<PAGE> 1
SCHEDULE 14A
(RULE 14A-101)
INFORMATION REQUIRED IN PROXY STATEMENT
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 Rule 14a-11(c) or Rule 14a-12
X-RITE, INCORPORATED
- --------------------------------------------------------------------------------
(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):
[ ] No fee required.
[ ] Fee computed on table below per Exchange Act Rules 14a-6(i)(4) 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:
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<PAGE> 2
X-RITE, INCORPORATED
3100 44TH STREET, S.W.
GRANDVILLE, MICHIGAN 49418
NOTICE OF ANNUAL MEETING TO BE HELD MAY 15, 2000
The Annual Meeting of Shareholders of X-Rite, Incorporated will be held at
the BYRON CENTER HIGH SCHOOL, VAN SINGEL FINE ARTS CENTER, 8500 BURLINGAME,
S.W., BYRON CENTER, MICHIGAN, on Monday, May 15, 2000, at 4:30 p.m., for the
following purposes:
1. To elect three directors as set forth in the accompanying Proxy
Statement.
2. To transact any other business that may properly come before the
meeting.
Shareholders of record as of the close of business on March 24, 2000, are
entitled to notice of, and to vote at the meeting. You are requested to sign,
date, and return the accompanying Proxy in the enclosed, self-addressed
envelope, regardless of whether you expect to attend the meeting in person. If
you attend the meeting in person, you may withdraw your Proxy and vote your
shares in person if you wish.
By Order of the Board of Directors
DUANE F. KLUTING
Secretary
April 7, 2000
Grandville, Michigan
<PAGE> 3
X-RITE, INCORPORATED
3100 44TH STREET, S.W.
GRANDVILLE, MICHIGAN 49418
------------------------
PROXY STATEMENT
APRIL 7, 2000
------------------------
SOLICITATION OF PROXIES
This Proxy Statement is being furnished to the shareholders of X-Rite,
Incorporated (the "Company") on or about April 7, 2000, in connection with the
solicitation by the Board of Directors of the Company of Proxies to be used at
the Annual Meeting of Shareholders to be held on Monday, May 15, 2000, at 4:30
p.m. at the Van Singel Fine Arts Center, 8500 Burlingame, S.W., Byron Center,
Michigan.
If the form of Proxy accompanying this Proxy Statement is properly executed
and returned, the shares represented by the Proxy will be voted at the Annual
Meeting of Shareholders in accordance with the directions given in the Proxy.
Where shareholders specify a choice by marking on the Proxy card, the Proxy will
be voted as specified. If no choice is specified, the shares represented by the
Proxy will be voted for the election of the directors listed as nominees in the
Proxy, and at the discretion of the Proxy voters on any other matters voted upon
at the meeting. A Proxy may be revoked prior to its exercise by delivering a
written notice of revocation to the Secretary of the Company, executing a
subsequent Proxy or attending the meeting and voting in person.
The cost of the solicitation of Proxies will be borne by the Company. In
addition to the use of the mails, Proxies may be solicited personally or by
telephone or facsimile by a few regular employees of the Company without
additional compensation. The Company has retained D.F. King & Co., Inc., to aid
in the solicitation of proxies at an estimated cost of $4,800, plus expenses. In
addition, brokers, nominees, custodians, and other fiduciaries will be
reimbursed by the Company for their expenses in connection with sending proxy
materials to beneficial owners and obtaining their Proxies.
VOTING SECURITIES AND RECORD DATE
March 24, 2000, has been fixed by the Board of Directors as the record date
for determining shareholders entitled to vote at the Annual Meeting. On that
date 21,275,951 shares of the Company's common stock, par value $.10 per share,
were issued and outstanding. Shareholders are entitled to one vote for each
share of the Company's common stock registered in their names at the close of
business on the record date.
ELECTION OF DIRECTORS
The Company's Articles of Incorporation specify that the Board of Directors
shall consist of at least six (6), but not more than nine (9) members, with the
exact number to be fixed by the Board from time to time. The Board has fixed the
number of directors at eight (8). The Articles also specify that the Board of
Directors be divided into three classes, with the directors of the classes to
hold office for staggered terms of three (3) years each. Richard E. Cook, Rufus
S. Teesdale, and Charles Van Namen, as described in the following table, have
been nominated for election to three-year terms expiring in 2003.
