<PAGE>
SCHEDULE 14A INFORMATION
PROXY STATEMENT PURSUANT TO SECTION 14(A)
OF THE SECURITIES EXCHANGE ACT OF 1934
Filed by the Registrant [X]
Filed by a party other than the Registrant [ ]
Check the appropriate box:
[ ] Preliminary Proxy Statement
[ ] Confidential, for Use of the Commission Only (as permitted by
Rule 14a-6(e)(2))
[X] Definitive Proxy Statement
[ ] Definitive Additional Materials
[ ] Soliciting Material Pursuant to Rule 14a-11(c) or Rule 14a-12
HAUSER, INC.
------------------------------------------------
(Name of Registrant as Specified in Its Charter)
(Name of Person(s) Filing Proxy Statement, if other than the Registrant)
Payment of Filing Fee (Check the appropriate box):
[X] No fee required.
[ ] Fee computed on table below per Exchange Act Rules 14a-6(i)(1) and
0-11.
(1) Title of each class of securities to which transaction applies:
(2) Aggregate number of securities to which transactions applies:
(3) Per unit price or other underlying value of transaction computed
pursuant to Exchange Act Rule 0-11 (set forth the amount on which the
filing fee is calculated and state how it was determined):
(4) Proposed maximum aggregate value of transaction:
(5) Total fee paid:
[ ] Fee paid previously with preliminary materials.
[ ] Check box if any part of the fee is offset as provided by Exchange
Act Rule 0-11(a)(2) and identify the filing for which the offsetting
fee was paid previously. Identify the previous filing by registration
statement number, or the Form or Schedule and the date of its filing.
(1) Amount Previously Paid:
(2) Form, Schedule or Registration Statement No.:
(3) Filing Party:
(4) Date Filed:
<PAGE>
HAUSER, INC.
5555 Airport Boulevard
Boulder, CO 80301
NOTICE OF ANNUAL MEETING OF STOCKHOLDERS
To Be Held November 28, 2000
To Our Stockholders:
The Annual Meeting of Stockholders of Hauser, Inc. (the "Company") will be
held at Shuster Laboratories, 85 John Rd., Canton, MA, CLT Room, on November 28,
2000 at 9:30 A.M., for the following purposes:
1. To elect the Board of Directors;
2. To consider and act upon such other business as may properly come before
the Annual Meeting or any adjournment or postponement thereof.
All stockholders are cordially invited to attend the meeting, although only
stockholders of record at the close of business on October 20, 2000, 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
Kenneth C. Cleveland
President and Chief Executive Officer
November 7, 2000
PLEASE COMPLETE, DATE, SIGN AND RETURN THE ENCLOSED PROXY CARD IN THE
ENCLOSED POSTAGE PREPAID ENVELOPE, WHETHER OR NOT YOU PLAN TO ATTEND THE ANNUAL
MEETING. YOUR PROMPT RETURN OF THE PROXY WILL HELP TO ASSURE A QUORUM AT THE
ANNUAL MEETING AND AVOID ADDITIONAL COMPANY EXPENSE FOR FURTHER SOLICITATION.
YOUR PROXY MAY BE REVOKED AT ANY TIME BEFORE IT IS VOTED.
<PAGE>
HAUSER, INC.
5555 AIRPORT BOULEVARD
BOULDER, CO 80301
----------------------
PROXY STATEMENT
SOLICITATION AND REVOCATION OF PROXIES
This proxy statement is furnished in connection with the solicitation of
proxies by the Board of Directors of Hauser, Inc., a Delaware corporation (the
"Company"), to be used at the annual meeting of stockholders of the Company (the
"Annual Meeting") to be held on November 28, 2000 at 9:30 A.M. at Shuster
Laboratories, 85 John Rd., Canton, MA, CLT Room, or at any adjournment or
postponement thereof, for the purposes set forth in the accompanying notice of
Annual Meeting. If the enclosed form of proxy is executed and returned, it may
nevertheless be revoked at any time before it is exercised, either in person at
the Annual Meeting or by written notice or by a duly executed proxy, bearing a
later date, sent to the Secretary of the Company. The mailing address of
principal executive offices of the Company is 5555 Airport Boulevard, Boulder,
CO 80301. The Company anticipates mailing this proxy statement and the
accompanying proxy to stockholders on or about November 7, 2000.
The cost of soliciting proxies will be borne by the Company. In addition,
the Company will reimburse its transfer agent for charges and expenses in
connection with the distribution of proxy materials to the beneficial owners.
Solicitations may further be made by officers, directors and regular employees
of the company, without additional compensation, by use of mails, telephone,
telegraph or by personal calls.
