THE SPORTSMAN'S GUIDE, INC.
NOTICE OF ANNUAL MEETING OF SHAREHOLDERS
TO BE HELD ON JULY 16, 1997
TO OUR SHAREHOLDERS:
The Annual Meeting of Shareholders of The Sportsman's Guide,
Inc., a Minnesota corporation (the "Company"), will be held at
the offices of the Company, 411 Farwell Avenue, South St. Paul,
Minnesota, on July 16, 1997, at 2 p.m., Minnesota time, for the
following purposes:
1. To elect seven directors to serve until the next
Annual Meeting and until their successors have
been elected and qualified;
2. To approve the Company's 1996 Stock Option Plan;
3. To approve the engagement of Grant Thornton as
independent certified public accountants for the
Company for the fiscal year ending December 26,
1997; and
4. To consider and act upon such other business as
may properly come before the meeting or any
adjournment thereof.
Only holders of record of the Company's Common Stock at the
close of business on June 20, 1997, will be entitled to notice of
and to vote at the meeting or any adjournment thereof.
<PAGE>
A copy of the Company's Annual Report for the year ended
December 27, 1996, is enclosed.
BY ORDER OF THE BOARD OF
DIRECTORS
Charles B. Lingen, Secretary
June 25, 1997
IMPORTANT
WE ARE NOT ASKING YOU FOR A PROXY AND
YOU ARE REQUESTED NOT TO SEND A PROXY
<PAGE>
THE SPORTSMAN'S GUIDE, INC.
INFORMATION STATEMENT
FOR
ANNUAL MEETING OF SHAREHOLDERS
June 25, 1997
This Information Statement is furnished in connection with
the matters to be voted on at the Annual Meeting of Shareholders
of The Sportsman's Guide, Inc. (the "Company"), to be held at 2
p.m., Minneapolis time, on July 16, 1997, at the offices of the
Company, 411 Farwell Avenue, South St. Paul, Minnesota 55075, and
at any and all adjournments thereof. This Information Statement
is first being mailed to shareholders on or about June 25, 1997.
The Company's Annual Report to Shareholders is being
furnished to each shareholder with this Information Statement.
WE ARE NOT ASKING YOU FOR A PROXY AND YOU ARE
REQUESTED NOT TO SEND US A PROXY
VOTING SECURITIES AND RECORD DATE
The Company has one class of voting securities outstanding,
namely Common Stock, par value $.01 per share.
All holders of record of the Company's Common Stock at the
close of business on June 20, 1997, are entitled to notice of and
to vote at the Annual Meeting. As of June 20, 1997, there were
2,333,600 shares of Common Stock outstanding, and each share is
entitled to one vote on all matters to be voted upon at the
Annual Meeting. Under the Company's Articles of Incorporation
and Bylaws, each shareholder has the right to vote cumulatively
for the election of directors by giving written notice of his
intent to cumulate his votes to any officer of the Company before
the Annual Meeting or to the presiding officer of the Company at
the Annual Meeting at any time before the election of directors.
The presence in person or by proxy of holders of 40% of the
shares of the Company's Common Stock entitled to vote at the
Annual Meeting will constitute a quorum for the transaction of
business.
PRINCIPAL SHAREHOLDERS
The following table sets forth, as of June 20, 1997, certain
information with respect to the beneficial ownership of the Com-
pany's Common Stock and Series A Preferred Stock, par value $.01
per share, by each director and nominee for director of the
Company, each executive officer and all directors and officers as
a group, and the beneficial ownership of the Company's Common
Stock by those persons or groups known by the Company to own more
than 5% of the Common Stock.
<PAGE>
Directors (all of whom are nominees) and executive officers:
<TABLE>
<CAPTION>
Number of Shares Percent of
Name and Address(1) Title of Class Beneficially Class
Owned Outstanding(2)
<S> <C> <C> <C>
Vincent W. Shiel Common Stock 692,353(3) 27.4%
6900 Golf House Drive Preferred Stock 10,000(4) 50.0%
Hobe Sound, FL 33455
Mark F. Kroger Common Stock 107,836(5) 4.6%
110 Baird Parkway Preferred Stock 1,000 5.0%
Mansfield, OH 44903
Leonard M. Paletz Common Stock 260,420(6) 10.9%
4740 S. Ocean Blvd.
#814
Highland Beach, FL 33487
Gary Olen Common Stock 105,058(7) 4.5%
411 Farwell Avenue
S. St. Paul, MN 55075
William T. Sena -- -- --
300 Main Street
Cincinnati, OH 45202
Gregory R. Binkley Common Stock 15,313(8) *
411 Farwell Avenue
S. St. Paul, MN 55075
Charles B. Lingen Common Stock 1,875(9) *
411 Farwell Avenue
S. St. Paul, MN 55075
William G. Luth -- -- --
411 Farwell Avenue
S. St. Paul, MN 55075
All Directors and Common Stock 1,182,855(10) 45.1%
Officers as a Group Preferred Stock 11,000 55.0%
(8 persons)
</TABLE>
[FN]
* Less than 1% of outstanding shares
2<PAGE>
Holders of More Than 5% of Common Stock (in addition to directors named
above):
<TABLE>
<CAPTION>
Number of Shares Percent of
Name and Address Title of Class Beneficially Class
Owned Outstanding
<S> <C> <C> <C>
Stuart A. Shiel Common Stock 183,334(11) 7.8%
37710 Pinwood Court
Magnolia, TX 77355
Susan M. Mills Common Stock 183,638(12) 7.8%
640 Hay Avenue Preferred Stock 3,920 19.6%
Brookville, OH 45309
Ralph E. Heyman, Esq. Common Stock 497,488(13) 20.5%
1100 Courthouse Plaza SW
Dayton, OH 45402
Frederick J. Kroger Common Stock 188,636(14) 7.8%
905 East Third Street Preferred Stock 3,000 15.0%
Dayton, OH 45402
Thomas A. Smith Common Stock 128,000(15) 5.4%
96 N.E. 4th Avenue
Delray Beach, FL 33444
</TABLE>
[FN]
(1) Unless otherwise indicated, all shares are held of record and
beneficially owned by the person indicated.
