<PAGE> 1
SCHEDULE 14A
(RULE 14A-101)
INFORMATION REQUIRED IN PROXY STATEMENT
SCHEDULE 14A INFORMATION
PROXY STATEMENT PURSUANT TO SECTION 14(A) OF THE SECURITIES
EXCHANGE ACT OF 1934 (AMENDMENT NO. )
Filed by the Registrant [X]
Filed by a Party other than the Registrant [ ]
Check the appropriate box:
<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 Rule 14a-11(c) or Rule 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] No fee required.
[ ] Fee computed on table below per Exchange Act Rules 14a-6(i)(1) and 0-11.
(1) Title of each class of securities to which transaction applies:
(2) Aggregate number of securities to which transaction applies:
(3) Per unit price or other underlying value of transaction computed
pursuant to Exchange Act Rule 0-11 (set forth the amount on which the
filing fee is calculated and state how it was determined):
(4) Proposed maximum aggregate value of transaction:
(5) Total fee paid:
[ ] Fee paid previously with preliminary materials:
[ ] Check box if any part of the fee is offset as provided by Exchange Act Rule
0-11(a)(2) and identify the filing for which the offsetting fee was paid
previously. Identify the previous filing by registration statement number,
or the Form or Schedule and the date of its filing.
(1) Amount Previously Paid:
(2) Form, Schedule or Registration Statement No.:
(3) Filing Party:
(4) Date Filed:
<PAGE> 2
LOGO
4300 SOUTH 104TH PLACE
SEATTLE, WASHINGTON 98178
------------------------
NOTICE OF ANNUAL MEETING OF SHAREHOLDERS
Notice is hereby given that the Annual Meeting of Shareholders of Lindal
Cedar Homes, Inc., a Delaware corporation (the "Company"), will be held at the
Washington Athletic Club, 1325 Sixth Avenue, Seattle, Washington on June 4, 1998
at 3:00 p.m., for the following purposes:
1. To elect five members of the Board of Directors to hold office for
two years, or until their successors are elected and qualified.
2. To ratify the appointment of KPMG Peat Marwick LLP as the Company's
independent auditors for the year ending December 31, 1998.
3. To transact such other business as may properly come before the
meeting or any adjournment thereof.
So as far as management is aware, as of this date, no business will
properly come before the meeting other than the matters set forth above.
Only shareholders of record at the close of business on April 20, 1998 will
be entitled to notice of and to vote at the Annual Meeting and any adjournment
thereof. For the convenience of the shareholders who do not expect to attend the
meeting in person and desire to have their stock voted, a form of proxy and an
envelope, for which no postage is required, are enclosed. A shareholder may
later revoke this proxy at any time before it is voted in the manner set forth
in the accompanying proxy statement.
Please complete, sign, date and mail promptly the accompanying proxy card
in the return envelope furnished for that purpose, whether or not you plan to
attend the meeting. Your cooperation is appreciated since a majority of the
common stock must be represented, either in person or by proxy, to constitute a
quorum for the conduct of business.
By Order of the Board of Directors
SIR WALTER LINDAL
Chairman Emeritus and Secretary
Seattle, Washington
May 15, 1998
<PAGE> 3
LINDAL CEDAR HOMES, INC.
4300 SOUTH 104TH PLACE
SEATTLE, WASHINGTON 98178
------------------------
PROXY STATEMENT
This proxy statement is furnished in connection with the solicitation of
proxies by the Board of Directors of Lindal Cedar Homes, Inc., (the "Company")
for use at the Annual Meeting of Shareholders to be held June 4, 1998, at 3:00
p.m., and at any adjournment thereof (the "Annual Meeting"), for the purposes
set forth herein and in the accompanying Notice of Annual Meeting of
Shareholders. The Annual Meeting will be held at the Washington Athletic Club,
1325 Sixth Avenue, Seattle, Washington.
The approximate date on which this proxy material is first to be sent to
shareholders is May 15, 1998. 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, directors
and other employees of the Company. All costs of solicitation of proxies will be
borne by the Company.
