HAUSER CHEMICAL RESEARCH, INC.
5555 Airport Boulevard
Boulder, CO 80301
NOTICE OF ANNUAL MEETING OF SHAREHOLDERS
To Be Held November 8, 1995
To Our Shareholders:
The Annual Meeting of Shareholders of Hauser Chemical
Research, Inc., a Delaware corporation (the "Company"), will
be held at 3:00 p.m., Mountain Time, on November 8, 1995, at
The Ramada Hotel Denver/Boulder, 8773 Yates Drive,
Westminster, Colorado, 80030-3678, for the following purposes,
all of which are more completely set forth in the accompanying
Proxy Statement.
1. To elect nine (9) Directors;
2. To transact such other business as may properly come
before the meeting, or any adjournment thereof.
All shareholders are cordially invited to attend the
meeting, although only shareholders of record at the close of
business on October 3, 1995, will be entitled to notice of,
and to vote at, the meeting or any and all adjournments
thereof.
BY ORDER OF THE BOARD OF DIRECTORS
Dean P. Stull, Chairman
October 9, 1995
PLEASE COMPLETE, DATE, SIGN AND RETURN THE ENCLOSED
PROXY CARD IN THE ENCLOSED POSTAGE PREPAID ENVELOPE,
WHETHER OR NOT YOU PLAN TO ATTEND THE MEETING. YOUR
PROMPT RETURN OF THE PROXY WILL HELP TO ASSURE A
QUORUM AT THE MEETING AND AVOID ADDITIONAL COMPANY
EXPENSE FOR FURTHER SOLICITATION. YOUR PROXY MAY BE
REVOKED AT ANY TIME BEFORE IT IS VOTED.
HAUSER CHEMICAL RESEARCH, INC.
SOLICITED BY THE BOARD OF DIRECTORS FOR THE ANNUAL
MEETING OF SHAREHOLDERS TO BE HELD NOVEMBER 8, 1995
The undersigned hereby constitutes, appoints and
authorizes Dean P. Stull and Randall J. Daughenbaugh, and each
of them, the true and lawful attorneys and Proxies of the
undersigned with full power of substitution and appointment,
for and in the name, place and stead of the undersigned to act
for and vote as designated below, all of the undersigned's
shares of the $.001 par value common stock of Hauser Chemical
Research, Inc., a Delaware corporation, at the Annual Meeting
of Shareholders to be held at The Ramada Hotel Denver/Boulder,
8773 Yates Drive, Westminster CO 80030-3678, at 3:00 p.m.
Mountain Time, on November 8, 1995, and at any and all
adjournments thereof, for the following purposes:
1. To elect nine (9) Directors:
/__/ For all nominees listed below (except as marked to
the contrary):
/__/ Withhold authority to vote for the nominees listed
below:
Dean P. Stull, Randall J. Daughenbaugh, Stanley J.
Cristol, Ray L. Hauser, Bert M. Tolbert, William E.
Coleman, Christopher W. Roser, Robert F. Saydah and
Willem A. Maas
(INSTRUCTION: To withhold authority to vote for any
individual nominee, draw a line through or otherwise strike
out his name. If authority to vote for the election of any
nominee is not withheld, the execution of this Proxy shall be
deemed to grant such authority.)
2. To transact such other business as may properly come
before the meeting, or any adjournment thereof.
/__/ FOR /__/ AGAINST /__/ ABSTAIN
The undersigned hereby revokes any Proxies as to said
shares heretofore given by the undersigned, and ratifies and
confirms all that said attorneys and Proxies may lawfully do
by virtue hereof.
THIS PROXY WHEN PROPERLY EXECUTED WILL BE VOTED IN THE MANNER
DIRECTED HEREIN BY THE UNDERSIGNED SHAREHOLDER. IF NO
DIRECTION IS MADE, THIS PROXY WILL BE VOTED FOR ALL PROPOSALS.
THIS PROXY CONFERS DISCRETIONARY AUTHORITY IN RESPECT TO
MATTERS NOT KNOWN OR DETERMINED AT THE TIME OF THE MAILING OF
THE NOTICE OF THE ANNUAL MEETING OF SHAREHOLDERS TO THE
UNDERSIGNED.
The undersigned hereby acknowledges receipt of the Notice
of Annual Meeting of Shareholders and Proxy Statement
furnished herewith.
DATED: _____________, 199_.
________________________________________
Signature(s) of Shareholder(s)
________________________________________
Signature(s) of Shareholder(s)
Signature(s) should agree with the name(s) shown hereon.
Executors, administrators, trustees, guardians and attorneys
should indicate their capacity when signing. Attorneys should
submit powers of attorney.
THIS PROXY IS SOLICITED ON BEHALF OF THE BOARD OF DIRECTORS OF
HAUSER CHEMICAL RESEARCH, INC. PLEASE SIGN AND RETURN THIS
PROXY TO AMERICAN SECURITIES TRANSFER, INCORPORATED, 938 QUAIL
STREET, SUITE 101, LAKEWOOD, CO 80215. THE GIVING OF A PROXY
WILL NOT AFFECT YOUR RIGHT TO VOTE IN PERSON IF YOU ATTEND THE
MEETING.
HAUSER CHEMICAL RESEARCH, INC
5555 Airport Boulevard
Boulder, CO 80301
PROXY STATEMENT
ANNUAL MEETING OF SHAREHOLDERS
To Be Held November 8, 1995
SOLICITATION OF PROXIES
This Proxy Statement is furnished in connection with the
solicitation of proxies by the Board of Directors of Hauser
Chemical Research, Inc., a Delaware corporation (the
"Company"), for use at the Annual Meeting of Shareholders of
the Company to be held at 3:00 p.m. Mountain Time, on November
8, 1995, at The Ramada Hotel Denver/Boulder, 8773 Yates Drive,
Westminster CO 80030-3678, and at any and all adjournments of
such meeting.
If the enclosed Proxy Card is properly executed and
returned in time to be voted at the meeting, the shares of
Common Stock represented will be voted in accordance with the
instructions contained therein. Executed proxies that contain
no instructions will be voted for each of the nominees for
director indicated herein. It is anticipated that this Proxy
Statement and the accompanying Proxy Card and Proxy Notice
will be mailed to the Company's shareholders on or about
October 9, 1995.
Shareholders who execute proxies for the Annual Meeting
may revoke their proxies at any time prior to their exercise
by delivering written notice of revocation to the Company, by
delivering a duly executed Proxy Card bearing a later date, or
by attending the meeting and voting in person.
The costs of the meeting, including the costs of
preparing and mailing the Proxy Statement, Proxy Notice and
Proxy Card, will be borne by the Company. The Company may, in
addition, use the services of its directors, officers and
employees to solicit proxies, personally or by telephone, but
at no additional salary or compensation. The Company will
also request banks, brokers, and others who hold shares of
Common Stock of the Company in nominee names to distribute
annual reports and proxy soliciting materials to beneficial
owners, and will reimburse such banks and brokers for
reasonable out-of-pocket expenses which they may incur in so
doing.
