SCHEDULE 14A INFORMATION
Proxy Statement Pursuant to Section 14(a)
of the Securities Exchange Act of 1934
Filed by Registrant /X/
Filed by a Party other than the Registrant / /
Check the appropriate box:
/ / Preliminary Proxy Statement / / Confidential, for Use of the
/X/ Definitive Proxy Statement Commission Only (as permitted)
/ / Soliciting Material Pursuant to Section by Rule 14a-6(e)(2))
240.14a-11(c) or Section 240.14a-12
WTD INDUSTRIES, 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:
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(2) Aggregate number of securities to which transaction applies:
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(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):
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(4) Proposed maximum aggregate value of transaction:
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(5) Total fee paid:
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/ / 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:
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(2) Form, Schedule or Registration Statement No.:
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(3) Filing Party:
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(4) Date Filed:
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<PAGE>
[WTD Letterhead]
August 15, 1997
Dear Shareholders:
We need your help to approve a very important proposal on the proxy for
this year's Annual Meeting that will restore voting rights to Quinault
Corporation (our new director, Larry Black's company), which recently acquired
about 26% of WTD's common stock, as an investment.
In June of this year WTD, Quinault, Mr. Black, and I entered into an
agreement providing for first refusal and option rights on WTD's shares held by
Quinault. The agreement restricts WTD from taking certain actions to dilute
Quinault's holdings and restricts Quinault's ability to cause management changes
or the liquidation, sale or other disposition of WTD.
Because Quinault Corporation acquired more than 20% of our Company's
stock, Oregon law deemed this to be a "Control Share Acquisition" and some of
Quinault's shares are being denied voting rights, unless reinstatement is
approved by the shareholders or the Bylaws of the Company are changed to remove
all future stock acquisitions from the Control Share provisions of Oregon law.
I believe you will agree with us that it is only fair that Quinault
should have the same right to vote their WTD shares as everyone else. We also
prefer obtaining shareholder approval of Quinault's share acquisition.
On behalf of the Board of Directors of WTD Industries, Inc., I strongly
urge you to vote YES on all proposals, giving particular attention to Proposal
3. Please sign, date and mail your proxy promptly in the enclosed return
envelope.
Thank you for your support and cooperation.
Sincerely yours,
s/ Bruce L. Engel
-------------------------
Bruce L. Engel
President
<PAGE>
[WTD Logo]
WTD INDUSTRIES, INC.
Lincoln Tower, Suite 900
10260 S.W. Greenburg Road
Portland, Oregon 97223
----------------------
NOTICE OF ANNUAL MEETING OF SHAREHOLDERS
to be held October 7, 1997
----------------------
To Our Shareholders:
WTD Industries, Inc. (the "Company") will hold its Annual Meeting of
Shareholders at 10:00 a.m. local time on Tuesday, October 7, 1997 at the Tigard
Courtyard Marriott, 15686 S.W. Sequoia Parkway, Tigard, Oregon, for the
following purposes:
1. To elect seven (7) directors to the Company's Board of Directors.
2. To ratify the appointment of Moss Adams LLP as the Company's
independent auditors for the fiscal year ending April 30, 1998.
3. To approve the restoration of voting rights to certain shares of
the Company's Common Stock which are Control Shares under the
Oregon Control Share Act.
4. To transact such other business as may properly come before the
Annual Meeting or any adjournment or postponement thereof.
The nominees for election as directors are named in the enclosed Proxy
Statement.
The Board of Directors has fixed the close of business on August 15,
1997, as the record date for the determination of shareholders entitled to
notice of and to vote at the Annual Meeting or any adjournments or postponements
thereof.
Whether you expect to attend the annual meeting or not, your vote is
important. Accordingly, we ask that you sign and date the enclosed proxy card
and return it in the enclosed envelope. If you do attend the meeting and wish to
vote in person, you may revoke your proxy at that time.
Very truly yours,
Robert J. Riecke
Secretary
Portland, Oregon
August 15, 1997
<PAGE>
WTD INDUSTRIES, INC.
Lincoln Tower, Suite 900
10260 S.W. Greenburg Road
Portland, Oregon 97223
----------------------
PROXY STATEMENT
ANNUAL MEETING OF SHAREHOLDERS
to be held October 7, 1997
----------------------
This Proxy Statement is furnished by the Board of Directors of WTD
Industries, Inc., an Oregon corporation (the "Company"), in connection with the
solicitation of proxies by the Board of Directors for use at the Company's 1997
Annual Meeting of Shareholders (the "Annual Meeting"), to be held at 10:00 a.m.
local time, on Tuesday, October 7, 1997 at Tigard Courtyard Marriott, 15686 S.W.