PURPOSE OF THE ANNUAL MEETING
At the Annual Meeting, action will be taken: (1) to elect the Board of
Directors to hold office until the next annual meeting of shareholders and until
their successors shall have been elected and qualified, and (2) to transact such
other business that may properly come before the Annual Meeting. The Board of
Directors does not know of any other matter that is to come before the Annual
Meeting. If any other matters are properly presented for consideration, however,
the persons authorized by the enclosed proxy will have discretion to vote on
such matters in accordance with their best judgment.
OUTSTANDING SHARES, QUORUM AND VOTING RIGHTS
As of October 31, 2000, there were 4,988,792 shares of the Company's Common
Stock, par value $.001 (the "Common Stock"), outstanding. Each share of Common
Stock is entitled to one vote. Only holders of record of Common Stock at the
close of business on October 20, 2000 will be entitled to notice of, and to vote
at, the Annual Meeting. The presence in person or by proxy of holders of a
majority of the issued and outstanding Common Stock will constitute a quorum for
the transaction of such business as may properly come before the Annual Meeting.
<PAGE>
All proxies received pursuant to this solicitation will be voted, except as
to matters where authority to vote is specifically withheld and, where a choice
is specified as to the proposal, such proxies will be voted in accordance with
such specification. If no instructions are given, the persons named in the
proxies solicited by the Board of Directors of the Company intend to vote for
the nominees for election as directors of the Company set forth herein. If any
other matter should be presented at the Annual Meeting upon which a vote may
properly be taken, the shares represented by the proxy will be voted with
respect thereto at the discretion of the person or persons holding such proxy.
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<PAGE>
SECURITY OWNERSHIP AND CERTAIN
BENEFICIAL OWNERS AND MANAGEMENT
The following table sets forth, as of October 31, 2000, the number of
shares of Common Stock owned by any person who is known by Hauser to be the
beneficial owner of more than 5% of Hauser's voting securities, by all
individual Directors, by the Company's Chief Executive Officer and the two most
highly paid executives with annual base salaries of $100,000 or more (the "NAMED
EXECUTIVE OFFICERS"), and by all Executive Officers and Directors as a group:
<TABLE>
<CAPTION>
Amount and Nature of
Name of Beneficial Owner Beneficial Ownership(1) Percent of Class
------------------------ ----------------------- ----------------
<S> <C> <C>
DIRECTORS:
Dean P. Stull(2) .................. 107,715 2.2%
Robert F. Saydah(3) ............... 27,933 (*)
Kenneth C. Cleveland(4) ........... 7,500 (*)
Herbert Elish(5) .................. 37,426 (*)
James R. Mellor(6) ................ 20,999 (*)
Harvey L. Sperry(7) ............... 90,999 1.8%
Volker Wypyszyk(8) ................ 625 (*)
Michael C. Davis(9) ............... 17,804 (*)
NAMED EXECUTIVE OFFICERS:
Brian E. Hufford .................. 0 (*)
Philip H. Katz (10) ............... 4,512 (*)
ALL OFFICERS AND DIRECTORS
AS A GROUP: (10 PERSONS) ........ 315,513 6.3%
5% SHAREHOLDERS:
T. Rowe Price Associates(11) ...... 285,325 5.7%
ZatPack Inc. (12) ................. 3,186,215 64.0%
</TABLE>
-------------------
* Indicates less than 1%.
(1) Includes the following number of shares which could be acquired within 60
days through the exercise of stock options: Dr. Stull, 60,220 shares; Mr.
Saydah, 4,809 shares and all directors and officers as a group, 65,029
shares.
(2) Mr. Stull's business address is 5555 Airport Boulevard, Boulder, CO 80301.
(3) Mr. Saydah's address is Heidrick & Struggles, 2493 Biltmore Dr., Alamo, CA
94507.
(4) Mr. Cleveland's address is 2550 El Presidio St., Long Beach, CA 90810.
(5) Mr. Elish's address is 4400 Forbes Avenue, Pittsburgh, PA 15231.
(6) Mr. Mellor's address is 32161 South Coast Highway, Laguna Beach, CA 92651.
-3-
<PAGE>
(7) Mr. Sperry's address is 787 Seventh Ave., New York, NY 10019.
(8) Mr. Wypyszyk's address is 2550 El Presidio St., Long Beach, CA 90810.
(9) Mr. Davis's address is 3/F Zuellig Bldg., Sen.Gil Puyat Ave., Makati City
1200 Philippines.
(10) Mr. Katz's address is 85 John Rd., Canton, MA 02021.
(11) The business address for T. Rowe Price Associates, Inc., is 100 E. Pratt
Street, Baltimore, MD 21202.
