<PAGE>
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 Section240.14a-11(c) or
Section240.14a-12
K2 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:
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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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<PAGE>
[LOGO]
K2 INC.
NOTICE OF ANNUAL MEETING OF SHAREHOLDERS
APRIL 28, 2000
TO THE SHAREHOLDERS OF K2 INC.:
You are cordially invited to attend our Annual Meeting to be held at our
main office, 4900 South Eastern Avenue, Los Angeles, California on Friday,
April 28, 2000 at 9:00 a.m. (local time).
The ANNUAL MEETING will be held for the following purposes:
1. To elect three directors to serve for a term of three years.
2. To ratify the selection of Ernst & Young LLP as independent auditors
for 2000.
3. To transact such other business as may properly come before the
meeting or any adjournments thereof.
Only shareholders of record at the close of business on March 24, 2000 are
entitled to notice of the meeting and to vote at it or any adjournments thereof.
If it is convenient for you to do so, we hope you will attend the meeting.
If you cannot, and wish your stock to be voted, we urge you to fill out the
enclosed proxy card and return it to us in the envelope provided. No additional
postage is required.
[SIGNATURE]
RICHARD M. RODSTEIN
PRESIDENT AND
CHIEF EXECUTIVE OFFICER
LOS ANGELES, CALIFORNIA
MARCH 29, 2000
- --------------------------------------------------------------------------------
PLEASE DATE AND SIGN THE ACCOMPANYING PROXY CARD AND
MAIL IT PROMPTLY IN THE ENCLOSED RETURN ENVELOPE.
<PAGE>
[LOGO]
K2 INC.
4900 SOUTH EASTERN AVENUE
LOS ANGELES, CALIFORNIA 90040
---------------------
PROXY STATEMENT
---------------
The enclosed proxy is solicited by the Board of Directors of K2 Inc. ("K2").
It may be revoked at any time before it is exercised by delivering a written
notice to the Secretary of K2 stating that the proxy is revoked, by executing a
subsequent proxy and presenting it to the Secretary of K2 or by attending the
annual meeting and voting in person. Only shareholders of record at the close of
business on March 24, 2000 will be entitled to notice of and to vote at the
annual meeting. As of that date, K2 had outstanding 17,949,700 shares of Common
Stock, each share entitled to one vote. It is anticipated that the mailing to
shareholders of this Proxy Statement and the enclosed proxy will commence on or
about March 29, 2000.
Proxies will be solicited by mail, telephone, fax or telegram and may be
personally solicited by directors, officers and other employees of K2 and by
Morrow & Co., 445 Park Avenue, New York, New York, which has been engaged for a
fee of $6,500 plus expenses for this purpose. The cost of soliciting proxies
will be borne by K2.
Both abstentions and broker non-votes are counted for purposes of
determining the presence or absence at the annual meeting of a quorum for the
transaction of business, but shares represented by broker non-votes on a matter
submitted to shareholders are not considered present and entitled to vote on
that matter. Directors will be elected by plurality vote of the shares present
and entitled to vote. The ratification of the selection of independent auditors
will require the affirmative vote of a majority of the shares present and
entitled to vote. Consequently, broker non-votes will have no effect, but
abstentions will have the effect of a vote against such ratification.
<PAGE>
ELECTION OF DIRECTORS
Under the Certificate of Incorporation of K2, the Board of Directors is
divided into three classes, each having a three-year term, with the term of
office of one of the classes expiring each year. Proxies solicited herewith will
be voted for election to the Board of Directors of the three nominees named
below (unless authority to vote for one or more such nominees is withheld), to
serve until the 2003 annual meeting of shareholders and until their successors
are elected and qualified. While the Board of Directors has no reason to believe
that any of those named will not be available as a candidate, should such a
situation arise the proxy may be voted for the election of other nominees as
directors in the discretion of the persons acting pursuant to the proxy.
Directors will be elected by plurality vote.
Bernard I. Forester, who served as Chairman of the Board of K2 and was its
Chief Executive Officer from 1973 to 1995, will retire from the Board of
Directors at the Annual Meeting. Robin Hernreich has been selected by the Board
of Directors to fill the resulting vacancy. Information concerning
Mr. Hernreich appears below.
Certain information concerning the nominees and each director whose term of
office will continue after the 2000 annual meeting is set forth below:
NOMINEES FOR ELECTION AT THE ANNUAL MEETING
FOR TERM OF OFFICE EXPIRING IN 2003
RICHARD J. HECKMANN Director since 1997
Mr. Heckmann, 56, has served as Chairman of Vivendi Water, the worldwide
water products group of Vivendi S.A., a worldwide utility and communications
company with headquarters in France, since September 1999. Mr. Heckmann has also
been Chairman, President and Chief Executive Officer of United States Filter
Corporation, a worldwide provider of water and wastewater treatment systems and
services, since 1990. Vivendi acquired US Filter on April 29, 1999.
Mr. Heckmann was a director and the owner of Smith Goggles until its sale in
1996. He served as the associate administrator for finance and investment of the
Small Business Administration in Washington, DC and was the founder and chairman
of the board of Tower Scientific Corporation. Mr. Heckmann is a member of the
board of directors of United Rentals, Inc., a national equipment rental
organization and Station Casinos, a gaming and entertainment enterprise.
ROBIN E. HERNREICH
Mr. Hernreich, 55, is an owner of the Sacramento Kings of the National
Basketball Association. Mr. Hernreich has been President of Remonov Capital,
Inc., since August 1992, and Vice-President of Remonov & Company, Inc., since
November 1996. Both are private investment firms. From November 1989 through
June 1996, Mr. Hernreich was Chairman and Chief Executive Officer of Sigma
Broadcasting Company, formerly Arkansas' largest television and radio operator,
and from January 1988 through September 1990, Mr. Hernreich was Chairman of the
United States Repeating Arms, maker of Winchester sporting firearms. Mr.