Unless otherwise specifically directed by a marking on a shareholder's
Proxy, the persons named as proxy voters in the accompanying Proxy will vote for
the nominees described below. In the event any of these nominees is no longer a
candidate at the time of the Annual Meeting of Shareholders (a situation which
is not now anticipated), the Board of Directors may designate a substitute
nominee, in which case the accompanying Proxy will be voted for the substituted
nominee.
Directors are elected by a plurality of the votes cast by shareholders.
Therefore, the nominees receiving the most affirmative votes cast will be
elected, irrespective of the number of votes received. Broker nonvotes, votes
withheld, and votes against any candidate will not have a bearing on the outcome
of the election. Votes will be counted by Inspectors of Election appointed by
the presiding officer at the meeting.
The Board of Directors recommends a vote FOR the election of all the
persons nominated by the Board.
<PAGE> 4
The content of the following table relating to business experience is based
upon information furnished to the Company by the nominees and directors.
<TABLE>
<CAPTION>
NAMES, (AGES), POSITIONS AND BACKGROUNDS
OF NOMINEES SERVICE AS A DIRECTOR
- -----------------------------------------------------------------------------------------------------
<S> <C>
Nominees for Terms to Expire in 2003
Richard E. Cook (54) became the President and C.O.O. of Director since 1997
X-Rite, Incorporated during 1998, and was appointed C.E.O. Member of the Strategic
and President in January of 2000. Previously, he was the Planning & Technology
President of Cascade Engineering, a developer and producer Committee
of plastic mold injection technology headquartered in Grand
Rapids, Michigan, and he held that position for more than
five years.
Rufus S. Teesdale (79) has been retired for more than five Director since 1958
years. Prior to retirement he was a Partner in Loan Services Member of the Audit &
and Systems in Glen Ellyn, Illinois (a software supplier to Finance Committee and
financial institutions). the Strategic Planning &
Technology Committee
Charles Van Namen (74) has been retired for more than five Director since 1958
years. Prior to retirement he was a Senior Engineer with the Member of the Audit &
Instrument Division of Lear Siegler, Inc., in Grand Rapids, Finance Committee and the
Michigan (a manufacturer of aerospace instruments). Compensation Committee
Directors Whose Terms Expire in 2001
Dr. Peter M. Banks (62) is a Senior Vice President of Director since 1998
Veridian Corporation, an information technology and advanced Chairman of the Strategic
engineering company headquartered in Ann Arbor, Michigan. Planning & Technology
From 1995 to 1999 he held the position of President, C.E.O. Committee
and Chairman of the Board of ERIM, International, Inc., a
high technology research and development defense systems
company headquartered in Ann Arbor, Michigan. From 1990 to
1995 Dr. Banks was the Dean of Engineering at the University
of Michigan. He also serves as a director of Tecumseh
Products, Inc.
Ted Thompson (70) is the Chairman of the Board of X-Rite, Director since 1958
Incorporated. Prior to 1999, he was also the C.E.O. of Chairman of the Board
X-Rite and he held those positions for more than five years. of Directors
Mr. Thompson also serves as a director of Gentex
Corporation.
Ronald A. VandenBerg (60) is a general business consultant. Director since 1989
Prior to 1999, for more than five years, he served as a Chairman of the Compensation
Senior Vice President at Donnelly Corporation, a Committee and Member of
manufacturer of glass related products for the automotive the Strategic Planning &
and electronics industries, headquartered in Holland, Technology Committee
Michigan.
