<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>
LINDAL CEDAR HOMES, 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
LINDAL CEDAR HOMES, INC.
4300 SOUTH 104TH PLACE
SEATTLE, WASHINGTON 98178
- --------------------------------------------------------------------------------
PROXY STATEMENT
- --------------------------------------------------------------------------------
For Annual Meeting of Shareholders To Be Held May 30, 1996.
Proxies in the form enclosed are solicited by and on behalf of the Board of
Directors of the Company. The individuals named as Proxies are Sir Walter Lindal
and Robert W. Lindal. Proxies may be solicited by use of the mails, by personal
interview or by telephone and may be solicited by officers and directors and by
other employees of the Company. All costs of solicitation of proxies will be
borne by the Company.
All shares represented by proxies received will be voted in accordance with
instructions contained therein. In the absence of voting instructions, the
shares will be voted in favor of the proposals set forth therein.
VOTING SECURITIES AND PRINCIPAL HOLDERS THEREOF
At the close of business on April 5, 1996 there were 4,061,671 shares of
common stock outstanding, which represent all of the voting securities of the
Company. Each share of common stock is entitled to one vote. Only shareholders
of record at the close of business on April 23, 1996 will be entitled to vote at
the meeting. Shareholders have cumulative voting rights with respect to the
election of directors and may exercise these rights without giving any notice or
taking any other prior action. The existence of cumulative voting rights means
that a shareholder may cast a total number of votes in the election of directors
which is equal to the number of directors to be elected multiplied by the number
of such shareholder's shares. Such votes may be cast entirely for one candidate
or may be distributed equally or disproportionately among as many candidates as
the shareholder may consider appropriate.
A shareholder may vote in person or by proxy. A proxy must be in writing
and dated and signed by the shareholder. A shareholder giving a proxy has the
power to revoke it at any time before it is voted.
<PAGE> 3
The following table sets forth as of April 5, 1996 certain information as
to the number of shares of common stock beneficially owned by each person who is
known to the Company to own beneficially more than 5% of its outstanding common
stock or who is a Company director or nominee for director, and by all officers
and directors of the Company as a group:
BENEFICIAL OWNERSHIP OF COMMON STOCK
<TABLE>
<CAPTION>
NUMBER PERCENTAGE OF
NAME OF SHARES(1)(5) OUTSTANDING SHARES
<S> <C> <C>
- ---------------------------------------------------------------------------------------
Sir Walter Lindal(2) 947,908(3) 21.65%
Robert W. Lindal(2) 443,389(4) 10.12
Douglas F. Lindal(2) 392,118(4) 8.95
Bonnie G. McLennaghan(2) 397,943(4)(6) 9.09
Martin J. Lindal(2) 368,863(4) 8.42
Everett G. Martin 45,169 1.03
Harry A. Pryde 17,017 *
Rick L. Stanley 6,328 *
Charles R. Widman 17,725 *
William M. Weisfield 17,017 *
All officers and directors
as a group (13 persons) 2,717,715 62.06
- ---------------------------------------------------------------------------------------
</TABLE>
* less than one percent
(1) Beneficial ownership includes both voting power and investment power.
(2) Robert W. Lindal, Martin J. Lindal and Douglas F. Lindal are sons, and
Bonnie G. McLennaghan is the daughter, of Sir Walter Lindal. The address of
each of the individuals listed is the address of the Company's headquarters
at 4300 South 104th Place, Seattle, Washington 98178.
(3) Includes 772,898 shares held by Lindal, Inc., a private corporation
controlled by Sir Walter Lindal in which all adult members of the Lindal
family have an ownership interest.
(4) Does not include 772,898 shares owned by Lindal, Inc.
(5) With respect to each such individual and to all officers and directors as a
group, the beneficial ownership data includes options to purchase common
stock exercisable within 60 days as follows: (i) options to purchase 37,375
shares held by each of Sir Walter Lindal, Robert W. Lindal, Douglas F.
Lindal, Martin J. Lindal and Bonnie G. McLennaghan, (ii) options to purchase
15,189 shares held by Everett G. Martin, (iii) options to purchase 16,017
shares held by Harry A. Pryde and William M. Weisfield, (iv) options to
purchase 5,328 shares held by Rick L. Stanley, (v) options to purchase
16,725 shares held by Charles R. Widman, and (vi) options to purchase
317,572 shares held by all directors and officers as a group.