(12) Includes 988,471 shares owned by Zuellig Group, N.A., Inc. ("ZGNA"), a
wholly owned subsidiary of Zatpack Inc., an international business company
organized under the laws of the British virgin Islands ("Zatpack"),
1,204,955 shares owned by Zuellig Botanicals, Inc. ("ZBI"), a wholly owned
subsidiary of ZGNA and 992,789 shares which could be acquired within 60
days through the exercise of warrants. Zatpack has 100 shares of common
stock issued and outstanding, which is divided into three classes. 49
shares of Zatpack Class A common stock are held by the Stephen Zuellig
Issue Trust for the benefit of Stephen Zuellig's descendants. 49 shares of
Zatpack Class B common stock are held by the Gilbert Zuellig Issue Trust
for the benefit of Gilbert Zuellig's descendants. 2 shares of Zatpack Class
C common stock are held by the Peter Zuellig and Thomas Zuellig Trust for
the benefit of Peter Zuellig, the eldest son of Stephen Zuellig, and Thomas
Zuellig, the eldest son of Gilbert Zuellig. The trustee for each trust is
the Bermuda Trust Company.
-4-
<PAGE>
PROPOSAL 1 - ELECTION OF DIRECTORS
The Company's Board of Directors has nominated the eight persons listed
below for election as directors for the ensuing year, each to hold office until
the 2001 Annual Meeting of Shareholders and until their successors are duly
elected and qualified, or until their death, resignation or removal. All the
nominees except for Kenneth C. Cleveland are present members of the Board of
Directors. 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 such nominee. 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. Currently, the Company is
authorized to have nine members on the Board of Directors. Accordingly, there
shall be one vacancy in the event that all persons nominated by the Board of
Directors are approved. Proxies cannot be voted for a greater number of persons
than the number of nominees named. The eight persons listed below have been
nominated for election as Directors of the Company:
KENNETH C. CLEVELAND AGE 67
Mr. Cleveland has served as President and Chief Executive Officer of the
Company since October 2000. He has served as Chief Financial Officer of the
Company since July 2000. Mr. Cleveland is president of Kenneth Cleveland
Associates, Inc., a firm that specializes in financial and operational
restructuring for businesses. During 1999, Mr. Cleveland served as president of
American Security Distribution, a distributor of door hardware. From April 1995
through November 1997, Mr. Cleveland served as president of Kroy, Inc., a
manufacturer of labeling equipment. From April 1994 through March 1995, Mr.
Cleveland served as President of Birtcher Medical Systems, a manufacturer of
electro-surgical equipment. Mr. Cleveland is Chairman of the Board of Directors
of GEL-PAK, Inc., a company which manufactures systems for shipping fragile
devices. He also serves as a director for Clothestime, Inc., a retailer of
women's apparel. Mr. Cleveland has served as President and Chief Executive
Officer of Zuellig Group, N.A., Inc. since October 2000.
MICHAEL C. DAVIS AGE 60 DIRECTOR SINCE 1999
Mr. Davis has served as a Director of the Company since December 1999.
Since 1995, Mr. Davis has served as the Chairman and Chief Executive Officer of
Interpharma Holdings & Management Corporation, a Philippines corporation which
distributes pharmaceutical products in South East Asia, since 1995. Prior
thereto, Mr. Davis was Regional Director of the Australia and South East Asia
region for AB Astra Sweden.
HERBERT ELISH AGE 66 DIRECTOR SINCE 1999
Mr. Elish has served as a Director of the Company since June 1999. Mr.
Elish was the Chief Executive Officer of Weirton Steel Corporation from 1987
until December 31, 1995. Currently, Mr. Elish is Director of The Carnegie
Library of Pittsburgh and a Director of Hampshire Group Limited, an apparel
manufacturer.
-5-
<PAGE>
JAMES R. MELLOR AGE 69 DIRECTOR SINCE 1999
Mr. Mellor has served as a Director of the Company since June 1999. Mr.
Mellor was Chairman and Chief Executive Officer of General Dynamics
Corporation before retiring in May 1997. Currently, Mr. Mellor is a Director
of General Dynamics Corporation and Computer Sciences Corporation. Mr. Mellor
also serves as a Director and the Chairman of USEC, Inc., and serves as a
Director and Chairman of the Executive Committee of Bergen Brunswig
Corporation.
ROBERT F. SAYDAH AGE 73 DIRECTOR SINCE 1994
Mr. Saydah has served as a Director of the Company since January 1994. Mr.
Saydah retired as a Partner of Heidrick & Struggles, a publicly held
international executive search consulting firm, in March 2000 where he had been
employed since May 1992. Previously, Mr. Saydah held general management
positions for the Lederle Laboratories Division of American Cyanamid Company.
HARVEY L. SPERRY AGE 70 DIRECTOR SINCE 1999
Mr. Sperry has served as a Director of the Company since June 1999. Mr.
Sperry is a Retired Partner of the law firm of Willkie Farr & Gallagher. Mr.
Sperry is a Director of Hampshire Group Limited, an apparel manufacturer.
