<PAGE>
SCHEDULE 14A INFORMATION
Proxy Statement Pursuant to Section 14(a) of
the Securities Exchange Act of 1934 (Amendment No. )
Filed by the Registrant /X/
Filed by a party other than the Registrant / /
Check the appropriate box:
/ / Preliminary Proxy Statement
/ / Confidential, for Use of the Commission Only (as permitted by Rule
14a-6(e)(2))
/X/ Definitive Proxy Statement
/ / Definitive Additional Materials
/ / Soliciting Material Pursuant to Section 240.14a-12
ISCO, INC.
--------------------------------------------------------------------------------
(Name of Registrant as Specified In Its Charter)
--------------------------------------------------------------------------------
(Name of Person(s) Filing Proxy Statement, if other than the Registrant)
Payment of Filing Fee (Check the appropriate box):
/X/ No fee required.
/ / Fee computed on table below per Exchange Act Rules 14a-6(i)(1)
and 0-11.
(1) Title of each class of securities to which transaction applies:
------------------------------------------------------------------------
(2) Aggregate number of securities to which transaction applies:
------------------------------------------------------------------------
(3) Per unit price or other underlying value of transaction computed
pursuant to Exchange Act Rule 0-11 (set forth the amount on which the
filing fee is calculated and state how it was determined):
------------------------------------------------------------------------
(4) Proposed maximum aggregate value of transaction:
------------------------------------------------------------------------
(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>
ISCO, INC.
4700 Superior Street
Lincoln, Nebraska 68504
NOTICE OF ANNUAL MEETING OF SHAREHOLDERS
to be held December 14, 2000
The annual meeting of shareholders of Isco, Inc. will be held at Isco, Inc.'s
corporate headquarters, 4700 Superior Street, Lincoln, Nebraska on December 14,
2000 at 2:00 p.m. for the purpose of:
1. The election, as Directors, of four persons listed in the accompanying
Proxy Statement dated November 10, 2000.
2. Whatever other business may properly be brought before the meeting or
any adjournment thereof.
Only those shareholders of record at the close of business on October 13, 2000
(the "Record Date") shall be entitled to notice of the meeting and to vote at
the meeting.
In order to assure a quorum, all shareholders are urged to attend the meeting or
to vote by proxy.
SHAREHOLDERS WHO ATTEND THE ANNUAL MEETING MAY VOTE IN PERSON EVEN THOUGH THEY
HAVE VOTED BY PROXY.
IF YOU PLAN TO ATTEND THE ANNUAL MEETING AND YOUR ISCO SHARES ARE HELD BY YOUR
BROKER FOR YOUR ACCOUNT AND YOU DO NOT PERSONALLY HOLD THE CERTIFICATES FOR THE
SHARES, YOU SHOULD MARK THE PROXY TO INDICATE THAT YOU PLAN TO ATTEND THE ANNUAL
MEETING. YOU WILL THEN RECEIVE A "LEGAL PROXY" SHOWING THE NUMBER OF SHARES YOU
OWN. BRING THAT "LEGAL PROXY" TO THE ANNUAL MEETING AND YOU WILL THEN BE
CREDITED WITH VOTING YOUR SHARES IN PERSON AT THE MEETING.
By Order of the Board of Directors
Robert W. Allington
Chairman and Chief Executive Officer
November 10, 2000
<PAGE>
PROXY STATEMENT
November 10, 2000
GENERAL INFORMATION.
This Proxy Statement is furnished in connection with the solicitation of proxies
by the Board of Directors of Isco, Inc. (the "Company") for use at the annual
meeting of shareholders to be held on December 14, 2000. Shareholders of record
at the close of business on October 13, 2000 are entitled to notice of and to
vote at the meeting and any adjournment thereof.
This Proxy Statement was first mailed to shareholders on November 17, 2000.
As of the close of business on October 13, 2000, the Company had 5,643,992
shares of common stock outstanding ("Common Stock"), all of which are entitled
to vote at the annual meeting.
As of the record date, Robert W. Allington of 4700 Superior Street, Lincoln, NE
68504 owned 2,748,722 shares or 46.90 percent of the Company's outstanding
Common Stock plus currently exercisable stock options. On the record date,
Dimensional Fund Advisors, Inc. of 1299 Ocean Avenue, 11th floor, Santa Monica,
CA 91401 and UMB Bank, n.a. of 928 Grand Avenue, Kansas City, MO 64141 owned
505,651 and 354,176 shares, respectively, or 8.96 percent and 6.28 percent,
respectively, of the Common Stock outstanding. Neither Dimensional Fund
Advisors, Inc., nor UMB Bank, n.a. hold any stock options.