Sequoia Parkway, Tigard, Oregon. The mailing address of the principal executive
offices of the Company is P.O. Box 5805, Portland, Oregon 97228-5805. The
approximate date this proxy statement and the accompanying proxy form are first
being sent to shareholders is August 25, 1997.
SOLICITATION AND REVOCABILITY OF PROXY
The Company will bear all soliciting costs that it incurs in connection
with the Annual Meeting, including the cost of preparing, printing and mailing
this Proxy Statement and the Proxy solicited hereto. Proxies will be solicited
by use of the mails. Officers and employees of the Company may also solicit
proxies by telephone or personal contact, without additional remuneration. The
Company has retained Allen Nelson & Co. to assist with solicitation of proxies,
at an estimated fee of $5,000 plus reimbursement of expenses. Copies of
solicitation material will be furnished to fiduciaries, custodians, and
brokerage houses for forwarding to beneficial owners of the stock held in their
names. Your cooperation in promptly completing, signing, dating and returning
the enclosed proxy card will help avoid additional expense.
Any person giving a proxy pursuant to this solicitation may revoke it
at any time before its exercise by filing with the Company, attention Robert J.
Riecke, Secretary, an instrument of revocation or a duly executed proxy bearing
a later date. A shareholder may also revoke the proxy by affirmatively electing
to vote in person at the meeting. However, a shareholder who attends the Annual
Meeting need not revoke his proxy and vote in person unless he wishes to do so.
All valid, unrevoked proxies will be voted at the Annual Meeting.
QUORUM AND VOTING
The Common Stock, no par value ("Common Stock"), is the only
outstanding voting security of the Company. The record date for determining
holders of Common Stock entitled to vote at the Annual Meeting is August 15,
1997. As of the date hereof there are 11,083,474 shares of Common Stock
outstanding, entitled to one vote per share. The Common Stock does not have
cumulative voting rights.
If a quorum is present, the seven nominees for election as directors
who receive the greatest number of votes cast for the election of directors by
the shares of Common Stock present in person or represented by proxy at the
meeting and entitled to vote shall be elected directors. Proposal No. 2 to
ratify the appointment of Moss Adams LLP ("Moss Adams") as independent auditors
for the Company will be approved if the number of votes cast in favor of the
Proposal exceeds the number of votes cast against it. Proposal No. 3 to approve
the restoration of voting rights to certain shares of the Company's Common Stock
which currently lack such voting rights will be approved if both (i) a majority
of all shares entitled to vote, and (ii) a majority of all shares entitled to
vote excluding "interested shares" (as defined in "Restoration of Control Share
Voting Rights"), are cast in favor of the Proposal. With respect to the election
of directors, directors are elected by a plurality of the votes cast and only
votes cast in favor of a nominee will affect the outcome. Therefore, abstention
from voting or nonvoting by brokers will have no effect. With respect to voting
on Proposal No. 2, abstention from voting or nonvoting by brokers will have no
effect. With respect to Proposal No. 3,
1
<PAGE>
negative votes or abstentions will affect the outcome because an affirmative
vote of a majority of the outstanding shares is required for the Proposal to be
approved.
ELECTION OF DIRECTORS
(Proposal No. 1)
Nominees for Director
- ---------------------
The nominees for director are listed below. Information about each
nominee is contained in the section entitled "Directors and Executive Officers."
Name Director Since
---- --------------
Larry G. Black 1997
Scott Christie 1988
Richard W. Detweiler 1995
Bruce L. Engel 1983
K. Stanley Martin 1994
Robert J. Riecke 1986
William H. Wright 1992
Pursuant to Article XII of the Company's Second Amended Joint Plan of
Reorganization, commencing with the 1997 Annual Meeting of Shareholders, the
election of the Board of Directors will be in accordance with the Company's
Articles of Incorporation and Bylaws. Seven Board seats will be filled at the
1997 Annual Meeting of Shareholders. Pursuant to the Company's Articles, in the
event that there are six or more directors on the Board, the Board will be
divided into three classes with each class to be as nearly equal in number as
possible. At the 1997 Annual Meeting of Shareholders, the directors of class I
will be elected for a term expiring at the 1998 Annual Meeting of Shareholders,
the directors of class II will be elected for a term expiring at the 1999 Annual
Meeting of Shareholders and the directors of class III will be elected for a
term expiring at the 2000 Annual Meeting of Shareholders. Commencing in 1998,
and at each Annual Meeting of Shareholders thereafter, the successors to the
class of directors whose terms expired at that meeting will be elected to hold
office for a term of three years. Messrs. Wright and Detweiler have been
nominated as class I directors, Messrs. Black and Christie have been nominated
as class II directors, and Messrs. Engel, Martin and Riecke have been nominated
as class III directors.
