<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-11(c) or Section
240.14a-12
THE SPORTSMAN'S GUIDE, 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>
[LOGO]
NOTICE OF ANNUAL MEETING OF SHAREHOLDERS
TO BE HELD ON APRIL 23, 1998
To Our Shareholders:
The Annual Meeting of Shareholders of The Sportsman's Guide, Inc., a
Minnesota corporation (the "Company"), will be held at IDS Tower, 50th Floor,
Galaxy Room, 80 S. Eighth Street, Minneapolis, Minnesota on Thursday, April 23,
1998, at 10:00 a.m., Minnesota time, for the following purposes:
1. Election of seven directors to serve until the next Annual Meeting
and until their respective successors have been elected and qualified;
2. Ratification of the engagement of Grant Thornton LLP as independent
certified public accountants for the Company for the fiscal year ending
January 3, 1999; and
3. Transaction of 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 February 27, 1998 will be entitled to notice of and to vote at the
meeting or any adjournment thereof.
All shareholders are cordially invited to attend the Annual Meeting in
person.
By Order Of The Board Of Directors
[SIGNATURE]
Charles B. Lingen, SECRETARY
South St. Paul, Minnesota
March 25, 1998
WHETHER OR NOT YOU PLAN TO ATTEND THE MEETING, PLEASE MARK, DATE, SIGN
AND PROMPTLY RETURN THE ENCLOSED PROXY IN THE ENVELOPE PROVIDED.
<PAGE>
THE SPORTSMAN'S GUIDE, INC.
411 FARWELL AVENUE
SOUTH ST. PAUL, MINNESOTA 55075
------------------------
PROXY STATEMENT
MAILING DATE
MARCH 25, 1998
------------------------
GENERAL INFORMATION
This Proxy Statement is furnished in connection with the solicitation of
proxies by the Board of Directors of The Sportsman's Guide, Inc., a Minnesota
corporation (the "Company"), for use for the purposes set forth herein at its
Annual Meeting of Shareholders to be held on April 23, 1998 and any adjournments
thereof. All properly executed proxies will be voted as directed by the
shareholder on the proxy card. If no direction is given, proxies will be voted
in accordance with the Board of Directors' recommendations and, in the
discretion of the proxy holders, in the transaction of such other business as
may properly come before the Annual Meeting and any adjournments thereof. Any
proxy may be revoked by a shareholder by delivering written notice of revocation
to the Company or in person at the Annual Meeting at any time prior to the
voting thereof.
VOTING SECURITIES AND RECORD DATE
The Company has one class of voting securities outstanding, namely Common
Stock, par value $.01 per share. Only holders of record of the Company's Common
Stock at the close of business on February 27, 1998 are entitled to notice of
and to vote at the Annual Meeting. As of February 27, 1998, there were 4,014,649
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 Restated
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. Under cumulative voting, each shareholder
has the right to cast that number of votes per share equal to the number of
directors to be elected and may cast all of the shareholder's votes for a single
candidate or distribute those votes among any number of candidates. In the event
that directors are elected by cumulative voting and cumulated votes represented
by proxies solicited hereby are insufficient to elect all the nominees, then the
proxy holders will vote such proxies cumulatively for the election of as many of
such nominees as possible and in such order as the proxy holders may determine.
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.
Directors are elected by a plurality of the votes cast by the holders of
Common Stock at a meeting at which a quorum is present. Abstentions and broker
non-votes will not be counted toward a nominee's achievement of a plurality and
thus will have no effect. A broker non-vote occurs when a broker submits a proxy
that indicates the broker does not have discretionary authority to vote the
shares on a particular matter.
2
<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. Unless otherwise directed, it is the intention of the
persons named in the accompanying proxy to vote each proxy for the election of
the nominees listed below. Each nominee is presently a director of the Company.
If at the time of the Annual Meeting any nominee is unable or declines to serve,
the proxy holders will vote for the election of such substitute nominee as the
Board of Directors may recommend. The Company and the Board of Directors have no
reason to believe that any substitute nominee will be required.
THE BOARD OF DIRECTORS RECOMMENDS THAT SHAREHOLDERS VOTE FOR THE ELECTION OF
EACH OF THE NOMINEES FOR DIRECTOR.
Set forth below is certain information with respect to each nominee for
director.