(2) Percentages are calculated on the basis of the number of shares
outstanding on June 20, 1997, plus the number of shares issuable
pursuant to presently exercisable options and stock warrants for
that individual.
(3) Includes 572,351 shares (147,348 of which represent shares
issuable upon the exercise of stock warrants) held in the name of
Vincent W. Shiel as Trustee and Settlor of the Vincent W. Shiel
Revocable Trust and 120,002 shares (45,001 of which represent
shares issuable upon the exercise of stock warrants) held in the
name of Helen M. Shiel, the wife of Dr. Shiel, as Trustee and
Settlor of the Helen M. Shiel Revocable Trust.
(4) Includes 7,500 shares held in the name of Vincent W. Shiel as
Trustee and Settlor of the Vincent W. Shiel Revocable Trust and
2,500 shares held in the name of Helen M. Shiel as Trustee and
Settlor of the Helen M. Shiel Revocable Trust.
3<PAGE>
(5) Includes 14,501 shares issuable upon the exercise of stock
warrants.
(6) Includes 46,020 shares issuable upon the exercise of stock
warrants and 5,000 shares issuable upon the exercise of an
option.
(7) Includes 21,875 shares issuable upon the exercise of options.
(8) Includes 2,000 shares held in the name of Mr. Binkley's wife and
5,313 shares issuable upon the exercise of options.
(9) Includes 1,875 shares issuable upon the exercise of stock
warrants and options.
(10) Includes 286,933 shares issuable upon the exercise of stock
warrants and options.
(11) Includes 20,000 shares issuable upon the exercise of stock
warrants. Does not include 172,665 shares held in trust for the
benefit of Stuart Shiel's children. Mr. Shiel expressly disclaims
beneficial ownership of all such shares.
(12) Includes 11,760 shares issuable upon the exercise of stock
warrants.
(13) Includes 97,652 shares issuable upon the exercise of stock
warrants as a trustee of various trusts. Mr. Heyman holds
397,836 shares as a trustee of various trusts, of which he has no
pecuniary interest.
(14) Includes 1,501 shares issuable upon the exercise of stock
warrants and 93,800 shares issuable upon the exercise of stock
warrants as a co-trustee of various trusts.
(15) Includes 40,000 shares issuable upon the exercise of stock
warrants as a trustee of various trusts. Mr. Smith holds 88,000
shares as a trustee of various trusts, of which he has no
pecuniary interest.
Section 16(a) Beneficial Ownership Reporting Compliance
Section 16(a) of the Securities Exchange Act of 1934 requires the
Company's directors, executive officers, and ten percent beneficial
owners of the Common Stock to file reports with the Securities and
Exchange Commission. The Company believes that during fiscal 1996,
all filing requirements applicable to its directors, executive
officers, and ten percent beneficial owners were met.
4<PAGE>
MATTERS TO BE ACTED UPON
AT THE ANNUAL MEETING
1. Election of Directors
Seven directors are to be elected at the Annual Meeting to
hold office until the next Annual Meeting of Shareholders and
until their successors have been elected and qualified. Each
nominee is presently a director of the Company. There is no
reason to believe that any nominee will be unable to serve if
elected. The seven candidates receiving the greatest number of
votes will be elected as directors. Abstentions and broker
non-votes will be treated as non-votes.
Set forth below is certain information with respect to each
nominee for director.
VINCENT W. SHIEL, 64, has been a director of the Company
since 1990, and has extensive experience in the sporting goods
industry. Dr. Shiel was elected Chairman on April 27, 1994. Dr.
Shiel was the principal owner and president of Outdoor Sports
Headquarters, Inc., a hunting and sporting goods retailer, from
its formation in the early 1960s until 1978. From 1984 through
1988, Dr. Shiel served on the board of directors and owned a
controlling interest in Gander Mountain, Inc., a Wisconsin-based
retail mail-order company specializing in outdoor sporting
equipment. Dr. Shiel has not been associated with Gander
Mountain since 1988. Gander Mountain, which had been a
competitor of the Company, discontinued its catalog operations
during 1996. Dr. Shiel owns an interest and serves as a director
of ABN Sports Supply, Inc., a Mansfield, Ohio based wholesale
firearms distributor. Dr. Shiel is a principal shareholder of
and has served as President, director, and consultant to Outdoor
Consulting, Inc., a management consulting firm, for the past nine
years.
GARY OLEN, 55, is a co-founder of the Company and served as
its Executive Vice President and Secretary from its incorporation
until December 31, 1993. Mr. Olen was elected President and
Chief Operating Officer of the Company on January 1, 1994. Mr.
Olen was elected Chief Executive Officer on April 27, 1994. Mr.
Olen has been a director of the Company since its incorporation.
From 1970 through 1977, Mr. Olen was employed as the Marketing
Director for Fidelity File Box, Inc. From 1967 through 1970, Mr.
Olen was a Merchandise Manager with C&H Distributors, a specialty
business to business mail-order catalog specializing in the sale
of industrial and office equipment. From 1960 through 1967, Mr.
Olen was employed in the catalog division of J.C. Penney Company.