VOTING SECURITIES AND PRINCIPAL SHAREHOLDERS
Only shareholders of record at the close of business on
October 3, 1995, will be entitled to vote at the Annual
Meeting. Each issued share of Common Stock entitles its
record owner to one vote on each matter to be voted upon at
the meeting. As of July 31, 1995, there were 10,539,668
shares of the Company's $0.001 par value Common Stock
outstanding. The Company has authorized 800,000 shares of
Preferred Stock, $1.00 par value, none of which were
outstanding as of the record date. The presence in person or
by proxy of the holders of forty percent (40%) of the total
issued and outstanding shares of Common Stock of the Company
which are entitled to be voted at the Annual Meeting is
necessary in order to constitute a quorum for the meeting. If
a quorum is present, directors will be elected by a plurality
of the votes present in person or by proxy.
ELECTION OF DIRECTORS
(Proxy Item #1)
The Company's Board of Directors has nominated the nine
persons listed below for election as directors for the ensuing
year, each to hold office until the 1996 Annual Meeting of
Shareholders and until their successors are duly elected and
qualified, or until their death, resignation or removal. Each
of the nominees is a member of the present Board of Directors
of the Company and has served in that capacity since
originally elected except Willem A. Maas. A shareholder using
the enclosed proxy form can vote for all or any of the
nominees of the Board of Directors or such shareholder may
withhold his or her vote from all or any of such nominees. If
the proxy card is properly executed but not marked, it will be
voted for all of the nominees. Each of the nominees has
agreed to serve as a director if elected; however, should any
nominee become unable or unwilling to accept nomination or
election, the persons named in the proxy will exercise their
voting power in favor of such other person or persons as the
Board of Directors of the Company may recommend. There are no
family relationships among these nominees. The following
table sets forth the directors of the Company, their ages as
of April 30, 1995, all positions and offices held with the
Company and the period from which served:
<TABLE>
Period
All Positions and from
Offices Held with Which
Name Age the Company Served
<S> <C> <C> <C>
Dean P. Stull, Ph.D. 45 Chairman, Chief Executive 11/83
Officer, President and Director
Randall J. Daughenbaugh, Ph.D. 47 Executive Vice President, 11/83
Chief Technical Officer and
Director
William E. Coleman, Ph.D. (1) 61 Director 2/88
Stanley J. Cristol, Ph.D. (1) 79 Director 11/83
Ray L. Hauser, Ph.D. (2) 67 Director 11/83
Willem A. Maas 64 Director Nominee
Christopher W. Roser (2) 37 Director 12/90
Robert F. Saydah (1)(2) 68 Director 1/94
Bert M. Tolbert, Ph.D. (1) 74 Director 11/83
</TABLE>
_________________________
(1) Member of Compensation Committee.
(2) Member of Audit Committee.
The principal occupation and business experience of each
Director is set forth below:
Dean P. Stull, Ph.D. is one of the founders of the
Company. He has been a Director, Chairman of the Board of
Directors and Chief Executive Officer since November 1983. In
May 1995, he assumed the position of President of the Company.
From 1978 to 1986, Dr. Stull held the position of Chief
Chemist, Chemical Section Manager, of Hauser Laboratories,
Inc. Dr. Stull received a Bachelor of Science Degree in
Chemistry from Colorado State University in 1972, and a Master
of Science and Ph.D. in Physical Organic Chemistry from the
University of Colorado, Boulder, in 1974 and 1976,
respectively. Dr. Stull has presented numerous professional
papers at professional scientific meetings around the country
and has published scientific articles in the Journal of
Organic Chemistry, the Journal of the American Chemical
Society, and the Proceedings of the Colorado-Wyoming Academy
of Science and Industry and Commerce.
Randall J. Daughenbaugh, Ph.D. is one of the founders of
the Company. He has been a Director of the Company since
November 1983, and served as President until November 1992,
when he became Executive Vice President and Chief Technical
Officer. Prior to forming the Company, Dr. Daughenbaugh served
as research chemist for Chemical Exchange Industries, Inc., a
chemical company, from November 1980 and research director
from August 1983 to October 1983. Dr. Daughenbaugh worked for
Air Products & Chemicals, Inc., a diversified chemical
company, in Allentown, Pennsylvania, as a Senior Principal
Investigator in chemical process development from 1975 to
1980. Dr. Daughenbaugh received a Bachelor of Science Degree
from South Dakota School of Mines and Technology in 1970 and a
Ph.D. in Physical Organic Chemistry from the University of
Colorado in 1975. Dr. Daughenbaugh has published numerous
articles in such professional publications as the Journal of
Organic Chemistry, The Journal of the American Chemical
Society, Tetrahedron Letters, Photochemistry, and co-authored
portions of the textbook Organic Photochemical Synthesis with
Professor Stanley J. Cristol. Dr. Daughenbaugh has developed
processes to isolate pure compounds from plant materials and
holds several patents in the area of organic chemical
processes.
William E. Coleman, Ph.D. has served as a Director of the
Company since February 1988. Dr. Coleman has served as
President of Colorado Venture Management, Inc., Boulder,
Colorado, an investment and project management firm from 1980
to 1990 and as Chairman since 1990. He also serves as
President of Cogen Technology, Inc., a privately held company
developing cogeneration projects; Chairman of Econalytic
Systems, Inc., a privately held company which markets fuel
additive products; and is a director of B.I., Inc., a
publicly-held company which designs, manufactures, markets and
supports electronic monitoring systems. Dr. Coleman received
a Bachelor of Science Degree in Chemistry in 1956 from the
University of Illinois, and a Ph.D. in Organic Chemistry in
1960 from the University of California, Berkeley.
Stanley J. Cristol, Ph.D. is one of the founders of the
Company and has been a Director of the Company since November
1983. Dr. Cristol has been on the faculty of the University
of Colorado since 1946 and was appointed the Joseph Sewell
Distinguished Professor of Chemistry in 1979. Dr. Cristol has
held the positions of Chairman of the Department of Chemistry,
Acting Dean of the Graduate School and Acting Associate Vice
Chancellor for Graduate Affairs at the University of Colorado.
Dr. Cristol has also taught at Stanford University, University
of Geneva and University of Lausanne. Dr. Cristol has acted
as consultant to many large U.S. government and industrial
organizations and companies. Dr. Cristol received a Bachelor
of Science Degree in Chemistry from Northwestern University in
1937, and Master of Arts and Ph.D. Degrees in Organic
Chemistry from the University of California at Los Angeles in
1939 and 1943, respectively. Dr. Cristol's honors and awards
include those from U.S. and foreign professional and
industrial organizations. Dr. Cristol is the author of over
220 scientific papers and texts.
Ray L. Hauser, Ph.D. is one of the founders of the
Company and has been a Director of the Company since November
1983. Dr. Hauser was the owner and sole shareholder of Hauser
Laboratories, Inc. prior to its acquisition by the Company in
1990. Since 1961, Dr. Hauser has worked with the formulation,
development, processing and evaluation of plastics and other
non-metallic materials. Dr. Hauser is an internationally
recognized expert in materials science and technology and, as
an individual or through the performance of his laboratories,
has supplied consulting and contract services to a large
number of U.S. and international organizations and companies.