VINCENT W. SHIEL, Ph.D, 64, has been a director of the Company since 1990
and was elected Chairman of the Board in 1994. Dr. Shiel owns an interest in and
serves as a director of ABN Sports Supply, Inc. ("ABN Sports"), a wholesale
firearms distributor. Dr. Shiel is a principal shareholder and has served as
President and a director of Outdoor Consulting, Inc., a management consulting
firm, since 1988. From 1984 to 1988, Dr. Shiel served on the board of directors
and owned a controlling interest in Gander Mountain, Inc. ("Gander Mountain"),
then a retail mail order catalog company specializing in outdoor sporting
equipment. Dr. Shiel resigned as a director of and sold his controlling interest
in Gander Mountain in 1988. Dr. Shiel was the principal owner and President of
Outdoor Sports Headquarters, Inc., a hunting and sporting goods wholesaler, from
its formation in the early 1960s until 1978.
GARY OLEN, 55, is a co-founder of the Company and served as its Executive
Vice President and Secretary from its incorporation in 1977 until December 31,
1993. Mr. Olen was elected President and Chief Executive Officer in 1994. Mr.
Olen has been a director of the Company since its incorporation. From 1970 to
1977, Mr. Olen was employed as the Marketing Director for Fidelity File Box,
Inc. ("Fidelity File Box"), which sells corrugated storage products, office and
industrial equipment and office industrial supplies through mail order catalogs.
From 1967 to 1970, Mr. Olen was a Merchandise Manager with C&H Distributors, a
business-to-business mail order catalog specializing in the sale of industrial
and office equipment. From 1960 to 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, The Olen Company, founded in 1970.
GREGORY R. BINKLEY, 49, 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 April 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 Fingerhut Companies, Inc. ("Fingerhut"), a
mail order catalog business, as Director of Distribution. From 1988 to 1990, Mr.
Binkley was Director of Distribution with Cable Value Network, Inc., a cable
television retailer. From 1975 to 1988, Mr. Binkley was employed by Donaldsons
Department Stores, a division of Allied Stores Corporation, serving as Vice
President of Finance and Operations from 1987 to 1988 and Vice President of
Operations from 1981 to 1987.
CHARLES B. LINGEN, 53, has been a director of the Company since 1995. Mr.
Lingen has been employed by the Company since May 1994 as its Chief Financial
Officer, Vice President of Finance and Treasurer, in 1995 was elected Secretary
and in 1996 was elected Senior Vice President of Finance. From 1973 to 1994, Mr.
Lingen was employed by Fingerhut, serving as Vice President of Finance and
Controller from 1989 to 1994.
3
<PAGE>
LEONARD M. PALETZ, 63, is a co-founder of the Company and served as Chairman
of the Board, Chief Executive Officer, Treasurer and a director from the
Company's incorporation in 1977 until 1994. Mr. Paletz resigned his offices of
Chairman of the Board, Chief Executive Officer and Treasurer in May 1994,
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
in various positions including Vice President and General Manager and was also a
director and shareholder of Fidelity File Box.
MARK F. KROGER, 44, has been a director of the Company since 1990. He is the
former Chairman of the Board, President, Chief Executive Officer and Treasurer
of ABN Sports. Mr. Kroger served as President and a director of ABN Sports from
1987 to December 1997. Mr. Kroger also served as the Chairman of the Board,
President and Chief Executive Officer of LMV, Inc. dba Ohio Powder Company, a
wholesale distributor of gun powder, from 1995 to December 1997 and as the
President and a director of MKS Supply, Inc., a marketer and seller of firearms
to distributors, from 1993 to December 1997. Mr. Kroger was employed by Outdoor
Sports Headquarters, Inc. from 1973 to 1985 where he held various positions in
sales and merchandising.
WILLIAM T. SENA, 60, has been a director of the Company since 1990. He is an
investment advisor with Sena Weller Rohs Williams, Inc., an investment advisory
firm. Mr. Sena has been associated with the investment advisory firm and its
predecessor since 1965. Mr. Sena is also a director of Phoenix Medical
Technology, Inc.
MEETINGS OF THE BOARD AND COMMITTEES
During fiscal 1997, the Board of Directors held four meetings and took
action by unanimous written consent eight times. Each director attended all
Board meetings held during 1997, except that Mr. Paletz was not present at one
meeting.
The Board of Directors has three standing committees: the Audit Committee,
the Compensation Committee and the Executive Committee. The Board has no
nominating committee.
The Board of Directors established the Audit Committee on February 13, 1997.