Each shareholder is entitled to one vote for each share on each matter
presented, except that in the election of Directors each shareholder shall have
the right to vote the number of shares owned by him or her for as many persons
as there are Directors to be elected, or to cumulate such shares and give one
candidate as many votes as the number of Directors multiplied by the number of
his or her shares, or to distribute them on the same principle among as many
candidates as he or she shall determine.
Proxies which are properly signed and returned will be voted at the annual
meeting. Shareholders may specify their preference by marking the appropriate
boxes on the proxy and the proxy will then be voted in accordance with such
specifications. In the absence of such specifications the proxy will be voted
"FOR" the election of the four nominees for Director and in accordance with the
instructions of the Board of Directors as to any other matters. A proxy is
revocable at any time before it is voted and a proxy is automatically revoked
upon the giving of a subsequent proxy. The Company will bear the cost of
solicitation of proxies, including the charges and expenses of brokers and
others for forwarding solicitation material to shareholders. In addition to the
use of mail, proxies may be solicited by personal interview, telephone,
facsimile or telegraph.
SHAREHOLDERS WHO ATTEND THE ANNUAL MEETING MAY VOTE IN PERSON EVEN THOUGH THEY
HAVE VOTED BY PROXY.
IF YOU PLAN TO ATTEND THE ANNUAL MEETING AND YOUR ISCO SHARES ARE HELD BY YOUR
BROKER FOR YOUR ACCOUNT AND YOU DO NOT PERSONALLY HOLD THE CERTIFICATES FOR THE
SHARES, YOU SHOULD MARK THE PROXY TO INDICATE THAT YOU PLAN TO ATTEND THE ANNUAL
MEETING. YOU WILL THEN RECEIVE A "LEGAL PROXY" SHOWING THE NUMBER OF SHARES YOU
OWN. BRING THAT "LEGAL PROXY" TO THE ANNUAL MEETING AND YOU WILL THEN BE
CREDITED WITH VOTING YOUR SHARES IN PERSON AT THE MEETING.
SHAREHOLDER PROPOSALS.
In the event that any shareholder desires to submit a proposal for action at the
2001 annual meeting of shareholders, such proposal must be received at the
Company's office at 4700 Superior Street, Lincoln, Nebraska 68504-1398, marked
to the attention of the President or Secretary of the Company, no later than
July 13, 2001. It is suggested that any shareholder desiring to submit a
proposal, do so by Certified Mail, Return Receipt Requested. Shareholders should
also note that, in addition to the requirement of timely receipt by the Board of
Directors of a proposal as stated above, such proposal will not be included in
the proxy solicitation material for the 2001 annual meeting of shareholders
unless it otherwise complies with the requirements of Section 14(a) of the
Securities Exchange Act of 1934 and the rules and regulations promulgated and in
effect thereunder.
2
<PAGE>
1. ELECTION OF DIRECTORS.
The Bylaws of the Company provide that the number of Directors shall be not more
than nine, such number to be set annually by the Board of Directors.
The Bylaws also provide that the Directors shall be divided into classes and
that there be two classes if the number of Directors is less than nine. The
first class has a term expiring December 13, 2001 and the second class has a
term expiring upon the adjournment of the 2002 annual meeting of shareholders,
currently scheduled for December 12, 2002. The Board of Directors has nominated
James L. Carrier, Douglas M. Grant, Ronald K. Jester, and Philip M. Wittig for
election to the second class to serve a two-year term.
THE BOARD OF DIRECTORS RECOMMENDS A VOTE "FOR" ITEM NO. 1.
The proxy holders named in the proxy intend to vote "FOR" the election of the
four nominees listed above unless authority to so vote is withheld. In the
unexpected event that any of the nominees are unable to serve, or for good cause
will not serve as a Director, the proxy holders reserve the right to vote for
such substitute nominees as are designated by the Board of Directors.
Following is a list of the names and ages of the four nominees, each of whom is
presently serving as a Director. Also listed are the three Directors whose terms
expire in 2001. Included is the past five-year business history of each nominee
and each Director, the year in which each became a Director of the Company, and
the number and the percentage of outstanding shares of Common Stock of the
Company beneficially owned by each as of October 13, 2000.