Mr. Olen was also the sole proprietor of the predecessor of the
Company.
5<PAGE>
LEONARD M. PALETZ, 62, is a co-founder of the Company and
served as its Chairman, Chief Executive Officer, Treasurer and a
director from the Company's incorporation in 1977 until 1994.
Mr. Paletz resigned his offices of Chairman, Chief Executive
Officer and Treasurer, retiring as an employee of the Company
effective December 31, 1994. Mr. Paletz also served as the
Company's President from its incorporation through December 31,
1993. From 1962 through 1977, Mr. Paletz was employed by
Fidelity File Box, Inc. in various positions including Vice
President and General Manager. Mr. Paletz was also a director
and shareholder of Fidelity File Box, which sells, through
mail-order catalogs, corrugated storage products, office and
industrial equipment and office and industrial supplies.
MARK F. KROGER, 43, has been a director of the Company since
1990. He is the Chairman of the Board, President, Chief Executive
Officer and Treasurer of ABN Sports Supply, Inc. Mr. Kroger has
served as President of ABN since 1986 and is a member of its
board of directors. Mr. Kroger has over 22 years experience in
the sporting goods industry, including various positions in sales
and merchandising while employed by Outdoor Sports Headquarters,
Inc. from 1973 to 1985.
WILLIAM T. SENA, 60, has been a director of the Company
since 1990. He is an investment advisor with Sena Weller Rohs
Williams Inc., a Cincinnati, Ohio investment advisory firm. Mr.
Sena has been associated with the investment advisory firm and/or
its predecessor since 1965. Mr. Sena is also a director of
Phoenix Medical Technology, Inc.
GREGORY R. BINKLEY, 48, has been a director of the Company
since 1995. Mr. Binkley has been employed by the Company since
February 1994 and was elected Vice President in 1994, Senior Vice
President of Operations and Chief Operating Officer in 1995, and
Executive Vice President in 1996. From 1993 to 1994, Mr. Binkley
served as an independent operations consultant. From 1990 to
1993, Mr. Binkley was employed by the operations division of
Fingerhut Companies, Inc., a mail-order catalog business.
CHARLES B. LINGEN, 52, has been a director of the Company
since December 1995. Mr. Lingen has been employed by the Company
since May 1994 as its Chief Financial Officer, Vice President-Finance
and Treasurer and in 1996 was elected Senior Vice
President of Finance. In 1995 Mr. Lingen was elected to serve as
Secretary of the Company. From 1973 to 1994, Mr. Lingen was
employed by Fingerhut Companies, Inc., a mail-order catalog
business, serving as Vice President of Finance and Controller
from 1984 to 1994.
6<PAGE>
Meetings of the Board and Compensation Committee
During fiscal 1996, the Board of Directors held four
meetings and took action by unanimous written consent eight
times. Each director attended all Board meetings held during
1996, except that Mr. Kroger was not present at one meeting.
The Company did not have any standing audit or nominating
committees during 1996. The Board of Directors established an
Audit Committee on February 13, 1997. Prior to that time, audit
committee functions were performed by the entire Board. The
Board has established a Compensation Committee to review and
determine compensation of the Company's executive officers. The
Compensation Committee held one meeting during fiscal 1996, at
which each of the committee members was present. The
Compensation Committee consists of Vincent W. Shiel, Leonard M.
Paletz and William T. Sena. The Compensation Committee has the
responsibility to review the salaries, bonuses and stock options
for, as well as any other compensation of, the officers of the
Company. The Committee recommends any changes or updates to
officer compensation to the Board of Directors for its approval.
Director Compensation
The Company does not currently pay any director fees.
Directors are reimbursed for out-of-pocket expenses incurred in
attending board meetings.
2. Approval of 1996 Stock Option Plan
One of the purposes of the Annual Meeting is to consider and
vote upon approval of the Company's 1996 Stock Option Plan (the
"Plan"). The Board of Directors of the Company adopted the Plan
on October 21, 1996, and subsequently amended the Plan on June
20, 1997 to increase the number of authorized shares, subject to
the approval of the Company's shareholders. The following
summary of the Plan is qualified in its entirety by reference to
the Plan, which is attached hereto as Exhibit A.
Summary of the Plan
The purpose of the Plan is to advance the interests of the
Company by providing an opportunity to selected key employees to
purchase Common Stock of the Company through the exercise of
options granted under the Plan. Options may be granted under the
Plan that qualify as incentive stock options under the provisions
of Section 422 of the Internal Revenue Code of 1986 (the "Code"),
and options which do not so qualify ("nonqualified options").
7<PAGE>
Options may be granted under the Plan to such key employees
of the Company as are recommended by the Compensation Committee
of the Board of Directors. Currently, 21 employees hold options
granted under the Plan, including four executive officers of the
Company. See "New Plan Benefits Table" for information
concerning these options.
A maximum of 600,000 shares of Common Stock will be
available for issuance upon the exercise of options granted under
the Plan, subject to adjustment for stock splits, stock dividends
and other changes in the capital structure of the Company.
Shares subject to an option which expires or is terminated
unexercised as to such shares may again be the subject of an
option under the Plan. On June 17, 1997, the last reported bid
price of the Common Stock in the Minneapolis-St. Paul over-the-counter
market was $6 per share.
The Plan will be administered by the Compensation Committee.
The Compensation Committee will recommend to the Board of
Directors the individuals to whom and the times at which options
are granted, the designation of each option as an incentive stock
option or a nonqualified option, the number of shares subject to
each option and the option price. The maximum number of shares
subject to options which may be granted under the Plan to any one
employee is the total number of shares available under the Plan.