Hernreich is a member of the board of directors of the Colorado State Parks and
Outdoor Recreation, where he serves as its chairman, The Eagle Valley Land
Trust, the Snowboard Outreach Society and The Youth Foundation of Vail. Mr.
Hernreich is also a former member of the board of directors of Ride, Inc.
2
<PAGE>
STEWART M. KASEN Director since 1997
Mr. Kasen, 60, is a private investor. He retired as Chairman of the Board,
President and Chief Executive Officer of Factory Card Outlet Corp. where he
served in that position from May 1998 to October 1999, and prior to that he
served as its chairman from 1997. In April 1996, he retired as Chairman,
President and Chief Executive Officer of Best Products Co., Inc., a catalog
showroom chain of retail stores and nationwide mail order services. He was also
its president and chief executive officer from 1991 to 1996 and its president
and chief operating officer from 1989 to 1991. Prior to joining Best Products,
Co., Inc., Mr. Kasen served in various capacities in two divisions of Carter
Hawley Hale Stores over a 24-year period, including President and Chief
Executive Officer of Emporium, from 1987 to 1989, and Thalhimers, from 1984 to
1987. Mr. Kasen is a member of the board of directors of Markel Corporation, a
specialty insurance underwriter, and The Elder-Beerman Stores Corp., a regional
department store chain. In September 1996, Best Products Co., Inc., filed for
bankruptcy under the federal bankruptcy laws. In March 1999, Factory Card Outlet
Corp. filed for bankruptcy under the federal bankruptcy laws.
DIRECTORS CONTINUING IN OFFICE
FOR TERM OF OFFICE EXPIRING IN 2002
JERRY E. GOLDRESS Director since 1996
Mr. Goldress, 69, has served as Chairman of the Board and Chief Executive
Officer of Grisanti, Galef and Goldress, Inc., a corporate turnaround management
firm, since 1981. As a corporate turnaround manager, Mr. Goldress provides
assistance to businesses in financial difficulty and, as such, has frequently
been appointed a director and an executive officer of such businesses. In this
capacity, Mr. Goldress has served as president or chief executive officer of
numerous manufacturing, distribution and retail organizations. He is a member of
the board of directors of Applied Magnetics Corporation, a manufacturer of
magnetic heads for computers, and Chairman of the Board of Frontier Insurance, a
specialty property casualty insurance carrier.
JOHN H. OFFERMANS Director since 1987
Mr. Offermans, 71, is a real estate investment consultant engaged in private
practice. From 1973 through 1993, Mr. Offermans was an active commercial real
estate broker. Prior to that, from 1970 to 1973 Mr. Offermans was president and
chief executive officer of Fabri-Tek Educational Systems, Inc., an educational
computer manufacturer, and from 1968 to 1970, he was international marketing
vice president of Electronic Associates, Inc., a manufacturer of computer
systems for the aerospace and other high technology industries.
ALFRED E. OSBORNE, JR. Director since 1999
Dr. Osborne, 55, has been an Associate Professor of Business Economics in
the Anderson Graduate School of Management at the University of California at
Los Angeles since 1972, and the Director of the Harold Price Center for
Entrepreneurial Studies at UCLA since its inception twelve years ago.
Dr. Osborne is a member of the Board of Directors of the Times Mirror Company, a
newspaper and media company, and Nordstrom, Inc., a specialty fashion retailer.
He also is a trustee of the WM Group of Funds, an independent general partner of
Technology Funding Venture Partners V, and a director of First Pacific Advisors'
Capital and New Income Funds, all 1940 Investment Company Act Companies.
3
<PAGE>
DIRECTORS CONTINUING IN OFFICE
FOR TERM OF OFFICE EXPIRING IN 2001
SUSAN E. ENGEL Director since 1996
Ms. Engel, 53, has been Chairwoman of the Board, President and Chief
Executive Officer of Department 56, Inc., a marketer of collectibles and
specialty giftware, since September 1997. Ms. Engel was its president and chief
executive officer from November 1996 to August 1997, and from September 1994 to
November 1996 she was its president and chief operating officer. From
October 1991 through September 1993, Ms. Engel was president and chief executive
officer of Champion Products, Inc., a marketer and manufacturer of authentic
athletic apparel and a division of Sara Lee Corporation. Prior to Champion,
Ms. Engel was a vice president and eastern retail practice leader for Booz,
Allen and Hamilton, a general management consulting firm. Ms. Engel is a member
of the board of directors of Supervalu, a grocery wholesaler and supermarket
chain located in the Midwest, and Wells Fargo & Co., a leading financial
institution.
WILFORD D. GODBOLD, JR. Director since 1998
Mr. Godbold, 61, is a private investor. He retired as President and Chief
Executive Officer of ZERO Corporation, which provides packaging and climate
control products to the telecommunications, instrumentation and data processing
markets, where he served in that position from 1984 to August 1998. For the two
prior years he served as chief operating officer of ZERO Corporation. From 1966
through 1982 he practiced law as an attorney with the law firm of Gibson,
Dunn & Crutcher LLP in Los Angeles, serving as a Partner from 1973, where his
focus was acquisitions, mergers and public financings. Mr. Godbold serves as a
member of the board of directors of Sempra Energy and its subsidiaries,
including Southern California Gas Company, a public utility, and San Diego
Gas & Electric Co., a public utility.
RICHARD M. RODSTEIN Director since 1995
Mr. Rodstein, 45, has been President and Chief Executive Officer of K2 since
1996. Mr. Rodstein was president and chief operating officer of K2 from 1990 to
1995 and has held various executive positions with K2 since joining it in 1983.
Prior to 1983, Mr. Rodstein was a certified public accountant with Ernst & Young
LLP, an international auditing and consulting firm.