Prior to that time, audit committee functions were performed by the entire
Board. The Audit Committee consists of Mark F. Kroger, Leonard M. Paletz and
William T. Sena and has the responsibility to meet with Company personnel and
representatives of the Company's independent auditors to review internal
auditing procedures and matters related to the Company's annual audit. The Audit
Committee recommends to the Board of Directors the appointment of independent
public accountants. The Audit Committee did not meet or take any action during
1997.
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. The
Compensation Committee took action by unanimous written consent one time during
1997.
The Board of Directors established the Executive Committee on December 6,
1997. The Executive Committee consists of Vincent W. Shiel, Gary Olen and
William T. Sena. The Executive Committee is empowered to exercise all of the
powers and authority of the Board of Directors between meetings of the Board.
The Executive Committee did not meet or take any action during 1997.
DIRECTOR COMPENSATION
The Company does not currently pay directors fees. Directors are reimbursed
for out-of-pocket expenses incurred in attending board meetings.
4
<PAGE>
2. RATIFICATION OF ENGAGEMENT OF INDEPENDENT PUBLIC ACCOUNTANTS
The Board of Directors has engaged Grant Thornton LLP to audit the books,
records and accounts of the Company for the fiscal year ending January 3, 1999.
The Board has determined that it is desirable to request that the shareholders
ratify the selection. Grant Thornton LLP has served as the Company's independent
certified public accountants since 1989. The Board of Directors will reconsider
the engagement of Grant Thornton LLP if its selection is not ratified by the
shareholders (although it is not obligated to select other independent public
accountants).
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.
THE BOARD OF DIRECTORS RECOMMENDS THAT SHAREHOLDERS VOTE FOR RATIFICATION OF
THE APPOINTMENT OF GRANT THORNTON LLP.
3. OTHER BUSINESS
The Board of Directors does not know of any matters to be presented at the
Annual Meeting other than those mentioned above. However, if other matters
should properly come before the Annual Meeting or any adjournments thereof, the
proxy holders will vote the proxies thereon in their discretion.
5
<PAGE>
EXECUTIVE COMPENSATION
The following table sets forth the cash compensation paid to the Chief
Executive Officer and to each of the other executive officers of the Company
whose total annual salary and bonus for fiscal 1997 exceeded $100,000 (the
"Named Executive Officers") for services rendered in all capacities to the
Company for each of the fiscal years indicated.
SUMMARY COMPENSATION TABLE
<TABLE>
<CAPTION>
ANNUAL COMPENSATION LONG-TERM
COMPENSATION
-------------------- -------------
SALARY BONUS OPTIONS
NAME AND PRINCIPAL POSITION YEAR ($) ($) (#)
- --------------------------------------------------------------------- --------- --------- --------- -------------
<S> <C> <C> <C> <C>
Gary Olen............................................................ 1997 207,782 110,000 33,790
President and Chief 1996 137,127 158,000 38,950
Executive Officer 1995 126,253 -- --
Gregory R. Binkley................................................... 1997 129,985 60,000 20,740
Executive Vice 1996 103,275 86,500 21,210
President and Chief Operating Officer 1995 98,269 -- --
Charles B. Lingen.................................................... 1997 119,165 50,000 15,420
Senior Vice President 1996 97,218 79,500 17,670
of Finance, Chief 1995 90,816 -- --
Financial Officer and Secretary/Treasurer
William G. Luth(1)................................................... 1997 125,705 50,000 17,250
Senior Vice President 1996 94,311 79,500 17,670
of Marketing 1995 42,489 -- --
John M. Casler(2).................................................... 1997 100,235 45,000 10,000
Vice President of 1996 96,661 47,000 5,500
Merchandising
</TABLE>
- ------------------------
(1) Mr. Luth was employed by the Company in June 1995. Salary paid in 1995
consists of amounts paid from such date to the end of the fiscal year. Mr.
Luth resigned his employment with the Company effective March 6, 1998.
(2) Mr. Casler was employed by the Company in January 1996. Salary paid in 1996
consists of amounts paid from such date to the end of the fiscal year. Mr.
Casler was deemed an executive officer of the Company for reporting purposes
effective February 23, 1998.
6
<PAGE>
The following table sets forth information with respect to the Named
Executive Officers concerning the grant of options during fiscal 1997.