(6) Includes options to purchase 10,000 shares held by Robert McLennaghan, the
husband of Bonnie G. McLennaghan.
2
<PAGE> 4
ELECTION OF DIRECTORS
The Company's Bylaws provide that the Board is divided into two classes.
Each class is as nearly equal in number as possible. Unless a director has been
appointed to fill a vacancy or to fill a position that was created by increasing
the number of directors, each director serves for a term ending at the second
annual shareholders' meeting following the annual meeting at which elected. Each
director serves until such director's successor is elected and qualified or
until such director's earlier death, resignation or removal. Information as to
the nominees and as to each other director whose term will continue after the
1996 Annual Meeting of Shareholders is provided below.
The Board of Directors presently consists of ten members. Four members of
the Board of Directors will be elected at the meeting: Robert W. Lindal, Martin
J. Lindal, Charles R. Widman, and Everett G. Martin will be elected for two-year
terms expiring at the 1998 Annual Meeting and until their respective successors
have been elected and qualified. Daniel B. Ward has decided not to stand for
re-election and the Board determined to reduce the number of directors to nine
effective at the 1996 Annual Meeting rather than seek a replacement. The
directors will be elected by a plurality vote of the shares represented, in
person or by proxy, at the meeting.
Each year the Board of Directors has traditionally selected a nominee for
director from among the Company's distributors. The Company believes this
improves relationships with its distributors by giving them a voice in the
decision-making process and provides the Company with an additional source of
information about its markets. The Board of Directors selected Rick L. Stanley
from among its distributors as a nominee for election as a director at the 1995
Annual Meeting. Mr. Stanley was first elected to the Board in January 1995 to
fill a vacancy created by the resignation of Charles T. Kollerer. His current
term as a director will expire in 1997.
Each of the nominees for director has indicated that he is willing and able
to serve as a director. If any nominee becomes unable or unwilling to serve, the
accompanying proxy may be voted for the election of such other person as shall
be designated by the Board of Directors.
During 1995, there were six meetings of the Board of Directors. No director
attended fewer than 75% of the meetings of the Board of Directors and the
various committees thereof at which he or she was entitled to vote, except that
Charles Widman attended four of the six full Board Meetings.
3
<PAGE> 5
The following table sets forth information regarding each continuing
director, each nominee for election as a director, and each executive officer of
the Company:
<TABLE>
<CAPTION>
DIRECTOR POSITION
NAME(1) AGE SINCE WITH COMPANY
<S> <C> <C> <C>
- -----------------------------------------------------------------------------------
Sir Walter Lindal(2) 77 1966-1975 Chairman Emeritus of the
& 1978 on Board of Directors,
Secretary and Director
Robert W. Lindal(2) 48 1969-1975 Chairman of the Board of
& 1976 on Directors and Chief
Executive Officer
Douglas F. Lindal(2) 45 1971-1975 President, Chief
& 1980 on Operating Officer and
Director
Bonnie G. McLennaghan(2) 51 1966-1981 Vice President
& 1984-1993
Martin J. Lindal(2) 42 1981 Vice President
Information Systems &
Assistant Secretary and
Director
Everett G. Martin 72 1986 Vice President Midwest &
Eastern Canada and
Director
Harry A. Pryde 65 1994 Director
Rick L. Stanley 37 1995 Director
Charles R. Widman 70 1993 Director
William M. Weisfield 54 1994 Director
Richard C. Bendix 47 Vice President Marketing
John F. Dacy 47 Vice President Finance
and Treasurer
Gary D. Kline 47 Vice President Operations
- -----------------------------------------------------------------------------------
</TABLE>
(1) Each of the individuals listed are continuing directors or nominees for
director except Messrs. Bendix, Dacy and Kline, and Ms. McLennaghan who
serve solely in their capacities as executive officers of the Company. Each
executive officer is elected by the Board of Directors following the Annual
Meeting of Shareholders to serve for a term of one year or until a successor
is elected and qualified. The address of each of the individuals listed is
the address of the Company's headquarters at 4300 South 104th Place,
Seattle, Washington 98178.
(2) Robert W. Lindal, Martin J. Lindal and Douglas F. Lindal are sons, and
Bonnie G. McLennaghan is the daughter, of Sir Walter Lindal.
