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 21, 1998
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 63017, on Thursday, May 21, 1998, 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 1998 (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 6, 1998, 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 17, 1998 /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 21, 1998. The proxy materials are being mailed to shareholders of record
at the close of business on April 6, 1998.
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 6, 1998,
are entitled to vote at the Annual Meeting. On that day, there were issued and
outstanding 9,652,507 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.
1
<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 6, 1998. 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 6,
1998.
Amount and
Nature of
Beneficial Percent of
Name of Beneficial Owner Ownership(1) Class(1)(2)
------------------------ ------------ -----------
Robert L. and Sandra S. Montgomery(3) 2,296,618 23.09%
Carl W. Hastings(4) 649,914 6.65%
David G. Kreher 105,600 1.09%
Stephen M. Merrick 528,507 5.45%
Donald L. McCain 272,459 2.81%
Marvin W. Solomonson 322,425 3.34%
Thomas T. Moody 100,000 1.03%
Thomas W. Pinnock III 60,600 *
John B. Akin 20,880 *
Donald E. Gibbons, Jr. 44,300 *
Frederick S. Cameron 11,000 *
All Directors and Executive Officers as a
Group (12 persons) 4,412,303 42.62%
*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 6, 1998, through the exercise of
stock options: Mr. Montgomery, 294,700, Dr. Hastings, 127,433, Mr.
Kreher, 64,900, Mr. Merrick, 53,417, Mr. McCain, 36,083, Mr.
Solomonson, 10,000, Mr. Moody, 15,500, Mr. Pinnock, 26,500, Mr. Akin,
20,000, Mr. Gibbons, 41,000, 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 6, 1998.
(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 1999. 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 56, 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 director 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 56, 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 is also a director of Reliv', Inc. and Reliv' World Corporation. 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 45, 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', Inc. and 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 56, principal of Fishman, Merrick, Miller,
Genelly, Springer, Klimek & Anderson, P.C., a Chicago, Illinois, law firm. Mr.
Merrick has been a principal of the firm since November, 1977, and has been a
practicing attorney 29 years. Fishman, Merrick, Miller, Genelly, Springer,
Klimek & Anderson, P.C. 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. and Reliv' World Corporation. Mr.
Merrick is also Chief Executive Officer and a director of CTI Industries
Corporation (NASDAQ-CTIB).
THOMAS W. PINNOCK III, age 47, 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. 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 39, 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.
DONALD L. McCAIN, age 54, is the Chairman and co-owner of Robertson
International Incorporated, a remanufacturer and worldwide supplier of mining
equipment and supplies. Mr. McCain acquired his interest in Robertson
International Incorporated in September, 1995, and as part of the transaction,
Coal Age Incorporated, a mining equipment company he acquired in September of
1994, was merged into Robertson International Incorporated. Mr. McCain
co-founded G&T Resources, Inc., an owner and operator of nursing homes, in 1980
and was engaged in the management of that company until he sold his interest in
September, 1994. 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. and Reliv' World Corporation.
4
<PAGE>
JOHN B. AKIN, age 69, 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.
SANDRA S. MONTGOMERY, age 52, 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 45, 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 42, 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 56, is Vice President of Asia Pacific Sales
for Reliv' World, a market that the Company is investigating. He was first
employed by the Company in April, 1991, as the sales and marketing manager of
the Company's subsidiary, Reliv' Australia, Pty. Ltd. and Reliv' New Zealand
Ltd. in May, 1992. In January, 1995, he was appointed Director - International
Marketing which position he held until January, 1998, when 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 nine times during 1997.
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
5
<PAGE>
concerning the compensation of officers and key employees of the Company. The
Compensation Committee met one time during 1997.
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 one time during 1997.
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 one time
during 1997.
The Board of Directors met seven times during 1997. Each director
attended all meetings of the Board of Directors and each committee of which such
director was a member except that Mr. Moody attended only 2 Board of Directors
meetings.
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, 1997, and any executive officer who
left during the last fiscal year who would have been included in this group (the
"Named Executives").