<TABLE>
<CAPTION>
------------------------------------------------------------------------------------------------------------------------
COMMON STOCK
BENEFICIALLY OWNED AS
OF OCTOBER 13, 2000
------------------------
NUMBER
DIRECTOR OF
NAME OF INDIVIDUAL AGE EMPLOYMENT HISTORY SINCE SHARES(1) PERCENT(2)
------------------- --- ------------------------------------------------ -------- --------- ----------
<S> <C> <C> <C> <C> <C>
NOMINEES FOR ELECTION TO THE SECOND CLASS (TERM EXPIRING DECEMBER 12, 2002):
James L. Carrier 51 President and Chief Executive Officer, Lester 1997 3,417 .06
Electrical, Inc., since 1979.
Douglas M. Grant 54 President and Chief Operating Officer since 1988 61,141 1.04
October 6, 1995; Vice President August 31, 1989
to October 5, 1995; Environmental Division
General Manager May 26, 1987 to July 15, 1996.
Ronald K. Jester 46 Partner, Labenz & Associates, LLC, since 1998; 2000 1,000 .02
Senior Manager, KPMG LLP, January 1, 1987
to September 30, 1998.
Philip M. Wittig 66 Retired Chief Financial Officer and Treasurer 1967 38,145(4) .65
of Isco, Inc. since January 15, 2000.
-----------------------------------------------------------------------------------------------------------------------------
</TABLE>
3
<PAGE>
<TABLE>
<CAPTION>
------------------------------------------------------------------------------------------------------------------------
COMMON STOCK
BENEFICIALLY OWNED AS
OF OCTOBER 13, 2000
------------------------
NUMBER
DIRECTOR OF
NAME OF INDIVIDUAL AGE EMPLOYMENT HISTORY SINCE SHARES(1) PERCENT(2)
------------------- --- ------------------------------------------------ -------- --------- ----------
<S> <C> <C> <C> <C> <C>
FIRST CLASS (TERM EXPIRING DECEMBER 13, 2001):
Robert W. Allington 65 Chairman of the Board and Chief Executive 1959 2,748,722 46.90
Officer since 1959; President 1959 to October 5,
1995.
James L. Linderholm 62 Chairman of the Board and President since 1986 1994 11,500 .20
and 1984, respectively, of HWS Consulting
Group, Inc.
Dale L. Young 72 Corporate Secretary since 1991; Retired 1966 52,420(3) .89
Executive Vice President and Cashier of FirsTier
Bank, NA, Lincoln, NE.
-----------------------------------------------------------------------------------------------------------------------------
</TABLE>
Executive Officers of the Company collectively hold 2,861,226 shares or 48.82
percent of the outstanding Common Stock including currently exercisable options.
Executive Officers and Directors collectively hold 2,967,708 shares or 50.64
percent of the outstanding Common Stock including currently exercisable options.
(1) Unless otherwise noted, all shares are held with sole investment and voting
power. The number of shares include the number of shares outstanding on
October 13, 2000 and currently exercisable options.
(2) Percentage computed by dividing the number of shares beneficially owned,
including options currently exercisable, by the total shares outstanding on
October 13, 2000, including currently exercisable options.
(3) Includes 20,000 shares as to which Dale L. Young has shared voting rights
and investment power.
(4) Includes 4,622 shares as to which Philip M. Wittig has shared voting
rights and investment power.
ADDITIONAL INFORMATION CONCERNING BOARD OF DIRECTORS.
The Company's Board of Directors has not established a Nominating Committee.
The Audit Committee, during fiscal 2000, was comprised of Directors James L.
Linderholm, Chairman; James L. Carrier, Secretary and John J. Brasch. All are
independent members of the Board. The Audit Committee assists the Board in
fulfilling its fiduciary responsibilities with respect to accounting policies,
reporting practices, and the sufficiency of the Company's annual audit. The
Committee met four times during fiscal year 2000.
The Compensation Committee, during fiscal 2000, was comprised of Directors John
L. Brasch, Chairman; Dale L. Young, Secretary/Chairman; James L. Carrier; Philip
M. Wittig, Secretary; and Robert W. Allington (a non-voting member). Dr. Brasch
resigned from the Board during the fiscal year, upon his resignation Dale Young
became Chairman and Philip Wittig became Secretary. The Committee recommends to
the Board the compensation programs and salaries for the officers and also acts
as the stock option committee. The Committee met three times during fiscal 2000.