DEAN P. STULL, Ph.D. AGE 50 DIRECTOR SINCE 1983
Dr. Stull has served as a Director since 1983. He was Chief Executive
Officer from 1983 to June 1999 and Co-Chief Executive Officer of the Company
from June 1999 through February, 2000. In February of this year he assumed the
position of Senior Executive Vice President, Technology. Dr. Stull has a Ph.D.
in Physical Organic Chemistry.
VOLKER WYPYSZYK AGE 54 DIRECTOR SINCE 1999
Mr. Wypyszyk has been a Director of the Company since June 1999. From June
1999 to February 2000, Mr. Wypyszyk served as President and Co-Chief Executive
Officer. From February 2000 to October 2000, Mr. Wypyszyk served as President
and Chief Executive Officer of the Company. Mr. Wypyszyk currently serves as
Senior Executive Vice President of the Company. From 1983 until October 2000,
Mr. Wypyszyk served as President and Chief Executive Officer of Zuellig Group
N.A., Inc.
RECOMMENDATION AND VOTE
To be elected each nominee must receive a plurality of all votes cast with
respect to such position as Director. Abstentions will not be included in the
vote totals with the result that an abstention will not have an effect on the
vote. In instances where nominee recordholders, such as brokers, are prohibited
from exercising discretionary authority for beneficial owners of shares of
Common Stock who have not returned a proxy ("Broker Non-Votes"), those shares of
-6-
<PAGE>
Common Stock will not be included in the vote totals and, therefore, will have
no effect on the vote. If a quorum should not be present, the Annual Meeting may
be adjourned from time to time until a quorum is obtained.
THE BOARD OF DIRECTORS UNANIMOUSLY RECOMMENDS A VOTE FOR EACH OF THE PERSONS
NOMINATED FOR ELECTION TO THE BOARD OF DIRECTORS.
-7-
<PAGE>
EXECUTIVE OFFICERS
The following sets forth the names of the executive officers of the Company
who are not Directors of the Company, their respective positions with the
Company and business experience and background.
PHILIP H. KATZ has served as President of Hauser Technical Services, Inc.,
a wholly owned subsidiary of the Company, since November 1999. From January 1996
through October 2000, Mr. Katz served as President of Shuster Laboratories,
Inc., a subsidiary of the Company which merged into Hauser Technical Services,
Inc.
BRIAN E. HUFFORD has served as Executive Vice President of Manufacturing of
the Company since February 1999. Prior to February 1999, Mr. Hufford served as
Executive Vice-President of Operations at Murdock, Madaus, Schwabe, Inc., a
large dietary supplement consumer products company for the period from 1996 to
1999. Prior thereto Mr. Hufford was Senior Director- Manufacturing of
Schering-Plough Corporation.
MEETINGS AND COMMITTEES OF THE BOARD OF DIRECTORS
The Board of Directors held 5 meetings during fiscal 2000. During fiscal
2000, the Board of Directors had a Compensation Committee consisting of William
Coleman(1), James Mellor and Harvey Sperry, and an Audit Committee consisting of
Robert Saydah, Rudy Bryce(2) and Herbert Elish. The Compensation Committee held
1 meeting in fiscal 2000 and the Audit Committee held 2 meetings in fiscal 2000.
-------------------
(1) Mr. Coleman resigned as a Director of the Company in July 2000.
(2) Mr. Bryce resigned as a Director of the Company in June 2000.
-8-
<PAGE>
EXECUTIVE COMPENSATION
The following table contains information concerning annual and long-term
compensation of each individual who served as chief executive officer during
Fiscal 2000 and each of the other most highly compensated executive officers of
the Company who were serving as executive officers at the end of Fiscal 2000
(the "Named Executive Officers") for services rendered in all capacities during
the fiscal years 2000, 1999 and 1998.
COMPENSATION TABLE
<TABLE>
<CAPTION>
Long Term Compensation
---------------------------
Awards
---------------------------
Annual Compensation Restricted Securities
Name and Fiscal ----------------------------- Stock Underlying All Other
Principal Positions Year Salary ($) Bonus ($) Award(s) ($) Options(#) Compensation ($)
------------------------ ------ ----------- ----------- ------------- ---------- ----------------
<S> <C> <C> <C> <C> <C> <C>
Volker Wypyszyk (1) 2000 $150,000(2) $200,000(3) 125,000
Chief Executive Officer -- --
and President
Dean P. Stull (4) 2000 207,000 200,000(3) 125,000
Senior Executive Vice 1999 200,000 - 25,001(5)
Pres., Technology 1998 155,500 - 17,500(5)
Ralph Heimann 2000 120,000(6) 160,000(3) 62,500
Chief Financial Officer,
Treasurer and Secretary
Brian E. Hufford(7) 2000 150,000 22,5000 62,500
1999 36,346(8) -- --
Philip H. Katz 2000 145,000 -- 62,500
1999 120,838 61,001(9) 2,174 $3,495(10)
1998 117,500 29,410(9) 1,000 4,212(10)
</TABLE>
(1) As of October, 2000, Volker Wypyszyk became Senior Executive Vice President
of the Company. Previously he served as Chief Executive Officer.