Under the By-Laws of K2, nominations for the election of directors may be
made by the Board or by any stockholder entitled to vote in the election of
directors, provided that no stockholder may nominate a person for election as a
director unless written notice of such nomination is presented to K2 at least
90 days prior to the date of the applicable meeting. No such notice has been
given with respect to the election of directors. As a result, no other nominees
for election as director will be considered at the annual meeting except
nominations made by the Board in the event one of the nominees named herein
should unexpectedly be unavailable.
4
<PAGE>
BOARD OF DIRECTORS AND COMMITTEES
The Board of Directors held six meetings in 1999. Each director attended at
least 75% of the total number of meetings of the Board of Directors and
Committees on which he or she served.
The Board of Directors currently has four standing committees: Audit
Committee, Compensation Committee, Executive Committee and Nominating Committee.
The Audit Committee of the Board of Directors, consisting of Ms. Engel
(Chairwoman), Mr. Godbold and Mr. Offermans, held three meetings in 1999. The
functions of the Committee include recommending to the Board the engagement or
discharge of the independent auditors, directing investigations into matters
relating to audit functions, reviewing the plan and results of audit with the
auditors, reviewing K2's internal accounting controls and approving services to
be performed by the auditors and related fees.
The Compensation Committee of the Board of Directors, consisting of
Mr. Goldress (Chairman), Mr. Heckmann and Mr. Kasen, held two meetings in 1999.
The Committee considers and authorizes remuneration arrangements for senior
management, including the granting of options under K2's stock option plan.
The Executive Committee of the Board of Directors, consisting of
Mr. Forester, Mr. Godbold and Mr. Rodstein (Chairman), held no meetings in 1999,
but took actions from time to time by written consent. The Committee is
authorized to act on behalf of the Board on all corporate actions for which
applicable law does not require participation of the full Board.
The Nominating Committee of the Board of Directors, consisting of
Mr. Goldress, Mr. Heckmann (Chairman) and Dr. Osborne, held two meetings in
1999, in addition to informal meetings of Committee members with potential
nominees for director from time to time. The Committee recruits and interviews
qualified candidates to serve as directors and reports on its findings to the
full Board.
5
<PAGE>
STOCK PRICE PERFORMANCE GRAPH
The graph below compares cumulative total return to shareholders, assuming
quarterly reinvestment of dividends, of K2, the Russell 2000 Index and a
weighted index of a peer group of companies with market capitalizations similar
to that of K2. The peer group is comprised of Cannondale Corporation, First Team
Sports, Inc., Johnson Outdoor Inc., Oakley Inc., Rawlings Sporting Goods
Company, Inc., Rockshox Inc., The North Face, Inc. and Vans Inc. The graph
assumes investment of $100 on December 31, 1994 in K2's Common Stock, the
Russell 2000 Index and common stock of the peer group (except for Oakley, which
became a public company in 1995; Rockshox, which became a public company in
1996; and The North Face, which became a public company in 1996). In 1999,
Morrow Snowboards, Inc. ("Morrow"), was replaced by Oakley, Rockshox and Vans
due to the acquisition of certain assets of Morrow by K2.
COMPARATIVE 5-YEAR TOTAL RETURNS
K2 INC., RUSSELL 2000, PEER GROUP
PERFORMANCE RESULTS THROUGH DECEMBER 31, 1999
EDGAR REPRESENTATION OF DATA POINTS USED IN PRINTED GRAPHIC
<TABLE>
<CAPTION>
<S> <C> <C> <C>
KTO Russell 2000 Peer Group
1994 $100.0 $100.0 $100.0
1995 147.3 126.2 98.8
1996 179.1 144.8 78.8
1997 152.2 174.6 78.2
1998 70.2 168.5 45.2
1999 52.5 201.6 32.7
</TABLE>
6
<PAGE>
EXECUTIVE COMPENSATION
The following table sets forth information concerning annual, long-term and
other compensation of K2's President and Chief Executive Officer and the four
most highly compensated executive officers of K2:
SUMMARY COMPENSATION TABLE
<TABLE>
<CAPTION>
LONG-TERM
COMPENSATION
ANNUAL COMPENSATION AWARDS OF
NAME AND ---------------------- STOCK ALL OTHER
PRINCIPAL POSITION YEAR SALARY ($) BONUS ($) OPTIONS (#) COMPENSATION ($)
------------------ -------- ---------- --------- ------------ ----------------
<S> <C> <C> <C> <C> <C>
Richard M. Rodstein .................. 1999 325,000 202,000 150,000 6,180(a)
President and Chief Executive 1998 325,000 -- 50,000 11,400(a)
Officer 1997 280,000 233,300 35,000 12,500(a)
John J. Rangel ....................... 1999 210,000 101,000 75,000 6,028(a)
Senior Vice President--Finance 1998 210,000 -- 35,000 8,500(a)
1997 195,000 132,900 20,000 9,500(a)
David H. Herzberg .................... 1999 160,000 70,000 -- 3,480(a)
Vice President & President of 1998 160,000 95,000 12,000 9,000(a)
Shakespeare Monofilament 1997 160,000 160,000 8,000 10,100(a)
J. Wayne Merck ....................... 1999 155,000 75,000 -- 1,892(a)
Vice President & President of 1998 155,000 75,000 12,000 2,000(a)
Shakespeare Composites & Electronics 1997 155,000 125,000 8,000 3,300(a)
David G. Cook ........................ 1999 155,000 70,000 -- 4,130(a)
Vice President & President of 1998 155,000 75,000 12,000 5,100(b)
Stearns 1997 155,000 100,000 8,000 5,100(b)
</TABLE>
- ------------------------
(a) Dollar value of allocations to the accounts of the named individuals in K2's
Employee Stock Ownership Plan: Mr. Rodstein ($1,180 in 1999, $6,400 in 1998
and $7,700 in 1997), Mr. Rangel ($1,028 in 1999, $3,500 in 1998 and $4,800
in 1997), Mr. Herzberg ($1,180 in 1999, $2,500 in 1998 and $8,000 in 1997),
and Mr. Merck ($892 in 1999, $900 in 1998 and $2,300 in 1997); and K2's
matching contribution to the accounts of the named individuals in K2's
401(k) Retirement Savings Plan: Mr. Rodstein ($5,000 in 1999, $5,000 in 1998
and $4,800 in 1997), Mr. Rangel ($5,000 in 1999, $5,000 in 1998 and $4,700
in 1997), Mr. Herzberg ($2,300 in 1999, $2,500 in 1998 and $2,100 in 1997)
and Mr. Merck ($1000 in 1999, $1,000 in 1998 and $1,000 in 1997).
