------------------------------
Potential
Realizable
Value at Assumed
Annual Rates of
Number of Percent Stock Price
Securities of Total Appreciation for
Underlying Options granted Exercise or Option Term (5)
Options to Employees in Base Price Expiration -----------------
Name Granted Fiscal Year (3) (per share) Date 5% 10%
---- ---------- --------------- ----------- ---------- -------- --------
<S> <C> <C> <C> <C> <C> <C>
William R. Dutmers (1).. 27,500 14.3% $14.43 2/1/05 $109,725 $242,275
William R. Dutmers (2).. 62,214 32.3% $18.41(4) 6/30/04 $126,916 $459,761
Michael G. Van Rooy
(2).................... 31,406 16.3% $18.41(4) 6/30/04 $ 64,068 $232,090
James S. Dahlke (2)..... -- -- -- -- -- --
</TABLE>
--------
(1) The options granted to Mr. Dutmers are not part of the 1997 Stock
Incentive Plan and are not exercisable unless the Company's Common Stock
has a sale price on the NASAQ National Market of $19.09 for twenty
consecutive trading days.
9
<PAGE>
(2) Indicates the number of shares that may be purchased pursuant to options
granted under the Company's 1997 Stock Incentive Plan. The options relate
to fiscal 1999 performance.
(3) The Company granted options covering 192,757 shares to eligible employees
of the Company and its subsidiaries.
(4) The exercise price equals the average NASDAQ closing sale price per share
of the Company's common stock during the calendar month immediately
preceding the relevant valuation date, increased by the yield on five-year
U.S. Treasury securities plus 2%, less the projected dividend yield on the
Company's Common Stock, compounded annually over the term of the options.
(5) The potential realizable values are based on assumed rates of appreciation
in the market value of the Company's Common Stock over the entire option
period and without any discount to present value. The market value of the
Company's stock was $14.43 on 1/31/00 and $16.02 on 7/1/99, the grant
dates. There can be no assurances that the amounts reflected in this table
will be achieved.
AGGREGATED STOCK OPTION EXERCISES IN FISCAL 2000
AND YEAR-END OPTION VALUES
The following table provides information on the number and value of
unexercised options at July 1, 2000.
<TABLE>
<CAPTION>
Number of Shares Subject Value of Unexercised in
to Unexercised Options at the Money Options at
July 1, 2000 July 1, 2000(1)
Shares Acquired Value ------------------------- -------------------------
Name on Exercise Realized Exercisable Unexercisable Exercisable Unexercisable
---- --------------- -------- ----------- ------------- ----------- -------------
<S> <C> <C> <C> <C> <C> <C>
William R. Dutmers...... -- $ -- -- 89,714 $ -- $22,550
Michael G. Van Rooy..... -- -- 17,270 69,337 $18,276 --
James S. Dahlke......... -- -- -- -- -- --
</TABLE>
--------
(1) Values are based on the difference between the closing price of the
Company's Common Stock on July 1, 2000, ($15.25) and the exercise prices
of the options.
10
<PAGE>
SHAREHOLDER RETURN PERFORMANCE GRAPH
The following graph shows the cumulative total shareholder return on an
investment in the Company's Common Stock compared to the cumulative total
return of the NASDAQ market for U.S. companies and a peer group of NASDAQ
traded companies with the same Standard Industrial Classification (SIC) code
as that of the Company's. The comparison assumes a $100 dollar investment on
June 30, 1995, and the reinvestment of dividends.
COMPARISON OF FIVE-YEAR CUMULATIVE TOTAL RETURN
PERFORMANCE GRAPH FOR
KNAPE & VOGT MANUFACTURING COMPANY
[Performance Graph of Knape & Vogt]
Legend
<TABLE>
<CAPTION>
Total Returns Index for: 06/1995 06/1996 06/1997 06/1998 06/1999 06/2000
<S> <C> <C> <C> <C> <C> <C>
Knape & Vogt Manufacturing
Company 100.0 109.7 116.1 168.7 137.1 136.0
NASDAQ Stock Market (US
Companies) 100.0 128.4 156.2 205.6 296.0 437.3
NASDAQ Stocks (SIC 3400-3499
US Companies) 100.0 124.8 171.5 181.0 135.5 111.9
</TABLE>
11
<PAGE>
RELATIONS WITH INDEPENDENT PUBLIC ACCOUNTANTS
The consolidated financial statements of the Company have been examined by
BDO Seidman, LLP, Certified Public Accountants. A representative of BDO
Seidman, LLP is expected to be present at the Annual Meeting with the
opportunity to make a statement, if desired, and will be available to respond
to appropriate questions. During October of 1999, the Company's Audit
Committee selected the Company's auditors for the current fiscal year. It is
expected that the same practice will be followed this year. The Company has no
reason to believe that BDO Seidman, LLP will not be selected as the Company's
principal auditors for the current fiscal year. They have audited the records
of the Company for over ten years.