(2) Mr. Wypyszyk was compensated by the Company beginning on July 1, 1999.
(3) Messers. Wypyszyk, Stull, and Heimann were awarded cash bonuses for Fiscal
2000 in accordance with their individual employment agreements.
(4) As of February, 2000, Dr. Stull became Senior Executive Vice President,
Technology. Previously he served as Co-Chief Executive Officer and Chairman
of the Board.
(5) Of these shares, 25,001, and 12,500 and options were performance options
based upon operating income objectives for fiscal 1999 and 1998.
(6) Mr. Heimann was compensated by the Company beginning July 1, 1999.
(7) Mr. Hufford was employed as Executive Vice President of Manufacturing of
the Company on February 10, 1999.
(8) As of April 30, 1999, Mr. Hufford received $36,346.21 in compensation.
(9) The bonuses represent earn-out payments in connection with the Company's
acquisition of Shuster Laboratories, Inc. in 1995. The fiscal year 1999
payment is the last payment due to Mr. Katz.
-9-
<PAGE>
(10) The bonuses represent phantom stock payments made to Mr. Katz for his
phantom stock in Shuster. The Shuster Phantom Stock Plan was a bonus plan
through which the individuals earned an equity interest in Shuster. The
payments were made monthly. The individuals are also entitled to share in
an earnout which may be paid to former shareholders of Shuster. No earnout
was paid during 1998, 1997, or 1996.
OPTION GRANTS IN LAST FISCAL YEAR
<TABLE>
<CAPTION>
Potential Realizable
Value at Assumed
Number of Percentage Annual Rates of Stock
Securities of Total Price Appreciation
Underlying Options Granted Exercise Market Price for Option Term
Options to Employee Price on Date of Expiration ---------------------------
Granted(#) in Fiscal Year ($/sh) Grant Date 5%($) 10%($)
---------- ---------------- -------- ------------ ---------- ----------- -----------
<S> <C> <C> <C> <C> <C> <C> <C>
Volker Wypyszyk 125,000 15.672% $3.453 $3.453 12/08/2009 $271,485.95 $687,998.70
Dean P. Stull 125,000 15.672% $3.453 $3.453 12/08/2009 $271,485.95 $687,998.70
Ralph Heimann 62,500 7.8360% $3.453 $3.453 12/08/2009 $135,742.97 $343,999.35
Brian E. Hufford 62,500 7.8360% $3.453 $3.453 12/08/2009 $135,742.97 $343,999.35
Phil H. Katz 62,500 7.8360% $3.453 $3.453 12/08/2009 $135,742.97 $343,999.35
</TABLE>
(1) All grants specified above become exercisable on the earlier of i) the 20th
consecutive trading day on which the Common Stock closes at or above $18.00
or ii) December 8, 2004.
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<PAGE>
AGGREGATE OPTION EXERCISES IN LAST FISCAL YEAR
AND FISCAL YEAR END OPTION VALUES
The following table shows with respect to the Company's Named Executive
Officers, (a) the number of shares exercised during the fiscal year, (b) the
dollar value realized upon exercise (c) the total number of unexercised stock
options and (d) the aggregate dollar value of in-the-money, unexercised options
held at the end of the fiscal year.
<TABLE>
<CAPTION>
Number of Securities Value of Unexercised
Underlying Unexercised In-the-Money
Shares Value Options at FY End (#) Options at FY End ($)
Acquired on Realized -------------------------------- -----------------------------
Exercise # ($) Exercisable Unexercisable(1) Exercisable Unexercisable
----------- -------- ----------- ---------------- ----------- -------------
<S> <C> <C> <C> <C> <C> <C>
Dean P. Stull (1)....... 0 $ -- 56,720 134,500 $ -- $ --
Volker Wypyszyk(2)...... 0 $ -- 125,000 $ -- $ --
Ralph Heimann........... 0 $ -- 62,500 $ -- $ --
Brian E. Hufford........ 0 $ -- 62,500 $ -- $ --
Phil H. Katz............ 0 $ -- 3,262 62,500 $ -- $ --
</TABLE>
(1) As of February, 2000, Dr. Stull has served as Senior Executive Vice
President, Technology.
(2) As of October, 2000, Volker Wypyszyk has served as Senior Executive Vice
President of the Company. Previously he served as President and Chief
Executive Officer.
The fair market value of Company Common Stock at March 31, 2000, measured as the
average between the high and low trade of Common Stock on such date, was $2.3125
per share.