(b) Dollar value of allocation to Mr. Cook's account in K2's Employee Stock
Ownership Plan ($930 in 1999, $1,800 in 1998 and $3,400 in 1997) and K2's
matching contribution to the Stearns 401(k) Payroll Savings and Profit
Sharing Plan ($3,200 in 1999, $3,300 in 1998 and $1,700 and $3,000 in 1996).
7
<PAGE>
The following table summarizes the number of shares and the terms and
conditions of stock options granted to the named executive officers in 1999.
OPTION GRANTS IN 1999
<TABLE>
<CAPTION>
POTENTIAL REALIZABLE
% OF TOTAL VALUE AT ASSUMED ANNUAL
OPTIONS RATES OF STOCK PRICE
GRANTED APPRECIATION FOR OPTION
EMPLOYEES EXERCISE TERM (D)
OPTIONS DURING PRICE PER EXPIRATION -----------------------
NAME GRANTED (A) 1999 SHARE (B) DATE (C) 5% 10%
---- ----------- ---------- --------- ---------- --------- -----------
<S> <C> <C> <C> <C> <C> <C>
R. M. Rodstein................. 150,000 66.7% $7.500 12/20/09 $707,500 $1,793,000
J. J. Rangel................... 75,000 33.3% $7.500 12/20/09 $353,800 $ 896,500
D. H. Herzberg................. -- -- -- -- -- --
J.W. Merck..................... -- -- -- -- -- --
D. G. Cook..................... -- -- -- -- -- --
</TABLE>
- ------------------------
(a) All options granted to the named individuals for 1999 are exercisable as to
20% after one year from date of grant, an additional 30% after two years and
an additional 50% after three years. During 1999, stock option awards were
granted only to Mr. Rodstein and Mr. Rangel shown on the schedule above. In
early 2000, awards were made to the named individuals as follows:
Mr. Rodstein (150,000), Mr. Rangel (75,000), Mr. Herzberg (25,000),
Mr. Merck (25,000) and Mr. Cook (22,000). These grants were more than the
customary annual grant and were intended to be the only grants to these
recipients for three years in the absence of promotions or other special
circumstances.
(b) The exercise price is the closing price of K2's common stock on
December 20, 1999, the date of grant.
(c) All options granted to the named individuals for 1999 expire on the tenth
anniversary of the date of grant, subject to earlier expiration in the event
of the officer's termination of employment with K2.
(d) In order for the named individuals to realize these potential values, the
closing price of K2's common stock on December 20, 2009 would have to be
$12.22 and $19.45 per share, respectively.
8
<PAGE>
The following table summarizes exercises of stock options in 1999 which were
previously granted to the President and Chief Executive Officer and the other
named executive officers, as well as the number of all unexercised options held
by them at the end of 1999, and their value at that date if they were in-the-
money.
AGGREGATED STOCK OPTION EXERCISES IN 1999 AND YEAR-END OPTION VALUES
<TABLE>
<CAPTION>
VALUE OF UNEXERCISED IN-THE-MONEY
OPTIONS AT 12/31/99
NUMBER OF UNEXERCISED -----------------------------------------
SHARES OPTIONS AT 12/31/99 EXERCISABLE UNEXERCISABLE
ACQUIRED ON VALUE --------------------------- ------------------- -------------------
NAME EXERCISE (A) REALIZED EXERCISABLE UNEXERCISABLE SHARES TOTAL $ SHARES TOTAL $
---- ------------ -------- ----------- ------------- -------- -------- -------- --------
<S> <C> <C> <C> <C> <C> <C> <C> <C>
R. M. Rodstein....... -- -- 160,920 207,500 -- -- 150,000 18,750
J. J. Rangel......... -- -- 88,575 113,000 -- -- 75,000 9,375
D. H. Herzberg....... -- -- 36,908 13,600 -- -- -- --
J. W. Merck.......... -- -- 11,400 13,600 -- -- -- --
D. G. Cook........... -- -- 36,254 13,600 -- -- -- --
</TABLE>
- ------------------------
(a) Optionees, in the discretion of the Compensation Committee, may be granted
the right to borrow money from K2 in connection with the exercise of options
under the 1994 and 1988 Incentive Stock Option Plans. Each currently
outstanding loan bears interest, payable quarterly, at a fixed rate equal to
the applicable federal rate, as published by the Internal Revenue Service,
for the period during which the loan was made. At December 31, 1999, the
aggregate loans outstanding to executive officers in connection with the
exercise of stock options and the weighted average Applicable Federal Rate
at which they bear interest were: Mr. Doyle ($128,400, 5.57%), Mr. Herzberg
($46,100, 5.89%) and Mr. Merck ($43,800, 5.97%).
PENSION PLANS
K2 maintains several defined benefit pension plans for the benefit of
eligible K2. employees and employees of its Shakespeare and Stearns business
units. The plans are tax-qualified, K2-funded plans subject to the provisions of
ERISA. Contributions to the plans, which are made solely by K2, are actuarially
determined. Benefits under the plans are based on years of service and
remuneration.