The Board of Directors met 14 times in fiscal 2000. All of the directors
attended greater than 75 percent of the total meetings held by the Board and its
committees in fiscal 2000 with the exception of John L. Brasch and James L.
Carrier.
4
<PAGE>
LIST OF CURRENT EXECUTIVE OFFICERS OF THE COMPANY.
The following is a list of the names and ages of the current executive officers
of the Company and their business history for the last five years.
<TABLE>
<CAPTION>
-----------------------------------------------------------------------------------------------------------------
YEAR FIRST BECAME
POSITION AND PRINCIPAL OCCUPATION EXECUTIVE OFFICER
NAME OF INDIVIDUAL AGE SINCE JULY 30, 1994 OF THE COMPANY
-------------------- --- ------------------------------------------------------------------- -----------------
<S> <C> <C> <C>
Robert W. Allington 65 Chairman of the Board and Chief Executive Officer since 1959; 1959
President 1959 to October 5, 1995.
Douglas M. Grant 54 President and Chief Operating Officer since October 6, 1995; Vice 1987
President August 31, 1989 to October 5, 1995.
Alfred G. Craske 57 Vice President, Sales and Marketing since July 18, 1996; Director, 1996
Sales and Marketing, May 20, 1996 to July 18, 1996; Vice President,
Marketing, Gelman Science, Inc. 1994-1996.
Vicki L. Benne 38 Chief Financial Officer and Treasurer since December 18, 1999; 1991
Assistant Treasurer January 2, 1999 to December 18, 1999;
Controller and Chief Accounting Officer October 21,
1989 to January 2, 1999.
John J. Korab, Jr. 51 Vice President, Corporate Development since December 11, 1989. 1989
Donald E. Wademan 36 Controller and Chief Accounting Officer since January 2, 1999. 1999
Assistant Controller, June 15, 1998 to January 2, 1999. Division
Controller, Hoover Materials Handling Group Inc., June 1995 to
June 1998.
-----------------------------------------------------------------------------------------------------------------
</TABLE>
5
<PAGE>
EXECUTIVE COMPENSATION.
The following table sets forth a summary of the compensation paid to the chief
executive officer and the four other executive officers of the Company whose
compensation exceeded $100,000 for the fiscal year ended, July 28, 2000.
Compensation is provided for the past three fiscal years for each officer.
<TABLE>
<CAPTION>
LONG-TERM COMPENSATION
--------------------------------
ANNUAL COMPENSATION AWARDS PAYOUTS
-------------------------------------- ---------------------- ---------
OTHER RESTRICTED OPTIONS/ LTIP ALL OTHER
NAME AND PRINCIPAL FISCAL SALARY BONUS ANNUAL STOCK SARS PAYOUTS COMPENSATION
POSITION YEAR ($) ($) COMPENSATION(1) AWARDS (#) ($) ($) (3)
-------------------------- ------- --------- ---------- ----------------- ----------- ---------- --------- --------------
<S> <C> <C> <C> <C> <C> <C> <C> <C>
Robert W. Allington 2000 205,521 -- 41,181 -- -- -- 7,173
Chairman and Chief 1999 205,521 -- 47,706 -- -- -- 214
Executive Officer 1998 205,521 -- 45,169 -- 49,474(2) -- 91
-------------------------------------------------------------------------------------------------------------------------
Douglas M. Grant 2000 179,999 -- 6,998 -- 30,000(2) -- 6,311
President and Chief 1999 179,999 -- 8,384 -- -- -- 2,384
Operating Officer 1998 172,307 -- 7,192 -- 46,259(2) -- 2,219
-------------------------------------------------------------------------------------------------------------------------
Alfred G. Craske 2000 139,846 16,673 318 -- 12,500(2) -- 6,407
Vice President, Sales 1999 132,384 20,000 75 -- -- -- 2,394
and Marketing 1998 127,452 -- 940 -- 21,224(2) -- 2,701
-------------------------------------------------------------------------------------------------------------------------
Vicki L. Benne 2000 96,252 8,578 4,927 -- 10,000(2) -- 2,854
Chief Financial Officer 1999 87,760 2,000 2,634 -- -- -- 859
and Treasurer 1998 83,083 11,880 -- -- 6,618(2) -- 1,675
-------------------------------------------------------------------------------------------------------------------------
John J. Korab, Jr. 2000 105,347 13,025 1,266 -- 10,000(2) -- 5,225
Vice President, 1999 99,002 -- 75 -- -- -- 1,828
Corporate Development 1998 99,002 -- 75 -- 9,796(2) -- 1,607
-------------------------------------------------------------------------------------------------------------------------
</TABLE>
(1) During fiscal 1996, the Company modified its vacation policy to limit the
number of accrued vacation hours an employee could have on each anniversary
of his or her employment. Those hours in excess of the established limit
related to length of service were valued, frozen, and scheduled for payment
over a maximum period of six years. In addition, the policy included a
future paid-in-lieu-of provision whereby following the employee's
anniversary he or she would be paid for hours of accrued vacation which
were in excess of the established limit provided, however, that the
employee had actually taken a minimum number of vacation hours during the
preceding year. These combined payment amounts are included in "Other
Annual Compensation" and for fiscal 2000, 1999, and 1998, respectively,
were as follows: Mr. Allington, $31,351, $39,256, and $37,888; Mr. Grant,
$0, $1,386, and $6,923; Mr. Craske, $243, $0, and $0; and Mr.