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 1997 $485,000 $121,250 (1) -- -- -- -- $12,916 (4)
Chief Executive Officer 1996 $485,000 $266,125 (1) -- -- -- -- $ 1,303 (5)
and President 1995 $393,750 -- -- -- 220,000 (2) -- $ 5,377 (5)
Carl W. Hastings 1997 $275,000 $ 68,750 (1) -- -- -- -- $10,060 (4)
Executive Vice President 1996 $275,000 $150,100 (1) -- -- -- -- $ 4,662 (5)
1995 $210,000 -- -- -- 92,400 (2) -- $ 5,377 (5)
David G. Kreher 1997 $200,000 $ 50,000 (1) -- -- -- -- $ 8,298 (4)
Senior Vice President 1996 $200,000 $109,900 (1) -- -- -- -- $ 1,288 (5)
Chief Operating Officer 1995 $165,000 -- -- -- 70,400 (2) -- $ 5,377 (5)
Donald E. Gibbons, Jr. 1997 $145,000 $ 79,750 -- -- 50,000 (3) -- $ 6,876 (4)
Vice President of U.S. 1996 $125,000 $ 31,250 -- -- -- -- $ 2,600 (5)
Sales 1995 $ 90,000 $ 13,500 -- -- 11,000 (2) -- $ 3,178 (5)
Frederick S. Cameron 1997 $100,000 $ 40,000 -- -- -- -- $ 4,000 (5)
Vice President of 1996 $ 75,000 $ 75,000 -- -- -- -- $ 2,011 (5)
Reliv' World 1995 $ 75,000 $ 40,000 -- -- 5,500 (2) -- $ 9,655 (6)
</TABLE>
- ---------------------------------------------
(1) 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>
(2) 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.
(3) Incentive Stock Options issued on December 18, 1997, pursuant to
the Company's Stock Option Plan. Under these options Mr. Gibbons
is entitled to purchase Common Stock of the Company at the price
of $3.125 per share. The options are exercisable for 30,000
shares upon issuance and 20,000 shares on December 18, 1998. The
options expire five years from the date of grant.
(4) Includes the value of cash contributions by the Company to the
Reliv' International, Inc. 401(K) Plan, a defined contribution
plan of $9,500 for Mr. Montgomery, $8,125 for Dr. Hastings,
$7,938 for Mr. Kreher and $6,616 for Mr. Gibbons. Also includes
portion of premiums paid by the Company on life insurance
policies on each executive's life attributable to the death
benefit which each executive's estate is entitled to. Pursuant
to agreements with each executive, approximately two-thirds of
the death benefit under a policy is paid to the executive's
beneficiaries. The allocated portion of premium paid was $3,416
for Mr. Montgomery, $1,935 for Dr. Hastings, $360 for Mr. Kreher
and $260 for Mr. Gibbons. (See "Employment Agreements.")
(5) Reflects the cash value of contributions by the Company to the
Reliv' International, Inc. 401(K) Plan, a defined contribution
plan.
(6) Reflects the cash value of contributions by the Company to the
individual's superannuation fund, a form of retirement fund
available in Australia. Figure represents U.S. dollar equivalent
based on then current exchange rate.
The Company has never granted any stock appreciation rights.
During the period from January 1, 1995 to December 31, 1997, there have been no
awards or payments made for long term incentive compensation and there have been
no restricted stock awards to any of the Named Executives.
7
<PAGE>
The following table sets forth the options granted to the Named
Executives during the fiscal year ended December 31, 1997.
<TABLE>
<CAPTION>
Option/SAR Grants in Last Fiscal Year
Potential Realizable
Value at Assumed
Annual Rates of
Stock Price
Appreciation for
Individual Grants Option Term
----------------------------------------------------- ---------------------
Number
of % of Total
Securities Options/
Underlying SARs
Options/ Granted to Exercise
SARs Employees or Base
Granted in Fiscal Price Expiration
Name (#) Year ($/Sh) Date 5% ($) 10% ($)
- ---- -------- -------- -------- -------- ---------- ----------
<S> <C> <C> <C> <C> <C> <C>
Robert L. Montgomery 0 0 0 -- -- --
Carl W. Hastings 0 0 0 -- -- --
David G. Kreher 0 0 0 -- -- --
Donald E. Gibbons, Jr. 50,000(1) 50% $3.125 12/18/02 43,150(2) 95,400(2)
Frederick S. Cameron 0 0 0 -- -- --
- ------------------
<FN>
(1) Exercisable for 30,000 shares of Common Stock on December 18, 1997 and
20,000 shares of Common Stock on December 18, 1998.
(2) Value assumes price of Company's Common Stock increases each year by 5%
and 10%, respectively.