A shareholder may vote in person or by proxy. A proxy must be in writing
and dated and signed by the shareholder. 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. Any shareholder granting a proxy has the power to
revoke it at any time before it is exercised by (i) delivering written notice to
the Company's Secretary prior to the Annual Meeting, (ii) executing another
proxy dated as of a later date, or (iii) voting in person at the Annual Meeting.
VOTING SECURITIES AND PRINCIPAL HOLDERS THEREOF
At the close of business on March 31, 1998, there were 4,118,446 shares of
common stock outstanding, which represent all of the voting securities of the
Company. Only shareholders of record at the close of business on April 20, 1998
will be entitled to vote at the meeting. Under Delaware law and the Company's
Bylaws, the presence at the meeting, in person or by duly authorized proxy, of
the holders of a majority of the outstanding shares of stock entitled to vote
constitutes a quorum for the transaction of business. Each share of common stock
is entitled to one vote.
Shareholders do not have the right to cumulate their votes in the election
of directors. The five nominees who receive the greatest number of votes cast
for the election of directors by shares entitled to vote and present in person
or by proxy at the Annual Meeting will be elected directors. In an uncontested
plurality election such as this, abstentions will have no effect, since approval
by a specified percentage of shares present or outstanding is not required.
Because brokers have discretion to vote shares of common stock held on behalf of
beneficial owners if no instructions are received about how to vote such shares,
there will be no "broker nonvotes" in the election of directors.
<PAGE> 4
BENEFICIAL OWNERSHIP OF COMMON STOCK
The following table sets forth as of March 31, 1998 certain information as
to the number of shares of common stock beneficially owned by (i) each person
who is known to the Company to own beneficially more than 5% of its outstanding
common stock, (ii) each director or nominee for director, (iii) each executive
officer of the Company for whom information is given in the Summary Compensation
Table in this proxy statement, and (iv) all executive officers and directors of
the Company as a group:
<TABLE>
<CAPTION>
PERCENTAGE OF
NUMBER OF OUTSTANDING
NAME SHARES(1)(2) SHARES
---- ------------- -------------
<S> <C> <C>
Sir Walter Lindal(3)............................. 945,633(4) 21.49%
Robert W. Lindal(3).............................. 437,114(5) 9.93%
Bonnie G. McLennaghan(3)......................... 395,668(5)(6) 8.99%
Douglas F. Lindal(3)............................. 385,656(5) 8.76%
Martin J. Lindal(3).............................. 366,588(5) 8.33%
Everett G. Martin................................ 46,304 1.05%
Charles R. Widman................................ 29,725 *
William M. Weisfield............................. 29,017 *
William F. Lorenz III............................ 6,140 *
William R. Monkman............................... -- --
Charles T. Collins............................... -- --
All executive officers and directors as a group
(14 persons)................................... 2,683,024 60.97%
</TABLE>
- ---------------
* Less than one percent
(1) Beneficial ownership includes both voting and investment power.
(2) With respect to the following individuals and to all executive officers and
directors as a group, the beneficial ownership data includes options to
purchase common stock exercisable within 60 days of March 31, 1998 as
follows: (i) options to purchase 35,100 shares held each by Sir Walter
Lindal, Robert W. Lindal, Bonnie G. McLennaghan, Douglas F. Lindal, and
Martin J. Lindal; (ii) options to purchase 9,023 shares held by Everett G.
Martin; (iii) options to purchase 26,725 shares held by Charles R. Widman;
(iv) options to purchase 26,017 shares held by William M. Weisfield; (v)
options to purchase 5,140 shares held by William F. Lorenz III; and (vi)
options to purchase 282,161 shares held by all directors and executive
officers as a group.
(3) Robert W. Lindal, Martin J. Lindal and Douglas F. Lindal are sons, and
Bonnie 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.
(4) 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.
(5) Does not include any portion of the 772,898 shares owned by Lindal, Inc.