DIRECTOR COMPENSATION
Non-employee directors of the Company receive annual compensation of
$25,000, which is payable quarterly in Common Stock. The number of shares per
quarter to which each non-employee director is entitled is determined by
dividing $6,250 by the closing price of the Common Stock on the last trading day
of the calendar quarter. Mr. Elish, as the Chairman of the Board receives
additional compensation of $25,000, which is also payable quarterly in Common
Stock. In fiscal 2000, the Company's non-employee directors were granted 42,843
shares of Common Stock for services rendered to the Company at an average price
of $2.91 per share (100% of fair market value on the date of grant).
COMPENSATION COMMITTEE INTERLOCKS AND INSIDER PARTICIPATION
During fiscal year ended March 31, 2000, Messers. Coleman, Mellor and
Sperry comprised the Company's Compensation Committee. All were non-employee
directors. None of the members of the Compensation Committee have ever been
officers of the Company.
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<PAGE>
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.
During fiscal 2000, the Compensation Committee established salaries and bonus
compensation for the Executive Officers.
EXECUTIVE OFFICER COMPENSATION
The Company's compensation program consists of base salary, cash as
additional compensation and incentive stock option awards. Compensation for the
Company's executive officers consists of cash bonuses and stock options. The
executive officers also participate in a 401(k) retirement plan and a medical
insurance plan with other employees.
BASE SALARY. The Compensation Committee's policy is to provide competitive
compensation which includes competitive-based salaries.
CASH BONUSES AWARDED IN FISCAL 2000. In 1999, the Company entered into
employment agreements with Messrs. Wypyszyk, Stull, and Heimann with cash
bonuses equivalent to their annual salary to be paid for fiscal 2000.
Discretionary cash bonuses for future fiscal years will be based on achieving
operating goals as determined by the Compensation Committee.
STOCK OPTIONS. It is the Compensation Committee's policy that a significant
potion of the total compensation package for its executive officers will be
derived from stock options.
During fiscal 2000, Executive Officers received stock options to purchase
312,500 shares at an average price of $3.453. Such options may not be exercised
within the first five years of grant until the closing price of the Common Stock
shall have exceeded $18.00 per share for 30 consecutive business days.
CHIEF EXECUTIVE OFFICER COMPENSATION
The Compensation Committee's policy with respect to the Chief Executive
Officer's compensation is consistent with its policy with respect to other
executive officers. The Compensation Committee seeks to provide competitive
compensation, which includes a competitive base salary. As previously stated,
pursuant to his employee agreement, Mr. Wypyszyk was entitled to receive a cash
bonus equal to his base salary. Discretionary cash bonuses to the Chief
Executive Officer in the future will be based upon achieving operating goals as
determined by the Compensation Committee.
Section 162(m) of the International Revenue Code of 1986, as amended (the
"Code") limits to $1 million the amount of compensation deductible by a public
company paid to its Named Executive Officers. Because none of the Named
Executive Officers has compensation from the Company in excess of $1 million,
the Company has not yet formulated a policy with respect to the deduction
limitations of Section 162(m) of the Code.
By the Compensation Committee
-12-
<PAGE>
Mr. James Mellor, Director
Mr. Harvey L. Sperry, Director
EMPLOYMENT CONTRACTS
STULL EMPLOYMENT AGREEMENT. On June 11, 1999, the Company and Dean P. Stull
entered into an employment agreement pursuant to which Mr. Stull receives an
annual base salary of $200,000 for the fiscal year ended March 31, 2000, a bonus
of $200,000 and thereafter incentive compensation as determined by the
Compensation Committee. Mr. Stull's employment agreement may be terminated by
the Company without cause provided that for a period of 24 months after such
termination Mr. Stull receives an amount equal to his salary, incentive
compensation paid to him for the prior fiscal year and benefits provided at
termination.
WYPYSZYK EMPLOYMENT AGREEMENT. On June 11, 1999, the Company and Volker
Wypyszyk entered into an employment agreement pursuant to which Mr. Wypyszyk
receives an annual base salary of $200,000 for the fiscal year ended March 31,
2000, a bonus of $200,000 and thereafter incentive compensation as determined by
the Compensation Committee. Mr. Wypyszyk's employment agreement may be
terminated by the Company without cause provided that for a period of 24 months
after such termination Mr. Wypyszyk receives an amount equal to his salary,
incentive compensation paid to him for the prior fiscal year and the benefits
provided at termination.
HEIMANN EMPLOYMENT AGREEMENT. On June 11, 1999, the Company and Ralph L.
Heimann entered into an employment agreement pursuant to which Mr. Heimann
receives an annual base salary of $160,000 for the fiscal year ended March 31,
2000, a bonus of $160,000 and thereafter incentive compensation as determined by
the Compensation Committee. Mr. Heimann's employment agreement may be terminated
by the Company without cause provided that for a period of 12 months after such
termination Mr. Heimann receives an amount equal to his salary, incentive
compensation paid to him for the prior fiscal year and the benefits provided at
termination.