OPTION/SAR GRANTS IN LAST FISCAL YEAR
<TABLE>
<CAPTION>
INDIVIDUAL GRANTS
--------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C>
POTENTIAL REALIZABLE
VALUE
AT ASSUMED RATES OF
STOCK
NUMBER OF # OF TOTAL PRICE APPRECIATION
SECURITIES OPTIONS/SARS EXERCISE FOR
UNDERLYING GRANTED TO OR BASE OPTION TERM (1)
OPTIONS/SARS EMPLOYEES IN PRICE EXPIRATION --------------------
NAME GRANTED (#) FISCAL YEAR ($/SH) DATE 5%($) 10%($)
- -------------------------------- ------------- --------------- ----------- ----------- --------- ---------
Gary Olen....................... 33,790 26.0% 4.00 4/18/07 85,001 215,410
Gregory R. Binkley.............. 20,740 16.0% 4.00 4/18/07 52,173 132,217
Charles B. Lingen............... 15,420 11.9% 4.00 4/18/07 38,790 98,302
William G. Luth................. 17,250 13.3% 4.00 4/18/07 43,394 109,968
John M. Casler.................. 10,000 7.7% 4.00 4/18/07 25,156 63,750
</TABLE>
- ------------------------
(1) The compounding assumes a ten-year exercise period for all option grants.
The 5% and 10% assumed annual rates of compounded stock price appreciation
are mandated by rules of the Securities and Exchange Commission and do not
represent the Company's estimate or projection of the Company's future
Common Stock prices. These amounts represent certain assumed rates of
appreciation only. Actual gains, if any, on stock option exercises are
dependent on the future performance of the Common Stock and overall stock
market conditions. The amounts reflected in this table may not necessarily
be achieved.
The following table sets forth information with respect to the Named
Executive Officers concerning options held at fiscal year end 1997.
AGGREGATED FISCAL YEAR END OPTION VALUES
<TABLE>
<CAPTION>
NO. OF UNEXERCISED VALUE OF UNEXERCISED
OPTIONS/ SARS AT FY-END IN-THE- MONEY OPTIONS/SARS
SHARES VALUE (#) AT FY- END ($)
ACQUIRED ON REALIZED -------------------------- --------------------------
NAME EXERCISE (#) ($) EXERCISABLE UNEXERCISABLE EXERCISABLE UNEXERCISABLE
- ---------------------------------- --------------- ----------- ----------- ------------- ----------- -------------
<S> <C> <C> <C> <C> <C> <C>
Gary Olen......................... -- -- 69,273 80,342 141,775 213,056
Gregory R. Binkley................ -- -- 31,708 15,555 77,637 25,277
Charles B. Lingen................. -- -- 23,400 11,565 61,561 18,793
William G. Luth................... -- -- 21,983 12,937 62,227 21,023
John M. Casler.................... -- -- 8,000 7,500 21,250 12,188
</TABLE>
EMPLOYMENT AGREEMENTS
The Company entered into employment agreements in 1997 with Gary Olen,
Gregory R. Binkley, Charles B. Lingen, William G. Luth and John M. Casler to
continue their employment in their present positions at their current annual
base salary levels. Mr. Olen's agreement continues until December 31, 2001, and
Messrs. Binkley's, Lingen's, Luth's and Casler's agreements continue until
December 31, 1998. (Mr. Luth resigned his employment effective March 6, 1998).
Such agreements contain certain nondisclosure, nonsolicitation and option
forfeiture provisions. Each agreement is automatically renewed for additional
one year terms unless either party gives two months' notice of nonrenewal, and
terminates upon the employee's death, disability or retirement at age 65. Upon
termination of the agreement by reason of death or disability, each of the
employees or his estate is entitled to a payment equal to 12 months of his
monthly base salary, plus a pro rata portion of the bonus that would otherwise
have been payable to the
7
<PAGE>
employee under the Company's bonus plan then in effect. Upon termination of the
agreement (i) by the employee for good reason (as defined in the agreement) or
(ii) by the Company without good cause or upon the Company's failure to renew
the agreement, the employee is entitled to a payment equal to 24 months of his
monthly base salary, plus a pro rata portion of the bonus that would otherwise
have been payable to the employee under the Company's bonus plan then in effect.
Each agreement also provides that if the employee is terminated, or resigns for
good reason or if the Company fails to renew the agreement within two years
following a substantial event (defined as a sale of substantially all of the
Company's assets, a merger or other reorganization resulting in the incumbent
directors constituting less than a majority of the board, or a tender offer for
50% or more of the Company's outstanding voting stock), such employee is
entitled to a payment equal to three times his annual base salary, plus a pro
rata portion of the bonus otherwise payable to the employee.