(6) Includes options to purchase 10,000 shares held by Robert McLennaghan, the
husband of Bonnie G. McLennaghan.
2
<PAGE> 5
PROPOSAL 1: ELECTION OF DIRECTORS
The Company's Amended Bylaws (the "Bylaws") divide the Board of Directors
into two classes. Each class consists of five directors, but such number may be
increased or decreased by resolution of the Board or by the shareholders
amending the Bylaws. Classes are to be 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 Annual Meeting is provided below.
The Board of Directors presently consists of ten members. Five members of
the Board of Directors will be elected at the meeting: Robert W. Lindal, Martin
J. Lindal, Charles R. Widman, William R. Monkman and Charles T. Collins will be
elected for two-year terms expiring at the annual meeting in 2000 and until
their respective successors have been elected and qualified. Everett G. Martin,
whose term expires at the Annual Meeting, is not seeking re-election as a
director. The director position, currently held by Mr. Martin, will be vacant
after the expiration of his term, until such time as the Board of Directors can
appoint a qualified 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 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 William F. Lorenz
III from among its distributors. Mr. Lorenz was elected as a director at the
annual meeting 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.
NOMINEES FOR ELECTION
(TERMS TO EXPIRE IN 2000)
ROBERT W. LINDAL, age 50, 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 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 T. COLLINS, age 56, was appointed to the Board of Directors in
January 1998 to fill one of the two new director positions. Since 1981, Mr.
Collins has served as President of Colsper Corporation, a diversified holding
company focused primarily in waste management. Mr. Collins' diversified
experience in both government and business includes currently serving as Chair
of the Washington State Commission on Student Learning, and member of the
Washington Dental Service Board of Directors. Earlier Mr. Collins served as
member, 1981 to 1985, and chair, 1984 to 1985, of the Northwest Power Council;
chairman of the State Higher Education Coordinating Board, 1985 to 1991; Transit
Director of Seattle Metro, 1976 to 1979 and County Administrator of King County,
1973 to 1976.
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<PAGE> 6
MARTIN J. LINDAL, age 44, has served as a director of the Company since
1981, and was employed by the Company as Administration Manager from 1982 to
1990. Mr. Lindal was elected Assistant Secretary in 1986 and Vice President
Information Systems & Assistant Secretary in 1990.
WILLIAM R. MONKMAN, age 54, was appointed to the Board of Directors in
January 1998 to fill the second of the two new director positions. Since 1982,
Mr. Monkman has served as Chairman, President and Chief Executive Officer of
Precision Aerospace, a group of companies whose primary business is the
manufacture of field controls for industrial and general aviation engines. Mr.
Monkman built Precision Aerospace from $2 million in revenues to more than $120
million in revenues.
CHARLES R. WIDMAN, age 72, 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 Ltd., a forest industry consulting
firm. Mr. Widman has been a director of the Company since 1993.
THE BOARD OF DIRECTORS RECOMMEND A VOTE FOR THE NOMINEES
CONTINUING DIRECTORS
(TERMS TO EXPIRE IN 1999)
DOUGLAS F. LINDAL, age 47, was Executive Vice President of the Company from
1981 until January 1995, when he became President and Chief Operating Officer.
Mr. Lindal continues to have the Sales, Marketing and Administration areas
report to him as well as functioning as General Manager supervising most Company
activities. He has served as a director of the Company from 1971 to 1975 and
from 1980 to present. Prior to 1981, Mr. Lindal also was an independent
distributor for the Company's products in Hawaii.
SIR WALTER LINDAL, age 79, was Chairman of the Board from 1981 until 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 managed the Company. Mr. Lindal is the Company's
founder.
WILLIAM F. LORENZ III, age 55, has been the President of Southern Wisconsin
Cedar Homes, a dealer of the Company, since 1991. In 1996, Mr. Lorenz was
elected to the Dealer Advisory Council and in 1997 was elected as a director of
the Company.