The table below illustrates approximate annual benefits under the Pension
Plan of K2 Inc. (the "K2 Plan"), based on the indicated assumptions. For 1999,
the Internal Revenue Code (the "Code") limits the K2 Plan's covered compensation
to $160,000.
<TABLE>
<CAPTION>
APPROXIMATE ANNUAL PENSION UPON RETIREMENT AT AGE 65 (A)
YEARS OF SERVICE
---------------------------------------------------------
COVERED COMPENSATION 15 20 25 30 35
-------------------- --------- --------- --------- --------- ---------
<S> <C> <C> <C> <C> <C>
$125,000....................... $18,750 $25,000 $31,250 $37,500 $43,750
$150,000....................... 22,500 30,000 37,500 45,000 52,500
$175,000....................... 24,000 32,000 40,000 48,000 56,000
</TABLE>
- ------------------------
(a) An individual retiring at age 65 earns his maximum pension (as a percentage
of covered compensation) at 35 years of service.
9
<PAGE>
The K2 Plan defines remuneration on which annual benefits are based as the
average of the participant's highest five consecutive years' earnings. Earnings
include salary, wages, overtime pay, commissions, bonuses, and similar forms of
incentive compensation actually paid during the year not exceeding certain
amounts for sales personnel and subject to the $160,000 Code Limit in 1999 for
all personnel.
Compensation for 1999 that would be included in the calculation of covered
compensation and credited years of service at December 31, 1999 is shown below
for the individuals named in the Summary Compensation Table who are participants
in the plan.
<TABLE>
<CAPTION>
COVERED YEARS OF
NAME COMPENSATION SERVICE
---- ------------ --------
<S> <C> <C>
Richard M. Rodstein.................................... $160,000 16
John J. Rangel......................................... 160,000 15
</TABLE>
The Salaried Employees' Pension Plan of Shakespeare Company (the
"Shakespeare Plan") defines remuneration upon which annual benefits are based as
the average of the employee's highest five consecutive years' earnings. Earnings
include the employee's regular basic monthly earnings excluding commissions,
bonuses, maintenance, overtime and other extra compensation, not exceeding
certain amounts for field sales personnel and subject to the $160,000 Code Limit
in 1999 for all personnel.
The table below illustrates approximate annual benefits under the
Shakespeare pension plan based on the indicated assumptions.
<TABLE>
<CAPTION>
APPROXIMATE ANNUAL PENSION UPON
RETIREMENT AT AGE 65 (A)
-----------------------------------------
YEARS OF SERVICE
----------------
COVERED COMPENSATION 15 20 25 45
-------------------- -------- -------- -------- --------
<S> <C> <C> <C> <C>
$125,000................................ $26,300 $43,800 $61,300 $75,000
$150,000................................ 31,500 52,500 73,500 90,000
$175,000................................ 33,600 56,000 78,400 96,000
</TABLE>
- ------------------------
(a) An individual retiring at age 65 earns his maximum pension (as a percentage
of covered compensation) after approximately 43 years of service.
Compensation for 1999 that would be included in the calculation of covered
compensation and credited years of service at December 31, 1999 is shown below
for the individuals named in the Summary Compensation Table who are participants
in the Shakespeare Plan.
<TABLE>
<CAPTION>
COVERED YEARS OF
NAME COMPENSATION SERVICE
---- ------------ --------
<S> <C> <C>
David H. Herzberg...................................... $160,000 20
J. Wayne Merck......................................... $160,000 9
</TABLE>
The Stearns Manufacturing Company Salaried, Administrative and Clerical
Employees' Pension Plan (the "Stearns Plan") defines remuneration on which
annual benefits are based as the average of the participant's highest
60 months' compensation. Compensation includes salary, wages, overtime pay,
bonuses, and commissions, subject to the $160,000 Code limit for 1999. The 1999
covered compensation of
10
<PAGE>
Mr. Cook, the only individual named in the Summary Compensation Table who
participates in the Stearns Plan, was $160,000, and he had 20 years of service
as of December 31, 1999.
The table below illustrates approximate annual benefits under the Stearns
Plan based on the indicated assumptions.
<TABLE>
<CAPTION>
APPROXIMATE ANNUAL PENSION UPON
RETIREMENT AT AGE 65 (A)
-----------------------------------------
YEARS OF SERVICE
----------------
COVERED COMPENSATION 15 20 25 30
-------------------- -------- -------- -------- --------
<S> <C> <C> <C> <C>
$125,000................................ $26,700 $34,200 $42,800 $51,300
$150,000................................ 31,300 41,700 52,100 62,600
$175,000................................ 33,500 44,700 55,900 67,000
</TABLE>
- ------------------------
(a) An individual retiring at age 65 earns his maximum pension (as a percentage
of covered compensation) at 30 years of service.
EMPLOYMENT AGREEMENTS
Messr's Rodstein and Rangel are employed pursuant to employment agreements
which expire May 7, 2001 and November 7, 2000, respectively. Mr. Rodstein's
agreement calls for base salary at the annual rate of $325,000, subject to such
increases as the Board may approve, and participation in K2's incentive
compensation and benefit programs on a basis which is appropriate in light of
his position. Mr. Rangel's agreement calls for base salary at the annual rate of
$210,000 and is otherwise similar to Mr. Rodstein's. Each of the agreements
provides for severance benefits payable following a change in control, based
upon 299% of the employee's total compensation prior to the termination, and
accelerated vesting of outstanding stock options.