Korab, $1,191, $0, and $0.
(2) Options granted pursuant to the 1996 Stock Option Plan.
(3) The amounts set forth under "All Other Compensation", include
profit-sharing contributions, and forfeitures plus 401(k) matching
contributions and forfeitures. Profit sharing contributions including
forfeitures and 401(k) matching contributions including forfeitures,
respectively, for fiscal 2000 were as follows: Mr. Allington, $4,173 and
$0; Mr. Grant, $4,173 and $2,138; Mr. Craske, $4,173 and $2,234; Ms. Benne,
$2,745 and $109; and Mr. Korab, $3,168 and $2,057.
6
<PAGE>
OPTIONS/SAR GRANTS IN LAST FISCAL YEAR.
The following table sets forth information with respect to options and SAR's
that were granted during the last completed fiscal year to each of the
executives.
<TABLE>
<CAPTION>
------------------------------------------------------------------------------------------------- -------------------------
POTENTIAL REALIZABLE
INDIVIDUAL GRANTS VALUE AT ASSUMED
ANNUAL RATE OF STOCK
PRICE APPRECIATION FOR
OPTION TERM
------------------------------------------------------------------------------------------------- -------------------------
NUMBER OF POTENTIAL TOTAL
SECURITIES OPTIONS/SAR'S EXERCISE OR EXPIRATION
NAME UNDERLYING GRANTED TO BASE PRICE DATE 5% 10%
OPTIONS/SAR'S EMPLOYEES IN FISCAL ($/SH) ($) ($)
GRANTED (#) YEAR
-------------------------- ------------------ ---------------------- -------------- ------------- ------------ ------------
<S> <C> <C> <C> <C> <C> <C>
Douglas M. Grant 18,000 23.9% 4.1250 10/19/09 120,945 192,585
12,000 15.9% 4.7500 06/15/10 92,847 147,843
---------------------------------------------------------------------------------------------------------------------------
Alfred G. Craske 12,500 16.6% 5.2500 08/19/09 106,896 170,214
---------------------------------------------------------------------------------------------------------------------------
Vicki L. Benne 10,000 13.3% 5.9375 12/16/09 96,716 154,003
---------------------------------------------------------------------------------------------------------------------------
John J. Korab, Jr. 10,000 13.3% 5.9375 12/16/09 96,716 154,003
---------------------------------------------------------------------------------------------------------------------------
</TABLE>
AGGREGATED OPTION/SAR EXERCISES IN LAST FISCAL YEAR AND FY-END OPTIONS/SAR
VALUES.
The following table sets forth information with respect to exercised options and
SARs, if any, during fiscal 2000 and exercised and unexercised options and SARs,
if any, held by the executive officers of the Company during fiscal 2000.