Dr. Hauser received a Bachelor of Science Degree in Chemical
Engineering from the University of Illinois in 1950, a Master
of Science Degree in Chemical Engineering from Yale University
in 1952, and a Ph.D. in Chemical Engineering from the
University of Colorado in 1957. Dr. Hauser is a widely
published author and holder of several patents in the areas of
materials and medical equipment.
Willem A. Maas has served as a President and a Director
of Hauser Northwest, Inc., since May 1994. From February 1990
to May 1994, he was President of Ironwood Evergreens, Inc., an
Oregon corporation engaged in the floral greens business.
From December 1990 to the present, he has also been the
Chairman of Ark Interface Inc., a software development
company. From July 1984 to the present, he has also been the
President of Ironwood Strategy for Marketing, a consulting
company. From August 1980 until July 1989, he was the Chief
Executive Officer and Executive Vice President for Florist
Transworld Delivery Association ("FTD").
Christopher W. Roser has served as a Director of the
Company since December 1990. Mr. Roser is a general partner
of The Roser Partnership, Ltd., and The Roser Partnership II,
Ltd., privately held venture capital funds, and is a Director
on the Board of Directors of Tactilitics, Inc., a privately
held medical instruments company and WG Inc., a privately-held
distribution company. From 1984 to 1987, Mr. Roser was
employed as a technology research analyst and an associate in
corporate finance for Ladenburg Thalmann & Co., Inc., an
investment banking firm. From 1981 to 1984, Mr. Roser was a
staff public accountant for Main Hurdman KMG in New York City.
Mr. Roser received a Bachelor of Arts Degree in Economics from
The University of Colorado in 1981 and an M.B.A. in Finance
from New York University Graduate School of Business
Administration in 1985.
Robert F. Saydah has served as a Director of the Company
since January 1994. Mr. Saydah has been Managing Partner and
a Director of Heidrick & Struggles, a privately-held
international executive search consulting firm, since May
1992. Heidrick & Struggles is the oldest of four major
executive search firms in the United States. Before joining
Heidrick & Struggles in 1988, Mr. Saydah worked for the
Lederle Laboratories Division of American Cyanamid Company for
39 years. He held general management positions responsible
for strategic planning and marketing and sales, culminating as
Vice President in charge of ethical, generic, and consumer
health products businesses. He also had operational
responsibility for pharmaceutical divisions in Latin America
and Europe. Mr. Saydah received a Bachelors of Science Degree
in Biology from Lehigh University in 1948, and a Masters of
Science Degree in Bacteriology from Lehigh University in 1949.
Bert M. Tolbert, Ph.D. is one of the founders of the
Company and has been a Director of the Company since November
1983. From 1957 to 1989, Dr. Tolbert served as Professor,
Department of Chemistry and Biochemistry at the University of
Colorado at Boulder, and from 1945 to 1957 he served as
Associate Director of BioOrganic Chemistry at the University
of California at Berkeley. Dr. Tolbert received a Bachelor of
Science (cum laude) Degree from the University of California
at Berkeley in 1942 and a Ph.D. in Physical-Organic Chemistry
from the University of California at Berkeley in 1945. Dr.
Tolbert has published over 190 papers in Chemistry and
Biochemistry.
Compensation Committee Interlocks and Insider Participation
Directors Coleman, Cristol, Saydah and Tolbert comprise
the Company's Compensation Committee. All are nonemployee
directors. None of the members of the Compensation Committee
have ever been officers of the Company.
Director Compensation
During fiscal 1995, the Company's non-employee directors
were granted options to purchase a total of 15,450 shares of
Common Stock for services rendered to the Company at an
average price of $5.3623 per share (100% of fair market value
on the date of grant). Directors receive an option to
purchase 300 shares for Board service and options to purchase
150 shares for attendance at each meeting of the Board or each
committee thereof. The options are exercisable for a
five-year period.
In May 1992, the Board of Directors approved a two-step
plan to compensate outside Directors. The plan includes
options for Board and committee service as discussed above,
and an annual cash payment of $10,000 per outside Director
plus an annual payment of $2,500 for committee chairman.
During fiscal 1995, the Company's five outside directors
received cash compensation of $53,625 in the aggregate
pursuant to this plan plus reimbursement of travel expenses.
During the fiscal year ended April 30, 1995, the
Company's Board of Directors held ten meetings. The
Compensation Committee, consisting of directors Coleman,
Cristol, Saydah and Tolbert held twelve meetings during the
fiscal year. The function of the Compensation Committee is to
recommend raises and bonuses, if any, for the Company's
officers and to grant stock option awards to Company
employees. The Audit Committee consisting of Directors
Hauser, Saydah and Roser held five meetings during the fiscal
year.
Compliance With Section 16(a)
Section 16(a) of the Securities Exchange Act of 1934, as
amended, requires the Company's directors, executive officers
and holders of more than 10% of the Company's Common Stock to
file with the Securities and Exchange Commission initial
reports of ownership and reports of changes in ownership of
Common Stock of the Company. Based solely upon a review of
Forms 3 and 4 and amendments thereto furnished to the Company
during the fiscal year ended April 30, 1995 and Forms 5 and
amendments thereto furnished to the Company with respect to
the fiscal year ended April 30, 1995, to the best of the
Company's knowledge, the Company's directors, officers and
holders of more than 10% of its Common Stock complied with all
Section 16(a) filing requirements.
EXECUTIVE OFFICERS
The following sets forth the names of the executive
officers of the Company not named previously, their respective
positions with the Company and business experience and
background.
William E. Paukert became Chief Financial Officer of the
Company in August 1986 and Treasurer in December 1987. He
also serves as Corporate Treasurer for the Company's wholly-
owned subsidiaries, Hauser Northwest, Inc. d/b/a Ironwood, and
Herbert V. Shuster, Inc. Prior to joining the Company, Mr.
Paukert was a senior financial officer for several high
technology, service and processing companies. Mr. Paukert
received a Bachelor of Arts Degree in Economics and Business
Administration from Hamline University in 1953 and an M.B.A.
in Finance and Accounting from the University of Minnesota in
1955.
Patricia A. Roberts was elected Corporate Secretary for
the Company effective April 30, 1995. She has been employed
by Hauser since its founding, serving as manager of Corporate
Affairs and Secretary to the Board of Directors. She also
serves as Corporate Secretary for the Company's wholly-owned
subsidiaries, Hauser Northwest, Inc. d/b/a Ironwood, and
Herbert V. Shuster, Inc. Ms. Roberts is an alumnus of the
University of Colorado at Boulder.
Timothy D. Ziebarth, Ph.D. is Senior Vice
President/Director of Technical Services of the Company and
President and a director of Herbert V. Shuster, Inc., a
wholly-owned subsidiary of the Company. Dr. Ziebarth became
Vice President, Research and Development, and Director of
Chemical Services for the Company in January 1990 as a result
of the Company's acquisition of Hauser Laboratories, Inc.
