<PAGE>
SCHEDULE 14A INFORMATION
Proxy Statement Pursuant to Section 14(a) of the
Securities Exchange Act of 1934
Filed by the Registrant [X] Filed by a Party other than the Registrant [_]
Check the appropriate box:
[_] Preliminary Proxy Statement
[_] Confidential, for Use of the Commission Only (as permitted by Rule
14a-6(e)(2))
[X] Definitive Proxy Statement
[_] Definitive Additional Materials
[_] Soliciting Material Pursuant to Section 240.14a-11(c) or Section
240.14a-12
RELIV' INTERNATIONAL, INC.
(Name of Registrant as Specified In Its Charter)
Payment of Filing Fee (check the appropriate box):
[X] No Fee Required
<PAGE>
RELIV' INTERNATIONAL, INC.
136 Chesterfield Industrial Boulevard
Chesterfield, Missouri 63005
NOTICE OF ANNUAL MEETING OF SHAREHOLDERS TO
BE HELD ON MAY 28, 1997
To: Shareholders of Reliv' International, Inc.
The annual meeting of the shareholders of Reliv' International, Inc. will
be held at the Doubletree Hotel and Conference Center, 16625 Swingley Ridge
Road, Chesterfield, Missouri 60317, on Wednesday, May 28, 1997, at 10:00 a.m.,
Central Daylight Savings Time, for the following purposes:
1. To elect 10 directors to hold office during the year following the
annual meeting or until their successors are elected (Item No. 1 on proxy card);
2. To ratify the appointment of Ernst & Young L.L.P. as auditors of the
Corporation for 1997 (Item No. 2 on proxy card); and
3. To transact such other business as may properly come before the
meeting.
The close of business on April 4, 1997, has been fixed as the record date
for determining the shareholders entitled to receive notice of and to vote at
the annual meeting.
BY ORDER OF THE BOARD OF DIRECTORS
April 28, 1997 /s/ Stephen M. Merrick
------------------------------
Stephen M. Merrick, Secretary
YOUR VOTE IS IMPORTANT
It is important that as many shares as possible be represented
at the annual meeting. Please date, sign, and promptly return
the proxy in the enclosed envelope. Your proxy may be revoked
by you at any time before it has been voted.
<PAGE>
RELIV' INTERNATIONAL, INC.
136 Chesterfield Industrial Boulevard
Chesterfield, Missouri 63005
PROXY STATEMENT
Information Concerning the Solicitation
- ---------------------------------------
This statement is furnished in connection with the solicitation of proxies
to be used at the Annual Shareholders Meeting (the "Annual Meeting") of Reliv'
International, Inc. (the "Company"), an Illinois corporation, to be held on May
28, 1997. The proxy materials are being mailed to shareholders of record at the
close of business on April 4, 1997.
The solicitation of proxies in the enclosed form is made on behalf of the
Board of Directors of the Company.
The cost of preparing, assembling and mailing the proxy material and of
reimbursing brokers, nominees and fiduciaries for the out-of-pocket and clerical
expenses of transmitting copies of the proxy material to the beneficial owners
of shares held of record by such persons will be borne by the Company. The
Company does not intend to solicit proxies otherwise than by use of the mail,
but certain officers and regular employees of the Company or its subsidiaries,
without additional compensation, may use their personal efforts, by telephone or
otherwise, to obtain proxies.
Quorum and Voting
- -----------------
Only shareholders of record at the close of business on April 4, 1997, are
entitled to vote at the Annual Meeting. On that day, there were issued and
outstanding 9,646,494 shares of Common Stock. Each share has one vote. A
simple majority of the outstanding shares is required to be present in person or
by proxy at the meeting for there to be a quorum for purposes of proceeding with
the Annual Meeting. A simple majority of the shares present in person or by
proxy at the Annual Meeting, at which a quorum is present, is required to elect
directors and to ratify the appointment of auditors. Abstentions and withheld
votes have the effect of votes against these matters. Broker non-votes (shares
held of record by a broker for which a proxy is not given) will be counted for
purposes of determining shares outstanding for purposes of a quorum, but will
not be counted as present for purposes of determining the vote on any matter
considered at the meeting.
A shareholder signing and returning a proxy on the enclosed form has the
power to revoke it at any time before the shares subject to it are voted by
notifying the Secretary of the Company in writing. If a shareholder specifies
how the proxy is to be voted with respect to any of the proposals for which a
choice is provided, the proxy will be voted in accordance with such
specifications. If a shareholder fails to so specify with respect to such
proposals, the proxy will be voted "FOR" the nominees for directors contained in
these proxy materials and "FOR" proposal 2.
<PAGE>
Stock Ownership by Management and Others
- ----------------------------------------
The following table provides information concerning the beneficial
ownership of common stock of the Company by each director and nominee for
director, certain executive officers, and by all directors and officers of the
Company as a group as of April 4, 1997. In addition, the table provides
information concerning the beneficial owners known to the Company to hold more
than 5 percent of the outstanding common stock of the Company as of April 4,
1997. The figures reflect the 10% common stock dividend issued on February 28,
1997.
<TABLE>
<CAPTION>
Amount and Nature of
Name of Beneficial Owner Beneficial Ownership/(1)/ Percent of Class/(1)(2)/
- ------------------------ ------------------------- -------------------------
<S> <C> <C>
Robert L. and Sandra S. Montgomery/(3)/ 2,194,975 22.29%
Carl W. Hastings/(4)/ 673,581 6.92%
David G. Kreher 70,766 *
Stephen M. Merrick 508,090 5.25%
Donald L. McCain 260,376 2.69%
Marvin W. Solomonson 317,925 3.29%
Thomas T. Moody 88,000 *
Thomas W. Pinnock III 45,100 *
John B. Akin 880 *
Donald E. Gibbons, Jr. 14,300 *
Frederick S. Cameron 11,000 *
All Directors and Executive Officers as a
Group (12 persons) 4,184,993 41.46%
</TABLE>
/*/less than one percent
/(1)/ In each case the beneficial owner has sole voting and investment power.