COMPENSATION COMMITTEE INTERLOCKS AND INSIDER PARTICIPATION
The Compensation Committee of the Board of Directors is comprised of Vincent
W. Shiel, Leonard M. Paletz and William T. Sena. Mr. Paletz is a former Chief
Executive Officer of the Company.
During fiscal 1997, the Company purchased merchandise inventory in the
amount of $2.0 million from ABN Sports. Dr. Shiel is a shareholder and director
of ABN Sports, and Mark F. Kroger was a shareholder, Chairman of the Board,
President, Chief Executive Officer and Treasurer of ABN Sports during 1997. The
Company believes that the terms of such purchases were as favorable as could
have been obtained from an unrelated party.
Outdoor Consulting, Inc., a corporation owned by Dr. Shiel, provides certain
consulting services to the Company. In addition, during 1997, Dr. Shiel, Mr.
Paletz and Mr. Kroger held subordinated notes payable which were paid in full,
and Dr. Shiel and Mr. Kroger owned shares of Series A Preferred Stock which were
repurchased by the Company, upon completion of the Company's public offering of
Common Stock in February 1998. See "Certain Relationships and Related
Transactions."
COMPENSATION COMMITTEE REPORT ON EXECUTIVE COMPENSATION
The Compensation Committee is responsible for the review and determination
of salaries, bonuses and stock options for the executive officers of the
Company. The Company's compensation policy seeks to provide an appropriate
relationship between executive pay and the creation of shareholder value, while
motivating and retaining key employees. To achieve this goal, the Company's
executive compensation policies integrate annual base compensation with bonuses
based upon corporate performance and stock options. Measurement of corporate
performance is primarily based on the pre-tax earnings of the Company.
Accordingly, in years in which pre-tax earnings exceed certain goals, executive
bonuses tend to be higher than in years in which performance is below these
goals. The Committee revises these goals annually to create an incentive for
senior management to increase sales, profit margin and earnings. The number of
stock options granted to executive officers is 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 and pre-tax income and earnings
per share as well as the executive's overall contribution to the Company's
success.
FISCAL 1997 COMPENSATION
For fiscal 1997, the Company's executive compensation program consisted of
base salary, a cash bonus pool and a stock option plan. The Board feels that
options 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
8
<PAGE>
stock price. In addition to the options granted to the Company's executive
officers on an annual basis, the Board also authorized the grant of options to
purchase an additional 220,000 shares of Common Stock to certain officers
contingent upon the completion of the Company's recent public offering.
The performance-oriented nature of the Company's executive compensation
program is exemplified in the compensation granted in 1997 and 1996 when
compared to compensation granted to the executive officers in prior years. The
Chief Executive Officer and the other Named Executive Officers' compensation has
increased as the pre-tax earnings of the Company have increased. The base salary
for Mr. Olen, the Company's Chief Executive Officer, was $195,000 in 1997. Mr.
Olen was awarded a cash bonus of $110,000 for 1997 along with options to
purchase 33,790 shares of Common Stock.
The Board believes that the award of options to 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.
Section 162(m) of the Internal Revenue Code of 1986 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 proxy statement. Compensation which is performance-
based is exempt from the $1 million deductibility limitation. The Committee has
reviewed the application of Section 162(m) to its executive compensation
policies and does not believe that such policies are effected by the Section
162(m) limitation at this time.
Vincent W. Shiel
Leonard M. Paletz
William T. Sena
9
<PAGE>
PERFORMANCE GRAPH
The following graph shows a five-year comparison of the cumulative total
returns for the Company's Common Stock (*), the CRSP (**) Index for NASDAQ Stock
Market and the CRSP Index for NASDAQ Retail Trade Stocks.