Prior to joining the Company, he served as Chief Chemist,
General Manager and President of Hauser Laboratories, Inc.
from 1974 to 1978 and again from 1987 to 1990. In 1978, he
founded and served as Vice President of Hotline Energy
Reports, Inc., which was acquired in 1984 by Dwight's
Energydata, Inc. and for which he served as Executive Vice
President until returning to Hauser. Dr. Ziebarth received a
Bachelor of Science Degree in Chemistry from Montana State
University in 1969 and a Ph.D. in Organic Chemistry from
Oregon State University in 1973.
Neil A. Jans is currently Vice President and General
Manager of Nutraceuticals for the Company. He joined the
Company as Director, Business Development, in May 1988 and was
President of Hauser Northwest, Inc., a subsidiary of the
Company, from November 1990 to May, 1994. Mr. Jans was a
consultant and project manager for Western Consulting
Corporation, The Meyer Group, a management consulting group
specializing in business planning and strategy from 1985 to
1988. From 1984 to 1985 he was the President and co-founder
of Telemetry Designs, Inc., a company which designed and
manufactured low power, radio telemetry systems. Mr. Jans
received a Bachelor of Science Degree in Chemistry in 1973
from Rutgers University and an M.B.A. from the University of
Colorado in 1984.
Simon G. Maas has served as Executive Vice President and
General Manager of Hauser Northwest, Inc., since May 1994.
From February 1990 to May 1994, he was the Vice President and
General Manager of Ironwood Evergreens, Inc. From June 1987
to February 1990, he was a partner in Pyramid Construction.
From 1992 to the present, he has also been President of
Nahanni River Trading Co., Inc. Mr. Maas received a Bachelors
of Arts Degree in Art History from Trent University in 1985
and attended Oxford University in 1986.
The following table sets forth as of April 30, 1995,
the number of shares of the Company's Common Stock owned by
any person who is known by the Company to be the beneficial
owner of more than 5% of the Company's voting securities, by
all individual Directors, by all individual executive officers
and by all Officers and Directors as a group:
<TABLE>
Number
Name and Title of Shares Percent
Address of Class Owned (1)(2) of Class
<S> <C> <C> <C>
Dean P. Stull Common 266,510 2.6%
5555 Airport Boulevard
Boulder, CO 80301
Thomas A. Scales Common 105,677 1.0%
5555 Airport Boulevard
Boulder, CO 80301
Randall J. Daughenbaugh Common 131,304 1.3%
5555 Airport Boulevard
Boulder, CO 80301
William E. Coleman Common 33,305 (3) *
2995 Wilderness Place
Suite 103
Boulder, CO 80301
Stanley J. Cristol Common 124,093 1.2%
2918 - 3rd Street
Boulder, CO 80304
Ray L. Hauser Common 380,080 3.7%
5555 Airport Boulevard
Boulder, CO 80301
Bert M. Tolbert Common 91,427 *
444 Kalmia Avenue
Boulder, CO 80304
Willem A. Maas Common 2,000 *
2896 29th Avenue SW
Tumwater, WA 98512
Christopher W. Roser Common 68,070 *
2033 Eleventh Street
Boulder, CO 80302
Robert F. Saydah Common 8,600 *
2493 Biltmore Drive
Alamo, CA 94507
William E. Paukert Common 43,060 *
5555 Airport Blvd.
Boulder, CO 80301
Patricia A. Roberts Common 6,584 *
5555 Airport Blvd.
Boulder, CO 80301
Timothy D. Ziebarth Common 64,913 *
5555 Airport Blvd.
Boulder, CO 80301
Neil A. Jans Common 28,729 *
4161 Specialty Pl.
Longmont, CO 80504
All Officers and Common 1,355,350 12.7%
Directors as a Group
(15 persons)
Fidelity Management Common 913,500 8.8%
& Research Company
82 Devonshire Street
Boston, MA 02109
Dent D.F. & Company, Inc. Common 543,650 5.3%
2 East Read Street, 6th Floor
Baltimore, MD 21202
</TABLE>
________________________________
* Less than one percent.
(1) Includes the following number of shares which could be
acquired within 60 days through the exercise of stock options:
Dr. Stull, 87,484 shares; Dr. Daughenbaugh, 31,366 shares; Dr.
Cristol, 8,100 shares; Dr. Hauser, 5,400 shares; Mr. Saydah,
5,100 shares; Dr. Tolbert, 8,250 shares; Mr. Paukert 19,820
shares; Ms. Roberts 2,046 shares; Mr. Roser 9,900 shares; Dr.
Ziebarth 14,139 shares; Mr. Jans 11,376 shares; and all
directors and officers as a group, 316,457 shares.
(2) Includes the following number of shares which could be
acquired within 60 days through the exercise of warrants: Dr.
Cristol, 667 shares and Dr. Tolbert, 667 shares.
(3) Includes 14,359 shares owned by Dr. Coleman directly, 1
share owned by CVM Equity Fund II, Ltd., of which Dr. Coleman
is a general partner; 4,695 shares owned by Colorado Venture
Management, Inc., of which Dr. Coleman is Chairman; and shares
which could be acquired within 60 days through the exercise of
options to purchase 14,250 shares held by CVM, Inc.
Arrangements Affecting Control of the Company
As of April 30, 1995, the Officers and Directors of the
Company beneficially owned 1,355,350 shares of Common Stock
(approximately 12.7%) of the Company's Common Stock (assuming
exercise of all warrants and options deemed to be beneficially
owned by these persons).
EXECUTIVE COMPENSATION
COMPENSATION COMMITTEE REPORT ON COMPENSATION OF EXECUTIVE
OFFICERS OF THE COMPANY
The Compensation Committee of the Board of Directors and
the Company's Chief Executive Officer have furnished the
following joint report on executive compensation. The
specific responsibility of the Chief Executive Officer to
furnish information to the Compensation Committee has been
outlined below.
Executive Officer Compensation
The Committee has responsibility for making
recommendations for compensation and compensation policy. In
carrying out this responsibility, the Committee's first
objective is to provide a strong and direct link among
shareholder value, Company performance and executive
compensation. The second objective is to structure
compensation programs that will promote long-term stable
growth and development within the Company. The Committee
believes that corporate development at Hauser, an innovative
technology company, is dependent on its ability to attract and
retain high quality people and operates to ensure that goal.
The Chief Executive Officer's responsibility is to evaluate
for the Compensation Committee the individual performance of
the executive officers, other than himself, and their
contribution to the Company's business goals and objectives.
He is also asked to report on the performance reviews of these
officers to the Compensation Committee and make suggestions of
the percentage of discretionary cash and discretionary stock
bonuses to be awarded.