SHAREHOLDER PROPOSALS--2001 ANNUAL MEETING
Any proposal of a shareholder intended to be presented for action at the
next Annual Meeting of the Company must be received by the Company at 2700 Oak
Industrial Drive, N.E., Grand Rapids, Michigan 49505, not later than May 15,
2001, if the shareholder wishes the proposal to be included in the Company's
proxy materials for that meeting.
AVAILABILITY OF 10-K ANNUAL REPORT
The annual report on Form 10-K, filed with the Securities and Exchange
Commission, will be provided free to shareholders upon written request. Write
Corporate Secretary, Knape & Vogt Manufacturing Company, 2700 Oak Industrial
Drive, N.E., Grand Rapids, Michigan 49505.
SECTION 16(a) BENEFICIAL OWNERSHIP REPORTING COMPLIANCE
Section 16(a) of the Securities Exchange Act of 1934 requires the Company's
officers and directors, and persons who own more than 10 percent of a
registered class of the Company's equity securities, to file reports of
ownership and changes in ownership with the Securities and Exchange
Commission. Officers, directors and greater than 10 percent shareholders are
required to furnish the Company with copies of all Section 16(a) forms they
file. Based solely on the review of written communications and copies of such
forms received by the Company, the Company believes that all required forms
have been filed accurately and timely with the Securities and Exchange
Commission.
MISCELLANEOUS
Management of the Company is not aware of any other matter to be presented
for action at the meeting. However, if any such other matter is properly
presented for action, it is the intention of the persons named in the
accompanying form of proxy to vote thereon in accordance with their best
judgment.
The cost of soliciting proxies in the accompanying form will be borne by the
Company. In addition to solicitation by mail, proxies may be solicited in
person, or by telephone or telegraph, by some regular employees of the
Company, and by Morrow & Co., which the Company has retained to assist in the
solicitation. The Company will pay Morrow & Co. $4,000 for its services. The
above Notice and Proxy Statement are sent by order of the Board of Directors.
September 15, 2000
/s/ William R. Dutmers
William R. Dutmers
Chairman, President and Chief
Executive Officer
12
<PAGE>
PROXY PROXY
KNAPE & VOGT MANUFACTURING COMPANY
THIS PROXY IS SOLICITED ON BEHALF OF THE
BOARD OF DIRECTORS FOR THE ANNUAL MEETING OF
SHAREHOLDERS TO BE HELD ON OCTOBER 13, 2000
COMMON STOCK
The undersigned hereby appoints William R. Dutmers and Michael J.
Kregor, and each of them, Proxies with power of substitution to vote all of the
shares of Common Stock of Knape & Vogt Manufacturing Company which the
undersigned is entitled to vote at the Annual Meeting of Shareholders of the
Company to be held at Donnelly Conference Center, Aquinas College, 157 Woodward
Lane, S.E., Grand Rapids, Michigan, on Friday, October 13, 2000, at 11:30 a.m.
local time, and at all adjournments thereof as stated below.
IF YOU ALSO HOLD CLASS B COMMON STOCK, PLEASE FILL OUT THE BLUE CLASS B PROXY.
PLEASE MARK, SIGN, DATE AND MAIL THE PROXY CARD PROMPTLY
USING THE ENCLOSED ENVELOPE.
(Continued and to be signed on reverse side.)
--------------------------------------------------------------------------------
4253-KNAPE & VOGT MANUFACTURING COMPANY-COMMON STOCK (WHITE)
<PAGE>
PLEASE MARK VOTE IN OVAL IN THE FOLLOWING MANNER USING DARK INK ONLY
[ ]
FOR WITHHOLD
1. ELECTION OF DIRECTOR TO BE ELECTED
BY HOLDERS OF COMMON STOCK VOTING
AS A CLASS -
NOMINEE: GREGORY LAMBERT [ ] [ ]
FOR WITHHOLD
2. ELECTION OF DIRECTOR TO BE ELECTED BY
HOLDERS OF COMMON STOCK VOTING TOGETHER
AS A CLASS WITH CLASS B COMMON STOCK -
NOMINEE: JOHN E. FALLON [ ] [ ]
THIS PROXY WHEN EXECUTED WILL BE
VOTED IN THE MANNER DIRECTED BY THE
UNDERSIGNED. IF NO DIRECTION IS
GIVEN, THIS PROXY WILL BE VOTED
"FOR" THE ELECTION OF THE NOMINEES
NAMED IN ITEMS (1) AND (2).