DIRECTORS' COMPENSATION
In 1999 directors who were not salaried officers of K2 were paid $1,500 per
calendar quarter for their services as directors, $1,000 per calendar quarter
for each committee position held by them and $1,000 per meeting day for each
meeting of the Board of Directors and of any committee which they attended. They
were also reimbursed for out-of-pocket expenses. Directors may elect to defer
the receipt of fees. Interest on deferred fees is accrued quarterly based on the
average interest rate paid by K2 in the preceding quarter on its short-term
borrowings. Under K2's Directors' Medical Expense Reimbursement Plan, non-
employee directors are reimbursed at the rate of 185% for up to $10,000 of
medical and dental expenses not covered under other health insurance plans. For
1999 an aggregate of $94,644 was paid under such plan.
Under the 1994 Incentive Stock Option Plan, nonemployee directors receive an
initial grant of 1,000 stock options on the first grant date after their
election and annual grants thereafter of 500 stock options. All grants to
nonemployee directors are at fair market value on date of grant and are
exercisable as to 20% after one year from date of grant, an additional 30% after
two years and an additional 50% after three years, all exercisable amounts being
cumulative. In 1999, an initial grant of 1,000 stock options was made to Wilford
D. Godbold, Jr. and grants of 500 stock options each were made to Susan E.
Engel, Bernard I. Forester, Jerry E. Goldress, Richard J. Heckmann, Stewart M.
Kasen and John H. Offermans. Each stock option granted had an exercise price of
$10.63 per share, the closing price on the January 4, 1999 grant date, and each
was for a ten-year term.
11
<PAGE>
During 1999, K2 maintained a Non-Employee Directors' Benefit Plan, payable
out of the general funds of K2, under which a non-employee director who is
vested (at least ten years of service as a director) is entitled to receive, in
general, an annual retirement benefit during the period commencing upon the
later of age 55 and the date the director retires from the Board of Directors
and ending upon the earlier of the director's death or the number of years equal
to the director's years of service as a non-employee director. Under the Plan,
the annual retirement benefit is the product of (i) the director's average
annual fees (based on the three-year period immediately preceding retirement
from the Board of Directors) and (ii) the sum of .55 plus an additional .05 for
each full year of service in excess of 11 years of service and up to 20 years. A
director may make an irrevocable election so that, in lieu of the retirement
benefit described above, the director's beneficiary would instead receive, on
the director's postretirement death, the discounted value of such benefit. In
the event of a change in control, as defined in the Plan, a vested director
would receive on retirement an actuarially reduced lump sum payment in lieu of
installment payments. Under the terms of a retirement agreement between
Mr. Forester and K2, Mr. Forester has waived any right to a retirement benefit
under this Plan.
Mr. Forester receives supplemental retirement benefits of approximately
$319,300 each year during his lifetime under a retirement agreement with K2. The
supplemental retirement benefit is funded through a trust that has Wells Fargo
Bank as its trustee. The retirement agreement also provides for the continuation
of a pre-existing, split- dollar life insurance policy on Mr. Forester's life.
For 1999, the dollar value to Mr. Forester of the premiums paid by K2 on this
policy was $22,800.
COMPENSATION COMMITTEE REPORT
COMPENSATION OBJECTIVES AND PRACTICES
The compensation committee is comprised of directors who are not employees
or former employees of K2. K2's executive compensation program is designed to
help K2 attract, motivate and appropriately reward management who are
responsible for K2's short-term and long-term profitability, growth and return
to shareholders. The key elements of the program consist of base salary, annual
performance-based cash rewards and long-term incentive awards. The committee
utilizes the services of an independent executive compensation consulting firm
in evaluating awards.
BASE SALARY. Base salaries are generally established by evaluating the
responsibilities of the position, the experience of the individual and salaries
for comparable positions in the marketplace based on survey data provided by the
compensation consultant. Depending on the overall financial performance of K2,
salaries are adjusted from time to time to reflect increased responsibilities,
to keep pace with competitive practices and to reflect the performance of
individual executives. The program has been designed to place a significant
amount of compensation at risk by setting annual base salaries at levels just
below the 50th percentile of the marketplace for similar positions based on the
survey data obtained.
ANNUAL CASH INCENTIVES. The amount of the annual performance-based cash
incentive available for allocation to the executive officers who participated in
the plan is based on a formula adopted pursuant to the Executive Officers'
Incentive Compensation Plan. The formula makes available for allocation a
percentage of K2's incentive compensation income in excess of a required minimum
return on average shareholders' equity. Performance criteria were also adopted
for the plan participants to assist the compensation committee in determining
the allocation of any bonus pool generated. The performance criteria were
designed to create value for K2 and its shareholders. The individual's
performance is subjectively evaluated against their criteria. The targeted
annual incentive award is meant to bring total annual cash compensation (base
salary plus annual incentive award) to above the average, as defined by
12
<PAGE>
survey data provided by the compensation consultant for comparable positions at
similar-sized companies, when superior performance levels are achieved.
LONG-TERM STOCK INCENTIVES. Stock incentives are provided to encourage
management to take actions that will maximize long-term stockholder value, and
to link their interests to those of K2's stockholders. All stock options have an
exercise price equal to the market price of K2's stock on the date of grant and
vest over three years. By utilizing such pricing and vesting, the compensation
committee intended that the full benefit would be realized only if stock price
appreciation occurs and if the key employee does not leave K2 during that
period. In determining the number of options awarded to executive officers, the
compensation committee considered information provided by K2's independent
compensation consultants, which included, among other things, market studies of
annual stock option grants as a percentage of shares outstanding and individual
grants as a percentage of compensation utilizing the Black-Scholes formula.
During 1999, stock option awards were granted only to the Chief Executive
Officer and the Senior Vice President Finance. In early 2000, however, stock
options were granted to a broad group of executives, including Mr. Rodstein and
Mr. Rangel. These grants were greater than the customary annual grants and were
intended to be the only grants to these recipients for three years in the
absence of promotions or special circumstances.