The Company's compensation program for executive officers
consists of four key elements: a base salary, discretionary
cash and stock bonuses, discretionary incentive stock option
awards and annual grants of non-qualified stock options. The
Committee believes that this approach serves the interests of
shareholders by ensuring that executive officers are
compensated in a manner that advances both the short- and
long-term interests of the shareholders. Thus, compensation
for the Company's executive officers involves a high
proportion of pay which is at risk, a variable bonus based on
individual performance, and stock options, which directly
relate a portion of the officer's compensation to the long-
term stock price appreciation realized by the Company's
shareholders. To further these objectives, the Committee
regularly meets to evaluate the Company's compensation and
benefits programs. The executive officers also participate in
a 401(k) retirement plan, a medical plan, and the non-
qualified stock option plan available to employees generally.
Base Salary. The Compensation Committee's policy is to
provide compensation for executive officers competitive within
the Denver/Boulder metropolitan area while giving
consideration to national compensation paid by technology
companies. Salaries paid to the Company's executive officers
are based upon an assessment of the nature of the position,
and the contribution, experience and Company tenure of the
executive officer and salary survey results. The Committee
also considers the recommendations for pay treatment and
performance reviews submitted by the Chief Executive Officer
as well as giving consideration to the needs of the Company
for product line expansion. In evaluating the performance of
the executive officers other than himself, the Chief Executive
Officer measured individual leadership skills, business
development skills, management skills, external relations and
communication skills. The executive officers' individual
contribution to corporate financial results for the fiscal
year, including revenue growth and changes in net income and
earnings per share were also evaluated. In addition,
extraordinary management and supervisory responsibilities
assumed during the fiscal year were taken into consideration.
During fiscal 1993, base salaries were adjusted based
upon Wyatt Data Service's national survey of executive
salaries in Chemical Group Services companies with less than
$200 million in sales and a Company survey of local high
technology companies in the Boulder-Denver area with less than
$100 million in sales which are most likely to compete with
the Company for the services of its executive officers. At
that time, the Company's executive base salaries were adjusted
to the 10th to 20th percentile of the salaries represented by
the Wyatt Data Service's survey. During fiscal 1994, the
Committee reviewed the base salaries of the Chief Executive
Officer, President, Executive Vice President, Secretary and
Treasurer and made no adjustments. During fiscal 1995, the
base salaries of the Chief Executive Officer, President,
Executive Vice President, Senior Vice President, Vice
President, and Treasurer were adjusted down by ten percent
(10%), and the Secretary by five percent (5%). These salary
decreases were made because of financial exigencies within the
Company and were not based on inadequate performance. They
were a direct consequence of a loss of revenue due to the
decision by Bristol-Myers Squibb Company ("Bristol") not to
extend the Company's supply contract beyond August 1994.
President Thomas A. Scales resigned effective April 30,
1995 (the last day of the fiscal year). He received, in
addition to regular salary due to that date and accumulated
vacation pay, a cash termination compensation payment of
$68,400 (six months' salary).
During fiscal 1995, the Compensation Committee developed
a series of specific goal oriented compensation awards for the
named executives for fiscal 1996 and future years. On June
30, 1995 the Committee approved the plan for these executives
for fiscal 1996. Fiscal 1996 awards for these executives,
with one exception, are based on achieving budgeted sales
goals and to a lesser extent achieving a positive corporate
income. Senior Vice President Ziebarth's goal oriented
compensation will be based on meeting budgeted operating
income for the Company's combined Technical Services groups
(Chemistry Services, Engineering Services, and Herbert V.
Shuster, Inc.). The Committee expects that for fiscal 1997
and future years, award goals for all named executives will be
directed toward a combination of increased sales and
profitability. In addition, the base compensation of the
named executives will be restored to competitive levels.
Discretionary Cash Bonuses Paid in Fiscal 1995. After
reviewing the Company's annual report and audited financial
statements for the fiscal year ended April 30, 1995, the
Compensation Committee awarded no cash bonuses for fiscal
1995.
The Compensation Committee believes that it has a
responsibility to the shareholders to see that an annual
performance review of the Company's executive officers is
conducted. In an effort to satisfy this objective, the
Compensation Committee instructs the Chief Executive Officer
to complete performance evaluations for each of the executive
officers. The Chief Executive Officer's evaluation is an
informal, oral report to the Compensation Committee along with
informal suggestions of the percentage stock and cash bonuses
to be awarded. There were no individual bonuses awarded to
named executives during fiscal 1995. In evaluating the
performance of the executive officers other than himself, the
Chief Executive Officer measures leadership, strategic
planning, financial results, business development, management
skills, external relations and communication skills. The
Compensation Committee does not adopt the suggestions of the
Chief Executive Officer but rather adjusts those suggestions
to fit the parameters of their overall knowledge and
experience with the executive officers. The Compensation
Committee evaluates these performance reviews. Factors, other
than the report of the Chief Executive Officer, reviewed by
the Compensation Committee include increased management or
supervisory responsibilities and the direct impact of the
departments supervised by those executive officers on the net
sales, income and earnings per share of the Company.
Stock Options. It is the Compensation Committee's policy
that a significant portion of the total compensation package
for its executive officers will be derived from stock options
and other forms of compensation that are directly related to
the performance of the Company and the value of shareholder
investments. This motivation is extended to all employees and
the Board of Directors through the Company's Non-Qualified
Stock Option Plan approved by shareholders in 1987 and the
1992 Plan approved by shareholders in 1992. A system of stock
option awards for patentees has been developed for technical
achievement.
During any fiscal year, the named executive officers of
the Company may receive the following types of stock option
awards: 1) along with all employees of the Company, non-
qualified stock options awarded on the employee's anniversary
date and based upon a percentage of the employee's salary; 2)
incentive stock options awarded by the Compensation Committee
for technical achievement, usually related to the filing
and/or award of a patent invented by the individual; and 3)
incentive stock options awarded by the Compensation Committee
based on performance. Discretionary stock options distributed
to the named executive officers were determined by the
Compensation Committee and were based upon the same
performance review criteria previously stated. The number of
options granted were based upon the individual executive's
performance during the 1994 fiscal year, anticipated future
contributions based on that performance, and the officer's
ability to impact corporate financial results. Additional
factors considered by the Committee included increased
management or supervisory responsibilities and the direct
impact of the departments supervised by those executive
officers on the net sales, income and earnings per share of
the Company.
In addition, stock options and share grants may be part
of hiring packages for key executives and professional
personnel. Options typically vest over three to five years
and are exercisable for a five-year period. During fiscal
1995, executive officers received incentive stock options to
purchase 38,000 shares, non-qualified options to purchase
4,570 shares and incentive stock options (based on technical
achievement) to purchase 400 shares. Discretionary stock
option awards granted to the named executives during fiscal
1995, for fiscal 1994 performance, were determined based upon
the Chief Executive Officer's evaluation report to the
Committee of individual performances plus the Compensation
Committee's own knowledge and experience with these same
senior executive officers. The Committee observes that the
executive officers continue to own a relatively low percentage
of total outstanding stock and deems it beneficial to
shareholders as a whole to increase the equity ownership of
the executive officers.