</FN>
</TABLE>
The following table provides information related to options to purchase
the Company's Common Stock exercised by the named executive officers during the
fiscal year ended December 31, 1997, and the number and value of such options
held as of the end of such fiscal year:
Aggregated Option/SAR Exercises in Last Fiscal Year and FY-End Option/SAR Values
<TABLE>
<CAPTION>
Number of Securities Underlying Value of Unexercised In-
Value Unexercised Options/SARs at the-Money Options/SARs at
Shares Acquired on Realized Year End (#) Fiscal Year End ($)
Name Exercise (#) ($) Exercisable/Unexercisable Exercisable/Unexercisable
- - ---- -------------- --------- ------------------------------- ---------------------------
<S> <C> <C> <C> <C>
Robert L. Montgomery 0 0 277,200/193,600 $316,278/$249,535(1)
Carl W. Hastings 0 0 116,600/81,400 $148,050/$114,450(1)
David G. Kreher 0 0 90,933/63,067 $114,800/$88,200(1)
Donald E. Gibbons, Jr. 0 0 41,000/20,000 $19,250/$0(1)
Frederick S. Cameron 0 0 5,500/0 $9,625/$0(1)
- -----------------
(footnote continued on next page)
8
<PAGE>
<FN>
(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, 1997.
</FN>
</TABLE>
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.
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:
o 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.
o 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:
o 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.
o 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
9
<PAGE>
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.
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. 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. Over the period 1995
through 1997, 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 this period 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
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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 may
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 1997, 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 income before income tax. In
each case, the target levels were established in a range of four levels for
income before taxes at $2,800,000, $3,600,000, $4,500,000 and $5,750,000. 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%, 75% and 100% of
annual base compensation, respectively.
Incentive payments for Mr. Gibbons and Mr. Cameron in 1997 were based
on performance levels established for these individuals at the beginning of the
year. Mr. Gibbon's payments are based on U.S. sales levels and Mr. Cameron's on
worldwide sales levels.
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, 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"). On December 18, 1997, options to purchase
50,000 shares of the Company's Common Stock were granted to Mr. Gibbons. On
January 9, 1998, options to purchase 75,000, 65,000 and 55,000 shares of the
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<PAGE>
Company's Common Stock were issued to Messrs. Montgomery, Hastings and Kreher,
respectively. 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. 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 and 1997.
As discussed above, Mr. Montgomery, along with two other covered
executive officers, were eligible to receive awards in 1997, 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 and 75,000 shares of the Company's Common Stock in early 1998. (See
"Incentive Stock Options" above).
Compensation Committee:
Donald L. McCain, John B. Akin and
Stephen M. Merrick
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, Miller, Genelly, Springer, Klimek & Anderson, P.C. which serves as
general counsel to the Company and its subsidiaries. During the year ended
December 31, 1997, the aggregate amount paid or incurred by the Company to this
firm for services to the Company and its subsidiaries was $332,000.
Comparative Stock Price Performance Graph
- -----------------------------------------
The following graph compares, for the period January 1, 1993 to
December 31, 1997, 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
12
<PAGE>
assumes an investment of $100 on January 1, 1993, 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-December 31, 1992 100 100 100
FYE 12/31/93 241.34 110.08 91.77
FYE 12/31/94 130.45 111.53 102.58
FYE 12/31/95 106.02 153.45 130.85
FYE 12/31/96 313.04 188.68 155.03
FYE 12/31/97 166.07 251.63 222.19
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
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<PAGE>
to the NASDAQ National Market Tier of the NASDAQ Stock Market. Per share value
as of December 31, 1993, 1994, 1995, 1996 and 1997 is 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 June, 1997, the Company entered into an Employment Agreement with
Robert L. Montgomery replacing a prior agreement. The Agreement is for a term of
six years commencing on January 1, 1997, and provides for Mr. Montgomery to
receive base annual compensation during the term of not less than $485,000. 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 also allows Mr. Montgomery the option, upon reaching age
60, to reduce his level of service to the Company by approximately one-half with
a corresponding decrease in position and compensation. Mr. Montgomery also has
the option upon reaching age 60 to terminate his active service, and continue in
a consulting capacity. The term of the consulting period shall be 10 years and
Mr. Montgomery will receive approximately 20% of his prior annual compensation
as a consulting fee. The Agreement includes the obligation of Mr. Montgomery to
maintain the confidentiality of confidential information of the Company and
contains a covenant of Mr. Montgomery not to compete with the Company.
In June, 1997, the Company entered into an Employment Agreement with
Dr. Hastings replacing a prior agreement. The Agreement is for a period of six
years commencing on January 1, 1997, and provides for Dr. Hastings to receive
base annual compensation during the term of not less than $275,000. 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 also allows Dr. Hastings the option, upon reaching age 60,
to reduce his level of service to the Company by approximately one-half with a
corresponding decrease in position and compensation. Dr. Hastings also has the
option upon reaching age 60 to terminate his active service, and continue in a
consulting capacity. The term of the consulting period shall be 10 years and Dr.
Hastings will receive approximately 20% of his prior annual compensation as a
consulting fee. 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 and a covenant of Dr. Hastings not to compete with the
Company.