WILLIAM M. WEISFIELD, age 56, 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 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 the Chairman of the Board
of Directors of UTILIX Corporation, a NASDAQ traded company and several
non-public entities. Mr. Weisfield has been a director of the Company since
1994.
COMPENSATION OF DIRECTORS
The annual retainer for each director who is 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 is 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
4
<PAGE> 7
Directors attended and for significant non-Board or committee meetings. A fee of
$250 is paid for each meeting of the Board of Directors or committee of the
Board of Directors where the Board member participates by phone.
Pursuant to the standard policy on compensation of Directors, in December
1997 each of Messrs. Lorenz, 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 $3.625.
Each director who is not an employee of the Company is eligible to
participate in the Directors' and Distributors' Stock Option Plan (the "Plan").
Under the Plan, each non-employee director receives an option to purchase 10,000
shares upon becoming a director and an option to purchase 5,000 shares as of
October 1 of each year he or she continues as a director. The exercise price of
options granted under the Plan is the market price of the Company's stock on the
date of grant. In October 1997, Messrs. Lorenz, Widman and Weisfield were each
granted options to purchase 5,000 shares at a price of $4.00 per share. On May
29, 1997, upon election to the Board of Directors, Mr. Lorenz was granted
options to purchase 10,000 shares of the Company's common stock at a price of
$4.125. Upon their appointment to the Board of Directors, in January 1998, each
of Messrs. Collins and Monkman were granted options to purchase 10,000 shares of
the Company's common stock at a price of $3.563.
Options granted to non-employee directors are non-assignable except by will
or the laws of descent and distribution. Options granted are automatically fully
vested and are exercisable six months after the date of grant. Options granted
to non-employee directors expire at the earliest of ten years from the grant
date, one year after the option holder ceases to be a director for any reason
other than death, or one 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.
Non-employee directors who are also Company distributors, and other members
of the Dealer Advisory Council (the "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. Lorenz is a member of the
Council. In 1997, options to purchase 200 shares were granted to Mr. Lorenz for
his participation on the Council. Mr. Lorenz is also eligible for options
granted under the Plan. Options granted to distributors under the Plan vest over
a period of four years and expire at the earliest of ten years following the
date of grant or ninety days after the option holder ceases to be a distributor
(or one year after death).
COMMITTEES OF THE BOARD OF DIRECTORS
The Company presently has an Executive Committee which, within certain
prescribed limits, exercises all the powers of the Board of Directors when the
Board of Directors is not in session. The Executive Committee presently consists
of Sir Walter Lindal, Robert W. Lindal and Douglas F. Lindal. The Executive
Committee met four times in 1997.
The Company also has an Audit Committee and a Compensation 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
one time in 1997. Its members currently are William M. Weisfield and Charles R.
Widman.
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. This
Committee also has, effective in 1996, the authority to administer the Company's
employee
5
<PAGE> 8
stock option plans. The Compensation Committee, which consists of William M.
Weisfield (chairman) and Charles R. Widman, met three times in 1997.
During 1997, 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 a member.
RELATED PARTY TRANSACTIONS
William F. Lorenz III, a director of the Company, is the President of
Southern Wisconsin Cedar Homes, an independent dealership of the Company. Sales
to Southern Wisconsin Cedar homes were $382,242 in 1997. All sales were on
normal trade terms.
In 1997, the Company made payments aggregating $38,000 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 $2,000 was paid
to each of Robert W. Lindal and Douglas F. Lindal for rental payments on
property owned by them which was leased by the Company.
EXECUTIVE OFFICERS
Each executive officer is elected by the Board of Directors following each
annual meeting of shareholders to serve for a term of one year or until a
successor is elected and qualified.
For the biographical summaries of Robert W. Lindal, Douglas F. Lindal and
Sir Walter Lindal, see "Election of Directors."
RICHARD C. BENDIX, age 49, joined the Company in 1988 as marketing manager
and in 1989 was named Vice President Marketing. From 1980 to 1988, Mr. Bendix
was employed by Monterey Domes, Inc., a manufacturer of dome home kits, where he
last served as Executive Vice President.