4
<PAGE> 6
NOMINEES FOR ELECTION (TERMS TO EXPIRE IN 1998)
ROBERT W. LINDAL was President of the Company from 1981 to January 1995,
when he became Chairman of the Board. He has been the Chief Executive Officer of
the Company since 1981. Mr. Lindal continues to have the operations and finance
areas of the Company report to him. Mr. Lindal has been a Director of the
Company from 1969 to 1975 and 1976 to the present. Prior to 1981, Mr. Lindal was
an independent distributor for the Company's products in Hawaii, and the
Canadian Production Facilities Manager for the Company. Mr. Lindal is a
structural engineer.
CHARLES R. WIDMAN has been the President of Widman Associates, Inc., forest
industry analysts, since 1993. From 1991 to 1993, Mr. Widman was an executive
consultant with Sandwell, Inc., a diversified international consulting firm
specializing in engineering and the forest industry. From 1978 to 1991, he was
Chairman and CEO of Widman Management Limited. After being purchased by
Sandwell, Inc. in 1991, Widman Management Limited continues to operate as Widman
Management Consultants. Mr. Widman was elected a Director in 1993.
MARTIN J. LINDAL has served as a director of the Company since 1981, and
was employed by the Company as Administration Manager in 1982. Mr. Lindal was
elected Assistant Secretary in 1986 and Vice President Information Systems &
Assistant Secretary in 1990.
EVERETT G. MARTIN has been employed by the Company since 1967 in a variety
of key sales and administrative positions. Mr. Martin has been associated with
this Company and its predecessors in a variety of positions since 1951. For the
past twenty-nine years he has been the Supervisor of the Company's midwest U.S.
and eastern Canada operations. Mr. Martin was elected Vice President Midwest &
Eastern Canada in 1986. Mr. Martin has served as a Director since 1986.
CONTINUING DIRECTORS (TERMS TO EXPIRE IN 1997)
DOUGLAS F. LINDAL was Executive Vice President from 1981 until January
1995, when he became President and Chief Operating Officer of the Company. Mr.
Lindal continues to have the sales, marketing and administration areas report to
him as well as function as General Manager supervising most Company activities.
He has served as a Director of the Company from 1971 to 1975 and from 1980 to
the present. Prior to 1981, Mr. Lindal also was an independent distributor for
the Company's products in Hawaii.
HARRY A. PRYDE is currently the president of The Pryde Corporation, a full
service property management firm and a builder/developer of single and
multi-family housing. He is also a member of the board of directors of
Enterprise Bank and several non-profit entities. Mr. Pryde is a past president
of the National Association of Home Builders, as well as the Seattle Master
Builders Association and the Washington State Home Builders Association. He was
elected a Director of the Company in 1994.
RICK L. STANLEY has been active, since 1990, with his wife in Custom Cedars
of Idaho, an independent dealership for the Company. From 1992 to 1995, Custom
Cedars of Idaho has been the Company's fourth, second, sixth and, in 1995, the
top dealership based on home packages delivered. Mr. Stanley is the President of
Custom Cedars of Idaho and was elected as a director of the Company in January
1995.
5
<PAGE> 7
SIR WALTER LINDAL was Chairman of the Board from 1981 until January 1995,
when he became Chairman Emeritus of the Company. Mr. Lindal has been Secretary
of the Company since 1981. From 1966 to 1975 he was President of the Company and
Chairman of the Board and actively managed the Company. Mr. Lindal is the
Company's founder.
WILLIAM M. WEISFIELD has been the chief operating officer of Northern
Capital Company, a privately held investment company in Seattle, Washington
since January 1994. From December 1992 to December 1993, Mr. Weisfield was the
chief operating officer of The Robbins Company in Kent, Washington, a
manufacturer of underground tunnel boring machines. From 1988 to December 1992,
Mr. Weisfield was the Chief Executive Officer of Cornerstone Columbia
Development Company, a Seattle, Washington real estate development firm. From
1978 to 1982, Mr. Weisfield was Chairman of the Board of the Federal Home Loan
Bank of Seattle and he is currently a member of the Board of Regents of Seattle
University. Mr. Weisfield currently is also a member of the Board of Directors
of UTILX Corporation, a NASDAQ traded company, and several non-public entities.