Directors Whose Terms Expire in 2002
Stanley W. Cheff (58) is the President and C.E.O. of Director since 1996
Wolverine Building Group, a construction firm headquartered Chairman of Nominating &
in Grand Rapids, Michigan, and he has held that position for Resource Committee and
more than five years. Member of the Compensation
Committee
James A. Knister (62) served in several senior management Director since 1996
positions, including Chief Financial Officer, for Donnelly Chairman of Audit & Finance
Corporation until his retirement in 1999. Donnelly Committee and Member of
Corporation is a manufacturer of glass related products for the Nominating & Resource
the automotive and electronics industries, headquartered in Committee and the
Holland, Michigan. Mr. Knister also serves as a director of Strategic Planning &
several privately held companies. Technology Committee
- -----------------------------------------------------------------------------------------------------
</TABLE>
2
<PAGE> 5
The Company has an Audit & Finance Committee that recommends to the Board
of Directors the selection of independent public accountants to serve as the
Company's auditors and reviews the scope of their audit and their audit report,
as well as overseeing management of the Company's financial affairs and
financial disclosures. This Committee met on three (3) occasions during the
fiscal year ended January 1, 2000. A report from this Committee appears infra
under the caption Report of the Audit & Finance Committee.
The Company has a Compensation Committee that makes recommendations to the
Board regarding annual remuneration of the Company's executive officers, and
which is responsible for administering the Company's various incentive plans
involving the Company's common stock. This Committee met on four (4) occasions
during the fiscal year ended January 1, 2000. A report from this Committee
appears infra under the caption Report on Executive Compensation.
The Company has a Nominating & Resource Committee that is responsible for
overseeing executive career development and succession, Board development and
recommending to the Board annually a slate of nominees for election as directors
to be submitted to the shareholders of the Company at the Annual Meeting. The
Committee is also responsible for recommending nominees to fill vacancies that
may occur at other times. The Committee will consider persons suggested as
nominees by shareholders, and suggestions should be sent to the Nominating
Committee c/o the Company's Secretary at its headquarters. This Committee met on
two (2) occasions during the fiscal year ended January 1, 2000.
The Company has a Strategic Planning & Technology Committee that oversees
the Company's strategic, business development and technology planning functions.
This Committee met on three (3) occasions during the fiscal year ended January
1, 2000.
The Board of Directors met six (6) times during the past fiscal year, and
all directors attended at least seventy-five percent (75%) of the aggregate
number of meetings of the Board and meetings of committees on which they served.
3
<PAGE> 6
SECURITIES OWNERSHIP OF MANAGEMENT
The following table contains information regarding ownership of the
Company's common stock by each director and nominee for election as a director,
each executive officer named in the tables under the caption Executive
Compensation, and all directors and executive officers as a group. The content
of this table is based upon information supplied by the persons identified in
the table and represents the Company's understanding of circumstances in
existence as of March 1, 2000.
<TABLE>
<CAPTION>
AMOUNT AND NATURE OF OWNERSHIP
---------------------------------------------
NAME AND ADDRESS OF SHARES BENEFICIALLY EXERCISABLE
BENEFICIAL OWNER OWNED(L) OPTIONS(2) TOTAL PERCENT OF CLASS
- ---------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
Rufus S. Teesdale 1,426,450 50,000 1,476,450 6.7
3152 E. Gatehouse, S.E.
Grand Rapids, MI 49546
Ted Thompson 1,528,300(3) 160,000 1,688,300 7.6
3100 44th Street
Grandville, MI 49418
Joan Mariani Andrew 3,390 60,000 63,390 *
Dr. Peter M. Banks 1,000 20,000 21,000 *
Bernard J. Berg 19,044 97,000 116,044 *
Stanley W. Cheff 3,000 40,000 43,000 *
Richard E. Cook 39,482 45,000 84,482 *
Duane F. Kluting 23,869(4) 97,000 120,869 *
James A. Knister 2,000 40,000 42,000 *
Ronald A. VandenBerg 8,000 82,000 90,000 *
Charles Van Namen 679,000(5) 60,000 739,000 3.3
All Directors and Executive Officers as a
Group (14 persons) 3,739,598 838,500 4,578,098 20.7
</TABLE>
- --------------------------------------------------------------------------------
* Less than one percent
(1) Except as disclosed in the footnotes below, each person named in the table
has sole voting and investment power with respect to the issued shares
listed in this column.
(2) This column reflects shares subject to options exercisable within 60 days.
(3) Includes 160,000 shares issued to a trust established by Mr. Thompson's
wife, and he disclaims beneficial ownership of those shares.
(4) Includes 13,469 shares issued to a trust established by Mr. Kluting's wife,
and he disclaims beneficial ownership of those shares.