DENNIS L. GREGG, age 46, joined the Company in 1997 as Chief Financial
Officer. Mr. Gregg's previous experience includes Chief Financial Officer, 1996
to 1997, for Abacus Software, Inc./Microrim, Inc., a software development
company, Chief Financial Officer, 1995 to 1996, for Media Technologies, Inc., a
large software manufacturing company, and Chief Financial Officer, 1982 to 1995,
for Evans Group Seattle (formerly Evans/Kraft Inc.), a large marketing/public
relations firm.
GARY D. KLINE, age 49, 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.
SECTION 16(A) BENEFICIAL OWNERSHIP REPORTING COMPLIANCE
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 to the Securities and
Exchange Commission and the NASD.
With respect to 1997, the Company believes, based on copies of reports
furnished to it and written representations that no other reports were required
to be filed, that all filings under Section 16 were made in a timely fashion
except that Mr. Gary Kline did not file a Form 4, reporting one transaction, for
May 1997 or file a Form 4 for December 1997, reporting one transaction, but
instead reported the transactions on his 1997 Form 5 and Mr. Lorenz did not
include on his May 1997 Form 3 options held prior to his election as a director,
but instead reported these options on his 1997 Form 5.
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<PAGE> 9
EXECUTIVE COMPENSATION
The following table shows the compensation for the services rendered during
fiscal years 1997, 1996 and 1995 for the Chief Executive Officer and each of the
executive officers of the Company whose aggregate salary and bonus exceeded
$100,000 in the most recent fiscal year (the "Named Executive Officers").
SUMMARY COMPENSATION TABLE
<TABLE>
<CAPTION>
LONG-TERM
COMPENSATION ALL
ANNUAL COMPENSATION AWARDS OTHER
------------------- OPTIONS COMPENSATION(2)
SALARY(1) BONUS ------------ ----------------
NAME AND PRINCIPAL POSITION YEAR ($) ($) (#) ($)
--------------------------- ---- ---------- ------ ------------ ----------------
<S> <C> <C> <C> <C> <C>
Robert W. Lindal.............................. 1997 165,619 -- -- 3,109
CEO/Chairman 1996 174,782 60,537 20,100 6,460
1995 174,903 38,350 -- 4,690
Douglas F. Lindal............................. 1997 142,558 -- -- 2,737
President/Chief Operating Officer 1996 152,345 60,969 20,100 5,898
1995 146,913 38,359 -- 4,313
Sir Walter Lindal............................. 1997 144,852 -- -- 6,438
Secretary/Chairman Emeritus 1996 151,037 26,000 20,100 7,882
1995 152,765 22,000 -- 7,882
</TABLE>
- ---------------
(1) Includes base salary.
(2) For Robert W. Lindal and Douglas F. Lindal, other compensation in 1997
consists of matching contributions to such employees' contributions to the
Company's 401(k) Plan of $2,280 and $2,241, respectively, and group term
life insurance premiums of $829 and $496, respectively. For Sir Walter
Lindal, other compensation in 1997 includes group term life insurance
premiums of $6,438.
FISCAL YEAR-END OPTION VALUES
The following table shows the year-end values of unexercised options held
by the Named Executive Officers. No options were granted in 1997 to the Named
Executive Officers, and no shares were acquired on exercise of options in 1997
by the Named Executive Officers.
<TABLE>
<CAPTION>
NUMBER OF SHARES
UNDERLYING UNEXERCISED VALUE OF UNEXERCISED IN THE
OPTIONS AT YEAR-END MONEY OPTIONS AT YEAR-END(1)
---------------------------- ----------------------------
EXERCISABLE UNEXERCISABLE EXERCISABLE UNEXERCISABLE
NAME (#) (#) ($) ($)
---- ----------- ------------- ----------- -------------
<S> <C> <C> <C> <C>
Robert W. Lindal................... 35,100 -- 1,250 --
Douglas F. Lindal.................. 35,100 -- 1,250 --
Sir Walter Lindal.................. 35,100 -- 1,250 --
</TABLE>
- ---------------
(1) Values are based on the difference between the option exercise price and the
fair market value at fiscal year-end of $3.625.