Options granted under the Plan cannot be exercisable for a
price less than the fair market value of the underlying shares on
the date of grant or later than ten years from the date of grant,
except that options granted to employees who own more than 10% of
the combined voting power of the Company's stock cannot be
exercisable for a price less than 110% of such fair market value
or later than five years from the date of grant. Options are
exercisable at such times and in such installments as the Board
of Directors may determine at the time of grant. To the extent
that the aggregate fair market value of the underlying shares
(determined at the time an option is granted) with respect to
which incentive stock options first become exercisable by an
employee during any calendar year (under the Plan and any other
stock option plans of the Company) exceeds $100,000, the options
in excess of $100,000 will be treated as nonqualified options.
Full payment for shares purchased on exercise of an option,
along with payment of any required tax withholding, must be made
at the time of exercise in cash or, if permitted by the Board of
Directors, in shares of Common Stock having a fair market value
equivalent to the exercise price and withholding obligation.
Options granted under the Plan may not be transferred
otherwise than by will or the laws of descent and distribution
8<PAGE>
and may be exercised during the optionee's lifetime only by the
optionee. Unexercised options terminate upon termination of the
optionee's employment. If the optionee's employment terminates
for any reason other than cause or on account of disability or
death, the options then exercisable may be exercised by the
optionee or his or her legal representative within limited time
periods following termination of employment.
The Board of Directors may amend or terminate the Plan
(without further shareholder approval) or alter or amend any
outstanding stock option agreements under the Plan in any manner
it deems advisable, provided that no such action shall adversely
affect any outstanding option without the consent of the
optionee.
The Plan will be deemed effective as of October 21, 1996,
subject to shareholder approval within 12 months after such date.
Options granted before shareholder approval may not be exercised
until such approval is obtained, and such options will be null
and void (and the Plan will terminate) if such approval is not
obtained. The Plan will remain in effect until discontinued by
the Board of Directors, except that no incentive stock option may
be granted under the Plan after October 21, 2006.
Federal Income Tax Consequences
The following is a general description of federal income tax
consequences to optionees and the Company relating to incentive
stock options and nonqualified options that may be granted under
the Plan. This discussion does not purport to cover all tax
consequences relating to stock options.
An optionee will not recognize income upon the grant or
exercise of an incentive stock option, provided such optionee was
an employee of the Company at all times from the date of grant
until three months prior to exercise (or one year prior to
exercise in the event of death or disability). Generally, the
amount by which the fair market value of the Common Stock on the
date of exercise exceeds the option price will be includable in
income for purposes of determining alternative minimum tax and
such amount will be added to the tax basis of such stock for
purposes of determining alternative minimum taxable income in the
year the stock is sold. Where shares acquired upon exercise of
an incentive stock option are sold more than two years after
grant and more than one year after exercise, long-term capital
gain or loss will be recognized equal to the difference between
the sales price and the option price. An optionee who sells such
shares within two years after grant or one year after exercise
will recognize ordinary income in an amount equal to the lesser
of the difference between (i) the option price and the fair
9<PAGE>
market value of the shares on the date of exercise or (ii) the
option price and the sales proceeds. Any remaining gain or loss
will be treated as a capital gain or loss. In such event, the
Company will be entitled to a deduction equal to the amount of
ordinary income recognized by the optionee. The deduction will
be allowable at the time the optionee recognizes the income.
An optionee will not recognize income upon the grant of a
nonqualified stock option. Upon exercise of the option, the
optionee will recognize ordinary income equal to the excess of
the fair market value of the Common Stock on the date of exercise
over the option price. The tax basis of the option stock in the
hands of the optionee will equal the option price plus the amount
of ordinary income recognized upon exercise, and the holding
period for the stock will commence on the day the option is
exercised. An optionee who sells option stock will recognize
capital gain or loss measured by the difference between the tax
basis of the stock and the amount realized on sale. Such gain or
loss will be long-term if the stock is held for more than one
year after exercise. The Company will be entitled to a deduction
equal to the amount of ordinary income recognized by the
optionee. The deduction will be allowed at the same time the
optionee recognizes the income.
New Plan Benefits Table
The following table sets forth information concerning
options granted under the Plan.
10<PAGE>
1996 Stock Option Plan
<TABLE>
<CAPTION>
Potential
Realizable Value at
Assumed Annual Rates
of Stock Price
Appreciation
for Option Term
--------------------
Number of Shares
Name and Position Underlying Options 5%($) 10%($)
<S> <C> <C> <C>
Gary Olen 38,950(1) 61,239 155,191
President and Chief 33,790(2) 85,001 215,410
Executive Officer
Gregory R. Binkley 21,210(1) 33,347 84,508
Executive Vice President 20,740(2) 52,173 132,217
Charles B. Lingen 17,670(1) 27,781 70,404
Senior Vice President - 15,420(2) 38,790 98,302
Finance, Chief Financial
Officer and
Secretary/Treasurer
William G. Luth 17,670(1) 27,781 70,404
Senior Vice President - 17,250(2) 43,394 109,968
Marketing
All current executive 95,500(1) 150,149 380,506
officers as a group 87,200(2) 219,358 555,897
All non-executive 29,500(1) 46,381 117,539
employees as a group 42,800(2) 107,667 272,849
All non-employee
directors as a group 0 0 0
</TABLE>
[FN]
(1) Incentive stock options granted on October 21, 1996 at an
exercise price of $.25 per share, the fair market value of the
Common Stock on the date of grant, adjusted to $2.50 per share
to reflect a 1-for-10 reverse stock split on March 5, 1997. The
number of shares underlying the options was also adjusted to
reflect the effect of the reverse stock split. These options
are not exercisable until shareholder approval of the Plan (and
thereafter will be fully exercisable) and will expire on October
21, 2006.