In the event the Company fails to make a certain number of scheduled
dividend payments, or if a certain financial ratio covenant violation has
occurred and is continuing on its Series A Preferred Stock, holders of such
Preferred Stock may, under the circumstances and in the manner provided in the
Company's Articles, elect a majority of the Board of Directors by replacing
incumbent Board members or increasing the size of the Board.
Committees and Meetings of the Board
- ------------------------------------
The Board of Directors has standing Audit and Compensation Committees.
The Audit Committee meets from time to time with management, internal
auditors, and the Company's independent accountants to consider financial and
accounting matters. The Audit Committee reviews the scope, timing, and fees for
the annual audit. It also reviews policies and procedures with respect to the
Company's internal auditing, accounting, and financial controls. The Audit
Committee met five times in fiscal 1997. Directors Detweiler, Riecke, and Wright
constitute the Audit Committee.
The Compensation Committee reviews executive compensation matters and
makes recommendations to the Board. The Compensation Committee met once in
fiscal 1997. The Compensation Committee consists of directors Christie and
Wright.
2
<PAGE>
The Board of Directors met eight times during fiscal 1997. Each
director attended all of the meetings of the Board and the committees of which
he was a member, except Mr. Detweiler, who missed one Board meeting.
Board Recommendation
Proxies will be voted for election of directors in accordance with the
instructions specified in the proxy form. If no instructions are given, proxies
will be voted for the election of the nominees named above. If for some
unforeseen reason one or more of the nominees becomes unavailable for any reason
as a candidate for director, the number of directors constituting the Board of
Directors may be reduced prior to the meeting or the proxies may be voted for
such other candidate or candidates as may be nominated by the Board of
Directors, in accordance with the authority conferred in the proxy.
The Board of Directors recommends a vote FOR the election of all
nominees.
INDEPENDENT AUDITORS
(Proposal No. 2)
The Board of Directors will request that the shareholders ratify its
selection of Moss Adams as independent auditors to examine the financial
statements of the Company for the fiscal year ending April 30, 1998.
Moss Adams has audited the Company's financial statements for the 15
years ended April 30, 1997. Representatives of Moss Adams are expected to be
present at the Annual Meeting, will have an opportunity to make a statement if
they so desire, and will be available to respond to appropriate questions from
shareholders.
Board Recommendation
The Board of Directors recommends a vote FOR the ratification of the
selection of Moss Adams as independent auditors of the Company.
RESTORATION OF CONTROL SHARE VOTING RIGHTS
(Proposal No. 3)
On October 14, 1996, Quinault Corporation ("Quinault"), an entity
controlled by Larry G. Black, one of the directors of the Company, acquired
100,000 shares of the Common Stock of the Company. This acquisition brought
Quinault's aggregate holding in the Company to 2,313,500 shares, or
approximately 21 percent, of the issued and outstanding Common Stock of the
Company (Quinault's share ownership as of June 30, 1997 is set forth under
"Security Ownership of Certain Beneficial Owners and Management"). This
acquisition constituted a "control share acquisition" which is subject to the
provisions of the Oregon Control Share Act (Oregon Revised Statutes 60.801 to
60.816).
Under the Oregon Control Share Act, a "control share acquisition" is
defined as the acquisition of ownership of, or the power to direct the voting
of, voting shares of an issuing public corporation in a transaction such that
the total voting power of the acquiring person in an election of directors of
the corporation will exceed one-fifth, one-third or one-half of the total voting
power of all the voting shares. "Control shares" are defined as voting shares of
an issuing public corporation that are acquired in a control share acquisition.
Any voting shares acquired by the same acquiring person or group within 90 days
of a control share acquisition are considered to have been acquired in the same
control share acquisition.
The Oregon Control Share Act provides that control shares of an Oregon
corporation acquired in a control share acquisition have no voting rights unless
(i) the corporation's Articles of Incorporation or Bylaws provide that the
provisions of the Oregon Control Share Act do not apply to acquisitions of its
voting shares or (ii) voting rights are accorded to the shares acquired in the
control share acquisition by the shareholders of the corporation by the
affirmative vote of the majority of all shares entitled to vote, including the
votes of all "interested shares" entitled to be cast, and, in addition, by the
affirmative vote of the majority of all shares entitled to be cast excluding
votes of "interested shares."