14
<PAGE>
In April, 1994, the Company entered into an Employment Agreement with
David G. Kreher, Senior Vice President and Chief Operating Officer, effective
from January 1, 1994. The Agreement has been extended through December 31, 1998.
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.
In March, 1997, the Company entered into Split Dollar Agreements with
Robert L. Montgomery, Carl W. Hastings, David G. Kreher and Donald E. Gibbons,
whereby the Company pays the premiums on life insurance policies covering these
executive's lives. Upon the death of an executive, the Company shall be entitled
to receive the greater of (i) one-third of the insurance proceeds, (ii) the cash
surrender value of the policy and (iii) the total premiums paid under the
policy, with the executive receiving the balance of the insurance proceeds. On
termination of the Agreement prior to an executive's death, the executive shall
have the right to purchase the policy for the greater of (i) the cash surrender
value of the policy and (ii) the total premiums paid under the policy. The
policy amounts are $3,124,000 for Mr. Montgomery, $1,770,000 for Dr. Hastings,
$750,000 for Mr. Kreher and $750,000 for Mr. Gibbons.
In March, 1997, the Company entered into Salary Continuation Plan
Agreements with David G. Kreher and Donald E. Gibbons. The Agreements provide
for continuation of these executive's salaries upon termination of employment or
retirement, after these executives have reached the age of 55 and have been
employed by the Company for 15 years. Salary continuation payments are also made
in the event the executive is terminated prior to reaching these thresholds for
other than cause as defined in the Agreements. Payments are to be made for a
period of 10 years and the amount of the payments are based on the executive's
age at time of retirement or termination of employment.
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 $2,500 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. No stock options were granted to members of the
Board of Directors during fiscal 1997.
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 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 1997, all Section 16(a) filing requirements
applicable to the officers, directors and ten-percent beneficial owners were
complied with; except that Dr. Hastings failed to timely report three
15
<PAGE>
transactions on Form 4 for September 1997 (which transactions were reported on
Form 5 for year end) and Mr. McCain failed to timely report one transaction on
Form 4 for June 1997 (which transaction was reported on Form 5 for year end).
Board of Directors Affiliations and Related Transactions
- --------------------------------------------------------
During 1997, Mr. Montgomery received advances from the Company against
his anticipated incentive compensation. The highest balance of these advances
was $79,250 at December 31, 1997.
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 1998, 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 1999 Proxy Statement
- ----------------------------------------------
Proposals by shareholders for inclusion in the Company's Proxy
Statement and form of proxy relating to the 1999 Annual Meeting of Stockholders,
which is scheduled to be held on May 28, 1999, 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, 1999. 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.
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 17, 1998
/s/ Stephen M. Merrick
-----------------------------
Stephen M. Merrick, Secretary
16
<PAGE>
RELIV' INTERNATIONAL, INC.
Annual Meeting of Shareholders
May 21, 1998, 10:00 a.m.
Doubletree Hotel & Conference Center
16625 Swingley Ridge Road
Chesterfield, Missouri 63017
(314) 532-5000
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 case 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 Thursday, May 21, 1998, at the Doubletree Hotel &
Conference Center, 16625 Swingly Ridge Road, Chesterfield, Missouri 63017, (314)
532- 5000 at 10:00 a.m., Central Daylight Savings Time, and at 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
postponement thereof as specified. IF NO SPECIFICATIONS ARE MADE, THIS PROXY
WILL BE VOTED FOR THE ELECTION OF THE NOMINEES 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 reverse side)
<PAGE>
ADMISSION TICKET
Annual Meeting
of
Reliv' International, Inc.
Thursday, May 21, 1998
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
Please Detach and Mail in the Envelope Provided
|X| Please mark your
A votes as in this
example.
WITHHOLD
FOR AUTHORITY
all nominees to vote for all nominees
1. ELECTION OF listed listed at right
DIRECTORS
|_| |_| Nominee: Robert L. Montgomery
Sandra S. Montgomery
Carl W. Hastings
In the Event the undersigned wishes to withhold David G. Kreher
authority to vote for any particular nominee or Donald L. McCain
nominees listed above please so indicate by Thomas T. Moody
clearly and neatly writing through or striking out Thomas W. Pinnock, III
the name of any such nominee or nominees. Stephen M. Merrick
John B. Akin
Marvin W. Solomonson
FOR AGAINST ABSTAIN
2. Proposal to ratify the appointment |_| |_| |_|
of Ernst & Young as the
Independent Public Accountants
of the Company for 1998.
3. In their discretion upon such other matter 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.
Signature__________________ Signature__________________ Dated:_________, 1998
Note: Please date this proxy and sign exactly as your name appears on this
proxy. If shares are not 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 or other authorized officer. If a partnership, please
sign in partnership name by authorized person.