<TABLE>
<CAPTION>
NUMBER OF SECURITIES VALUE OF UNEXERCISED
SHARES UNDERLYING UNEXERCISED IN-THE-MONEY
ACQUIRED OPTIONS/SARS AT OPTIONS/SARS
ON VALUE FISCAL YEAR END (#) AT FISCAL YEAR END ($)
EXERCISE REALIZED EXERCISABLE ("EX") EXERCISABLE ("EX")
NAME (#) ($) UNEXERCISABLE ("UN") UNEXERCISABLE ("UN")
------------------------------- --------------------- ------------ -------------------------- ------------------------
<S> <C> <C> <C> <C>
Robert W. Allington -- -- 12,369 shares ("Ex") *
37,105 shares ("Un") *
----------------------------------------------------------------------------------------------------------------------
Douglas M. Grant -- -- 56,302 shares ("Ex") *
71,457 shares ("Un") *
----------------------------------------------------------------------------------------------------------------------
Alfred G. Craske -- -- 20,495 shares ("Ex") *
16,979 shares ("Un") *
----------------------------------------------------------------------------------------------------------------------
Vicki L. Benne -- -- 11,422 shares ("Ex") *
13,736 shares ("Un") *
----------------------------------------------------------------------------------------------------------------------
John J. Korab, Jr. -- -- 9,857 shares ("Ex") *
14,079 shares ("Un") *
----------------------------------------------------------------------------------------------------------------------
</TABLE>
* Share option price is not in-the-money.
7
<PAGE>
COMPENSATION COMMITTEE REPORT ON EXECUTIVE COMPENSATION.
The Compensation Committee ("Committee") of the Board of Directors was comprised
of Directors John J. Brasch, James L. Carrier, Philip M. Wittig, Dale L. Young,
and Robert W. Allington (an employee and non-voting member). Messrs. Brasch,
Carrier, Wittig, and Young are non-employee directors. Dr. Brasch resigned as a
director on May 5, 2000. Mr. Wittig was appointed to fill the vacancy created by
the resignation of Dr. Brasch. The Committee is responsible for reviewing and
recommending approval by the Company's Board of Directors the cash and equity
compensation of the Chairman/CEO, the President, and other elected officers of
the Company. Cash compensation is comprised of salary and incentive bonus, and
equity compensation is comprised of stock options. The Committee also functions
as the stock option committee. This report is for the fiscal year ended July 28,
2000.
COMPENSATION PHILOSOPHY. The philosophy of the Company with regard to executive
compensation is to design the executive compensation program in a manner
intended to enhance Company performance and shareholder value by achieving the
following objectives:
- Provide reasonable and appropriate levels of salary and cash incentive
compensation that will attract, motivate, and retain highly qualified
executives;
- Integrate executive compensation with the Company's business and
strategic plans;
- Reward both business and individual performance; and
- Encourage stock ownership by executives, thereby aligning executive
compensation with shareholder value.
EXECUTIVE OFFICER COMPENSATION PROGRAM. The Company's compensation program for
executive officers consists of salary, bonuses, and grants of options to
purchase the Company's Common Stock. In addition, executives are entitled to
customary benefits, including medical, vacation, and retirement benefits, that
are generally available to employees of the Company.
SALARY: The Committee believes that salary provides the executive with base
compensation that is competitive for the position and the task performed. The
salary levels of the Company's executives are evaluated periodically by the
Committee in view of specific job responsibilities and prevailing salary levels
of companies of comparable size and complexity. Burgess & Associates, an
executive compensation consulting firm, assists the Committee by surveying
publicly held manufacturing companies whose annual revenues are approximately
$60 million.
BONUSES: The Committee believes that cash incentives (bonuses) reward the
executive for achieving corporate and individual performance goals. The
short-term incentive bonus and stock option plan adopted by the Committee and
Board of Directors in January 1998 was based upon the achievement of certain
targeted revenue and operating income goals. The target goals were set for
fiscal years 1998, 1999, and 2000. Depending upon a covered executive's area of
responsibility, the executive could receive 100% of the incentive bonus if the
maximum revenue goal was met or if the maximum operating income goal was met. If
both maximum goals were met, the executive could receive a maximum of 150% of
targeted incentive bonus. No benefits under the short-term incentive bonus plan
were earned during fiscal 2000, however certain executives received cash bonuses
because they achieved individual performance targets.
STOCK OPTIONS: The Committee believes that stock options provide the executives
with incentives for long-term performance that is directly linked to the
interests of the shareholders because the value of the options increase or
decrease in relationship to the future price of the Company's common stock. The
Company did not achieve the targeted sales and operating income goals.