3
<PAGE>
"Interested shares" are defined as voting shares
of a corporation with respect to which (i) an acquiring person, (ii) an officer
of the corporation or (iii) an employee who is a director of the corporation has
the power to vote at a meeting at which the voting rights of control shares are
to be considered. The foregoing summary of the Oregon Control Share Act does not
purport to be complete and is qualified in its entirety by reference to the
provisions of the Oregon Control Share Act.
Because the Company has not opted out of the Oregon Control Share Act
in its Articles of Incorporation or Bylaws, Quinault is unable to vote those of
its shares which are considered control shares. Quinault's control shares
consist of the 100,000 shares of the Company's Common Stock acquired on October
14, 1996 and all other shares of the Company's Common Stock acquired within 90
days of this control share acquisition; Quinault acquired an additional 932,500
shares of the Company's Common Stock from July 16, 1996 to January 12, 1997 and
thus holds a total of 1,032,500 control shares. In addition to these control
shares, Quinault holds 1,846,500 voting shares of the Company's Common Stock and
14,698 shares of the Company's Series A Preferred Stock which was acquired from
Bruce L. Engel in the transaction described below.
Pursuant to an agreement dated June 10, 1997 between the Company, Mr.
Engel, Quinault and Larry G. Black, the sole officer and director of Quinault
(the "Agreement"), the Company has agreed, among other things, to recommend and
obtain the approval of the Company's shareholders at the Annual Meeting for
removal of the voting restrictions on those of Quinault's shares of the
Company's Common Stock which are control shares under the Oregon Control Share
Act. The Agreement provides that if such shareholder approval is not obtained,
the Company will amend its Bylaws to opt out of the Oregon Control Share Act so
that its provisions do not apply to shares of the Company's Common Stock,
including those held by Quinault. For a discussion of the other provisions of
the Agreement, see "Certain Relationships and Related Transactions." The
Agreement was filed with the Securities Exchange Commission ("SEC") as an
exhibit to the Company's Current Report on Form 8-K, dated June 10, 1997.
Quinault acquired 14,698 shares of the Company's Series A Preferred
Stock, pursuant to a Stock Purchase Agreement dated June 10, 1997, between
Quinault and Mr. Engel and his wife, Teri E. Engel. Part of the purchase price
for these shares consisted of the cancellation of certain indebtedness pusuant
to which Mr. and Mrs. Engel owed Quinault principal and interest in the total
amount of $453,341.81.
If the Company's shareholders approve the restoration of the voting
rights for those of Quinault's shares of the Company's Common Stock which are
control shares under the Oregon Control Share Act, such approval will lift the
voting restrictions for those shares. Unless the Company has amended its
Articles of Incorporation or Bylaws to opt out of the Oregon Control Share Act,
if at any time in the future Quinault acquires additional shares of the
Company's Common Stock such that Quinault's aggregate holding in the Company
exceeds one-third of the total voting power of all voting shares, then such
additional acquisition by Quinault will also be a control share acquisition.
Under the Oregon Control Share Act, the shares acquired by Quinault in such a
control share acquisition would not have voting rights unless a grant of such
voting rights were approved by a vote of the Company's shareholders at an annual
or special meeting. Likewise, if under similar circumstances Quinault acquired
additional shares of the Company's Common Stock such that Quinault's aggregate
holdings in the Company exceeded one-half of the total voting power of all
voting shares, such an acquisition would also be a control share acquisition,
subject to the same restrictions on voting as described above.
Board Recommendation
The Board of Directors recommends a vote FOR the restoration of voting
rights with respect to the control shares held by Quinault.