11<PAGE>
(2) Incentive stock options granted on April 18, 1997 at an exercise
price of $4 per share, the fair market value of the Common Stock
on the date of grant. These options are not exercisable until
shareholder approval of the Plan (and thereafter 25% will be
fully exercisable, with an additional 25% becoming exercisable
on each of the next three anniversaries of the date of grant).
Vote Required
Adoption of the Plan requires the affirmative vote of a
majority of the Common Shares present in person or by proxy.
Abstentions and broker non-votes will be treated as non-votes and
will have the effect of a vote against adoption of the Plan.
Shareholders who vote against the Plan are not entitled to any
dissenter's rights under Minnesota law. Adoption of the Plan is
subject to a veto by shareholders owning more than 40% of the
voting power of all shareholders entitled to vote.
3. Approval of Engagement of Auditors
The accounts of the Company for the fiscal year ended
December 27, 1996, were audited by Grant Thornton LLP. The Board
of Directors has engaged Grant Thornton LLP to audit its accounts
for the current fiscal year ending December 26, 1997. The Board
has determined that it is desirable to request that the
shareholders approve the selection.
It is anticipated that a representative of Grant Thornton
LLP will be present at the Annual Meeting with the opportunity to
make a statement if he or she desires to do so and to respond to
appropriate questions from shareholders.
4. Other Business
Management of the Company does not know of any matters to be
acted upon at the Annual Meeting other than those mentioned
above.
12<PAGE>
EXECUTIVE COMPENSATION
The following table sets forth the cash compensation paid to
the named executive officers for services rendered in all
capacities to the Company for each of the fiscal years indicated.
Summary Compensation Table
<TABLE>
<CAPTION>
Long-Term
Annual Compensation Compensation
------------------- ------------
Name and Principal Year Salary Bonus Options
Position ($) ($) (#)
<S> <C> <C> <C> <C>
Gary Olen, 1996 137,127 158,000 38,950
President and Chief 1995 126,253 -- --
Executive Officer 1994 125,000 95,571 21,875
Gregory R. Binkley 1996 103,275 86,500 21,210
Executive Vice 1995 98,269 -- --
President 1994 76,827 47,785 5,313
Charles B. Lingen 1996 97,218 79,500 17,670
Senior Vice President, 1995 90,816 -- --
Chief Financial Officer 1994 49,759 19,114 1,875
and Secretary/Treasurer
William G. Luth(1) 1996 94,311 79,500 17,670
Senior Vice President - 1995 42,489 -- --
Marketing 1994 -- -- --
</TABLE>
[FN]
(1) Mr. Luth was elected as an executive officer of the Company in
December 1995.
13<PAGE>
The following table sets forth information with respect to the named
executive officers concerning the grant of options during fiscal 1996.
Option/SAR Grants in Last Fiscal Year
<TABLE>
<CAPTION>
Individual Grants
-----------------------------------------------
Number of # of Total
Securities Options/SARs Exercise
Underlying Granted to or Base
Options/SARs Employees in Price Expiration
Name Granted (#) Fiscal Year ($/Sh) Date
<S> <C> <C> <C> <C>
Gary Olen 38,950 31.1% $2.50 10/21/06
Gregory R. Binkley 21,210 17.0% $2.50 10/21/06
Charles B. Lingen 17,670 14.1% $2.50 10/21/06
William G. Luth 17,670 14.1% $2.50 10/21/06
Option/SAR Grants in Last Fiscal Year (continued)
Potential Realizable Value
at Assumed Rates of Stock
Price Appreciation for
Option Term
--------------------------
5% ($) 10% ($)
<S> <C> <C>
Gary Olen 61,239 155,191
Gregory R. Binkley 33,347 84,508
Charles B. Lingen 27,781 70,404
William G. Luth 27,781 70,404
</TABLE>
14<PAGE>
The following table sets forth information with respect to the named
executive officers concerning options held at fiscal year end 1996.
Aggregated Option/SAR Exercises in Last Fiscal Year and
FY-End Option/SAR Values
<TABLE>
<CAPTION>
Value of
No. of Unexercised
Unexercised In-the-Money
Options/SARs Options/SARs
at FY-End (#) at FY-End ($)
---------------- ----------------
Name Shares Value Exercis- Unexer- Exercis- Unexer-
Acquired on Realized able cisable able cisable
Exercise # ($) -------- ------- -------- -------
<S> <C> <C> <C> <C> <C> <C>
Gary Olen -- -- 21,875 93,950 -- --
Gregory R. Binkley -- -- 5,313 21,210 -- --
Charles B. Lingen -- -- 1,875 17,670 -- --
William G. Luth -- -- -- 17,670 -- --
</TABLE>
Employment Agreements
No employment agreements are currently in effect with any of
the Company's officers.
Compensation Committee Interlocks and Insider Participation
The Compensation Committee of the Board of Directors is
comprised of Dr. Shiel, Mr. Paletz and Mr. Sena. Mr. Paletz is a
former chief executive officer of the Company. During 1996, the
company purchased merchandise inventory in the amount of $3.0
million from ABN Sports Supply, Inc., of which Dr. Shiel is a
shareholder and director.
Report of the Compensation Committee on Annual Compensation of
Officers' Compensation Policy
The Compensation Committee is responsible for the review and
determination of salaries, bonuses and stock options for the
executive officers of the Company. The compensation policy of
the Company is structured to provide that an appropriate
relationship exists between executive pay and the creation of
shareholder value, while motivating and retaining key employees.