COMPENSATION COMMITTEE REPORT ON EXECUTIVE COMPENSATION
COMPENSATION COMMITTEE
In 1997, the Compensation Committee (the "Committee") was composed of two
of the Company's non-employee directors, William M. Weisfield and Charles R.
Widman. The Committee is responsible for
7
<PAGE> 10
establishing and administering 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") and reporting thereon to
the Board of Directors. The Committee also administers the Company's stock
option plans and reviews the compensation of other executive officers that is
set by the Executive Committee.
COMPENSATION POLICIES
The Committee bases executive officer compensation on the same guiding
principals 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 the
long-term success of the Company,
(b) Maintain compensation that is 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 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
compensations levels for manufacturing companies of similar size and
profitability. The Committee does not set executive compensation at specific
target ranges of any particular survey.
Bonus. The Committee has devised a bonus plan for Owner/Officers and other
executive officers 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 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 pre-tax 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. Based on the Company's performance in 1997 no bonuses
were paid or accrued for Owner/Officers.
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 Compensation Committee.
Based on the Company's performance in 1997, no stock options were granted to
Owner/Officers.
Chief Executive Officer Compensation
In establishing the Chief Executive Officer's compensation package, the
Committee pursues the same objectives and policies applicable for the Company's
other executive officers. For 1997, the salary of Mr. Robert Lindal decreased
5.1% from 1996. On November 29, 1997, due to the performance of the Company in
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<PAGE> 11
1997, all Owner/Officers voluntarily reduced their base salary by 50%. The
amount of the reduction in base salary was discretionary by the Owner/Officers.
Section 162(m) of the Internal Revenue Code of 1986, as amended (the
"Code"), includes potential limitations on the deductibility for federal income
tax purposes of compensation in excess of $1 million paid or accrued with
respect to any of the executive officers whose compensation is required to be
reported in the Company's proxy statement. Certain performance-based
compensation that has been approved by shareholders is not subject to the
deduction limit. The Company's stock option plans are structured to qualify
options granted thereunder as performance-based compensation under Section
162(m). For 1998, the Committee does not contemplate that there will be any
nondeductible compensation.
COMPENSATION COMMITTEE
William M. Weisfield, Chairman
Charles R. Widman
9
<PAGE> 12
STOCK PRICE PERFORMANCE GRAPH
The graph below compares for each of the last five calendar years ended
December 31, 1997 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, 1992 and re-investment 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
(FISCAL YEAR COVERED) HOMES, INC.' INDUSTRY INDEX BROAD MARKET
<S> <C> <C> <C>
1992 100.00 100.00 100.00
1993 94.84 132.27 119.95
1994 49.31 80.04 125.94
1995 68.28 115.19 163.35
1996 66.39 115.86 202.99
1997 55.01 170.85 248.30
</TABLE>
Assumes $100 invested on January 1, 1992
Assumes dividends reinvested
Fiscal year ended December 31, 1997
CHANGE OF CONTROL ARRANGEMENTS
Under the Company's 1997 Stock Option Plan, in the event of (a) the merger
or consolidation of the Company in which it is not the surviving corporation or
pursuant to which shares of Common Stock are converted into cash, securities or
other property and the holders of the Company's stock own less than 66 2/3% of
the outstanding voting securities of the Company, (b) the sale, lease, exchange
or other transfer of all or substantially all of the Company's assets (other
than transfer to a majority-owned subsidiary); or (c) the approval by the
holders of Common Stock of any plan or proposal for the Company's liquidation or
dissolution (each, a "Corporate Transaction"), each outstanding option under the
Company's stock option plans will automatically accelerate so that it will
become 100% vested and exercisable immediately before the Corporate Transaction,
except to the extent that options are assumed by the successor corporation. The
vesting of such assumed options accelerates at the time an optionee's employment
is terminated by the Company for reasons other than "cause" or by the optionee
for "good reason" within two years after a change of control.