EXECUTIVE OFFICERS
RICHARD C. BENDIX joined the Company in 1988 as marketing manager and in
1989 was named Vice President Marketing. Prior to joining the Company, Mr.
Bendix was employed by Monterey Domes Inc. from 1980 to 1988 where he last
served as Executive Vice President.
BONNIE G. MCLENNAGHAN has been active in marketing as Publications Director
since the Company's formation in 1966 and served as an officer and director of
the Company from 1966 to 1981 and as a director from 1984 to February 1993. From
1981 to 1986, Mrs. McLennaghan was Director of Publications. In 1986, she was
elected Vice President Publications and in 1990 was elected Vice President.
JOHN F. DACY joined the Company in 1976 and has been the Company's Chief
Financial Officer since 1981.
GARY D. KLINE joined the Company in 1973 and has worked in several key
positions in the scheduling and production areas. Mr. Kline was elected Vice
President Operations in 1983.
COMPENSATION OF DIRECTORS
Prior to October 26, 1995, the annual retainer for each director, who was
not an employee of the Company, was $2,000, payable $500 per quarter. The
chairman of each committee was paid $1,000 a year, payable $250 per quarter. A
fee of $250 was paid for each meeting of the Board of Directors or committee of
the Board of Directors attended. Additionally, the Company may pay a fee of $250
for significant non-Board or committee meetings, such as meeting with
accountants, counsel or Company executives to review or discuss matters relating
to Board or Committee matters.
Effective October 26, 1995, the annual retainer for each director, who was
not an employee of the Company, is $4,000, payable $1,000 per quarter, and 1,000
shares of the Company's common stock. The chairman of each committee continues
to be paid $1,000 a year. A fee of $500 is paid for each meeting of the Board of
Directors or committee of the Board of Directors attended and for significant
non-Board or committee meetings.
6
<PAGE> 8
Pursuant to this revised compensation program, in December 1995 each of
Messrs. Pryde, Stanley, Widman and Weisfield were granted 1,000 shares of the
Company's stock. As the stock issued was not registered, all certificates bear
the appropriate restrictive legend. The market price of the stock on the date of
issuance was $4.125.
Each Director who is not an employee of the Company is eligible to
participate in the Directors' and Distributors' Stock Option Plan ("Plan").
Prior to the 1995 Annual Meeting, the Plan provided for the grant of options to
purchase one share of common stock to each non-employee Director for each $1,000
of net annual after-tax earnings of the Company during the years of 1993 and
1994. At the 1995 Annual Meeting an Amendment to the Plan was approved by the
shareholders providing that each non-employee Director would receive options to
purchase 10,000 shares upon becoming a Director and options to purchase 5,000
shares as of October 1 of each year he or she continues as a Director. The
non-employee directors in office when this amendment was approved were granted,
effective the day the amendment was approved, options to purchase 10,000 shares
of the Company's common stock.
For the year of 1993, the exercise price was the market price of the
Company's stock on April 1, 1993. For the year of 1994, the exercise price was
the market price of the Company's stock on the first business day of the year.
The exercise price of options granted in 1995 and in future years is the market
price of the Company's stock on the date of grant.
As of the end of 1993, Mr. Widman received options to purchase 708 shares
at a price of $6.36 per share (adjusted for the 10% stock dividend paid May 12,
1993). As of the end of 1994, each of Messrs. Widman, Pryde and Weisfield
received options to purchase 1,017 shares at $6.00 per share. Effective May 28,
1995, each of Messrs. Pryde, Stanley, Widman and Weisfield were granted options
to purchase 10,000 shares at a price of $3.75 per share; and as of October 1,
1995, each of the same non-employee Directors were granted options to purchase
5,000 shares at a price of $4.25 per share. Options granted to non-employee
Directors are nonassignable except by will or the laws of dissent and
distribution. Options granted are automatically fully vested and are exercisable
six (6) months after the date of grant. Options granted to non-employee
Directors expire at the earlier of ten (10) years from the grant date, one year
after the option holder ceases to be a Director for any reason other than death,
or one (1) year after death. However, options granted to Directors who are also
Company distributors are subject to the vesting and expiration rules described
in the next paragraph for options granted to distributors.