15<PAGE>
To achieve this goal, the Company's executive compensation
policies integrate annual base compensation with bonuses and
stock options based upon corporate performance. Measurement of
corporate performance is primarily based on the pre-tax income of
the Company. Accordingly, in years in which pre-tax earnings
exceed certain goals, executive compensation bonuses tend to be
higher than in years in which performance is below these goals.
The number of stock options granted to executive officers are
based on a subjective determination by the committee taking into
consideration the individual's management level, total
compensation package, contribution to the Company and overall
corporate performance. Annual cash compensation, together with
equity-based compensation, is designed to attract and retain
qualified executives and to ensure that the executives have a
continuing stake in the long-term success of the Company. In
evaluating annual executive compensation, the Board examines
sales growth, profit margin, pre-tax income earnings per share as
well as the executive's overall contribution to the Company's
success.
Fiscal 1996 Compensation
For fiscal 1996, the Company's executive compensation
program consisted of base salary, a bonus pool and a stock option
plan. The Board feels that options and stock-based performance
compensation arrangements are an effective incentive for
executives to create value for shareholders because the value of
an option bears a direct relationship to the Company's stock
price.
The performance-oriented nature of the Company's
compensation program is exemplified in the compensation granted
in 1996 when compared to past years. The base salary in 1996 for
Mr. Olen, Chief Executive Officer, was $137,127.
The Board believes that the ability to earn grants of such
options by Mr. Olen as well as his base compensation and the
Company's Annual Bonus Plan link his compensation to the
long-term performance of the Company and reflect the goals and
policies of the Compensation Committee and the Board.
The Omnibus Budget Reconciliation Act of 1993 limits the
deductibility of certain compensation in excess of $1 million per
year paid by a publicly traded corporation to the chief executive
officer and the other named executive officers in the company's
information statement. Compensation which is performance-based
is exempt from the $1 million deductibility limitation. The
Committee has reviewed the application of the Act to its
executive compensation policies and does not believe that such
policies are effected by the Act at this time.
Vincent W. Shiel Leonard M. Paletz
William T. Sena
16<PAGE>
PERFORMANCE GRAPH
The following graph shows a five-year comparison of the
cumulative total returns for the Company, the CRSP Index for
NASDAQ Stock Market and the CRSP Index for NASDAQ Retail Trade
Stocks.
<TABLE>
<CAPTION>
spg nasdaq retail
<S> <C> <C> <C>
12/31/91 100.00 100.00 100.00
03/31/92 100.00 103.14 99.28
06/30/92 116.67 96.09 82.84
09/30/92 133.33 100.03 86.45
12/31/92 133.33 116.38 94.19
03/31/93 233.33 118.56 89.15
06/30/93 233.33 120.84 88.02
09/30/93 266.67 131.02 97.63
12/31/93 133.33 133.60 99.39
03/31/94 250.00 127.98 91.35
06/30/94 300.00 121.99 87.63
09/30/94 283.33 132.09 95.79
12/31/94 483.33 130.59 90.55
03/31/95 416.67 142.36 89.57
06/30/95 250.00 162.84 98.67
09/30/95 216.67 182.45 105.62
12/31/95 108.33 184.67 99.76
03/31/96 33.33 193.30 112.20
06/30/96 58.33 209.08 119.91
09/30/96 100.00 216.52 126.55
12/31/96 106.67 227.16 118.97
</TABLE>
Certain Relationships and Transactions
On January 11, 1990, the Company entered into a Consulting
Agreement with Outdoor Consulting, Inc., pursuant to which
Outdoor Consulting provides consulting services to the Company
for $4,000 per month plus certain out-of-pocket expenses. The
initial term of the agreement expired on December 31, 1990, and
continues on a year-to-year basis until terminated by either
party upon 60 days prior written notice or unless sooner
terminated. Effective January 1, 1997, the compensation payable
under this agreement was increased to $5,000 per month. Vincent
W. Shiel is the controlling shareholder and sole employee of
Outdoor Consulting, Inc.
17<PAGE>
In February 1994, the Company issued $3.2 million of debt in
a private placement transaction to certain shareholders,
including Vincent Shiel, Leonard Paletz and Mark Kroger. The
debt was represented by promissory notes bearing interest at the
rate of 8% per annum payable quarterly. Pursuant to the terms of
the notes, the entire principal amount was payable in February
1996 which was subsequently extended until May 1996. Of the
entire financing, $2.5 million represented additional funds
provided to the Company to meet certain working capital needs,
$500,000 represented a rollover of the payment of short-term
promissory notes issued in June 1993, $167,000 represented a
rollover of the principal payments due on subordinated debt in
January 1994, and $80,000 represented a rollover of a principal
payment to Mr. Paletz. Warrants to purchase 324,700 shares of
common stock of the Company were attached to the promissory notes
issued in 1994.
In May 1996, the Company issued $3.4 million of debt in a
private placement to replace and renew the 1994 financing and
certain other subordinated debt. The new notes bear interest at
1.75% over prime, but not less than 9% per annum, payable
quarterly. Pursuant to the terms of the notes, the entire
principal amount is payable in June 1998. Warrants to purchase
341,400 shares of common stock of the Company, at an exercise
price of $1.81, were attached to these promissory notes. The
promissory notes are secured by the assets of the Company
subordinate to liens securing borrowings under the Company's
revolving credit facility with a financial institution. The
Company's aggregate interest expense during 1996 for all of these
financings was $317,000.