The figures include the following number of shares of Common Stock for
which an individual has the right to acquire beneficial ownership, within
sixty (60) days from April 4, 1997, through the exercise of stock
options: Mr. Montgomery, 198,733, Mr. Hastings, 83,600, Mr. Merrick,
33,000 Mr. Kreher, 65,266, Mr. Solomonson, 5,500, Mr. McCain, 22,000, Mr.
Moody, 5,500, Mr. Pinnock, 11,000, Mr. Gibbons, 11,000, and Mr. Cameron,
11,000.
/(2)/ The calculation of percent of class is based upon the number of shares of
Common Stock outstanding as of April 4, 1997.
(Footnotes continued on next page)
2
<PAGE>
/(3)/ Mr. Robert L. Montgomery is Chairman of the Board of Directors, Chief
Executive Officer and President of the Company. Ms. Montgomery is a
director of the Company. The Montgomerys' mailing address is 136
Chesterfield Industrial Boulevard, Chesterfield, Missouri 63005.
/(4)/ Dr. Carl W. Hastings is Executive Vice President and a Director of the
Company. Dr. Hastings' mailing address is 136 Chesterfield Industrial
Boulevard, Chesterfield, Missouri 63005.
Proposal One - Election of Directors
---------------------
Ten directors will be elected at the Annual Meeting to serve for terms of
one year expiring on the date of the Annual Meeting in 1998. Each director
elected will continue in office until a successor has been elected. If a
nominee is unable to serve, which the Board of Directors has no reason to
expect, the persons named in the accompanying proxy intend to vote for the
balance of those named and, if they deem it advisable, for a substitute nominee.
Information Concerning Nominees
- -------------------------------
The following is information concerning nominees for election as directors
of the Company. Each of such persons is presently a director of the Company.
ROBERT L. MONTGOMERY, age 55, Chairman of the Board, Chief Executive
Officer, President and Treasurer of the Company. Mr. Montgomery became Chairman
of the Board of Directors and Chief Executive Officer of the Company on February
15, 1985, and President on July 1, 1985. Mr. Montgomery has been a director of
the Company since 1985. Mr. Montgomery is also the President and Treasurer of
Reliv', Inc. and President and a director of Reliv' World Corporation, both
wholly-owned subsidiaries of the Company. Mr. Montgomery was, from 1982 to
July, 1985, President of Spectrum Foods, Inc., a corporation engaged in the
development, manufacture and sale of specialized food products utilizing soy as
a base. Mr. Montgomery, together with Carl W. Hastings, founded Spectrum Foods
in 1981. From 1970 to 1980, Mr. Montgomery was the Executive Vice President of
Modern Income Life Insurance Company and from 1965 to 1979 was an agent, manager
and vice president of Modern American Life Insurance Company. Mr. Montgomery
received a B.A. Degree in Economics from the University of Missouri in Kansas
City, Missouri in 1965.
DR. CARL W. HASTINGS, age 55, Executive Vice President, Assistant Secretary
and a Director of the Company. Dr. Hastings has been employed by the Company
since February, 1991, and became Executive Vice President of the Company on July
1, 1992. He has been a director of the Company since February, 1990. Dr.
Hastings holds B.S. and M.S. Degrees and a Ph.D. Degree in Food Science from the
University of Illinois. For more than the past 20 years, Dr. Hastings has been
engaged in a variety of employment and consulting capacities as a food
scientist. From May, 1988 to December, 1990, Dr. Hastings was employed as
President of Grove Country Foods, Inc. which was a principal supplier to Reliv',
Inc.
3
<PAGE>
DAVID G. KREHER, age 44, is Senior Vice President, Chief Operating Officer
and Assistant Secretary of the Company. He is also the Chief Operating Officer,
Secretary and a director of Reliv' World Corporation. Mr. Kreher was employed
by the Company in August, 1991, and became Senior Vice President and Chief
Operating Officer on July 1, 1992. From 1988 to August, 1991, Mr. Kreher was
owner and president of Creative Options Corporation in Washington, D.C., a firm
that provided specialized advertising services. From 1981 to 1988, Mr. Kreher
was Chief Operating Officer of Sandven Advertising & Marketing in Kansas City,
Missouri. Mr. Kreher holds a B.S. Degree in Accounting from Southwest Missouri
State University. Mr. Kreher has been a director of the Company since June 1,
1994. Mr. Kreher is the brother of Sandra S. Montgomery.
STEPHEN M. MERRICK, age 55, principal of Fishman & Merrick, P.C., a
Chicago, Illinois, law firm. Mr. Merrick has been a principal of the firm of
Fishman & Merrick since November, 1977, and has been a practicing attorney 29
years. The firm of Fishman & Merrick has represented the Company and its
subsidiaries since the founding of the Company. Mr. Merrick received a Juris
Doctor Degree from Northwestern University School of Law in 1966. Mr. Merrick
has been a director of the Company since July 20, 1989, and is also Secretary of
the Company and Secretary and a director of Reliv', Inc.
THOMAS W. PINNOCK III, age 46, independent distributor for Reliv', Inc.
Mr. Pinnock has been an independent distributor for Reliv', Inc. since January
15, 1990. He has been a director of the Company since April 29, 1992. Mr.
Pinnock is also a director of Reliv', Inc. On May 1, 1992, Mr. Pinnock was
employed by the Company and held the position of Senior Vice President - U.S.
Sales until June 30, 1994, at which time he, and several other former
distributors in management, resumed duties as a full time distributor as part of
a corporate restructuring designed to promote sales growth. Mr. Pinnock was
commissioned as a U.S. Army Officer in 1978 and commanded an armor company in
the 1st Infantry Division. For a period of more than five years prior to the
time be became a Reliv' distributor, Mr. Pinnock was a reporter for the Orlando
Sentinal. Mr. Pinnock holds a B.A. Degree from Valencia College, Orlando,
Florida and studied journalism at the University of Florida and the Defense
Department School of Journalism.