Effective July 31, 2000, Mr. Heimann resigned as Chief Financial Officer of
the Company.
COMPLIANCE WITH SECTION 16(a)
OF THE SECURITIES EXCHANGE ACT
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
Common Stock to file with the Securities and Exchange Commission initial reports
of ownership and reports of changes in ownership of the Common Stock. Based
solely upon a review of Forms 3, 4 and 5 and amendments thereto furnished to the
Company with respect to the fiscal year ended March 31, 2000, to the best of the
Company's knowledge, the Company's directors, officers and holders of more than
10% of the Common Stock complied with all Section 16(a) filing requirements,
other than a Form 5 filed by William Coleman and a Form 5 filed by Michael
Davis, each of which contained an incorrect share number. Such incorrect share
numbers were not material and have been corrected in subsequent Form 5 filings.
-13-
<PAGE>
SHAREHOLDER RETURN
The following chart compares the cumulative total return to shareholders
over the past five years for a holder of the 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 March 31, 2000, of a $100
investment made on April 30, 1995.
The value of a stock over time is affected by many factors, including the
Company's earnings. A primary objective of the Company has been to diversify
into natural ingredients markets. The Company's revenue mix is currently made up
of sales of natural ingredients, technical services and fine chemicals.
COMPARISON OF 59 MONTH CUMULATIVE TOTAL RETURN*
AMONG HAUSER, INC., THE NASDAQ STOCK MARKET (U.S.) INDEX
AND THE S&P CHEMICALS (SPECIALTY) INDEX
<TABLE>
<CAPTION>
Cumulative Total Return
-------------------------------------------------------------
4/95 4/96 4/97 4/98 4/99 3/00
<S> <C> <C> <C> <C> <C> <C>
HAUSER, INC. 100.00 145.71 145.71 177.14 55.71 13.57
NASDAQ STOCK MARKET (U.S.) 100.00 142.55 150.90 225.63 309.24 557.13
S&P CHEMICAL (SPECIALTY) 100.00 122.14 111.50 145.01 144.70 116.70
</TABLE>
* $100 INVESTED ON 4/30/95 IN STOCK OR INDEX -
INCLUDING REINVESTMENT OF DIVIDENDS
-14-
<PAGE>
CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS
The Company and Zuellig Group N.A., Inc. are parties to an Agreement dated
June 11, 1999 to Acquire Powders Business from Zuellig Botanicals, Inc. (the
"Powders Option"). The Powders Option grants the Company the right to purchase
the powders business from Zuellig Botanicals, Inc., including without limitation
all assets related thereto and all associated liabilities.
The Company and Zuellig Botanicals, Inc. are parties to an Agreement
Regarding Employees dated June 11, 1999 pursuant to which certain employees
provide sales and marketing services to Zuellig Botanicals, Inc. and the Company
and be employed and compensated by the Company and ZBI, respectively, when
performing such services.
On October 11, 2000, ZatPack, Inc. ("ZatPack"), the parent corporation of
Zuellig Botanicals, Inc. and ZGNA, purchased a $3 million Subordinated
Promissory Note (the "ZatPack Note") from the Company. The ZatPack Note is
subordinate to the Company's credit facility with Wells Fargo Bank, N.A. The
Note will accrue interest at 6.5%, is payable in three years and has five year
warrants attached. The warrants permit ZatPack to purchase 992,789 shares of
Common Stock at a price of $0.5855 per share.
On August 1, 2000, the Company, Kenneth Cleveland Associates, Inc., a
company that specializes in advising businesses with respect to both financial
and operational restructuring (the "Contractor"), and Kenneth C. Cleveland
entered into an Agreement to Provide Services. Pursuant to such agreement, the
Contractor has agreed to provide services to the Company, which services shall
consist of Mr. Cleveland serving as an officer of the Company, in exchange for a
fee of $8,000 per week. The agreement terminates automatically on August 1, 2000
or upon 30 days prior notice by either the Contractor or the Company. Mr.
Cleveland is the president of the Contractor.
Harvey L. Sperry, a director, is a retired Partner in the law firm of
Willkie Farr & Gallagher, which provides legal services.
OTHER MATTERS
Management of the Company knows of no other matter which may come before
the Annual Meeting. However, if any additional matters are properly presented at
the Annual 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.
STOCKHOLDER PROPOSALS
Stockholder proposals intended for presentation at the Company's 2001
Annual Meeting of Stockholders, other than nominations for Board of Directors,
should be sent to the Company at 5555 Airport Boulevard, Boulder, Colorado
80301, Attention: Secretary, and must be received by the Company no later than
July 10, 2001.