During fiscal 1996, the Company purchased merchandise
inventory in the amount of $3.0 million from ABN Sports Supply,
Inc. of which Dr. Shiel is a shareholder and director and Mark
Kroger is a shareholder, director and President. The Company
believes the terms of such purchases were as favorable as could
have been obtained from an unrelated party.
SHAREHOLDER PROPOSALS
Proposals by shareholders intended to be presented at the
1997 Annual Meeting must be received by the Secretary of the
Company on or before December 2, 1997, in order to be included in
the information or proxy statement for that meeting. Proposals
should be directed to the Company's executive offices at 411
Farwell Avenue, South St. Paul, Minnesota 55075.
18<PAGE>
ADDITIONAL INFORMATION
The Company's Report to Shareholders for the fiscal year
ended December 27, 1996, accompanies this Notice of Annual
Meeting of Shareholders and Information Statement.
A COPY OF THE COMPANY'S 1996 ANNUAL REPORT ON FORM 10-K AS FILED
WITH THE SECURITIES AND EXCHANGE COMMISSION, INCLUDING THE
FINANCIAL STATEMENTS AND SCHEDULES THERETO, MAY BE OBTAINED BY
SHAREHOLDERS WITHOUT CHARGE BY WRITING TO:
Mr. Charles B. Lingen
The Sportsman's Guide, Inc.
411 Farwell Avenue
South St. Paul, Minnesota 55075
WE ARE NOT ASKING YOU FOR A PROXY AND YOU ARE
REQUESTED NOT TO SEND US A PROXY
THE SPORTSMAN'S GUIDE, INC.
Charles B. Lingen, Secretary
19<PAGE>
Exhibit A
THE SPORTSMAN'S GUIDE, INC.
1996 STOCK OPTION PLAN
1. Purpose. The purpose of this Plan is to advance the
interests of The Sportsman's Guide, Inc., a Minnesota corporation
(the "Company") by providing an opportunity to selected key
employees of the Company to purchase stock of the Company through
the exercise of options granted under this Plan. By encouraging
such stock ownership, the Company seeks to attract, retain and
motivate key employees of training, experience and ability, and
to encourage the judgment, initiative and efforts of such
employees for the successful conduct of the Company's business.
It is intended that these purposes will be effected by the
granting of stock options as provided herein which will qualify
as "incentive stock options" under the provisions of Section 422
(or its successor provisions) of the Internal Revenue Code of
1986 (the "Code"), and options which do not qualify as incentive
stock options under the Code ("nonqualified options").
2. Stock Subject to the Plan. The total number of shares
that may be subject to options granted under this Plan shall not
exceed 600,000 shares of the Common Stock of the Company, $.01
par value ("Common Stock"). Shares subject to an option which
for any reason expires or is terminated unexercised as to such
shares may again be the subject of an option under the Plan. The
shares delivered upon exercise of options granted under this Plan
may be either authorized but unissued shares or issued shares
reacquired by the Company.
3. Administration. The Plan shall be administered by the
Compensation Committee of the Board of Directors of the Company
or such other committee designated by the Board (the "Committee")
consisting of two or more directors who shall be appointed by and
shall serve at the pleasure of the Board. Subject to the
provisions of this Plan, the Committee shall have full power to
construe and interpret the Plan and to establish, amend and
rescind rules and regulations for its administration. The
Committee shall recommend to the Board of Directors the
individuals to whom and the times at which options shall be
granted, the designation of each option as an incentive stock
option or a nonqualified option, and the number of shares subject
to each option. Any such construction, rule determination or
other action taken by the Committee pursuant to the Plan shall be
binding and conclusive upon the approval by the Board of
Directors.
<PAGE>
Actions by a majority of the Committee at a meeting at which
a quorum is present, or actions approved in writing by all of the
members of the Committee, shall be the valid acts of the
Committee. No member of the Board of Directors or the Committee
shall be liable for any action or determination made in good
faith with respect to the Plan or any option granted under it.
4. Eligible Employees. Options may be granted by the
Board of Directors to such key employees of the Company,
including members of the Board of Directors who are also
employees of the Company, as are selected by the Committee. The
maximum number of shares subject to options which may be granted
to any individual shall be the total number of shares available
under the Plan.
5. Terms and Conditions of Options. All options granted
under this Plan shall be evidenced by stock option agreements in
such form and not inconsistent with the Plan as the Committee
shall approve from time to time, which agreements shall include,
but not be limited to, the following terms and conditions:
(a) Price. The purchase price per share of stock
payable upon the exercise of each option granted hereunder shall
not be less than the fair market value of the stock on the date
the option is granted. If at the time of grant of an incentive
stock option the optionee owns stock possessing more than 10% of
the combined voting power of all classes of stock of the Company,
such purchase price per share shall not be less than 110% of the
fair market value of the stock on the date the option is granted.
Such fair market value shall be determined in accordance with
procedures established by the Committee conforming to regulations
issued by the Internal Revenue Service with regard to incentive
stock options.
(b) Number of Shares. Each option agreement shall
specify the number of shares to which it pertains.
(c) Exercise of Options. Each option shall be
exercisable for the full amount or for any part thereof and at
such intervals or in such installments as the Board of Directors
may determine at the time it grants such option. No option shall
be exercisable with respect to any shares later than ten years
after the date of grant of the option. If at the time of grant
of an incentive stock option the optionee owns stock possessing
more than 10% of the combined voting power of all classes of
stock of the Company, such option shall be exercisable no later
than five years after the date of grant.