EDGAR REPRESENTATION OF DATA POINTS USED IN PRINTED GRAPHIC
<TABLE>
<CAPTION>
SPORTSMAN'S GUIDE NASDAQ RETAIL
<S> <C> <C> <C>
12/31/92 $100.00 $100.00 $100.00
3/31/93 $175.00 $101.88 $94.65
6/30/93 $175.00 $103.83 $93.45
9/30/93 $200.00 $112.58 $103.65
12/31/93 $100.00 $114.80 $105.52
3/31/94 $187.50 $109.97 $96.98
6/30/94 $225.00 $104.83 $93.03
9/30/94 $212.50 $113.51 $101.70
12/31/94 $362.50 $112.21 $96.14
3/31/95 $312.50 $122.33 $95.10
6/30/95 $187.50 $139.93 $104.75
9/30/95 $150.00 $156.79 $112.13
12/31/95 $81.25 $158.70 $105.91
3/31/96 $25.00 $166.10 $119.12
6/30/96 $43.75 $179.66 $127.31
9/30/96 $75.00 $186.05 $134.40
12/31/96 $80.00 $195.19 $126.26
3/31/97 $143.75 $184.61 $120.10
6/30/97 $190.00 $218.45 $135.70
9/30/97 $247.50 $255.40 $153.86
12/31/97 $252.50 $239.53 $148.79
</TABLE>
- ------------------------
* The Company's Common Stock has traded on the NASDAQ National Market since
February 5, 1998. Prior to that date the Company's Common Stock was traded
in the local over-the-counter market.
** Center for Research in Security Prices, Graduate School of Business,
University of Chicago, Chicago, Illinois.
10
<PAGE>
SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT
The following table sets forth certain information with respect to the
beneficial ownership of the Company's Common Stock as of February 27, 1998 (the
record date for the Annual Meeting) by each director and nominee for director of
the Company, each Named Executive Officer and all directors and executive
officers as a group, and those persons or groups known by the Company to own
more than 5% of the Common Stock.
<TABLE>
<CAPTION>
COMMON STOCK
BENEFICIALLY OWNED
-------------------------
NAME(1) NUMBER PERCENT(2)
- --------------------------------------------------------------------- ---------- -------------
<S> <C> <C>
DIRECTORS AND EXECUTIVE OFFICERS:
Vincent W. Shiel(3).................................................. 637,647 15.2%
Gary Olen(4)......................................................... 228,403 5.6%
Gregory R. Binkley(5)................................................ 61,768 1.5%
Charles B. Lingen(6)................................................. 35,755 *
William G. Luth(7)................................................... 36,920 *
John M. Casler(8).................................................... 19,000 *
Leonard M. Paletz(9)................................................. 237,509 5.8%
Mark F. Kroger(10)................................................... 97,624 2.4%
William T. Sena, as trustee of various trusts for the benefit of Dr.
and Mrs. Shiel and their children(11).............................. 118,371 2.9%
All Directors and Executive Officers as a Group
(9 persons)(12).................................................. 1,472,997 32.4%
OTHER SHAREHOLDERS OWNING MORE THAN 5% OF COMMON STOCK:
Ralph E. Heyman, individually and as trustee of various trusts for
the benefit of Dr. and Mrs. Shiel and their children and
grandchildren(13).................................................. 453,960 11.0%
</TABLE>
- ------------------------
* Less than 1% of outstanding shares.
(1) The address of each director and executive officer of the Company is 411
Farwell Avenue, South St. Paul, Minnesota 55075.
(2) Percentages are calculated on the basis of the number of shares outstanding
on February 27, 1998, plus the number of shares issuable pursuant to
options and warrants held by the individual which are exercisable within 60
days after February 27, 1998. Warrants to purchase 695,603 shares of Common
Stock were exercised subsequent to February 27, 1998.
(3) Includes 525,851 shares (147,348 of which represent shares issuable upon
the exercise of warrants) held in the name of Dr. Shiel as Trustee of the
Vincent W. Shiel Revocable Trust and 111,796 shares (45,001 of which
represent shares issuable upon the exercise of warrants) held in the name
of Helen M. Shiel, wife of Dr. Shiel, as Trustee of the Helen M. Shiel
Revocable Trust. Does not include 751,379 shares (157,652 of which
represent shares issuable upon the exercise of warrants) held by Dr. and
Mrs. Shiel's children or in trusts for the benefit of Dr. and Mrs. Shiel
and their children and grandchildren, of which Dr. Shiel expressly
disclaims beneficial ownership.
(4) Includes 90,220 shares issuable upon the exercise of options.
(5) Includes 2,000 shares held in the name of Mr. Binkley's wife and 51,768
shares issuable upon the exercise of options.
(6) Includes 35,755 shares issuable upon the exercise of options.
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(7) Includes 36,920 shares issuable upon the exercise of options.
(8) Includes 19,000 shares issuable upon the exercise of options.
(9) Includes 46,020 shares issuable upon the exercise of warrants.
(10) Includes 14,501 shares issuable upon the exercise of warrants.