(5) Includes 265,900 shares issued to a trust established by Mr. Van Namen's
wife, and he disclaims beneficial ownership of those shares.
4
<PAGE> 7
SECURITIES OWNERSHIP OF CERTAIN BENEFICIAL OWNERS
The following table contains information regarding ownership of the
Company's common stock by persons or entities beneficially owning more than five
percent (5%) of the Company's common stock. The content of this table is based
upon information contained in Schedules 13G furnished to the Company. The
individuals listed on this table are founders and former directors of the
Company.
<TABLE>
<CAPTION>
AMOUNT AND NATURE OF PERCENT OF
NAME AND ADDRESS OF BENEFICIAL OWNER BENEFICIAL OWNERSHIP CLASS
- ------------------------------------------------------------------------------------------------------
<S> <C> <C>
Putnam Investments, Inc. 1,821,844 8.2
One Post Office Square
Boston, MA 02109
Leonard C. Blanding 1,457,132(1) 6.6
6600 Tanglewood, S.E.
Grand Rapids, MI 49546
Lawrence E. Fleming 1,541,500(2) 7.0
6200 Hall St., S.E.
Grand Rapids, MI 49546
- ------------------------------------------------------------------------------------------------------
</TABLE>
(1) Includes 20,000 shares subject to options exercisable within 60 days.
(2) Includes 30,000 shares subject to options exercisable within 60 days, and
500,000 shares issued to a trust established by Mr. Fleming's wife, and he
disclaims beneficial ownership of those shares.
EXECUTIVE COMPENSATION
The following table contains information regarding compensation paid by the
Company with respect to the preceding fiscal year to its chief executive officer
and to the four other most highly compensated executive officers.
SUMMARY COMPENSATION TABLE
<TABLE>
<CAPTION>
LONG TERM
COMPENSATION
ANNUAL ------------------------
COMPENSATION RESTRICTED SECURITIES
------------------ STOCK UNDERLYING ALL OTHER
SALARY BONUS AWARD(S) OPTIONS COMPENSATION
YEAR ($) ($)(1) ($)(1)(2) (#) ($)(3)
- --------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C>
Ted Thompson 1999 164,518 40,636 -- 20,000 16,969
Chairman and Retired 1998 295,570 40,641 -- 20,000 14,344
Chief Executive Officer 1997 289,455 121,510 -- 20,000 18,410
Richard E. Cook 1999 250,000 127,188 -- 17,500 4,455
President and Chief 1998 144,231 20,641 37,692 17,500 3,553
Executive Officer
Bernard J. Berg 1999 187,000 68,629 -- 15,000 7,290
Senior Vice President -- 1998 180,211 24,779 -- 15,000 6,730
Engineering 1997 155,961 65,643 -- 15,000 3,236
Duane F. Kluting 1999 185,000 71,595 -- 15,000 4,559
Vice President -- 1998 175,577 15,261 7,125 15,000 4,136
Chief Financial Officer 1997 150,894 63,548 -- 15,000 3,461
Joan Mariani Andrew 1999 180,000 68,220 -- 15,000 3,286
Vice President -- 1998 170,480 20,032 -- 15,000 3,449
Sales & Marketing 1997 131,750 55,692 -- 15,000 2,741
- --------------------------------------------------------------------------------------------------------------
</TABLE>
(1) The after tax portion of bonuses paid to the executive officers of the
parent company may be converted into common stock of the Company, at the
election of the executive, pursuant to the Company's Cash Bonus Conversion
Plan. Bonuses are converted at a discount of 50 percent from the market
value of the stock at the time the bonus is determined, but the shares
received are subject to certain restrictions on
5
<PAGE> 8
transfer and risks of forfeiture. Restricted Stock Awards shown above are
the result of such bonus conversions.
(2) The values shown in this column represent the aggregate market value at the
date of grant for shares of restricted stock acquired pursuant to the
Company's Cash Bonus Conversion Plan, net of purchase price paid.
Restrictions lapse as to 20 percent of the shares six months after grant and
as to 20 percent on each of the first four anniversaries of the grant date,
or as to all shares in the event of death, disability, retirement, or change
in control of the Company. Dividends will be paid on these shares to the
same extent paid on the Company's common stock generally. Restricted shares
held at the close of the Company's fiscal year were Mr. Berg 754 shares, Ms.