(d) Notice of Exercise and Payment. An option shall
be exercisable by delivery of a written notice to the Secretary
of the Company specifying the number of shares for which it is
2<PAGE>
exercised. If the shares are not at the time registered under
the Securities Act of 1933, the optionee shall include with such
notice a letter, in form and substance satisfactory to the
Company, confirming that the shares are being purchased for the
optionee's own account for investment and not with a view to
distribution. The exercise price and any withholding obligations
under applicable tax laws shall be paid in full at the time of
delivery of the notice of exercise, either by (i) cashier's,
certified or personal check, (ii) if permitted by a vote of the
Board of Directors by delivery and assignment to the Company of
shares of Common Stock or (iii) by a combination of (i) and (ii).
The value of the Company stock for such purpose shall be its fair
market value as of the date the option is exercised.
(e) Non-Transferability. No option shall be
transferable by the optionee otherwise than by will or the laws
of descent and distribution, and each option shall be exercisable
during the lifetime of the optionee only by him or her.
(f) Termination of Options. Each option shall
terminate and may no longer be exercised if the optionee ceases
for any reason to be an employee of the Company, except that:
(i) If the optionee's employment shall have
terminated for any reason other than cause, disability
(as defined below) or death, the optionee may at any
time within a period of 30 days after such termination
of employment exercise the option to the extent the
option was exercisable by the optionee on the date of
termination of employment.
(ii) If the optionee's employment shall have been
terminated because of disability within the meaning of
Section 22(e)(3) of the Code, the optionee may at any
time within a period of one year after such termination
of employment exercise the option to the extent the
option was exercisable by the optionee on the date of
termination of employment.
(iii) If the optionee dies at a time when the
option was exercisable by the optionee, the optionee's
estate, personal representative or beneficiary to whom
it has been transferred pursuant to Section 5(e) hereof
may, within six months following the death, exercise
the option to the extent the option might have been
exercised at the time of the optionee's death.
(iv) No option may be exercised to any extent by
anyone after the expiration date of the option.
3<PAGE>
(g) Rights as Shareholder. The optionee shall have no
rights as a shareholder with respect to any shares covered by an
option until the date of issuance of a stock certificate to the
optionee for such shares.
6. Treatment of Certain Incentive Stock Options. To the
extent that the aggregate fair market value (determined as of the
date the option is granted) of shares with respect to which one
or more incentive stock options first become exercisable by an
optionee in any calendar year exceeds $100,000, taking into
account shares subject to incentive stock options under this Plan
and shares subject to incentive stock options under all other
plans of the Company or other entities referenced in Section
422(d)(1) of the Code, the options shall be treated as
nonqualified stock options.
7. Stock Dividends; Stock Splits; Combinations;
Recapitalizations. Appropriate adjustment shall be made in the
maximum number of shares of Common Stock subject to the Plan and
in the number, kind and option price of shares covered by out-
standing options granted hereunder to give effect to any stock
dividends or other distribution, stock splits, stock
combinations, recapitalizations and other similar changes in the
capital structure of the Company after the effective date of the
Plan.
8. Merger; Sale of Assets; Dissolution. In the event of a
change of the Common Stock resulting from a merger or similar
reorganization as to which the Company is the surviving corpora-
tion, the number and kind of shares which thereafter may be
optioned and sold under the Plan and the number and kind of
shares then subject to options granted hereunder and the price
per share thereof shall be appropriately adjusted in such a
manner as the Committee may deem equitable to prevent substantial
dilution or enlargement of the rights available or granted here-
under. If the Company at any time should dissolve, sell all or
substantially all of its assets, undergo a reorganization, or
merge or consolidate with any corporation and the Company is not
the surviving corporation, then (unless in the case of a
reorganization, merger or consolidation the surviving corporation
assumes the optionees' rights under the Plan or issues
substantially equivalent substitute rights in place thereof) each
optionee shall be notified by the Company of his or her right to
exercise all outstanding options prior to any such dissolution,
sale, reorganization, merger or consolidation. The failure to
exercise such outstanding options within 30 days of such
notification shall cause the options to be terminated.
4<PAGE>
Notwithstanding the foregoing, in the case of an incentive
stock option, no adjustment shall be made pursuant to Section 7
or 8 hereof which would cause the Plan to violate Section 424(a)
of the Code or any successor provisions thereto, without the
written consent of the optionee adversely affected thereby.
9. Amendment or Termination of Plan. The Board of
Directors may at any time amend or terminate the Plan or alter or
amend any outstanding stock option agreements under the Plan in
any manner it deems advisable, provided that no such action shall
adversely affect or impair any then outstanding option without
the consent of the optionee holding such option.
10. Effect of the Plan on Employment Relationship. The
establishment of the Plan shall in no way, now or hereafter,
reduce, enlarge or modify the employment relationship between the
Company and the optionee. Nothing contained in the Plan shall be
construed as conferring upon any optionee any right to continued
employment with the Company or to give any employee any right to
participate in the Plan or to receive options. The granting of
options under the Plan shall be entirely discretionary with the
Board of Directors.
11. Effective Date; Duration of Plan. This Plan was
adopted by the Board of Directors on October 21, 1996 and shall
be deemed effective as of that date, subject to approval by the
shareholders of the Company within 12 months after such adoption.
Options granted before shareholder approval may not be exercised
until such approval is obtained, and such options will be null
and void (and the Plan shall terminate) if such approval is not
obtained. The Plan shall remain in effect until discontinued by
the Board of Directors, except that no incentive stock option may
be granted under the Plan after October 21, 2006.
12. Definitions.
(a) The term "key employees" means those executive,
administrative, operational or managerial employees of the
Company who are determined by the Committee to be eligible for
options under this Plan.
(b) The term "optionee" means a key employee to whom
an option is granted under this Plan.
As amended through June 20, 1997.
5