DATED: , 2000
---------------------
SIGNATURE(S)
-----------------------
-----------------------------------
PLEASE SIGN YOUR NAME AS IT APPEARS
ON THIS PROXY. IF SIGNING FOR
ESTATES, TRUSTS OR CORPORATIONS,
TITLE OF CAPACITY SHOULD BE STATED.
IF SHARES ARE HELD JOINTLY, EACH
HOLDER SHOULD SIGN. ATTORNEYS
SHOULD SUBMIT POWER OF ATTORNEY
FORMS.
--------------------------------------------------------------------------------
FOLD AND DETACH HERE
YOUR VOTE IS IMPORTANT!
PLEASE MARK, SIGN, DATE AND MAIL THE PROXY CARD PROMPTLY
USING THE ENCLOSED ENVELOPE.
4253-KNAPE & VOGT MANUFACTURING COMPANY-COMMON STOCK (WHITE)
<PAGE>
PROXY PROXY
KNAPE & VOGT MANUFACTURING COMPANY
THIS PROXY IS SOLICITED ON BEHALF OF THE
BOARD OF DIRECTORS FOR THE ANNUAL MEETING OF
SHAREHOLDERS TO BE HELD ON OCTOBER 13, 2000
CLASS B COMMON STOCK
The undersigned hereby appoints William R. Dutmers and Michael J.
Kregor, and each of them, Proxies with power of substitution to vote all of the
shares of Class B Common Stock of Knape & Vogt Manufacturing Company which the
undersigned is entitled to vote at the Annual Meeting of Shareholders of the
Company to be held at Donnelly Conference Center, Aquinas College, 157 Woodward
Lane, S.E., Grand Rapids, Michigan, on Friday, October 13, 2000, at 11:30 a.m.
local time, and at all adjournments thereof as stated below.
IF YOU ALSO HOLD COMMON STOCK, PLEASE FILL OUT THE WHITE COMMON STOCK PROXY.
PLEASE MARK, SIGN, DATE AND MAIL THE PROXY CARD PROMPTLY
USING THE ENCLOSED ENVELOPE.
(Continued and to be signed on reverse side.)
--------------------------------------------------------------------------------
4254-KNAPE & VOGT MANUFACTURING COMPANY-CLASS B COMMON STOCK (BLUE)
<PAGE>
PLEASE MARK VOTE IN OVAL IN THE FOLLOWING MANNER USING DARK INK ONLY
[ ]
FOR WITHHOLD
1. ELECTION OF DIRECTOR TO BE ELECTED
BY HOLDERS OF CLASS B COMMON STOCK
VOTING TOGETHER AS A CLASS WITH
COMMON STOCK -
NOMINEE: JOHN E. FALLON [ ] [ ]
THIS PROXY WHEN EXECUTED WILL BE
VOTED IN THE MANNER DIRECTED BY THE
UNDERSIGNED. IF NO DIRECTION IS
GIVEN, THIS PROXY WILL BE VOTED
"FOR" THE ELECTION OF THE NOMINEES
NAMED IN ITEM (1).
DATED: , 2000
---------------------
SIGNATURE(S)
-----------------------
-----------------------------------
PLEASE SIGN YOUR NAME AS IT APPEARS
ON THIS PROXY. IF SIGNING FOR
ESTATES, TRUSTS OR CORPORATIONS,
TITLE OF CAPACITY SHOULD BE STATED.
IF SHARES ARE HELD JOINTLY, EACH
HOLDER SHOULD SIGN. ATTORNEYS
SHOULD SUBMIT POWER OF ATTORNEY
FORMS.
--------------------------------------------------------------------------------
FOLD AND DETACH HERE
YOUR VOTE IS IMPORTANT!
PLEASE MARK, SIGN, DATE AND MAIL THE PROXY CARD PROMPTLY
USING THE ENCLOSED ENVELOPE.
4254-KNAPE & VOGT MANUFACTURING COMPANY-CLASS B COMMON STOCK (BLUE)