On October 27, 1994 the Compensation Committee directed
the reprice of options currently priced above the October 27th
fair market value of $6.00 per share. On this date, options
currently on the corporate books that had an exercise period
of less than five years were given a five year exercise period
with most grants vesting 100% as of the reprice date, October
27, 1994. In the Committee's opinion, the many options that
had been issued at higher prices were not serving the purpose
that these options were issued to serve, namely to provide
incentive compensation for employees at all levels. This
action reflects the Committee's evaluation that the Company's
future lies in long-term development of new products and
product lines, retention of high quality people, and promotion
of long-term growth within the Company.
<TABLE>
TEN-YEAR OPTION REPRICINGS
5/1/94 to 4/30/95
Length of
Original
Securities Market Option
Underlying Price of Exercise Term
Number of Stock at Price at Remaining
Options/SARs Time of Time of at Date
Repriced or Repricing or Repricing or New of Repricing
Amended Amendment Amendment Exercise or
Name Date (#) ($) ($) Price ($) Amendment
<S> <C> <C> <C> <C> <C> <C>
Dean P. Stull 10/27/94 10,050 $6.00 $6.8150 $6.00 4 years
Chief Executive Officer 254 days
Dean P. Stull 10/27/94 10,500 6.00 13.50 6.00 6 years
139 days
Dean P. Stull 10/27/94 12,000 6.00 8.9375 6.00 4 years
264 days
Thomas A. Scales 10/27/94 22,419 6.00 13.438 6.00 4 years
President 310 days
Thomas A. Scales 10/27/94 7,581 6.00 12.00 6.00 5 years
35 days
Thomas A. Scales 10/27/94 9,500 6.00 13.50 6.00 6 years
140 days
Thomas A. Scales 10/27/94 10,000 6.00 8.9375 6.00 4 years
264 days
Randall J. Daughenbaugh 10/27/94 9,950 6.00 6.8150 6.00 4 years
Executive Vice President 254 days
Randall J. Daughenbaugh 10/27/94 9,500 6.00 13.50 6.00 6 years
139 days
Randall J. Daughenbaugh 10/27/94 8,000 6.00 8.9375 6.00 4 years
264 days
William E. Paukert 10/27/94 5,000 6.00 13.5000 6.00 6 years
Chief Financial Officer 139 days
William E. Paukert 10/27/94 5,000 6.00 8.9375 6.00 4 years
264 days
Timothy D. Ziebarth 10/27/94 1,000 6.00 8.9375 6.00 4 years
Senior Vice President/ 264 days
Director of Technical Services
Timothy D. Ziebarth 10/27/94 400 6.00 7.5000 6.00 5 years
79 days
</TABLE>
The Compensation Committee regularly reviews other
possible forms of incentive compensation and modifies or
supplements the existing programs when appropriate. The
stock awards continue the Committee's policy that officers of
the Company should have a strong motivation to develop
performance of the Company and enhance the Company's stock
value. At present and in future years, successful
development of current and diversified projects and further
growth will be important considerations in discretionary
bonuses, both cash and stock.
Chief Executive Officer Compensation
As Chief Executive Officer, Dr. Stull is compensated
based on a review of his performance by the Compensation
Committee. The key factors measured by the Committee in
determining Dr. Stull's compensation package was its
assessment of his ability and dedication to enhancing the
long-term value of the Company by continuing to provide the
leadership and vision that he has provided throughout his
tenure as Chief Executive Officer. The base salary paid to
the Chief Executive Officer is based upon an assessment of the
nature of the position, the leadership exercised by, and the
contribution, experience and Company tenure of, Dr. Stull.
During fiscal 1993, Dr. Stull's base salary was reviewed
and compared with Wyatt Data Service's national survey of
executive salaries in Chemical Group Services companies with
less than $200 million in sales and a Company survey of local
high technology companies in the Boulder-Denver area with less
than $100 million in sales which are most likely to compete
with the Company for the services of Dr. Stull. At that time,
Dr. Stull's base salary was adjusted to the 10th to 20th
percentile of the salaries represented by the Wyatt Data
Service's survey. During fiscal 1994, the Committee reviewed
the base salary of the Chief Executive Officer and made no
adjustment. During fiscal 1995, the Committee reviewed the
base salary of the Chief Executive Officer and adjusted the
base salary downward by ten percent (10%). As stated
previously, decreases in salaries were made by the Committee
because of financial exigencies within the Company and were
not based on inadequate performance.
Dr. Stull's compensation is substantially related to the
Company's performance because his compensation package
includes a discretionary cash bonus determination and
discretionary incentive stock options which are granted at
100% of fair market value, based upon the Committee's review
of Dr. Stull's individual performance during the prior year in
the following areas: leadership, strategic planning, business
development, management skills, external relations and
communication skills. During fiscal 1995, Dr. Stull received
incentive stock options to purchase 39,953 shares and non-
qualified options to purchase 2,063 shares. In granting the
fiscal 1995 incentive stock option awards to Dr. Stull, the
Compensation Committee measured the Company's financial
performance during fiscal 1994 with respect to revenue growth,
net income, and earnings per share as compared to fiscal 1993.
During fiscal 1995, the Compensation Committee developed
a series of specific goal oriented compensation awards for the
Chief Executive Officer for fiscal 1996 and future years. On
June 16, 1995 the Committee approved the plan for the Chief
Executive for fiscal 1996. Fiscal 1996 awards for the Chief
Executive Officer are based on achieving budgeted sales goals
and to a lesser extent achieving a positive corporate income.
The Committee expects that for fiscal 1997 and future years,
award goals will be directed toward a combination of increased
sales and profitability. In addition, the base compensation
of the Chief Executive Officer will be restored to competitive
levels.
SUMMARY
The Compensation Committee will continue to review the
Company's executive compensation programs to assure that such
programs are consistent with the objective of providing a
strong and direct link among shareholder value, Company
performance, and executive compensation.
By the Compensation Committee
Dr. Bert M. Tolbert, Chairman
Dr. William E. Coleman, Director
Dr. Stanley J. Cristol, Director
Mr. Robert F. Saydah, Director
and by Dr. Dean P. Stull, Chief Executive Officer
for the limited purposes stated above
The following table sets forth the cash compensation paid
by the Company for services to the Chief Executive Officer and
to each of the four most highly compensated executive officers
of the Company whose cash compensation exceeded $100,000
during the fiscal year ended April 30, 1995:
<TABLE>
Summary Compensation Table
Long Term Compensation
Annual Compensation Awards
Name Restricted Securities All
and Stock Underlying Other
Principal Fiscal Award(s) Options/ Compensation
Positions Year Salary($)(1) Bonus($) ($) (#) ($)(2)
<S> <C> <C> <C> <C> <C> <C>
Dean P. Stull 1995 $155,798 - - 39,953 (4) 4,125
Chief Executive 1994 165,000 50,000 - 13,298 6,738
Officer 1993 156,700 - - 10,982 3,512
Thomas A. Scales 1995 136,550 68,400 (3) - 99,742 (4) 4,615
President/Chief 1994 152,000 60,000 - 10,823 6,712
Operations Officer 1993 146,800 20,000 26,750 9,780 3,826
Randall J. Daughenbaugh 1995 139,746 - - 23,928 (4) 4,440
Executive Vice Pres./ 1994 148,000 30,000 - 9,164 7,099
Chief Technical Officer 1993 142,700 - - 9,932 3,468
Timothy D. Ziebarth 1995 113,308 - - 11,239 (4) 3,600
Senior Vice Pres./ 1994 120,000 250 - 2,344 5,886
Director of 1993 89,300 - - 1,243 1,972
Technical Services
William E. Paukert 1995 84,981 - - 15,429 (4) 675
Chief Financial Officer 1994 90,000 20,000 - 5,341 2,049
and Treasurer 1993 84,400 - - 791 2,106
</TABLE>
_________________________
(1) The salaries did not increase from fiscal 1993 to fiscal
1994. The increase reflected in the table is attributable to
the time of year in which the raise in 1993 was effective,
September 1992. During fiscal 1995, the base salaries of the
five named executives were adjusted down by ten percent (10%).