Andrew 786 shares, Mr. Cook 10,580 shares, and Mr. Kluting 3,422 shares.
Corresponding net market values as of that same date were Mr. Berg $4,713,
Ms. Andrew $4,913, Mr. Cook $66,125, and Mr. Kluting $21,388.
(3) These amounts represent "matching" contributions by the Company pursuant to
its 401(k) Plan and annual premiums for term life insurance attributable to
each named executive officer.
------------------------
The following table contains information regarding stock options granted to
the above-named executive officers during the preceding fiscal year.
OPTION GRANTS IN LAST FISCAL YEAR
<TABLE>
<CAPTION>
INDIVIDUAL GRANTS
----------------------------------------------------------------------
OPTIONS PERCENT OF OPTIONS EXERCISE GRANT DATE
GRANTED GRANTED TO ALL PRICE EXPIRATION FAIR VALUE
(1) EMPLOYEES ($/SH)(2) DATE ($)(3)
- -----------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C>
Ted Thompson 20,000 8.2 7.50 1/20/09 59,600
Richard E. Cook 17,500 7.2 7.50 1/20/09 52,150
Bernard J. Berg 15,000 6.1 7.50 1/20/09 44,700
Duane F. Kluting 15,000 6.1 7.50 1/20/09 44,700
Joan Mariani Andrew 15,000 6.1 7.50 1/20/09 44,700
- -----------------------------------------------------------------------------------------------------------------
</TABLE>
(1) Options become exercisable one year after the date of grant.
(2) The price may be paid in cash or by the surrender of outstanding shares.
(3) Fair value calculated under the Black-Scholes Valuation Model, assuming a
risk-free rate of return of 4.65 percent, .68 percent dividend yield, 40
percent volatility, and exercise in 5 years. This model is an alternative
suggested by the Securities and Exchange Commission, and the Company neither
endorses this particular model nor necessarily agrees with the method for
valuing options. The future performance of the Company and the price of its
shares will ultimately determine the value of these options.
The following table contains information regarding the exercise of options
during the preceding fiscal year by the above-named executives, as well as
unexercised options held by them at fiscal year-end.
AGGREGATED OPTION EXERCISES IN LAST FISCAL YEAR AND YEAR-END VALUES
<TABLE>
<CAPTION>
NUMBER OF SECURITIES
UNDERLYING UNEXERCISED VALUE OF UNEXERCISED
OPTIONS AT FISCAL IN-THE-MONEY OPTIONS AT
SHARES VALUE YEAR-END( #) FISCAL YEAR-END($)
ACQUIRED ON REALIZED ---------------------------- ----------------------------
EXERCISE(#) ($) EXERCISABLE UNEXERCISABLE EXERCISABLE UNEXERCISABLE
- -----------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C>
Ted Thompson -- -- 140,000 20,000 -- --
Richard E. Cook -- -- 27,500 17,500 -- --
Bernard J. Berg 6,000 20,813 82,000 15,000 -- --
Duane F. Kluting -- -- 82,000 15,000 -- --
Joan Mariani Andrew -- -- 45,000 15,000 -- --
- -----------------------------------------------------------------------------------------------------------------------
</TABLE>
6
<PAGE> 9
REPORT ON EXECUTIVE COMPENSATION
The Compensation Committee is currently comprised of three (3) members, and
all members are outside directors; i.e., none is an employee of the Company. The
Committee makes recommendations to the Board of Directors with respect to all
executive compensation except for the award of stock-based incentives, which are
the exclusive prerogative of the Committee.
The Compensation policies established for executive officers are designed
to assure the Company's ability to attract, motivate, and retain competent and
dedicated senior management. In constructing and applying these policies, a
conscious effort is made to identify and evaluate the executive compensation
programs for comparable employers, considering such factors as geographic and
industry influences, relative sizes, growth stages, and market capitalizations.
With the assistance of a consulting firm, the Committee has established a peer
group of corporations that it uses for compensation comparison purposes.