CHIEF EXECUTIVE COMPENSATION
The compensation committee held the salary of the chief executive officer
for 1999 constant with the prior year at $325,000. Consequently, Mr. Rodstein's
base salary was 40% below the 50th percentile of the marketplace for similar
positions, according to survey data. In determining the Chief Executive
Officer's incentive compensation award for 1999, the Committee considered K2's
performance for the year in meeting sales and earnings targets, stock price
performance, innovating new products and generating sales from such new
products, completion of strategic acquisitions, implementation of cost reduction
programs, improving key quality and process improvement measures and augmenting
K2's long-term strategic plan for sustainable growth. The Committee noted that
while K2 exceeded published earnings targets for 1999, its stock price declined
25% for the year. The committee, on the other hand, noted that K2's peer group
index declined 28% in the same period. The Committee also noted that recent
product introductions and strategic acquisitions allowed K2 to extend its major
brands into new categories and geographic segments, and that sales of its
sporting goods products increased 17% over the prior year. Finally, the
committee considered the announcement and implementation of a strategic cost
reduction program. Taking all of these factors into consideration, an award of
$202,000 was granted to the Chief Executive Officer compared to no award a year
ago. The 1999 total compensation for the Chief Executive Officer, including the
award represents a 35% shortfall from the 50th percentile for total compensation
of the marketplace for similar positions, according to survey data. On December
20, 1999, Mr. Rodstein was granted options to purchase 150,000 shares of K2
common stock at $7.50 per share, the market price at the date of grant. An
additional grant of options to purchase 150,000 shares of K2 common stock was
awarded on January 4, 2000, with an exercise price of $7.125 per share, the
market price on the date of grant.
Jerry E. Goldress, Chairman
Richard J. Heckmann
Stewart M. Kasen
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<PAGE>
COMPENSATION COMMITTEE INTERLOCKS AND INSIDER PARTICIPATION
Messrs. Goldress, Heckmann and Kasen served on the compensation committee of
K2 during the year 1999. No member of the compensation committee was, during the
year 1999, either an officer or employee or a former officer or employee of K2
or any of its subsidiaries, nor did any member have any relationship with K2
which would be required to be disclosed.
STOCK OWNERSHIP OF CERTAIN BENEFICIAL OWNERS
Set forth below is the name, address and number of shares of Common Stock
beneficially owned as of March 24, 2000 by each person known to K2 to own 5% or
more of the outstanding shares of Common Stock.
<TABLE>
<CAPTION>
SHARES OF PERCENT
SHAREHOLDER COMMON STOCK OF CLASS
----------- ------------ --------
<S> <C> <C>
ICM Asset Management, Inc. ................................. 1,839,023(a) 10.2
601 West Main Avenue, Suite 600
Spokane, WA 99201
Trust under Company's Employee Stock Ownership Plan ........ 1,724,593(b) 9.6
4900 South Eastern Avenue
Los Angeles, CA 90040
Dimensional Fund Advisors .................................. 1,081,429(c) 6.0
1299 Ocean Avenue, 11th Floor
Santa Monica, CA 90401
Heartland Advisors, Inc. ................................... 1,054,500(d) 5.9
789 North Water Street
Milwaukee, WI 53202
The Anthony Family Trust ................................... 1,001,249(e) 5.6
65 Park Lane
Concord, MA 01742
</TABLE>
- ------------------------
(a) Based on the most recently filed Form 13G of ICM Asset Management, Inc.
dated February 8, 2000.
(b) Includes shares allocated to the accounts of participants in the ESOP, the
voting of which is directed by such participants. Until shares are allocated
to the accounts of participants in the ESOP, the terms of the Trust require
the Trustee to vote those shares in the same proportion as the allocated
shares are voted.
(c) Based on the most recently filed Form 13G of Dimensional Fund Advisors dated
February 4, 2000.
(d) Based on the most recently filed Form 13G of Heartland Advisors, Inc. dated
January 20, 2000.
(e) Based on the most recently filed Form 13D of The Anthony Family Trust dated
May 22, 1996.
14
<PAGE>
STOCK OWNERSHIP OF DIRECTORS AND EXECUTIVE OFFICERS
<TABLE>
<CAPTION>
SHARES OF COMMON STOCK
BENEFICIALLY OWNED ON
NAME MARCH 24, 2000 (A) PERCENT OF CLASS (B)
---- ---------------------- ---------------------
<S> <C> <C>
Directors and Nominees for Director
Susan E. Engel....................................... 11,350 *
Bernard I. Forester.................................. 377,363 2.1%
Wilford D. Godbold, Jr............................... 11,200 *
Jerry E. Goldress.................................... 12,850 *
Richard J. Heckmann.................................. 65,100 .4%
Robin E. Hernreich................................... 7,500 *
Stewart M. Kasen..................................... 12,100 *
John H. Offermans.................................... 3,107 *
Alfred E. Osborne, Jr................................ 15,000 *
Richard M. Rodstein.................................. 305,165 1.7%
Executive Officers (c).................................
John J. Rangel....................................... 140,433 .8%
David H. Herzberg.................................... 79,037 .4%
J. Wayne Merck....................................... 19,219 .1%
David G. Cook........................................ 79,254 .4%
All Directors and Executive Officers as a group (19)... 1,347,019 7.3%
</TABLE>
- ------------------------
(a) Includes the following shares subject to options exercisable within 60 days
of the date of this Proxy Statement: Susan E. Engel-11,350 shares; Bernard
I. Forester-1,850 shares; Wilford D. Godbold, Jr.-10,200 shares; Jerry E.
Goldress-11,350 shares; Richard J. Heckmann-10,600 shares; Stewart M.
Kasen-10,600 shares; John H. Offermans-2,900 shares; Alfred E. Osborne,
Jr.-10,000 shares; Richard M. Rodstein-160,920 shares; John J. Rangel-88,575
shares; David H. Herzberg-36,908 shares; J. Wayne Merck-11,400 shares; David
G. Cook-36,254 shares; and all directors and officers as a group-503,365
shares. The above include options granted on January 4, 2000 to Ms. Engel,
Mr. Godbold, Mr. Goldress, Mr. Heckmann, Mr. Kasen and Dr. Osborne under a
new directors compensation plan which was effective as of January 1, 2000.