4
<PAGE>
DIRECTORS AND EXECUTIVE OFFICERS
The directors and executive officers of the Company are:
Name Age Position
---- --- --------
Larry G. Black.............. 51 Director
Scott Christie.............. 48 Director
Richard W. Detweiler........ 55 Director
Bruce L. Engel............. 56 Director and President
David J. Loftus............. 55 Treasurer
K. Stanley Martin.......... 55 Director, Vice President-Finance and
Chief Financial Officer
Robert J. Riecke........... 47 Director, Vice President-Administration,
General Counsel and Secretary
John C. Stembridge.......... 38 Vice President-Sales and Marketing
James R. Wilson............. 47 Vice President-Timber
William H. Wright........... 62 Director
Larry G. Black was appointed to the Company's Board of Directors on
June 10, 1997 to fill a vacancy created by the resignation of H. Raymond Bingham
in March 1996. Mr. Black is president of Quinault, owner of approximately 26% of
the Company's Common Stock. Since its formation in 1985, Mr. Black has been
president of Quinault Logging Company, which is in the business of buying timber
and selling logs. Mr. Black has been involved in the timber industry for more
than thirty years. In connection with Mr. Black joining the Board, the Company,
Quinault, Mr. Black and Mr. Engel have entered into an agreement dated effective
June 10, 1997, pursuant to which the Company agreed to nominate Mr. Black as a
director for election at the Company's 1997 Annual Meeting of Shareholders to
serve a two year term. See "Certain Relationships and Related Transactions."
Scott Christie has been a director of the Company since March 1988. Mr.
Christie is currently general partner of Christie Capital Management. Since 1987
Mr. Christie has been engaged as an investment advisor for his own account and
the account of other individuals. From 1983 until 1987 Mr. Christie was senior
vice president of Kidder, Peabody & Co. Incorporated, an investment banking
firm. Mr. Christie headed Kidder, Peabody's underwriting team for the Company's
initial public offering and 1987 debenture offering.
Richard W. Detweiler has been a director of the Company since December
1995. Mr. Detweiler is currently a partner of Carlisle Enterprises, an
investment partnership. From 1990 to 1996 Mr. Detweiler was chief executive
officer of Precision Aerotech, a diversified manufacturing company. Mr.
Detweiler has 20 years of manufacturing management experience. Mr. Detweiler is
a director of Haskel International, Inc., a manufacturing company.
Bruce L. Engel, the Company's founder, has been president and a
director of the Company since its inception. Mr. Engel, a graduate of the
University of Chicago Law School, practiced business and corporate law,
including representation of clients in the wood products industry, from 1964 to
1984. Mr. Engel became engaged in sawmill operations in 1981 with the
acquisition of a mill in Glide, Oregon, now owned by a subsidiary of the
Company. Mr. Engel is involved in various other businesses. Mr. Engel is
president and a director of Encore Group, Inc.
David J. Loftus was appointed treasurer of the Company in October 1993
and continues to serve as vice president-finance of TreeSource, the Company's
marketing subsidiary, a position he has held since May 1986. As treasurer, Mr.
Loftus is primarily responsible for cash management matters and credit and
banking relationships. For the eight years prior to joining TreeSource, Mr.
Loftus served as the assistant treasurer for a publicly-traded company with
operations in the forest products industry.
5
<PAGE>
K. Stanley Martin is vice president-finance of the Company, a position
he has held since September 1983, and has been chief financial officer since
April 1991. Mr. Martin has been a director of the Company since January 1994.
Mr. Martin is responsible for all financial affairs of the Company. For the
eleven years prior to 1983, Mr. Martin served as a financial officer for
publicly-traded companies having all or a substantial portion of their
operations in the forest products industry. Mr. Martin is a certified public
accountant.
Robert J. Riecke became vice president-administration of the Company in
May 1989, has been general counsel of the Company since January 1987, assistant
secretary from March 1983 until January 1994, and a director of the Company
since March 1986. Mr. Riecke was named corporate secretary in January 1994. Mr.
Riecke has primary responsibility for the Company's legal, risk management,
environmental compliance, investor relations, and human resource functions. From
1976 through 1986, Mr. Riecke was in private law practice. Since 1983, Mr.
Riecke has devoted much of his professional endeavors to legal matters relating
to the Company and its subsidiaries. Mr. Riecke is a graduate of the University
of Illinois School of Law.
John C. Stembridge was appointed vice president-sales and marketing of
the Company in February 1995. Mr. Stembridge joined TreeSource, the Company's
marketing subsidiary, in 1989 and has served as its vice president and general
manager since June 1991. Mr. Stembridge has primary responsibility for managing
all aspects of the Company's lumber sales and transportation. For the nine years
prior to joining TreeSource, Mr. Stembridge was involved in domestic and export
lumber sales, primarily with North Pacific Lumber Co.