In general, compensation packages for executive officers are composed of
three elements: base salary, annual bonus, and stock-based incentives. Base
salary for an executive is determined by the executive's responsibility and the
Company's need to be competitive in the market for executive services. Bonus
compensation is based on achievement of corporate goals. Stock-based incentives
are intended to strengthen the alignment of interests between shareholders and
senior management and to address long-term performance.
In the early part of 1999, the Compensation Committee reviewed the annual
salary plan with the Chief Executive Officer for all other executive officers,
and made such adjustments as they thought appropriate, based upon salary survey
data for comparable employers, economic conditions in general, and individual
evaluations by the Chief Executive Officer. Annual salary for the Chief
Executive Officer was reviewed independently by the Committee and adjusted based
upon the same considerations for other executive salaries, plus the Committee's
evaluation of his performance as corporate leader.
At the same time, the Committee established an annual bonus program for
fiscal 1999 that is applicable to all executive officers of the parent Company.
The program has three components. One component is based on individual
performance as determined by the Compensation Committee, in conjunction with the
Chief Executive Officer with respect to other officers. A second component is
based upon Company-wide economic performance defined to be roughly the return on
average assets. The third component is based on increased sales where
performance is measured against prior year sales. The bonuses for the Company's
most highly compensated officers are reported in the Summary Compensation Table
contained in this Proxy Statement.
The Committee also awarded stock options to eight (8) executives during
1999 under the Employee Stock Option Plan, including the grants to the named
executives detailed in the foregoing table captioned Option Grants in Last
Fiscal Year. The options awarded to the executives, other than the Chief
Executive Officer, were awarded based upon recommendations from the Chief
Executive Officer, taking into account for each executive his or her
contribution to success in prior periods by achieving agreed upon goals, and his
or her ability and willingness to influence success in the future by striving to
achieve individual and corporate goals. The Chief Executive Officer Ted Thompson
was awarded an option based primarily on the Committee's judgment that it is in
the best interest of shareholders to provide incentive for the Chief Executive
Officer in the form of stock options, in an amount that is appropriate relative
to the options granted other executives, considering their abilities to
influence corporate performance.
COMPENSATION COMMITTEE
Ronald A. VandenBerg, Chairman
Stanley W. Cheff
Charles Van Namen
7
<PAGE> 10
STOCK PERFORMANCE GRAPH
The following graph depicts the cumulative total return on the Company's
common stock compared to the cumulative total return on the indices for NASDAQ
Stock Market (U.S. and foreign) and NASDAQ nonfinancial stocks. The graph
assumes an investment of $100 on the last trading day of 1994, and reinvestment
of dividends in all cases.
COMPARISON OF FIVE-YEAR CUMULATIVE TOTAL RETURNS
PERFORMANCE REPORT FOR
X-RITE, INCORPORATED
[PERFORMANCE GRAPH]
<TABLE>
<CAPTION>
NASDAQ STOCK MARKET NASDAQ NON-FINANCIAL
X-RITE, INCORPORATED (US & FOREIGN) STOCKS
-------------------- ------------------- --------------------
<S> <C> <C> <C>
1994 100.000 100.000 100.000
1995 71.913 140.359 139.257
1996 84.522 171.842 169.159
1997 94.009 209.846 198.093
1998 40.265 290.171 290.322
1999 32.947 531.738 559.352
</TABLE>
The Company has not adopted any long-term incentive plan or any defined
benefit or actuarial plan, as those terms are defined in the applicable
regulations promulgated by the Securities and Exchange Commission.
The Company has made available to its executive officers contracts assuring
them of continued employment for a period of three years, effective as of a
change in control of the Company. In the event the executive's employment is
terminated by the Company during the three-year employment term without good
cause, either actually or constructively, the executive is entitled to receive
continued compensation and employee benefits for the remainder of the term.
CEO/President Cook has an Employment Agreement with the Company for an
initial term of three years, ending May 31, 2001, renewable annually thereafter
for successive one-year periods unless terminated by either party as of the end
of the initial term or any renewal term. During its continuation, either party
may terminate the Agreement for specified reasons. Mr. Cook is entitled to
receive cash compensation and certain perquisites for the unexpired portion of
the then current term if his employment is terminated for any reason other than
death, disability, voluntary quit, or discharge for good cause. Mr. Cook is
obligated not to compete with the Company or solicit its employees for a period
of two years after termination of his employment. Mr. Cook's Agreement has been
coordinated with the above-described change in control arrangement in the event
a change in control of the Company occurs.