-15-
<PAGE>
INDEPENDENT AUDITORS
Arthur Andersen LLP served as the Company's independent auditors for the fiscal
year ended March 31, 2000 and has been selected to serve for the current year.
Representatives of Arthur Andersen LLP will not be present at the Meeting.
IN ORDER THAT YOUR SHARES MAY BE REPRESENTED IF YOU DO NOT PLAN TO ATTEND
THE ANNUAL 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.
AVAILABLE INFORMATION
The Company is subject to the disclosure and informational requirements of
the Exchange Act and, in accordance therewith, files reports, proxy statements
and other information with the Securities and Exchange Commission (the
"Commission"). The reports, proxy statements and other information filed by the
Company with the Commission may be inspected and copied at the Commission's
public reference room located at Judiciary Plaza, 450 Fifth Street, N.W., Room
1024, Washington, D.C. 20549, and at the public reference facilities in the
Commission's regional offices located at 7 World Trade Center, 13th Floor, New
York, New York 10048, and Citicorp Center, 500 West Madison Street, Suite 1400,
Chicago, IL 60661. Copies of such material may be obtained at prescribed rates
by writing to the Commission, Public Reference Section, 450 Fifth Street, N.W.,
Washington, D.C. 20549. Certain of such reports, proxy statements and other
information are also available from the Commission over the Internet at
http://www.sec.gov.
By Order of the Board of Directors
Kenneth C. Cleveland,
President and Chief Executive Officer
Boulder, Colorado
November 7, 2000
-16-
<PAGE>
[LOGO]
ANNUAL MEETING OF STOCKHOLDERS OF HAUSER, INC.
NOVEMBER 28, 2000, 9:30 A.M. (LOCAL TIME)
SHUSTER LABORATORIES
85 JOHN RD.
CANTON, MA 02021
The undersigned stockholder(s) of Hauser, Inc. (the "Company"), revoking all
previous proxies, hereby constitute(s) and appoint(s) Herbert Elish and Kenneth
C. Cleveland, and each of them, as proxies with full power of substitution to
vote on behalf of the undersigned all shares of Common Stock of the Company
which the undersigned is entitled to vote at the Annual Meeting of Stockholders
of the Company to be held at Shuster Laboratories, 85 John Rd., Canton, MA, CLT
Room, at 9:30 a.m. (local time), and at any adjournment and postponements
thereof, upon all matters presented before such annual meeting, and does hereby
ratify and confirm all that said proxies or their substitutes may lawfully do by
virtue hereof. The undersigned hereby acknowledges receipt of the Notice of the
Annual Meeting and hereby instructs said proxies to vote or refrain from voting
such shares of Hauser Common Stock as marked below upon the matters listed
below. In their discretion, such proxies are authorized to vote such shares upon
such other business as may properly come before the annual meeting.
PLEASE MARK VOTES AS IN THIS EXAMPLE. /X/
1. To elect the eight nominees listed below to the Board of Directors of the
Company until the next Annual Meeting of Stockholders of Hauser Inc. or
until their successors are elected and qualified.
/ / FOR / / WITHHOLD / / FOR ALL EXCEPT
Kenneth C. Cleveland, Michael C. Davis, Herbert Elish, James R. Mellor,
Robert F. Saydah, Harvey L. Sperry, Dean P. Stull, Volker Wypyszyk
If you do not wish your shares voted "FOR" a particular nominee, mark the "For
All Except" box and strike a line through the nominee(s) name. Your shares will
be voted for the remaining nominee(s).
(CONTINUED, AND TO BE DATED AND SIGNED ON OTHER SIDE)
<PAGE>
2. TO TRANSACT SUCH OTHER BUSINESS AS MAY PROPERLY COME BEFORE THE MEETING OR
ANY ADJOURNMENT OR POSTPONEMENT THEREOF.
<TABLE>
<S> <C> <C> <C>
MARK HERE FOR ADDRESS CHANGE AND NOTE / / MARK HERE IF YOU PLAN TO ATTEND THE / /
BELOW MEETING
</TABLE>
THIS PROXY WHEN PROPERLY EXECUTED, WILL BE VOTED AS DIRECTED HEREIN. IF NO
DIRECTION IS GIVEN, THIS PROXY WILL BE VOTED IN FAVOR OF THE NOMINEES FOR
DIRECTOR AND IN ACCORDANCE WITH RECOMMENDATIONS OF HAUSER'S BOARD OF DIRECTORS.
Please mark, date and sign exactly as your name appears hereon and return in
the enclosed envelope. If acting as executor, administrator, trustee, guardian,
etc., you should so indicate when signing. If the signer is a corporation,
please sign the full corporate name, by duly authorized officer. If shares are
held jointly, each stockholder named should sign.
Signature:_________________________
Date: _____________________________
Signature:_________________________
Date: _____________________________