THOMAS T. MOODY, age 38, independent distributor for Reliv', Inc. Mr.
Moody has been an independent distributor for Reliv', Inc. since July, 1989.
Prior to that time, since July, 1985, he had been employed by the Company in a
variety of capacities. Mr. Moody received a B.A. Degree from St. Mary's College
in Winona, Minnesota in 1981. He has been a director of the Company since
October 20, 1989, and is also a director of Reliv' World Corporation.
DONALD L. McCAIN, age 53, Vice President and co-owner of G & T Resources,
Inc., an operator of nursing homes in southern Illinois and co-owner of several
nursing homes. Mr. McCain co-founded G & T Resources, Inc. in 1980 and has been
engaged in the management of that company and several other small businesses
since that time. Prior to that time, Mr. McCain was employed with Archer
Daniels Midland in the Food Processing Management Department for fifteen years.
Mr. McCain has been a director of the Company since July 20, 1989, and is also a
director of Reliv', Inc.
JOHN B. AKIN, age 68, retired as Vice President, A.G. Edwards & Sons and
Resident Manager of the Decatur, Illinois branch office in 1995. Mr. Akin had
been associated with A.G. Edwards & Sons as a stock broker, manager and officer
since April, 1973. Mr. Akin holds a B.A. Degree from the University of Northern
Iowa, Cedar Falls, Iowa. Mr. Akin has been a director of the Company since
June, 1986.
4
<PAGE>
SANDRA S. MONTGOMERY, age 51, has been a director of the Company since
April 29, 1992. For more than the past five years, Mrs. Montgomery has been
engaged actively in the business of the Company. Mrs. Montgomery is also a
director of Reliv', Inc. Sandra S. Montgomery and Robert L. Montgomery are
husband and wife.
MARVIN W. SOLOMONSON, age 44, is the founder and owner of Solomonson
Investment Services and has been engaged in the marketing of investments and
insurance products through financial planning to clients since 1983. He is also
a registered principal of Aragon Financial. Since 1993, Mr. Solomonson has also
served as President and Chief Executive Officer for the following corporations:
Superior Family Foods, Inc. and Service Contracts, Inc. dba Dealership Services.
Mr. Solomonson has been a director of the Company since June 1, 1994.
Executive Officers Other Than Nominees
- --------------------------------------
DONALD E. GIBBONS, JR., age 41, is Vice President of U.S. Sales of the
Company. Mr. Gibbons was employed by the Company in June, 1991, and became Vice
President of Finance. He became Vice President of Distributor Relations in
1992, and accepted the position of Vice President of U.S. Sales in June, 1994, a
position he still holds. Mr. Gibbons was an Executive Correspondent for the
Governor of Illinois 1974-1976. From 1978 to 1990, Mr. Gibbons was a Journeyman
Electrician with I.B.E.W. Local 193. In 1981, Mr. Gibbons, with his wife
Elizabeth, became an independent distributor in a network marketing company and
operated that home business for 5 years. Mr. Gibbons received a B.A. Degree in
Accountancy from the University of Illinois, Springfield, graduating with
highest honors.
FREDERICK S. CAMERON, age 55, is the International Marketing Director for
the Company. He was first employed by the Company in July, 1991, as the sales
and marketing manager of the Company's subsidiary, Reliv' Australia, Pty. In
January, 1995, he was appointed to his current position. Prior to his joining
the Company, he was an independent distributor with another network marketing
company and an executive in the Australian broadcast media industry.
Committees of the Board of Directors
- ------------------------------------
The Company's Board of Directors has standing Management, Compensation,
Option and Audit Committees. The Company has no standing nominating committee.
The Management Committee is composed of Mr. Montgomery, Dr. Hastings, Mr.
Kreher, Mr. McCain and Mr. Merrick. The Management Committee has all of the
authority of the Board of Directors during the interim periods between Board
meetings, except for certain specified powers that are stated in the Company by-
laws. The Management Committee met six times during 1996.
The Compensation Committee is composed of Mr. McCain, Mr. Merrick and Mr.
Akin. The Compensation Committee reviews and makes recommendations to the Board
of Directors concerning the compensation of officers and key employees of the
Company. The Compensation Committee met twice during 1996.
The Option Committee is composed of Mr. Akin and Mrs. Montgomery. The
Option Committee administers the Company's Stock Option Plan. The Option
Committee met once during 1996.
5
<PAGE>
The Audit Committee is composed of Mr. McCain, Mr. Merrick and Mr.
Solomonson. The Audit Committee reviews and makes recommendations to the
Company about its financial reporting requirements. The Audit Committee met
twice during 1996.
The Board of Directors met five times during 1996. Each director attended
all meetings of the Board of Directors and each committee of which such director
was a member except that Mr. Hastings was absent from one meeting of the
Management Committee.
Executive Compensation
- ----------------------
The following table sets forth a summary of the compensation paid during
the last three fiscal years to the Chief Executive Officer of the Company and to
each of the four most highly compensated officers of the Company who were
officers of the Company as at December 31, 1996, and any executive officer who
left during the last fiscal year who would have been included in this group.