Members of the Company's Board of Directors received an annual retainer of
$13,000, plus a meeting fee of $750 ($1,500 for chairpersons) for each meeting
of the Board or a committee attended. In addition, each person who is a
nonemployee director immediately following each Annual Meeting of Shareholders
is entitled to receive an option to purchase 10,000 shares of the Company's
common stock at a price per share equal to the fair market value on the previous
day. Each option has a term of ten years.
8
<PAGE> 11
At the time Chairman Ted Thompson retired from his position as the
Company's Chief Executive Officer and from day-to-day management of the
Company's affairs, the Company entered into a Chairman's Agreement with Thompson
for the purpose of defining an ongoing relationship with the Company and its
management. In addition to specifying his responsibilities, compensation, and
benefits during his tenure as Chairman, the Agreement provides for compensation
and insurance benefits for a period of five years after conclusion of his
service as Chairman and for stock options as long as he is a member of the Board
of Directors. Mr. Thompson is obligated not to compete with the Company for a
period ending two years after termination of the Agreement. Compensation under
this Agreement for fiscal 1999 is described above under the caption "Executive
Compensation."
Directors who have served three or more terms (nine years) are eligible to
become Directors Emeritus at such time as they no longer hold the position of a
director of the Company, if elected to that position by the Board of Directors.
Directors Emeritus are entitled to attend meetings of the Board, but they may
not vote, and they are entitled to receive the directors' annual retainer, but
no meeting fees. Director Emeritus status lasts for a period equal to the length
of service as a director or until any earlier resignation or death.
RELATIONSHIP WITH INDEPENDENT PUBLIC ACCOUNTANTS
The consolidated financial statements of the Company and its subsidiaries
for the year ended January 1, 2000, have been audited by Arthur Andersen LLP,
independent public accountants, and the Board of Directors has selected Arthur
Andersen LLP to serve as the Company's independent accountants for the year
ending December 30, 2000. Representatives of Arthur Andersen LLP are expected to
be present at the Annual Meeting to respond to appropriate questions and will
have an opportunity to make a statement if they desire.
SECTION 16(a) Beneficial Ownership Reporting Compliance
Based upon a review of Forms 3, 4, and 5 furnished to the Company during or
with respect to the preceding fiscal year and written representations from
certain reporting persons, the Company is not aware of any failure by any
reporting person to make timely filings of those Forms as required by Section
16(a) of the Securities Exchange Act of 1934.
SHAREHOLDER PROPOSALS -- ANNUAL MEETING
If a shareholder intends to present a proposal for action at the 2000
Annual Meeting of Shareholders, notice of that proposal must be given to the
Secretary of the Company, in accordance with the Company's bylaws, on or before
April 15, 2000. In addition, any proposal of a shareholder intended to be
presented at the 2001 Annual Meeting of the Shareholders of the Company must be
received by the Company at its headquarters, 3100 44th Street, S.W., Grandville,
Michigan 49418, no later than December 8, 2000, if the shareholder wishes the
proposal to be included in the Company's Proxy Statement relating to that
meeting.
MISCELLANEOUS
The Company's Annual Report to Shareholders including financial statements,
is being mailed to shareholders with this Proxy Statement.
Management is not aware of any matters to be presented for action at the
Annual Meeting other than as set forth in this Proxy Statement. If other
business should come before the meeting, the persons named as proxy holders in
the accompanying Proxy intend to vote the shares in accordance with their
judgment, and discretionary authority to do so is included in the Proxy.
9
<PAGE> 12
A COPY OF THE COMPANY'S REPORT ON FORM 10-K FILED WITH THE SECURITIES AND
EXCHANGE COMMISSION IS AVAILABLE, WITHOUT CHARGE, UPON WRITTEN REQUEST FROM
DUANE F. KLUTING, THE COMPANY'S VICE PRESIDENT/CHIEF FINANCIAL OFFICER, 3100
44TH STREET, S.W., GRANDVILLE, MICHIGAN 49418.