These options, which are exercisable at the market price at the date of
grant, vest immediately. With the exception of the shares referred to in the
preceding sentence and the shares allocated to the accounts of Mr. Rodstein
(15,076 shares), Mr. Rangel (7,943 shares), Mr. Herzberg (15,031 shares),
Mr. Merck (1,519 shares), Mr. Cook (3,356 shares), and all directors and
officers as a group (80,630 shares), under K2's ESOP, each of the named
persons has sole voting and investment power with respect to the shares
beneficially owned by him.
(b) The shares subject to options described in note (a) for each individual were
deemed to be outstanding for purposes of calculating the percentage owned by
such individual.
(c) Executive officers named in the Summary Compensation Table (other than
Mr. Rodstein, whose securities holdings are listed above).
* Less than .1%.
15
<PAGE>
SECTION 16(a) BENEFICIAL OWNERSHIP REPORTING COMPLIANCE
Section 16(a) of the Securities Exchange Act of 1934 requires K2's directors
and executive officers to file initial reports of ownership and reports of
changes of ownership of K2's Common Stock with the Securities and Exchange
Commission. Executive officers and directors are required to furnish K2 with
copies of all Section 16(a) forms that they file. Based upon a review of these
filings and written representations from certain of K2's directors and executive
officers that no other reports were required, all such Forms were filed on a
timely basis by reporting persons, exept two Form 4's reporting single
transactions were filed late by Richard J. Heckmann; and a Form 3 reporting a
single transaction was filed late by Alfred E. Osborne, Jr.
EMPLOYMENT OF INDEPENDENT AUDITORS
Upon the recommendation of the Audit Committee, the Board of Directors has
chosen the firm of Ernst & Young LLP as independent auditors to examine the
consolidated financial statements of K2 for the year 2000. A representative of
Ernst & Young LLP is expected to be present at the annual meeting with the
opportunity to make a statement, if he so desires, and to be available to
respond to appropriate questions.
SHAREHOLDER PROPOSALS
Any proposal by a shareholder intended to be presented at K2's 2001 annual
meeting of shareholders must be received by K2 no later than November 30, 2000
for inclusion in the proxy statement and form of proxy for that meeting.
OTHER MATTERS
The Board of Directors knows of no other business to be presented at the
meeting. If other matters do properly come before the meeting, the persons
acting pursuant to the proxy will vote on them in their discretion. A copy of
the 1999 Annual Report to shareholders is being mailed with this Proxy
Statement.
UPON THE WRITTEN REQUEST OF ANY SHAREHOLDER OF RECORD AS OF MARCH 24, 2000,
A COPY OF K2'S ANNUAL REPORT ON FORM 10-K FOR THE YEAR ENDED DECEMBER 31, 1999
(EXCLUDING EXHIBITS) AS FILED WITH THE SECURITIES AND EXCHANGE COMMISSION WILL
BE SUPPLIED WITHOUT CHARGE. REQUESTS SHOULD BE DIRECTED TO THE SECRETARY OF K2
INC., 4900 SOUTH EASTERN AVENUE, LOS ANGELES, CALIFORNIA 90040.
[SIGNATURE]
RICHARD M. RODSTEIN
PRESIDENT AND
CHIEF EXECUTIVE OFFICER
LOS ANGELES, CALIFORNIA
MARCH 29, 2000
16
<PAGE>
K2, INC.
THIS PROXY IS SOLICITED ON BEHALF OF THE BOARD OF DIRECTORS
RICHARD M. RODSTEIN, BERNARD I. FORESTER and SUSAN E. McCONNELL, and
each of them, with full power of substitution, are hereby authorized to
represent and to vote the stock of the undersigned in K2, INC. at the Annual
Meeting of Shareholders to be held on April 28, 2000 and at any adjournment
thereof as set forth below:
(Continued and to be signed on reverse side)
- FOLD AND DETACH HERE -
<PAGE>
K2, INC.
PLEASE MARK VOTE IN OVAL IN THE FOLLOWING MANNER USING DARK INK ONLY /X/
For Withheld For All
All All Except
1. ELECTION OF DIRECTORS
01 Richard J. Heckmann, 02 Robin E. Hernreich, / / / / / /
03 Stewart M. Kasen
(INSTRUCTIONS: TO WITHHOLD AUTHORITY TO VOTE FOR
ANY INDIVIDUAL NOMINEE, WRITE THAT NOMINEE'S NAME
IN THE SPACE PROVIDED BELOW.)
_________________________________________________
For Against Abstain
2. PROPOSAL TO RATIFY THE SELECTION OF ERNST &
YOUNG LLP as independent auditors for 2000. / / / / / /
3. Upon or in connection with the transaction of
such other business as may properly come before / / / / / /
the meeting or any ajournment thereof.
THIS PROXY WILL BE VOTED AS SPECIFIED AND, UNLESS
OTHERWISE SPECIFIED, THIS PROXY WILL BE VOTED FOR
THE ELECTION OF DIRECTORS AND FOR PROPOSAL 2.
Dated _______________________________, 2000
_____________________________________
Signature
_____________________________________
Signature if held jointly
Please sign exactly as name appears at left.
When shares are held by joint tenants, both
should sign. When signing as attorney,
executor, administrator, trustee or
guardian, please give full title as such.
If a corporation, please sign in full
corporate name by President of other
authorized officer. If a partnership,
please sign in partnership name by
authorized person.
- FOLD AND DETACH HERE -
PLEASE MARK, DATE AND RETURN THIS PROXY CARD PROMPTLY
USING THE ENCLOSED ENVELOPE.