Non-employee Directors who are also Company distributors and members of the
Distributor Advisory Council are eligible to receive options to purchase
shares of the Company's stock each year in the amount of 100 shares for each
year during which the person was a member of the Council (without regard to
years of service as a Director). Mr. Stanley is a member of the Council and is
eligible for options granted under the Plan. Options granted to distributors
under the Plan vest over a period of four (4) years and expire at the earliest
of ten (10) years following the date of grant or ninety (90) days after the
option holder ceases to be a distributor (or one year after death).
7
<PAGE> 9
COMPLIANCE WITH SECTION 16 OF THE SECURITIES EXCHANGE ACT OF 1934
Section 16 of the Securities Exchange Act of 1934 and rules adopted
thereunder establish requirements for officers, directors and beneficial owners
of ten percent or more of the Company's outstanding common stock to report
transactions and holdings in the Company's securities.
With respect to 1995, the Company believes, based upon copies of reports
furnished to it and written representations that no other reports were required,
that all filings under Section 16 were made in a timely fashion.
COMMITTEES OF THE BOARD OF DIRECTORS
The Company presently has an Executive Committee which exercises all the
powers of the Board of Directors when the Board of Directors is not in session,
except the authority to (1) amend the Certificate of Incorporation; (2) adopt an
agreement of merger or consolidation under Section 251 or 252 of the Delaware
Corporation Law; (3) recommend to the stockholders the sale, lease or exchange
of all or substantially all of the Company's property and assets; (4) recommend
to the stockholders a dissolution of the corporation or a revocation of
dissolution; or (5) amend the bylaws of the Company. The Executive Committee
presently consists of Sir Walter Lindal, Robert W. Lindal and Douglas F. Lindal.
The Executive Committee met four times in 1995.
The Company also has an Audit Committee, a Compensation Committee, a Stock
Option Committee and a Research and Development Committee. The Audit Committee
is responsible for reviewing the results of the audit of the Company performed
by its independent public accountants. The Audit Committee met three times in
1995. Its members were Daniel B. Ward and William M. Weisfield.
The Compensation Committee is responsible for determining salary and bonus
compensation to executive officers who also own five percent or more of the
Company's common stock and to report thereon to the Board of Directors. The
Compensation Committee, which consisted of William M. Weisfield and Daniel B.
Ward, met four times in 1995.
The Stock Option Committee has the authority to grant stock options under
the Company's 1984 Incentive Stock Option Plan and the 1988 Combined Incentive
Stock Option Plan and Nonqualified Stock Option Plan. The Stock Option Committee
consisted of William M. Weisfield, Daniel B. Ward and Charles R. Widman. The
Stock Option Committee did not meet in 1995.
The Company has a Research and Development Committee, which consisted of
Sir Walter Lindal, Daniel B. Ward and Charles R. Widman. The committee met once
in 1995.
RELATED PARTY TRANSACTIONS
Mr. Rick Stanley is the President of Custom Cedars of Idaho, an independent
dealership of the Company since 1990. Sales to Custom Cedars of Idaho were
$949,000 in 1995. All sales were on normal trade terms, except for two model
homes. Extended terms for payment were allowed on these homes. The original
amount of the note, that was dated June 7, 1995, was $41,581 for the first home.
$7,539 was owed on this note at December 31, 1995. The amount of the note for
the
8
<PAGE> 10
second home, which shipped December 29, 1995, was $43,212. The Company does, at
its discretion, allow arrangements similar to this to other dealers.
In 1995 the Company made payments aggregating $48,206 to Lindal family
members under a variety of agreements. Of this amount $34,000 was paid to
Lindal, Inc., in connection with certain royalty agreements and $7,103 was paid
to each of Robert W. Lindal and Douglas F. Lindal for rental payments on
property owned by them which is leased by the Company.
Also, in 1995 options to purchase 10,000 shares of common stock were
granted to Robert McLennaghan for consulting services for the Company. The per
share exercise price of the options was the fair market value on the date of
grant, $3.75. The options were immediately exercisable and expire at the earlier
of 10 years from the date of grant or one year after death. Robert McLennaghan
is the husband of Bonnie McLennaghan.
9
<PAGE> 11
EXECUTIVE COMPENSATION
The following table shows the compensation for services rendered during
fiscal years 1995, 1994 and 1993 for the Chief Executive Officer and each of the
four highest paid executive officers of the Company whose aggregate salary and
bonus exceeded $100,000 in the most recent fiscal year.