SUMMARY COMPENSATION TABLE
<TABLE>
<CAPTION>
Long-Term Compensation
---------------------------------------
Annual Compensation Awards Payouts
--------------------------------------------- ------------------------ ------------
Other Restricted All Other
Annual Stock LTIP Compen-
Name and Principal Salary Bonus Compen- Award(s) Options/ Payouts sation
Position Year ($) ($) sation($) ($) SARs(#) ($) ($)
- ------------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C> <C> <C>
Robert L. Montgomery 1996 $485,000 $266,125/(2)/ -- -- -- -- $ 1,303/(6)/
Chief Executive Officer 1995 $393,750 -- -- -- 220,000/(3)/ -- $ 5,377/(6)/
and President 1994 $375,000 $ 35,156/(2)/ -- -- 250,800/(4)/ $35,000/(5)/ $30,000/(6)/
Carl W. Hastings 1996 $275,000 $150,100/(2)/ -- -- -- -- $ 4,662/(6)/
Executive Vice President 1995 $210,000 -- -- -- 92,400/(3)/ -- $ 5,377/(6)/
1994 $200,000 $ 30,000/(2)/ -- -- 105,600/(4)/ $30,000/(5)/ $30,000/(6)/
David G. Kreher 1996 $200,000 $109,900/(2)/ -- -- -- -- $ 1,288/(6)/
Senior Vice President 1995 $165,000 -- -- -- 70,400/(3)/ -- $ 5,377/(6)/
Chief Operating Officer 1994 $125,000 $ 16,250/(2)/ -- -- 83,600/(4)/ $16,250/(5)/ $30,000/(6)/
Donald E. Gibbons, Jr. 1996 $125,000 $ 31,250 -- -- -- -- $ 2,600/(6)/
Vice President of U.S. 1995 $ 90,000 $ 13,500 -- -- 11,000/(3)/ -- $ 3,178/(6)/
Sales 1994 $ 81,667 $ 4,000 -- -- -- -- $ 6,552/(6)/
Frederick S. Cameron 1996 $ 75,000 $ 75,000 -- -- -- -- $ 2,011/(6)/
Director-International 1995 $ 75,000 $ 40,000 -- -- 5,500/(3)/ -- $ 9,655/(1)(7)/
Marketing 1994 $ 59,101/(2)/ $ 61,561/(2)/ -- -- -- -- $20,597/(1)(7)/
</TABLE>
___________________________
/(1)/ Compensation paid in Australian dollars. Figures represent U.S. dollar
equivalent based on then current exchange rates.
/(2)/ Reflects payments under the Company's Annual Executive Incentive
Compensation Plan (See "Compensation Committee Report on Executive
Compensation - Annual Executive Incentive Plan").
(Footnotes continued on next page)
6
<PAGE>
/(3)/ Incentive Stock Options issued on December 4, 1995, pursuant to the
Company's 1995 Stock Option Plan (See "Compensation Committee Report on
Executive Compensation-Incentive Stock Options"). Under these options
recipients are entitled to purchase common stock of the Company at the
price of $1.25 per share ($1.375 for Montgomery). The options issued to
Messrs. Montgomery, Hastings and Kreher were exercisable for one-sixth of
the shares upon issuance and an additional one-sixth on each anniversary
date. The options issued to Messrs. Gibbons and Cameron were exercisable
upon issuance. The options expire five years from the date of grant. Due
to limitations on the grant of incentive stock options a portion of Mr.
Montgomery's options are non-qualified options. The shares subject to
exercise and the exercise price of the options reflect an anti-dilution
adjustment made as a result of the 10% stock dividend issued on February
28, 1997.
/(4)/ Incentive Stock Options issued on December 14, 1994, pursuant to the
Company's Incentive Stock Option Plan adopted on February 15, 1985 (See
"Compensation Committee Report on Executive Compensation-Incentive Stock
Options"). Under these options the recipients are entitled to purchase
common stock of the Company at the price of $2.05 per share ($2.25 for
Montgomery). The options were exercisable for one-sixth of the shares
upon issuance and an additional one-sixth on each anniversary date. The
options expire five years from the date of grant. The shares subject to
exercise and the exercise price of the options reflect an anti-dilution
adjustment made as a result of the 10% stock dividend issued on February
28, 1997.
/(5)/ Reflects cash payouts under the Company's Long-Term Incentive
Compensation Plan.
/(6)/ Reflects the cash value of contributions by the Company to the Reliv'
International, Inc. Profit Sharing Plan and the Reliv' International,
Inc. ESOP, both defined contribution plans.
/(7)/ Reflects the cash value of contributions by the Company to the
individual's superannuation fund, a form of retirement fund available in
Australia.
The Company issued no options to purchase the Company's Common Stock to the
named executive officers during the fiscal year ended December 31, 1996. The
Company has never granted any stock appreciation rights.
7
<PAGE>
The following table provides information related to options to purchase the
Company's Common Stock exercised by the named executive officers during the
fiscal year ended December 31, 1996, and the number and value of such options
held as of the end of such fiscal year:
Aggregated Option/SAR Exercises in Last Fiscal Year and FY-End Option/SAR Values
<TABLE>
<CAPTION>
Number of Securities Underlying Value of Unexercised In-the-
Unexercised Options/SARs at Money Options/SARs at
Shares Acquired on Value Realized Year End (#) Fiscal Year End ($)
Name Exercise (#) ($) Exercisable/Unexercisable Exercisable/Unexercisable
- ---- ------------------ -------------- ------------------------------- ----------------------------
<S> <C> <C> <C> <C>
Robert L. Montgomery 0 0 198,733/272,067 $754,301/$1,074,197/(1)/
Carl W. Hastings 0 0 83,600/114,400 $328,515/$465,021/(1)/
David G. Kreher 0 0 65,263/88,737 $255,997/$360,031/(1)/
Donald E. Gibbons, Jr. 0 0 11,000/0 $ 48,752/$0/(1)/
Frederick S. Cameron 0 0 5,500/0 $ 24,376/$0/(1)/
</TABLE>
- ----------------
/(1)/ The value of unexercised in-the-money options is based on the difference
between the exercise price and the fair market value of the Company's
Common Stock on December 31, 1996.
No awards or payments were made for long term incentive compensation to any
executive of the Company during 1996.
During the period from January 1, 1993 to December 31, 1996, there have
been no restricted stock awards to any of the named executive officers.