10
<PAGE> 13
Under the Company's 1998 Combined Incentive and Nonqualified Stock Option
Plan (the "1988 Plan") the Board has the discretion to accelerate the
exercisability of options in the event of certain events described in the 1988
plan, such as the dissolution or liquidation of the Company or a reorganization,
merger or consolidation within.
PROPOSAL 2:
RATIFICATION OF APPOINTMENT OF INDEPENDENT AUDITORS
The Board of Directors has selected KPMG Peat Marwick LLP, certified public
accountants, to continue as independent auditors to examine the consolidated
financial statements of the Company for the year ending December 31, 1998. KPMG
Peat Marwick LLP 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 1998
Annual Meeting to respond to appropriate questions and to make a statement if he
or she so desires.
THE BOARD OF DIRECTORS RECOMMENDS A VOTE FOR RATIFICATION
OF THE INDEPENDENT AUDITORS.
PROPOSALS BY SHAREHOLDERS
Proposals by shareholders intended to be presented at the 1999 Annual
Meeting and to be included in the Company's proxy statement must be received by
the Company at its principal executive offices no later than December 30, 1998,
and must otherwise comply with the rules issued under the Securities Exchange
Act of 1934.
ANNUAL REPORT AND FORM 10-K
The 1997 Annual Report of the Company was mailed to shareholders with this
proxy statement. Upon request, the Company will furnish without charge a copy of
the Company's Annual Report on Form 10-K for the fiscal year ended December 31,
1997, including financial statements and schedules. The Form 10-K has been filed
with the Securities and Exchange Commission. It may be obtained by writing to:
Sir Walter Lindal, Secretary
Lindal Cedar Homes, Inc.
Post Office Box 24426
Seattle, Washington 98124
By Order of the Board of
Directors
SIR WALTER LINDAL
Chairman Emeritus and Secretary
Seattle, Washington
May 15, 1998
11
<PAGE> 14
LINDAL CEDAR HOMES, INC.
THIS PROXY IS SOLICITED ON BEHALF OF BOARD DIRECTORS
PROXY FOR THE ANNUAL MEETING OF SHAREHOLDERS JUNE 4, 1998
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.
(TO BE SIGNED ON REVERSE SIDE)
<PAGE> 15
Please date, sign and mail your
proxy card back as soon as possible!
Annual Meeting of Shareholders
LINDAL CEDAR HOMES, INC.
June 4, 1998
Please Detach and Mail in the Envelope Provided
A [X] Please mark your
votes as in this
example.
1. ELECTION OF THE FOLLOWING NOMINEES, AS SET FORTH IN THE PROXY STATEMENT:
[ ] FOR ALL NOMINEES [ ] 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.
Nominees:
ROBERT W. LINDAL
CHARLES R. WIDMAN
MARTIN J. LINDAL
CHARLES T. COLLINS
WILLIAM R. MONKMAN
2. TO ELECT KPMG PEAT MARWICK LLP AS AUDITORS TO EXAMINE THE FINANCIAL
STATEMENTS OF THE COMPANY FOR THE YEAR ENDING DECEMBER 31, 1998.
[ ] FOR [ ] AGAINST [ ] ABSTAIN
3. THE TRANSACTION OF SUCH OTHER BUSINESS AS MAY PROPERLY COME BEFORE THE
MEETING.
THE SHARES REPRESENTED BY THIS PROXY WILL BE VOTED FOR THE ELECTION OF ALL
NOMINEES AND FOR PROPOSAL 2 IF NO INSTRUCTION IS GIVEN.
PLEASE MARK, SIGH, DATE AND RETURN THIS PROXY IN THE ENCLOSED ENVELOPE.
SIGNATURE(S) ________________ L.S. ________________ L.S. DATED: _______, 1998
(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 authoried officer. If shares held in the name of two
or more persons, all should sign.)