(2) The amounts included in All Other Compensation represent
the cash and stock contribution made by the Company on behalf
of the named executives to the Company's 401(k) Plan. The
Company matches, with a cash contribution, 20% of the first 6%
of the participants contribution, and effective January 1993,
the Company also matched, with a contribution of its Common
Stock, the remaining 80% of the first 6% of the participant's
contribution. During fiscal 1995, the Company did a
discretionary 10% cash match and a discretionary 40% stock
match. During fiscal 1995, the Company contributed an
aggregate of 3,274 shares of the Company's Common Stock on
behalf of the named executive officers, as a result of the
Company's 40% match in Common Stock. The fair market value of
the shares of Common Stock contributed was $4.315 per share as
of April 30, 1995. Accordingly, the value received by Messrs.
Stull, Scales, Daughenbaugh, Ziebarth and Paukert was $3,316,
$3,279, $3,897, $3,369 and $267, respectively. During fiscal
1994, the Company contributed an aggregate of 2,539 shares of
the Company's Common Stock on behalf of the named executive
officers, as a result of the Company's 80% match in Common
Stock. The fair market value of the shares of Common Stock
contributed was $8.50 per share as of April 30, 1994.
Accordingly, the value received by Messrs. Stull, Scales,
Daughenbaugh, Ziebarth and Paukert was $5,138, $5,040, $5,323,
$4,484 and $1,599, respectively. During fiscal 1993, the
Company contributed an aggregate of 612 shares of the
Company's Common Stock on behalf of the named executive
officers, as a result of the Company's 80% match in Common
Stock. The fair market value of the shares of Common Stock
contributed was $14.13 per share as of April 30, 1993.
Accordingly, the value received by Messrs. Stull, Scales,
Daughenbaugh, Ziebarth and Paukert was $1,951, $2,121, $2,066,
$1,261 and $1,256, respectively.
(3) Mr. Scales received a one-time cash termination payment
of $68,400 in connection with his resignation from the Company
effective April 30, 1995.
(4) Does not include options which were granted in prior
years and which were repriced on October 27, 1994.
Stock Option Plans
1987 Non-Statutory Stock Option Plan
In 1987, the Company adopted a non-statutory stock option
plan (the "Non-Statutory Plan") under which 658,720 shares of
its Common Stock have been reserved for issuance. As of April
30, 1995, there were 603,127 shares of Common Stock committed
under the Non-Statutory Plan. The Non-Statutory Plan provides
for the grant of non-statutory stock options to officers,
directors and key employees of the Company, or to independent
contractors providing services to the Company, as determined
by the Board. The Non-Statutory Plan is administered by the
Compensation Committee of the Board. Subject to the
limitations set forth in the Non-Statutory Plan, the
Compensation Committee of the Board has the authority to
select the persons to whom grants are to be made, to designate
the number of shares to be covered by and the terms of each
option, including exercise price and vesting, and to determine
the terms of option agreements and other agreements relating
to each option granted. Options granted under the Non-
Statutory Plan are generally non-transferrable and expire upon
the termination of an optionee's employment relationship with
the Company. In general, if an optionee is permanently
disabled during his or her employment by or service to the
Company, such person's option may be exercised up to one year
following the date of termination of employment. The Non-
Statutory Plan will terminate in November 1997, unless
terminated sooner by the Board.
During fiscal 1995, the Compensation Committee of the
Board of Directors (consisting of Drs. Tolbert, Coleman,
Cristol and Saydah) recommended the distribution of 151,805
stock options pursuant to the Non-Statutory Plan to employees
and directors who had been employed over one-half time for one
full year. The options are exercisable for periods ranging
from one to five years after grant, at an exercise price
ranging from 80% - 100% of market price on the date of grant.
The amount of the award was determined by using a percentage
of that employee's annual salary as of the employee's
anniversary date with the Company. During fiscal 1995,
options to purchase 18,607 shares were exercised and options
to purchase 118,250 shares expired.
1992 Incentive Stock Option Plan
The 1992 Plan provides for the granting of incentive
stock options to Executive Officers and key employees of the
Company and its subsidiaries to purchase a maximum of 700,000
shares of the Company's Common Stock. As of April 30, 1995,
251,032 shares were committed under the 1992 Plan. The 1992
Plan provides for the grant of incentive stock options
intended to qualify as such under Section 422 of the Internal
Revenue Code of 1986, as amended. The exercise price of
options granted under the 1992 Plan may not be less than 100%
of the fair market value of the Common Stock at the time of
the grant. Options are not transferrable and may not be
exercised more than 10 years from the date of grant. The
aggregate fair market value of the stock with respect to which
incentive stock options are first exercisable in any calendar
year may not exceed $100,000. The 1992 Plan is administered
by the Compensation Committee of the Company's Board of
Directors, which has the authority to determine the persons to
whom options will be granted, the number of shares to be
covered by each option, the time or times at which options
will be granted or exercised, and the term and provisions of
the options. During fiscal 1995, options to purchase 151,805
shares were granted, options to purchase 18,607 shares were
exercised and options to purchase 118,250 shares expired.
The following table shows with respect to the Company's
Non-Statutory Plan and the 1992 Plan, for each of the
Executive Officers named in the compensation table: (a) the
number of shares subject to options granted from May 1, 1994
to April 30, 1995, (b) the percentage of total options granted
to employees during the same period, (c) the exercise price
per share, (d) the market price on the date of grant, (e) the
expiration date of the options, and (f) the potential
realizable value of the options.