SUMMARY COMPENSATION TABLE
<TABLE>
<CAPTION>
LONG-TERM
COMPENSATION
ANNUAL COMPENSATION AWARDS
------------
------------------- STOCK OTHER
NAME AND SALARY(1) BONUS OPTIONS COMPENSATION(2)
PRINCIPAL POSITION YEAR ($) ($) (#) ($)
- ----------------------- ---- --------- ------ ------------ ---------------
<S> <C> <C> <C> <C> <C>
Robert W. Lindal 1995 176,532 38,350 0 5,858
CEO/Chairman 1994 153,766 20,350 10,000 5,849
1993 136,976 20,691 5,000 5,248
Douglas F. Lindal 1995 151,175 38,589 0 3,721
President 1994 133,424 20,589 10,000 3,721
1993 119,328 20,865 5,000 3,317
Sir Walter Lindal 1995 161,397 22,000 0 2,945
Secretary 1994 139,992 14,000 10,000 2,541
1993 124,689 14,000 5,000 2,599
Bonnie G. McLennaghan 1995 108,024 12,502 0 3,308
Vice President 1994 90,996 10,002 10,000 2,919
1993 80,348 10,271 5,000 2,306
Martin J. Lindal 1995 97,444 11,566 0 3,157
Vice President 1994 79,666 9,066 10,000 2,691
Information Systems 1993 67,739 9,342 5,000 2,081
& Assistant Secretary
</TABLE>
- ---------------
(1) Includes base salary; taxable life insurance in accordance with the
Company's term life insurance plan; life insurance premiums paid for Mr.
Robert W. Lindal and Ms. Bonnie G. McLennaghan; purchase of a portion of
each named executive's unused accrued paid time off; cash paid for business
use of personal automobile for which there is no accounting to the Company
for Mr. Douglas F. Lindal and Ms. Bonnie G. McLennaghan; and amounts paid
for medical expenses not covered by the Company's medical plan under a
program available only to executives for Sir Walter Lindal, Mr. Douglas F.
Lindal and Ms. Bonnie McLennaghan.
(2) For Messrs. Robert W. Lindal, Douglas F. Lindal, Martin J. Lindal and Ms.
Bonnie G. McLennaghan, Other Compensation consists of amounts contributed,
at the discretion of the Board of Directors, to the Company's 401(k) Plan
and a 25% matching contribution of such employees' contributions to the
Plan. For Mr. Robert W. Lindal it also includes the benefit of personal use
of a Company automobile. For Sir Walter Lindal Other Compensation consists
of the benefit of personal use of a Company automobile.
10
<PAGE> 12
OPTION GRANTS IN LAST FISCAL YEAR
The Company has two employee stock option plans, an Incentive Stock Option
Plan effective December 21, 1984 ("1984 Plan") and a 1988 Combined Incentive and
Nonqualified Stock Option Plan adopted at the Company's 1988 Annual Meeting of
Shareholders ("1988 Plan"). Options to purchase common stock have been granted
under the plans to officers and key employees of the Company. The 1984 Plan
expired on December 21, 1994. No options were granted to executive officers in
1995. The following table shows stock option exercises in fiscal year 1995 by
the executive officers of the Company and the year end values of unexercised
options.
AGGREGATED OPTION EXERCISES IN LAST FISCAL YEAR
AND FISCAL YEAR-END OPTION VALUES
<TABLE>
<CAPTION>
VALUE OF UNEXERCISED
NUMBER OF UNEXERCISED IN-THE-MONEY OPTIONS
SHARES OPTIONS AT YEAR-END AT YEAR-END(2)
ACQUIRED ON VALUE ----------------------------- -----------------------------
EXERCISE(1) REALIZED EXERCISABLE UNEXERCISABLE EXERCISABLE UNEXERCISABLE
NAME (#) ($) (#) (#) ($) ($)
(A) (B) (C) (D) (D) (E) (E)
- ---------------------- ----------- -------- ----------- ------------- ----------- -------------
<S> <C> <C> <C> <C> <C> <C>
Robert W. Lindal 0 0 27,375 0 (1,250) 0
Douglas F. Lindal 0 0 27,375 0 (1,250) 0
Sir Walter Lindal 0 0 27,375 0 (1,250) 0
Bonnie G. McLennaghan 0 0 27,375 0 (1,250) 0
Martin J. Lindal 0 0 27,375 0 (1,250) 0
</TABLE>
- ---------------
(1) Number of securities underlying options exercised.