(11) Includes 118,371 shares (of which 40,000 shares are issuable upon the
exercise of warrants) held as trustee of various trusts for the benefit of
Dr. and Mrs. Shiel and their children, of which Mr. Sena has no pecuniary
interest.
(12) Includes 526,533 shares issuable upon the exercise of warrants and
options. In addition, the Compensation Committee has approved the grant of
options to purchase 100,000 shares to be allocated among selected officers
and employees of the Company, including the Named Executive Officers.
(13) Includes 451,960 shares (of which 97,652 shares are issuable upon the
exercise of warrants) held as trustee of various trusts for the benefit of
Dr. and Mrs. Shiel and their children and grandchildren, of which Mr.
Heyman has no pecuniary interest. Mr. Heyman's address is 1100 Courthouse
Plaza, S.W., Dayton, Ohio 45402.
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 Common Stock
to file reports of ownership and changes of ownership of the Company's Common
Stock with the Securities and Exchange Commission. The Company believes that
during fiscal 1997 all filing requirements applicable to its directors,
executive officers and ten percent beneficial owners were met, except for one
Form 4 report which was not timely filed by Mr. Paletz due to inadvertence.
CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS
In January 1990, the Company entered into a Consulting Agreement with
Outdoor Consulting, Inc. pursuant to which Outdoor Consulting, Inc. provides
consulting services to the Company. The initial term of the agreement expired on
December 31, 1990; however, the agreement continues on a year-to-year basis
until terminated by either party upon 60 days prior written notice. The initial
compensation payable under the agreement was $4,000 per month. Effective January
1, 1997, the compensation payable under this agreement was increased to $5,000
per month. Vincent W. Shiel is the sole shareholder and employee of Outdoor
Consulting, Inc.
In February 1994, the Company issued $3.2 million of subordinated notes
payable in a private placement transaction with certain shareholders of the
Company, including Vincent W. Shiel, Leonard M. Paletz and Mark K. Kroger.
Pursuant to the terms of the notes, interest was payable quarterly at the rate
of 8% and the entire principal amount was payable in February 1996 and 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 in January 1994 for a subordinated note payable and
$80,000 represented a rollover of a principal payment due to Mr. Paletz.
Warrants to purchase 324,680 shares of Common Stock of the Company, at an
exercise price of $1.88, were attached to the promissory notes issued in 1994.
In May 1996, the Company issued $3.4 million of subordinated notes payable
in a private placement to replace and renew the 1994 financing and certain other
subordinated notes payable. These notes bore interest at 1.75% over prime, but
not less than 9% (10.25% at February 10, 1998), payable quarterly. Pursuant to
the terms of these subordinated notes payable, the entire principal amount was
due June 15,
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1998. The holders of the subordinated notes payable (and principal amount)
included: Vincent W. Shiel and his wife ($986,074); Frederick J. Kroger, father
of Mark F. Kroger ($723,334); Ralph E. Heyman, as trustee under various trusts
for the benefit of Dr. and Mrs. Shiel and their children and grandchildren
($397,260); William T. Sena, as trustee under a trust for the benefit of Dr. and
Mrs. Shiel and their children ($200,000); Leonard M. Paletz ($180,095); Stuart
A. Shiel, son of Dr. Shiel ($100,000); Mark F. Kroger ($31,667); and all others
($795,000). Warrants to purchase 341,347 shares of Common Stock of the Company,
at an exercise price of $1.81, were attached to these subordinated notes
payable. The Company's aggregate interest expense during 1997 for all of these
financings was $347,842. The Company used a portion of the net proceeds from its
public offering to pay in full all outstanding subordinated notes payable
effective February 10, 1998.
During 1997, the Company had 20,000 shares of Series A Preferred Stock
outstanding which were issued for an aggregate purchase price of $200,000
($10.00 per share) in 1990. The holders of the Series A Preferred Stock (and
number of shares) included: Dr. and Mrs. Shiel (10,000 shares); Frederick J.
Kroger (3,000 shares); Mark J. Kroger (1,000 shares); and all others (6,000
shares). The Company used a portion of the net proceeds from its public offering
to repurchase all of the Series A Preferred Stock effective February 10, 1998.
Because the terms of the Series A Preferred Stock did not contain any provision
for its repurchase, the Board of Directors determined that the fair value of the
Series A Preferred Stock was equal to the maximum amount payable under the terms
of the Series A Preferred Stock upon a liquidation, dissolution or winding up of
the Company. Based upon the formula contained in the terms of the Series A
Preferred Stock, such amount was equal to $50.00 per share, or an aggregate of
$1 million. One of the factors considered by the Board of Directors in making
this determination was the fact that the holders of the Series A Preferred Stock
would have received such maximum amount in connection with the proposed merger
of the Company with VISTA 2000, Inc. in 1996 which was never consummated.