Therefore, none of the options vested that were granted under the 1998 - 2000
Incentive Compensation Plan. During the year, one officer was granted a stock
option in lieu of an increase in base compensation, two officers were granted
stock options upon their promotion, and two officers were granted stock options
in recognition of individual performance.
OVERALL REVIEW: The Company's operating performance, the manufacture and
distribution of product, during fiscal 2000 has shown a significant turn around.
The write-off of the Company's investment in the ERP software was the result of
management's in-depth review of the Company's viable options. The performance of
Geomation, Inc. continued to decline in fiscal 2000 and resulted in the
divestiture decision. The executives took steps to reduce the cost structures of
Isco-STIP GmbH in Germany, and AFTCO, the limited partnership. These steps will
enhance the
8
<PAGE>
probability of future profitable performance of these entities. The Committee
believes that the executive officers of the Company have properly addressed the
several difficult situations and the compensation for the executive officers is
fair and reasonable for both the executives and the shareholders of the Company.
CEO COMPENSATION: The CEO did not receive a salary increase during fiscal 2000
nor did the CEO receive any cash incentive bonus because the Company failed to
achieve its revenue and income performance targets.
FUTURE EXECUTIVE INCENTIVE COMPENSATION AND STOCK OPTIONS: Subsequent to the
beginning of fiscal 2001, the Committee adopted an Executive Incentive
Compensation Plan effective for fiscal years 2001 through 2005. This plan
supercedes the plan discussed in the section above, entitled BONUSES. Under the
new plan, the cash incentive bonuses are based upon two factors: revenue and
net/operating income with the income component weighted 3 to 1 over revenue. A
portion of the cash incentive will be based on either net income or operating
income, depending upon the executive's area of responsibility. However, the
executive is not eligible for any cash incentive unless the net/operating income
threshold is exceeded. Individual goals are established annually for each of the
executives. In addition, the executives will receive stock options exercisable
over five years with a maximum of twenty percent of the options vested each year
subject to the performance level achieved by the Company and attainment of
individual goals.
Submitted by the Compensation Committee of the Company's Board of Directors.
Dale L. Young, Chairman
Philip M. Wittig, Secretary
James L. Carrier
Robert W. Allington (non-voting member)
9
<PAGE>
PERFORMANCE GRAPH.
The following performance graph compares the performance of the Company's Common
Stock to the NASDAQ peer group and the Standard and Poor's 500 Stock Index. The
industry peer group, selected by the Company, is comprised of 77 companies whose
stock is traded on NASDAQ and are included in the Standard Industrial Code
Classification No. 382 entitled "Measuring and Controlling Devices". The graph
assumes that $100 was invested on July 31, 1995 in the Company's stock and the
indices. It, also, is assumed that dividends were reinvested when paid and that
the fiscal year ends July 31.
<TABLE>
<CAPTION>
7/95 07/96 07/97 07/98 07/99 07/00
-------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C>
Isco, Inc. 100 93 83 68 63 45
-------------------------------------------------------------------------
Peer Group 100 66 122 76 119 215
-------------------------------------------------------------------------
S & P 500 100 117 177 212 254 277
-------------------------------------------------------------------------
</TABLE>
10
<PAGE>
RETIREMENT PLAN.
The Company's defined contribution retirement plan includes a profit sharing
provision and a 401(k) provision that covers all employees meeting age and
service requirements. Significant provisions of the plan include the following:
(i) an employee may reduce his or her salary by up to 12 percent, and the
Company will match the reduction, up to 10 percent, with a 20 percent matching
contribution; (ii) the Company's profit sharing contribution to the plan is
equal to approximately 7 percent of its net earnings before income taxes; (iii)
the Company's aggregate contribution to the plan is limited to 15 percent of the
aggregate compensation of the plan participants; (iv) participants vest 20
percent of employer profit sharing and employer 401(k) matching contributions
after three years of service and 20 percent per year thereafter until 100
percent vested. Management and administrative costs of the plan are borne by the
Company. For fiscal year 2000, amounts contributed to the plan for the chief
executive officer and the four other most highly compensated executive officers
of the Company are set forth as part of the table appearing in the Executive
Compensation section.
COMPENSATION OF DIRECTORS FOR FISCAL 2000.
The Directors' Deferred Compensation Plan has been in effect since January 1996.