(2) Based on a fair market value at fiscal year-end of $4.50.
COMPENSATION COMMITTEE REPORT ON EXECUTIVE COMPENSATION
COMPENSATION COMMITTEE
In 1995, the Compensation Committee (the "Committee") was composed of two
of the Company's outside directors, William M. Weisfield and Daniel B. Ward. The
Committee is responsible for the establishing and administering of policies that
govern compensation for the Chief Executive Officer and other executive officers
who own 5% or more of the Company's outstanding common stock ("Owner/Officers").
The Committee is also directly involved with the setting of the compensation of
other executive officers. The Stock Option Committee governs the Company's stock
option program.
COMPENSATION POLICIES
The Committee bases executive officer compensation on the same guiding
principles used to determine compensation programs for all employees. The
Company seeks to offer pay and benefits that allow the Company to:
A) Attract and retain people with the skills critical to achieve long term
success of the Company,
11
<PAGE> 13
B) Maintain compensation costs that are competitive, and
C) Pay for performance to both motivate and reward individual and team
performance in attaining business objectives and maximizing shareholder
value.
FORMS OF COMPENSATION
Compensation for the Owner/Officers is based on the above Policies and
consists of the following components: competitive base pay, bonuses, stock
options and competitive benefits.
Base Salary. The Committee reviews and approves all salary changes for
Owner/Officers. The Committee bases its approval of individual salary levels on
the compensation budget for the Company, performance-based evaluations,
recommendations by the Executive Committee and comparisons to published
compensation levels for manufacturing companies of similar size and
profitability. In 1994, the Committee approved recommended adjustments in the
base salary of the Owner/Officers to a level which would allow for the
implementation of a meaningful bonus program in 1995. Accordingly, the Executive
Committee recommended and the Committee approved that the base salary of the
Owner/Officers, as a group, be increased approximately 25% effective September
1, 1994. The base salary of Mr. Robert Lindal, the Chief Executive Officer,
increased from approximately $142,000 per year to approximately $173,000 per
year, effective September 1, 1994.
Bonus. The Committee has devised a bonus plan that is based on selected
performance criteria, emphasizing the pre-tax profitability of the Company. For
the Chief Executive Officer, the amount of any bonus payment is based solely on
the pre-tax earnings of the Company. The Committee consulted with independent
compensation experts when devising this plan. The plan was implemented for
Owner/Officers and other executive officers in 1995.
The bonus plan, among other things, defines the bonus pool that is to be
available for distribution to the Owner/Officers and other executive officers.
If pre-tax earnings are $500,000 or less there is no bonus. For pre-tax earnings
from $500,000 to $1,000,000, 10% of pre-tax earnings is the bonus pool. For
pretax earnings over $1,000,000 to a maximum of $3,000,000, 20% of pre-tax
earnings is added to the bonus pool. The available bonus pool is then divided
among the Owner/ Officers and other executive officers according to a
predetermined percentage.
Stock Options. Non-qualified or incentive options are periodically granted
to all Owner/ Officers. Incentive stock options are periodically granted to
other executive officers and certain other employees by the Stock Option
Committee.
1995 COMPENSATION
As part of the process of formulating a revised bonus plan for 1995, in
late 1994 the Committee reviewed the base salaries of the Owner/Officers. It was
determined, through consultations with independent compensation experts, that
the base salary of the Owner/Officers needed to be adjusted to arrive at a level
that allowed a workable bonus plan.
For the 12 months of 1995 the salary of Mr. Robert Lindal increased
approximately $23,000 or 15% over 1994. This comparative increase was due to the
base salary adjustment being implemented for only the last four months of 1994.
There was no increase in base pay for the Chief Executive Officer or any
Owner/Officer in 1995.
12
<PAGE> 14
It is the opinion of the Committee, based upon input from independent
compensation consultants, that the current base salaries are consistent with
base salaries for manufacturing companies of similar size.
COMPENSATION COMMITTEE
William M. Weisfield, Chairman
Daniel B. Ward
13
<PAGE> 15
STOCK PRICE PERFORMANCE GRAPH
The graph below compares for each of the last five calendar years ending
December 31, 1995 the cumulative total return of the Company, the NASDAQ Market
Index and the Media General Residential Construction Index. Cumulative total
return assumes $100 invested January 1, 1991 and reinvestment of all dividends.