During 1997, Gary Olen held an option to purchase 55,000 shares of Common
Stock at an exercise price of $2.50 per share which became exercisable upon
completion of the Company's public offering and would have expired six months
thereafter. On July 1, 1997, the Board of Directors approved a loan to Mr. Olen
in an amount necessary to pay the aggregate exercise price for the option and
the income taxes payable by Mr. Olen upon exercise of the option. Subsequent to
the public offering, the Company loaned Mr. Olen $238,700 for such purpose. The
loan is for a term of five years, bears interest at the mid-term applicable
federal rate as of the date of the loan (5.69%) and is collateralized by a
pledge of the shares acquired upon exercise.
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SHAREHOLDER PROPOSALS
Proposals by shareholders intended to be presented at the 1999 Annual
Meeting must be received by the Secretary of the Company on or before November
25, 1998 in order to be included in the proxy statement for that meeting.
Proposals should be directed to the Company's executive offices at 411 Farwell
Avenue, South St. Paul, Minnesota 55075, Attention: Mr. Charles B. Lingen,
Secretary/Treasurer.
ADDITIONAL INFORMATION
The Company's Annual Report to Shareholders for the fiscal year ended
December 28, 1997 accompanies this Notice of Annual Meeting of Shareholders and
Proxy Statement.
SOLICITATION OF PROXIES
The Company will bear the entire expense of this proxy solicitation.
Arrangements will be made with brokers and other custodians, nominees and
fiduciaries to send proxy solicitation materials to their principals and the
Company will, upon request, reimburse them for their reasonable expenses in so
doing. Officers and other regular employees of the Company may solicit proxies
by mail, in person or by telephone.
THE SPORTSMAN'S GUIDE, INC.
[SIGNATURE]
Charles B. Lingen, SECRETARY
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PROXY THE SPORTSMAN'S GUIDE, INC.
ANNUAL MEETING OF SHAREHOLDERS
APRIL 23, 1998
The undersigned hereby appoints Gary Olen, Gregory R. Binkley and Charles B.
Lingen and each of them, as proxies, with full power of substitution, to vote
all shares of Common Stock of The Sportsman's Guide, Inc. (the "Company") which
the undersigned is entitled to vote at the Annual Meeting of Shareholders of the
Company to be held on Thursday, April 23, 1998 at 10:00 a.m. and any
adjournments thereof as follows:
THE BOARD OF DIRECTORS RECOMMENDS A VOTE FOR ITEMS 1 AND 2.
1. ELECTION OF DIRECTORS FOR all nominees listed below WITHHOLD AUTHORITY
(EXCEPT AS MARKED TO THE TO VOTE FOR ALL
CONTRARY BELOW) / / NOMINEES LISTED
BELOW / /
INSTRUCTION: TO WITHHOLD AUTHORITY TO VOTE FOR ANY INDIVIDUAL NOMINEE STRIKE A
LINE THROUGH THE NOMINEE'S NAME BELOW.
Vincent W. Shiel, Gary Olen, Gregory R. Binkley, Charles B. Lingen
Leonard M. Paletz, Mark F. Kroger, William T. Sena
2. Ratification of the engagement of Grant Thornton LLP as independent
certified public accountants for the Company for fiscal 1998.
/ / FOR / / AGAINST / / ABSTAIN
3. In their discretion to vote upon such other business as may properly come
before the meeting.
(CONTINUED ON REVERSE SIDE)
<PAGE>
IF NO DIRECTION IS MADE, THIS PROXY WILL BE VOTED FOR THE ELECTION OF THE
DIRECTOR NOMINEES NAMED HEREIN AND FOR THE RATIFICATION OF THE ENGAGEMENT OF
GRANT THORNTON LLP.
Please sign and date this Proxy below and return in the enclosed envelope.
Dated: _____________________, 1998
__________________________________
(Signature)
__________________________________
(Signature)
Please date and sign your name as
it appears hereon. When signing as
an attorney, executor,
administrator, guardian or in some
other representative capacity,
please give full title. All joint
owners must sign.
THIS PROXY IS SOLICITED ON BEHALF OF THE BOARD OF DIRECTORS