Under the Directors' Deferred Compensation Plan, all Directors receive 35
Deferred Stock Units for each Board and Committee meeting attended, and 240
Deferred Stock Units for the annual Board retainer. In addition, the Corporate
Secretary receives an additional 250 Deferred Stock Units annually for serving
as Corporate Secretary. At the time the Director ceases to be a member of the
Board, the Director's accumulated Deferred Stock Units are converted to shares
of the Company's Common Stock at a ratio of 1 to 1 and distributed. Inside
Directors do not receive compensation for attending committee meetings.
The number of Deferred Stock Units earned by each of the directors during fiscal
2000 are as follows: Mr. Allington 695, Mr. Carrier 870, Mr. Grant 765, Mr.
Jester 0, Mr. Linderholm 870, Mr. Wittig 800, and Mr. Young 1,050.
ADDITIONAL INFORMATION.
COMPLIANCE WITH SECTION 16(a) OF THE SECURITIES EXCHANGE ACT OF 1934. Section
16(a) of the Securities Exchange Act of 1934 requires the Company's executive
officers and directors, and persons who beneficially own more than 10 percent of
the Company's stock, to file initial reports of ownership and reports of changes
in ownership with the Securities and Exchange Commission ("SEC"). Executive
officers, directors, and greater than 10 percent beneficial owners are required
by SEC regulations to furnish the Company with copies of all Section 16(a) forms
they file.
For fiscal 2000, due to an administrative error, Ronald K. Jester's initial Form
3 was filed late.
INDEPENDENT PUBLIC ACCOUNTANTS. Deloitte & Touche LLP, certified public
accountants, are the independent public accountants for the Company.
Representatives of Deloitte & Touche LLP are expected to be present at the
annual meeting and will be given the opportunity to make any statement they
might desire and will also be available to respond to appropriate questions from
shareholders. Deloitte & Touche LLP has been selected as independent public
accountants for the Company for fiscal year 2001.
OTHER MATTERS. The Board of Directors does not know of any other matters to be
presented at the annual meeting. In the event that other business is properly
brought before the meeting, it is the intention of the proxy holders named in
the proxy to vote the proxies in accordance with the recommendation of the Board
of Directors.
Robert W. Allington
Chairman and Chief Executive Officer
11
<PAGE>
ISCO, INC.
THIS PROXY IS SOLICITED ON BEHALF OF THE BOARD OF DIRECTORS FOR THE ANNUAL
MEETING OF SHAREHOLDERS DECEMBER 14, 2000.
The undersigned hereby constitutes and appoints ROBERT W. ALLINGTON and DALE
L. YOUNG, or either of them, with full power to act alone, or any substitute
appointed by either of them as the undersigned's agents, attorneys and
proxies to vote the number of shares the undersigned would be entitled to vote
if personally present at the Annual Meeting of the Shareholders of Isco,
Inc., to be held at Isco, Inc., 4700 Superior Street, Lincoln, Nebraska, on
the 14th day of December 2000, at 2:00 p.m., or any adjournments thereof, as
indicated below.
(1) ELECTION OF DIRECTORS (The Board of Directors recommends voting "FOR"
all nominees.)
NOMINEES: James L. Carrier, Douglas M. Grant, Ronald K. Jester, and
Philip M. Wittig
/ / Vote FOR all four nominees (except as marked to the contrary below)
/ / WITHHOLD AUTHORITY to vote for all four nominees
INSTRUCTIONS: To withhold authority to vote for any individual nominee,
write that nominee's name in the following space.
___________________________________________________________________________
(2) In their discretion, the proxies are authorized to vote upon such other
business as may properly come before the meeting.
<PAGE>
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 THE ELECTION OF ALL NOMINEES AND WITH DISCRETIONARY AUTHORITY ON
ALL OTHER MATTERS.
Dated: __________________________, 2000
________________________________________
Signature of Shareholder
________________________________________
Signature of Shareholder
PLEASE SIGN EXACTLY AS YOUR NAME APPEARS
AT THE LEFT. WHEN SIGNING AS ATTORNEY,
EXECUTOR, ADMINISTRATOR, TRUSTEE, GUARDIAN
OR CONSERVATOR, GIVE FULL TITLE. ALL JOINT
TENANTS MUST SIGN.
PLEASE MARK, SIGN, DATE AND RETURN THE PROXY
CARD PROMPTLY USING THE ENCLOSED ENVELOPE.
/ / I(WE) PLAN TO ATTEND THE ANNUAL MEETING.