SHAREHOLDERS ARE URGED TO PROMPTLY DATE, SIGN, AND RETURN THE ACCOMPANYING
PROXY IN THE ENCLOSED ENVELOPE.
By Order of the Board of Directors
DUANE F. KLUTING
Secretary
April 7, 2000
Grandville, Michigan
XRTCM-PS-00
10
<PAGE> 13
<TABLE>
<S><C>
X-RITE, INCORPORATED
3700 44TH STREET, S.W.
GRANDVILLE, MICHIGAN 49418
PROXY
THIS PROXY SOLICITED ON BEHALF OF THE BOARD OF DIRECTORS
The undersigned hereby appoint(s) J. Terry Moran and Duane Kluting, and each of them, as Proxies, each with the power to appoint a
substitute, to represent and to vote, as designated on the reverse, all shares of common stock of X-Rite, Incorporated held of
record by the undersigned on March 24, 2000, at the Annual Meeting of Shareholders to be held on May 15, 2000, or any adjournment
thereof.
When properly executed, this proxy will be voted in the manner directed by the undersigned shareholder(s). IF NO DIRECTION IS MADE,
THIS PROXY WILL BE VOTED FOR THE ELECTION OF THE NOMINEES LISTED ON THE REVERSE SIDE FOR A THREE-YEAR TERM.
- -------------------------------------------------------------------------------------------------------------------------------
PLEASE MARK, SIGN, DATE AND RETURN THIS PROXY CARD PROMPTLY IN THE ENCLOSED ENVELOPE.
- -------------------------------------------------------------------------------------------------------------------------------
- -------------------------------------------------------------------------------------------------------------------------------
Please sign exactly as your name(s) appear(s) on the reverse side. Joint owners should each sign personally. Trustees and other
fiduciaries should indicate the capacity in which they sign, and where more than one name appears, a majority must sign. If a
corporation, this signature should be that of an authorized officer who should state his or her title.
- --------------------------------------------------------------------------------------------------------------------------------
HAS YOUR ADDRESS CHANGED? DO YOU HAVE ANY COMMENTS?
- ------------------------------------------------------ ------------------------------------------------------------
- ------------------------------------------------------ ------------------------------------------------------------
- ------------------------------------------------------ ------------------------------------------------------------
</TABLE>
<PAGE> 14
<TABLE>
<S><C>
/X/ PLEASE MARK VOTES
AS IN THIS EXAMPLE
- ---------------------------------------- 1. Election of Directors.
X-RITE, INCORPORATED For all With- For All
- ---------------------------------------- Nominees hold Except
(01) RICHARD E. COOK
(02) RUFUS S. TEESDALE [ ] [ ] [ ]
(03) CHARLES VAN NAMEN
NOTE: IF YOU DO NOT WISH YOUR SHARES VOTED "FOR" A PARTICULAR
NOMINEE, MARK THE "FOR ALL EXCEPT" BOX AND STRIKE A LINE THROUGH
THE NAMES(S) OF THE NOMINEE(S).YOUR SHARES WILL BE VOTED FOR THE
REMAINING NOMINEE(S).
CONTROL NUMBER:
RECORD DATE SHARES:
2. In their discretion, the Proxies are authorized to vote upon
such other business as may properly come before the Meeting.
---------------
Please be sure to sign and date this Proxy. Date Mark box at right if an address change or comment has been noted
- --------------------------------------------------------------- on the reverse side of this card. / /
- ----Shareholder sign here---------------Co-owner sign here----
DETACH CARD DETACH CARD
X-RITE, INCORPORATED
Dear Shareholder,
Please take note of the important information in the Proxy Statement.
Your vote counts, and you are strongly encouraged to exercise your right to vote your shares.
Please mark the boxes on this proxy card to indicate how your shares will be voted. Then sign the card, detach it and return your
proxy vote in the enclosed postage paid envelope.
Your vote must be received prior to the Annual Meeting of Shareholders scheduled for May 15, 2000.
Thank you in advance for your prompt consideration of these matters.
Sincerely,
X-RITE, INCORPORATED
</TABLE>