COMPARE 5-YEAR CUMULATIVE TOTAL RETURN
AMONG LINDAL CEDAR HOMES, INC.,
NASDAQ MARKET INDEX AND MG GROUP INDEX
<TABLE>
<CAPTION>
MEASUREMENT PERIOD LINDAL CEDAR INDUSTRY IN-
(FISCAL YEAR COVERED) HOMES, INC. DEX BROAD MARKET
<S> <C> <C> <C>
1990 100 100 100
1991 129.14 202.88 128.38
1992 173.39 228.95 129.64
1993 164.43 302.84 155.50
1994 85.51 183.26 163.26
1995 118.39 263.73 211.77
</TABLE>
ASSUMES $100 INVESTED ON JANUARY 1, 1991
ASSUMES DIVIDEND REINVESTED
FISCAL YEAR ENDING DECEMBER 31, 1995
14
<PAGE> 16
ELECTION OF AUDITORS
KPMG Peat Marwick LLP, certified public accountants, has been nominated by
the Board of Directors for election as independent auditors to examine the
consolidated financial statements of the Company for the year ending December
31, 1996. KPMG Peat Marwick has served as the independent auditor of the
Company's United States operations since 1968 and of the Company's Canadian
operations since 1970. A representative of KPMG Peat Marwick LLP will be present
at the 1996 Annual Meeting to respond to appropriate questions.
THE BOARD OF DIRECTORS RECOMMENDS A VOTE FOR APPROVAL OF THE ELECTION OF
THE INDEPENDENT AUDITORS.
PROPOSALS BY SHAREHOLDERS
Proposals by shareholders intended to be presented at the 1997 Annual
Meeting and to be included in the Company's Proxy or Information Statement, must
be received by the Company at its principal executive offices no later than
December 31, 1996, and must otherwise comply with the rules issued under the
Securities Exchange Act of 1934.
By Order of the Board of Directors
SIR WALTER LINDAL
Chairman Emeritus and Secretary
For a copy of the Annual Report on Form 10-K to the Securities and Exchange
Commission, please write:
Sir Walter Lindal, Secretary
Lindal Cedar Homes, Inc.
Post Office Box 24426
Seattle, Washington 98124
15
<PAGE> 17
LINDAL CEDAR HOMES, INC.
THIS PROXY IS SOLICITED ON BEHALF OF THE BOARD OF DIRECTORS
PROXY FOR THE ANNUAL MEETING OF SHAREHOLDERS MAY 30, 1996
The undersigned hereby appoints Sir Walter Lindal and Robert W. Lindal or
either of them, attorneys and proxies with full power of substitution in each of
them, in the name, place and stead of the undersigned to vote as proxy all the
stock of the undersigned in Lindal Cedar Homes, Inc.
1. Election of the following nominees, as set forth in the Proxy Statement:
/ / FOR all nominees
Robert W. Lindal, Martin J. Lindal, Everett G. Martin, and Charles R. Widman.
/ / WITHHOLD AUTHORITY to vote for all
Instructions: To withhold authority to vote for any individual nominee, write
that nominee's name in the space provided below.
- --------------------------------------------------------------------------------
2. To elect KPMG Peat Marwick LLP as auditors to examine the financial
statements of the Company for the year ending December 31, 1996.
/ / FOR / / AGAINST / / ABSTAIN
3. The transaction of such other business as may properly come before the
meeting.
/ / FOR / / AGAINST / / ABSTAIN
THE SHARES REPRESENTED BY THIS PROXY WILL BE VOTED FOR THE ELECTION OF ALL
NOMINEES AND FOR PROPOSALS 2 AND 3 IF NO INSTRUCTION IS GIVEN.
PLEASE MARK, SIGN, DATE AND
RETURN THIS PROXY IN THE
ENCLOSED ENVELOPE
DATED: , 1996
L.S.
L.S.
(Note: Please sign exactly as
your name appears hereon.
Executors, administrators,
trustees, etc. should so
indicate when signing, giving
full title as such. If signer is
a corporation, execute in full
corporate name by authorized
officer. If shares held in the
name of two or more persons, all
should sign.)