<TABLE>
Option Grants in Last Fiscal Year
Potential
Percentage of Realizable
Total Value at
Options Assumed
Number of Granted to Annual Rates
Securities Employees Market of Stock Prices
Underlying in Exercise Price Appreciation for
Options Fiscal Price on Date Expiration Option Term (2)
Granted(#)(1) Year ($/sh) of Grant Date 5%($) 10%($)
<S> <C> <C> <C> <C> <C> <C> <C>
Dean P. Stull 30,000 (3) 6.7530 $6.0000 $6.0000 10/26/99 $49,699.97 $109,816.11
9,953 (3) 2.2404 6.0000 6.0000 10/26/00 20,309.83 46,076.08
2,063 (4) 0.4643 4.8000 6.0000 11/30/99 5,956.77 10,184.02
Thomas A. Scales 7,581 (4) 1.7064 6.0000 6.0000 12/01/99 2,839.18 28,442.23
25,000 (3) 5.6275 6.0000 6.0000 10/26/99 1,416.65 91,513.43
15,000 (3) 3.3765 6.0000 6.0000 10/26/99 4,849.99 54,908.06
9,169 (3) 2.0639 6.0000 6.0000 10/26/99 5,189.97 33,563.46
Randall J. 8,928 (3) 2.0096 6.0000 6.0000 10/26/01 1,797.48 50,793.62
Daughenbaugh 15,000 (3) 3.3765 6.0000 6.0000 10/26/02 42,953.22 102,872.62
1,850 (4) 0.4164 4.8000 6.0000 11/30/99 5,341.75 9,132.55
William E. Paukert 820 (4) 0.1845 5.6040 7.0000 8/31/99 1,144.72 2,760.01
5,429 (3) 1.2220 6.0000 6.0000 10/26/00 11,078.28 25,132.83
5,000 (3) 1.1255 6.0000 6.0000 3/15/01 10,956.84 25,111.29
Timothy D. Ziebarth 4,000 (3) 0.9004 6.0000 6.0000 10/26/99 6,626.66 14,642.15
7,239 (3) 1.6295 6.0000 6.0000 10/26/99 11,992.60 26,498.63
1,500 (4) 0.3376 4.8000 6.0000 11/30/99 4,331.15 7,404.77
</TABLE>
_________________________________
(1) Does not include options which were repriced on October
27, 1994.
(2) No gain to an executive officer is possible with an
Incentive Stock Option without an appreciation in stock value,
which will benefit all shareholders commensurately.
(3) Incentive Stock Option grants.
(4)Non-Statutory Stock Option grants which are granted at 80%
of the fair market value on the date of grant.
The following table shows with respect to the Company's
Executive Officers, (a) the number of shares exercised during
the fiscal year, (b) the dollar value realized upon exercise
(c) the total number of unexercised stock options and (d) the
aggregate dollar value of in-the-money, unexercised options
held at the end of the fiscal year.
Aggregated Option Exercised in Last Fiscal Year and Fiscal Year End Value Table
<TABLE>
Number of Securities Value of
Shares Value Underlying Unexercised Unexercised In-the-Money
Acquired on Realized Options at FY End (#) Options at FY End ($)(1)
Exercise (#) ($)(1) Exercisable Unexercisable Exercisable Unexercisable
<S> <C> <C> <C> <C> <C> <C>
Dean P. Stull - - 87,487 7,082 $51,300 -
Thomas A. Scales - - 96,892 2,850 - -
Randall J. Daughenbaugh 10,000 40,675 31,366 31,862 16,250 -
William E. Paukert - - 19,820 11,429 12,825 -
Timothy D. Ziebarth - - 14,139 - - -
</TABLE>
_____________________
(1) Represents the difference between the price paid and the
fair market value of the shares underlying options on the
exercise date with respect to options exercised during the
fiscal year or the fair market value of the shares underlying
options on April 30, 1995, ($4.315 per share) with respect to
unexercised options.
Employee Benefit Plan
Effective July 1992, the Company established a 401(k)
plan (the "401(k) Plan") for all employees who have completed
six months of service. Participants may contribute up to 15%
of their annual compensation subject to dollar limitations of
Section 402(g) of the Internal Revenue Code. The Company's
Board of Directors determine a discretionary cash and/or stock
match for each calendar year of the 401(k) Plan. The Company
has reserved 200,000 shares of Common Stock for issuance under
the 401(k) Plan. The Company's matching portion vests 20% per
year over 5 years. The 401(k) Plan is subject to the
provisions of the Employee Retirement Income Security Act of
1974. The Company's contribution expense for the year ended
April 30, 1995 totalled $218,010. Pursuant to the 401(k)
Plan, Messrs. Stull, Scales, Daughenbaugh, Paukert, Ziebarth
acquired an aggregate of 3,274 shares of the Company's Common
Stock during fiscal 1995, as a result of the Company's 40%
match in Common Stock for fiscal 1995.
Certain Transactions
There were no transactions with officers, directors and
their affiliates and the Company.
SHAREHOLDER RETURN
The chart on page 17 compares the cumulative total return
to shareholders over the past five years for a holder of the
Company's Common Stock against the cumulative total return of
the NASDAQ Stock Market-US Index and the S & P Chemicals
(Specialty) Index. The chart depicts the value on April 30,
1995, of a $100 investment made on April 30, 1990.
The value of a stock over time is affected by many
factors, including the Company's earnings. The growth in the
Company's earnings since April 1990 has been substantially due
to the Supply Agreement with Bristol for the production of
paclitaxel. The decline in the stock price in August 1993
occurred after Bristol failed to renew the Company's contract.
A primary objective of the Company over the past five years
has been to diversify into specialty natural products,
evidenced by the agreement with Tastemaker for the development
and marketing of natural flavors. Although the Company's
sales have been heavily concentrated in the paclitaxel
pharmaceuticals market, Management intends to diversify and
evolve into a more balanced mix, including health care
products, food ingredients, secondary forestry products, and
technical services. This diversification should provide a
less volatile market.
COMPARISON OF FIVE YEAR CUMULATIVE TOTAL RETURN
The table sets forth the cumulative five year total return
among the Company, the NASDAQ Stock Market-U.S. Index and the
S & P Chemicals (Specialty) Index assuming $100 invested on
April 30, 1990 in stock or index, including reinvestment of
dividends.
OTHER MATTERS
Management of the Company knows of no other matter which
may come before the meeting. However, if any additional
matters are properly presented at the meeting, it is intended
that the persons named in the enclosed Proxy, or their
substitutes, will vote such Proxy in accordance with their
judgment on such matters.
Shareholder proposals intended for presentation at the
Company's 1996 Annual Meeting of Shareholders must be received
by the Company at its principal offices in Boulder, Colorado,
not later than July 31, 1996.
ANNUAL REPORT TO SHAREHOLDERS
The Annual Report of the Company for the fiscal year
ended April 30, 1995, including audited Financial Statements
for the year then ended, was mailed to Shareholders on October
6, 1995, and is not incorporated into these proxy materials.
IN ORDER THAT YOUR SHARES MAY BE REPRESENTED IF YOU
DO NOT PLAN TO ATTEND THE MEETING, PLEASE SIGN, DATE
AND RETURN YOUR PROXY PROMPTLY. IN THE EVENT YOU
ARE ABLE TO ATTEND, WE WILL, IF YOU REQUEST, CANCEL
THE PROXY.
SIGNATURE
By Order of the Board of Directors
Dean P. Stull, Chairman
Boulder, Colorado
October 9, 1995