Compensation Committee Report on Executive Compensation
- -------------------------------------------------------
The Compensation Committee has provided the following report on
compensation of executives of the Company:
During 1993, the Compensation Committee undertook an in-depth review of the
executive compensation policies and practices of the Company. The Compensation
Committee retained Ernst & Young L.L.P. to provide consulting services in the
effort including (i) obtaining and reviewing executive compensation policies and
levels in companies similar to the Company in terms of product line, direct
marketing sales methods, sales and sales growth, (ii) consultation with the
Compensation Committee members and the Company's Chief Executive Officer
concerning the Company's existing executive compensation system and competitive
compensation practices and (iii) participation in the evaluation of, and
recommendation for, base, annual and long-term compensation and incentives.
Based upon this review and study, and the report and recommendation of
Ernst & Young L.L.P., the Compensation Committee recommended, and the Board of
Directors of the Company adopted for 1994 and subsequent years, a substantially
revised compensation structure and program for the senior executives of the
Company.
8
<PAGE>
The philosophy of the Compensation Committee and the Board of Directors of
the Company regarding executive compensation remains substantially the same as
in prior years:
- To attract and retain quality executive talent, which is regarded as
critical to the short and long term success of the Company, in
substantial part by offering compensation programs which provide
attractive rewards for successful effort.
- To make a substantial portion of the compensation of senior executives
of the Company dependent upon the success and profitability of the
Company.
The philosophy of the Compensation Committee, as reflected in the compensation
program, also, is:
- To create a mutuality of interest between executive officers of the
Company and shareholders through compensation structures that share the
rewards and risks of strategic decision-making and that provide for
additional stock ownership by executives.
- To assure that compensation will continue to be fully tax deductible.
Prior to 1994, compensation to executives of the Company was characterized
by (i) low base compensation, generally considerably below competitive rates of
base compensation and (ii) relatively high levels of compensation measured as a
percent of the profits of the Company. In general, the recommendation of the
Compensation Committee in 1994, as adopted by the Board of Directors, was to
change the compensation structure (i) to increase base compensation levels to
reasonably competitive levels in the industry and (ii) to provide for annual and
long-term incentives, measured as a percent of base compensation, based upon
performance measures which reflect the Company's business objectives and which
the individual participant can directly affect. The plan also includes intended
awards of stock options to executives. The emphasis on performance, success of
the Company and profitability remains but limits are provided on (i) the amount
of incentive compensation consistent with competitive methods and rates of
compensation and (ii) the amount of fluctuation in total compensation. The
Compensation Committee has recommended, and the Company has determined, to take
appropriate action to comply with the provisions of Section 162(m) of the
Internal Revenue Code so that executive compensation will continue to be
deductible as an expense to the fullest extent allowable.
Base Compensation. Prior to 1994, the Committee's approach to base
compensation had been to offer base salaries to senior executives which had
been, generally, lower than competitive rates coupled with significant incentive
compensation based upon the profitability of the Company. Rates of base
compensation of executives of the Company had, in general, been consistent with
that policy through 1993.
The annual base compensation of the three senior executive officers of the
Company was determined to be well under competitive rates. The Committee, with
the aid of Ernst & Young, compared compensation levels with executives employed
by similar companies. The base compensation of the Chief Executive Officer was
determined to be 61 percent below the median for such similar companies and the
base compensation for the Executive Vice President and Chief Operating Officer
were found to be 33 percent and 35 percent, respectively, below the median
competitive rates.
9
<PAGE>
The Committee recommended that base compensation rates of the senior
executives be raised to competitive levels (in conjunction with elimination of
the previous profit-based incentive program). Base salaries recommended for 1994
and approved by the Board of Directors of the Company were (i) Chief Executive
Officer - $375,000, (ii) Executive Vice President - $200,000, and (iii) Senior
Vice President and Chief Operating Officer - $125,000. These base salaries are
reflected in written employment agreements which the Company has entered into
with each of these executives for a period of 3 years. For 1995, the
Compensation Committee reviewed Mr. Kreher's compensation and, based on its
analysis of the marketplace and Mr. Kreher's responsibilities and performance as
Chief Operating Officer, increased Mr. Kreher's base salary to $165,000. The
Committee also considered and approved a 5% cost of living increase to the base
salaries of Messrs. Montgomery and Hastings for 1995. During 1995 and 1996,
the Company experienced significant increases in sales, profits and shareholder
value. In light of these results and in consideration of industry standards,
the Compensation Committee recommended and the Board of Directors approved
annual base compensation for Mr. Montgomery of $485,000, for Dr. Hastings of
$275,000 and for Mr. Kreher of $200,000. The annual compensation of Donald E.
Gibbons, Jr., Vice President of U.S. Sales was increased to $125,000. The
growth in revenues of the Company during 1995 and 1996 was primarily
attributable to increases in U.S. sales.
The Committee has examined market compensation levels and trends in
recommending the base salaries and has considered that information in
recommending base salary levels. The Committee has also considered additional
factors including results of operations of the Company, shareholder returns, the
decision-making responsibilities of each of the positions and the experience,
work performance and team-building skills of each of the individual executives
and has received information from the Chief Executive Officer in regard to these
matters. The Committee intends to conduct a structured annual review of base
compensation levels of each of the senior executives of the Company with input
from the Chief Executive Officer. Each of the foregoing factors will be
considered in relatively equal weight.
Annual Executive Incentive Plan. In March 1994, the Compensation Committee
recommended the adoption of a 1994 Annual Incentive Compensation Plan which
covered the three senior executives of the Company. The 1994 Plan was adopted
by the Board of Directors on April 13, 1994, to be effective for 1994 and
subsequent years, and supersedes all prior incentive compensation plans. The
purpose of the 1994 Plan is to provide competitive rates of incentive
compensation to executive officers of the Company for accomplishing periodic
financial objectives. Under the Plan, incentive compensation measured as a
percentage of base compensation will be paid to participants based upon
achieving specific objectives. The performance criterion for each executive
will vary and include both corporate and individual results. The criterion will
include profits, return on average equity, sales and expense control and may
include other measures. The measures selected for each executive will reflect
the Company's business objectives which the individual can directly affect.
Target performance levels for each measure of performance are recommended
by the Compensation Committee and approved by the Board of Directors. The
target performance levels will be based upon historic patterns of Company
performance and strategic objectives. Under the 1994 Plan, incentive
compensation is limited to a percentage of each executive's base salary.
For 1996, the target performance levels for annual incentive compensation
under the Plan were determined for each of the three executives covered by the
Plan on the basis of Company net
10
<PAGE>
income before income tax. In each case, the target levels were established in a
range of three levels for income before taxes at $1,580,000, $2,400,000 and
$5,250,000. At each profit level, incentive compensation was payable as a
percentage of the base salary of each of the executives at the rate of 25%, 50%
and 75% of annual base compensation, respectively.
Incentive Stock Options. As part of the executive compensation program it
presented in April, 1994, the Compensation Committee recommended that a
significant portion of the total compensation to executives be in the form of
incentive stock options and that incentive stock options consistent with
observed market practices be issued to senior executives of the Company during
1994. On December 4, 1995, options to purchase 220,000, 92,400 and 70,400,
11,000 and 11,000 shares of the Company's common stock were granted to Messrs.
Montgomery, Hastings, Kreher, Gibbons and Cameron, respectively, under the 1995
Stock Option Plan (the "1995 Plan"). These options were issued as part of the
overall compensation plan for these executives and are consistent with Ernst &
Young L.L.P.'s report and recommendations.
CEO Compensation. The base compensation of the Company's Chief Executive
Officer, Robert L. Montgomery, during 1993 was $120,000. In the study of
comparative compensation performed for the Compensation Committee, it was
determined that this base rate of compensation was 61 percent below the median
for similar companies in the comparison. Consistent with the executive
compensation recommendation of the Compensation Committee in April, 1994, the
base annual rate of Mr. Montgomery's compensation was increased to $375,000 for
1994, a rate consistent with the median levels in the study conducted. This
base rate was incorporated into the Employment Agreement entered into among the
Company and Mr. Montgomery for a three-year term. Mr. Montgomery's base rate
was adjusted by a 5% cost of living increase in 1995 to $393,750. Based upon the
Committee's review and evaluation of performance, results of operation and
industry compensation levels, Mr. Montgomery's annual base compensation was
increased to $485,000 for 1996.
As discussed above, Mr. Montgomery, along with two other covered executive
officers, were eligible to receive awards in 1995, under the Company's Annual
Executive Incentive Plan (See "Annual Executive Incentive Plan" above).
The Compensation Committee has also recommended that Mr. Montgomery and
other senior executives of the Company receive incentive stock options,
consistent with observed market practices of similar companies, so that a
significant portion of his total compensation will be based upon, and consistent
with, returns to shareholders. As discussed above, Mr. Montgomery was granted
incentive options to purchase up to 220,000 shares of the Company's common stock
in late 1995. (See "Incentive Stock Options" above).
Compensation Committee:
Donald L. McCain, John B. Akin and Stephen M. Merrick
11
<PAGE>
Compensation Committee Interlocks and Insider Participation
- -----------------------------------------------------------
Stephen M. Merrick, a member of the Compensation Committee, is the
Secretary of the Company. Mr. Merrick is a principal of the law firm of Fishman
& Merrick, P.C. which serves as general counsel to the Company and its
subsidiaries. During the year ended December 31, 1996, the aggregate amount
paid or incurred by the Company to this firm for services to the Company and its
subsidiaries was $231,000.
During 1996, the Company paid $121,000 for goods and services to MVP
Promotions, Inc., a company owned by Messrs. Montgomery, Hastings, Merrick and
McCain. The goods and services acquired related to promotional activities. Mr.
McCain and Mr. Merrick are members of the Compensation Committee.
Comparative Stock Price Performance Graph
- -----------------------------------------
The following graph compares, for the period May 1, 1992 (the date the
Company's Common Stock was first registered under Section 12 of the Securities
Exchange Act of 1934) to December 31, 1996, the cumulative total return
(assuming reinvestment of dividends) on the Company's Common Stock with (i) the
Standard & Poor's 500 Stock Index and (ii) the Standard & Poor's Foods Index.
The graph assumes an investment of $100 on May 1, 1992, in each of the Company's
Common Stock, the stock comprising the Standard & Poor's 500 Stock Index, and
the Standard & Poor's Foods Index.
COMPARISON OF FIVE YEAR CUMULATIVE RETURN AMONG
RELIV' INTERNATIONAL, INC., S&P 500 INDEX AND S&P FOOD INDEX
------------------------------------------------------------
Measurement Period Reliv' S&P 500 S&P Food Index
(Fiscal Year Covered)
Measurement Pt-April 30, 1992 $ 100 $ 100 $ 100
YE 12/31/92 $114.77 $107.26 $117.40
FYE 12/31/93 $276.99 $118.07 $107.73
FYE 12/31/94 $149.72 $119.63 $120.42
FYE 12/31/95 $121.68 $164.59 $153.62
FYE 12/31/96 $359.28 $202.37 $182.00
12
<PAGE>
The historical stock prices of the Company's Common Stock shown on the
above graph is not necessarily indicative of future price performance. Persons
evaluating the foregoing graph should consider that prior to March 8, 1993,
there was no formal market for shares of the Company's Common Stock and that the
values reflected on the graph for the stock prior to that date are based upon a
limited number of repurchases by the Company of its shares and voluntary reports
by shareholders to the Company of a very limited number of transactions.
Prior to March 8, 1993, there existed no public trading market for the
Company's Common Stock, and the stock values used to calculate total return on
the Company's Common Stock were based on prices paid by the Company during the
period for repurchases of its shares as well as stock price information obtained
by polling shareholders who purchased or sold shares of Common Stock during the
period. As the provision of this information by shareholders was voluntary, the
Company cannot assure the completeness or accuracy of the information provided
on the graph below for that period with respect to total return on its Common
Stock. Shares of Common Stock purchased by the Company under certain agreements
whereby the Company is obligated to redeem shares over a period of years were
treated, for purpose of calculating total return during this period, as
purchased on the date each installment payment was made.
On March 8, 1993, the Company's common stock was listed on The Emerging
Company Marketplace of the American Stock Exchange (AMEX) and, in July 1993,
graduated to the main board of the AMEX. On September 6, 1996, the Company
moved the listing of its common stock to the NASDAQ National Market Tier of the
NASDAQ Stock Market. Per share value as of December 31, 1993, December 31,
1994, December 31, 1995, and December 31, 1996, was based on the Common Stock's
closing price as of such date.
The information under this heading and under the heading "Compensation
Committee Report on Executive Compensation" shall not be deemed incorporated by
reference by any general statement incorporating by reference this Proxy
Statement into any filing under the Securities Act of 1933 or under the
Securities Exchange Act of 1934 and shall not otherwise be deemed filed under
such Acts.
Employment Agreements
- ---------------------
In April, 1994, the Company entered into an Employment Agreement with
Robert L. Montgomery replacing a prior agreement. The Agreement is for a term
of three years commencing on January 1, 1994, and provides for Mr. Montgomery to
receive base annual compensation during the term of not less than $375,000. Mr.
Montgomery is also to participate in the Annual Incentive Compensation and the
Long-Term Incentive Compensation Plans of the Company adopted in April, 1994,
the Company's Stock Option Plan and such other compensation plans as the Company
may from time to time have for executives of the Company. In the event of Mr.
Montgomery's death during the term of the Agreement, payments equal to his total
compensation under the Agreement will be made to his heirs for a period of six
months. The Agreement includes the obligation of Mr. Montgomery to maintain the
confidentiality of confidential information of the Company.
In April, 1994, the Company entered into an Employment Agreement with Dr.
Hastings replacing a prior agreement. The Agreement is for a period of three
years commencing on January 1, 1994, and provides for Dr. Hastings to receive
base annual compensation during the term of not
13
<PAGE>
less than $200,000. Dr. Hastings is also to participate in the Annual Incentive
Compensation and Long-Term Incentive Compensation Plans of the Company adopted
in April, 1994, the Company's Stock Option Plan and such other compensation
plans as the Company may from time to time have for executives of the Company.
In the event of Dr. Hastings' death during the term of the Agreement, payments
equal to his total compensation under the Agreement will be made to his heirs
for a period of six months. The Agreement includes the obligation of Dr.
Hastings to maintain the confidentiality of confidential information of the
Company and to assign to the Company any and all inventions made or conceived by
him during the term of the Agreement.
In April, 1994, the Company entered into an Employment Agreement with David
G. Kreher, Senior Vice President and Chief Operating Officer, for a term of
three years effective from January 1, 1994. The Agreement provides for Mr.
Kreher to receive base annual compensation of not less than $125,000. Mr.
Kreher is also to participate in the Annual Incentive Compensation and Long-Term
Incentive Compensation Plans of the Company adopted in April, 1994, the
Company's Stock Option Plan and such other compensation plans as the Company may
from time to time have for executives of the Company. In the event of Mr.
Kreher's death during the term of the Agreement, payments equal to his total
compensation under the Agreement will be made to his heirs for a period of six
months. The Agreement includes the obligation of Mr. Kreher to maintain the
confidentiality of confidential information of the Company.
Compensation of Directors
- -------------------------
Members of the Board of Directors who were not employees of the Company
received $1,000 per attendance at meetings of the Board of Directors and
committees thereof. Members of the Management Committee who were not employees
of the Company also received compensation of $1,000 per month for their services
and $2,000 per attendance at meetings of the Board of Directors or any
committees of the Board. On any date at which a Board member attends more than
one meeting of the Board or committee of the Board, the attendance fee is 150%
of the basic attendance fee.
On February 21, 1996, options to purchase 33,000, 5,500, and 5,500 shares
of the Company's common stock were issued to Messrs. Pinnock, Moody and
Solomonson respectively, at an exercise price of $1.7614. On May 31, 1996,
options to purchase 88,000 and 55,000 shares of the Company's common stock were
issued to Messrs. Merrick and McCain, respectively, at an exercise price of
$2.6136. With respect to Messrs. Pinnock, Merrick and McCain, the options are
exercisable as to 10,000, 12,500 and 17,500 shares immediately and the balance
of the shares exercisable in equal proportions over a period of five years,
terminable prior thereto upon the termination of the director's relationship
with the Company.
Section 16(a) Beneficial Ownership Reporting Compliance
- -------------------------------------------------------
Section 16(a) of the Securities Exchange Act of 1934 requires the Company's
officers and directors, and persons who own more than ten percent of a
registered class of the Company's equity securities, to file reports of
ownership and changes in ownership with the Securities and Exchange Commission
and with the NASDAQ Stock Market. Officers, directors and greater than ten-
percent
14
<PAGE>
shareholders are required by SEC regulation to furnish the Company with copies
of all Section 16(a) forms they file.
Based solely on a review of the copies of such forms furnished to the
Company, or written representations that no Form 5's were required, the Company
believes that during calendar year 1996, all Section 16(a) filing requirements
applicable to the officers, directors and ten-percent beneficial owners were
complied with; except that Messrs. Montgomery, Hastings and Kreher were awarded
incentive stock options in December, 1995, which were not reported timely on a
Form 5 for 1995 but were reported in 1996.
Board of Directors Affiliations and Related Transactions
- --------------------------------------------------------
Mr. Montgomery received advances in 1995 against expected annual incentive
compensation payments which were never realized. The largest aggregate amount
Mr. Montgomery was indebted to the Company for such advances during 1996 was
$162,751. The indebtedness bore interest at the prime rate of interest plus 1%
and was repaid in full during 1996.
Proposal Two - Selection of Auditors
---------------------
The Board of Directors have selected and approved Ernst & Young L.L.P. as
the principal independent auditor to audit the financial statements of the
Company for 1997, subject to ratification by the shareholders. It is expected
that a representative of the firm of Ernst & Young L.L.P. will be present at the
annual meeting and will have an opportunity to make a statement if they so
desire and will be available to respond to appropriate questions.
THE BOARD OF DIRECTORS RECOMMENDS SHAREHOLDERS VOTE FOR "FOR" SUCH
RATIFICATION.
Stockholder Proposals for 1998 Proxy Statement
- ----------------------------------------------
Proposals by shareholders for inclusion in the Company's Proxy Statement
and form of proxy relating to the 1998 Annual Meeting of Stockholders, which is
scheduled to be held on May 28, 1998, should be addressed to the Secretary,
Reliv' International, Inc., 136 Chesterfield Industrial Boulevard, P.O. Box 405,
Chesterfield, Missouri 63006-0405, and must be received at such address no later
than January 1, 1998. Upon receipt of any such proposal, the Company will
determine whether or not to include such proposal in the Proxy Statement and
proxy in accordance with applicable law. It is suggested that such proposal be
forwarded by certified mail, return receipt requested.
15
<PAGE>
Other Matters to Be Acted Upon at the Meeting
- ---------------------------------------------
The management of the Company knows of no other matters to be presented at
the meeting. Should any other matter requiring a vote of the shareholders arise
at the meeting, the persons named in the proxy will vote the proxies in
accordance with their best judgment.
BY ORDER OF THE
BOARD OF DIRECTORS
Dated: April 28, 1997
/s/ Stephen M. Merrick
--------------------------------
Stephen M. Merrick, Secretary
16
<PAGE>
RELIV' INTERNATIONAL, INC.
ANNUAL MEETING OF SHAREHOLDERS
May 28, 1997, 10:00 a.m.
Doubletree Hotel & Conference Center
16625 Swingley Ridge Road
Chesterfield, Missouri 63017
(314) 532-5000
FOLD AND DETACH HERE
- -------------------------------------------------------------------------------
REVOCABLE PROXY
RELIV' INTERNATIONAL, INC.
THIS PROXY IS SOLICITED ON BEHALF OF THE BOARD OF DIRECTORS
The undersigned hereby appoint(s) Robert L. Montgomery and David G. Kreher,
or either of them, with full power of substitution, as proxies of the
undersigned, with all the powers that the undersigned would possess if
personally present to cast all votes that the undersigned would be entitled to
vote at the annual meeting of shareholders of Reliv' International, Inc. (the
"Company") to be held on Wednesday, May 28, 1997, at the Doubletree Hotel &
Conference Center, 16625 Swingley Ridge Road, Chesterfield, Missouri 63017,
(314) 532-5000 at 10:00 a.m., Central Daylight Savings Time, and any and all
adjournments and postponements thereof (the "Annual Meeting"), including
(without limiting the generality of the foregoing) to vote and act as follows
on the reverse side.
This Proxy will be voted at the Annual Meeting or any adjournments or
postponements thereof as specified. IF NO SPECIFICATIONS ARE MADE, THIS PROXY
WILL BE VOTED FOR THE ELECTION OF THE NOMINEES FOR DIRECTORS NAMED ON THE
REVERSE SIDE AND FOR PROPOSAL 2. This proxy hereby revokes all prior proxies
given with respect to the shares of the undersigned.
(CONTINUED AND TO BE SIGNED ON OTHER SIDE)
<PAGE>
ADMISSION TICKET
ANNUAL MEETING
OF
RELIV' INTERNATIONAL, INC.
WEDNESDAY, MAY 28, 1997
10:00 A.M.
DOUBLETREE HOTEL & CONFERENCE CENTER
16625 SWINGLEY RIDGE ROAD
CHESTERFIELD, MISSOURI 63017
(314) 532-5000
*****************************************************************************
* AGENDA *
* ------ *
* * Election of Directors *
* * Ratification of the appointment of independent public *
* accountants *
* * Report on the progress of the corporation *
* *
*****************************************************************************
FOLD AND DETACH HERE
- ------------------------------------------------------------------------------
1. ELECTION OF DIRECTORS: The election of the following nominees to the Board
of Directors unless otherwise indicated:
/ / FOR all nominees listed / / WITHHOLD AUTHORITY for all nominees
Robert L. Montgomery Carl W. Hastings David G. Kreher
Thomas T. Moody Stephen M. Merrick
Sandra S. Montgomery Marvin W. Solomonson Donald L. McCain
Thomas W. Pinnock III John B. Akin
IN THE EVENT THE UNDERSIGNED WISHES TO WITHHOLD AUTHORITY TO VOTE FOR ANY
PARTICULAR NOMINEE OR NOMINEES LISTED ABOVE, PLEASE SO INDICATE BY CLEARLY AND
NEATLY LINING THROUGH OR STRIKING OUT THE NAME OF ANY SUCH NOMINEE OR NOMINEES.
2. Proposal to ratify the appointment of Ernst & Young as the Independent
Public Accountants of the Company for 1997.
/ / FOR / / AGAINST / / ABSTAIN
3. In their discretion upon such other matters as may properly come before the
meeting or any adjournment thereof.
Please complete, sign and mail this proxy
promptly in the enclosed envelope. No
postage is required for mailing in the
United States.
Dated: ____________________________, 1997
-----------------------------------------
Signature
-----------------------------------------
Signature
IMPORTANT: Please date this proxy and sign
exactly as your name appears on this
proxy. If shares are held by joint
tenants, both should sign. When signing as
attorney, executor, administrator, trustee
or guardian, please give title as such. If
a corporation, please sign in full
corporate name by president or other
authorized officer. If a partnership,
please sign in partnership name by
authorized person.