James R. Wilson was appointed vice president-timber of the Company in
October 1993. Mr. Wilson has primary responsibility for the Company's timber
supply program. Prior to his present position, Mr. Wilson served at both mill
and corporate levels of WTD Industries commencing in February 1992. Prior to
1992, Mr. Wilson served as general manager of Estacada Lumber Company, a
division of RSG Forest Products. From 1973 to 1984, Mr. Wilson was involved in
all phases of the wood products industry with Crown Zellerbach Corporation.
William H. Wright has been a director of the Company since April 1992.
Mr. Wright has held a variety of management positions in the forest products
industry since 1957. He is currently president of Heartwood Consulting Service,
which advises forest products clients. From 1989 until 1994 he was president and
chief executive officer of Dee Forest Products Inc., a manufacturer of hardboard
and related products. From 1984 to 1989 Mr. Wright was general manager of
Stevenson Co-Ply Inc., a manufacturer of veneer and plywood.
Section 16(a) Beneficial Ownership Reporting Compliance
- -------------------------------------------------------
Section 16(a) of the Securities Exchange Act of 1934, as amended,
requires that the Company's officers, directors and persons who own more than 10
percent of the Common Stock file with the SEC initial reports of beneficial
ownership on Form 3 and reports of changes in beneficial ownership of Common
Stock and other equity securities of the Company on Forms 4 and 5. Officers,
directors, and greater than 10 percent shareholders of the Company are required
by SEC regulations to furnish to the Company copies of all Section 16(a) reports
that they file. To the Company's knowledge, based solely on reviews of such
reports furnished to the Company and written representations that no other
reports are required, all Section 16(a) filing requirements applicable to its
officers, directors and greater than 10 percent beneficial owners were complied
with during the fiscal year ended April 30, 1997.
6
<PAGE>
EXECUTIVE COMPENSATION
Summary Compensation Table
- --------------------------
The following table shows the cash and non-cash compensation paid by
the Company for each of the last three fiscal years to the chief executive
officer and the four other most highly compensated executive officers (the
"Named Executive Officers").
<TABLE>
<CAPTION>
Long Term
Compensation
Awards
Annual Compensation(1) --------------------
------------------------------ Number of Securities
Name and Principal Position Year Salary($) Bonus($) Underlying Options
------------------------------- ------ ---------- ---------- --------------------
<S> <C> <C> <C> <C>
Bruce L. Engel 1997 $ 300,000 $ 171,122 35,000
President 1996 $ 300,000 $ 23,142 --
1995 $ 300,000 $ 48,200 --
K. Stanley Martin 1997 $ 120,000 $ 68,447 35,000
Vice President-Finance and 1996 $ 120,000 $ 9,256 --
Chief Financial Officer 1995 $ 120,000 $ 19,280 --
Robert J. Riecke 1997 $ 132,000 $ 75,295 35,000
Vice President- 1996 $ 132,000 $ 10,183 --
Administration, General 1995 $ 132,000 $ 21,209 --
Counsel and Secretary
John C. Stembridge 1997 $ 100,000 $ 80,238 35,000
Vice President-Sales and 1996 $ 100,000 $ 12,197 --
Marketing 1995 $ 86,667 $ 15,539 --
James R. Wilson 1997 $ 100,000 $ 57,040 35,000
Vice President-Timber 1996 $ 100,000 $ 7,714 --
1995 $ 85,833 $ 12,853 --
</TABLE>
(1) Personal benefits for each executive officer named in the table did not
exceed $50,000 or 10% of such executive officers' total annual salary
and bonus for the fiscal years ended April 30, 1997, 1996 and 1995,
respectively.
7
<PAGE>
Option Grants in Last Fiscal Year
- ---------------------------------
The following table provides information on option grants for the last
fiscal year to the Named Executive Officers:
<TABLE>
<CAPTION>
Individual Grants Potential
------------------------------------------------------ Realizable Value at
% of Assumed Annual Rates
# of Total of Stock Price
Securities Options Exercise Appreciation for
Underlying Granted to or Base Option Term(2)
Options Employees in Price Expiration ----------------------------------------
Name Granted(1) Fiscal Year ($/Share) Date 0%($) 5%($) 10%($)
------------------- ------------- ------------ ------------- ------------- ------------ ------------- -------------
<S> <C> <C> <C> <C> <C> <C> <C>
Bruce L. Engel 35,000 7.7% $1.515 10/21/2006 $9,319 $48,528 $108,679
K. Stanley Martin 35,000 7.7% $1.515 10/21/2006 $9,319 $48,528 $108,679
Robert J. Riecke 35,000 7.7% $1.515 10/21/2006 $9,319 $48,528 $108,679
John C. Stembridge 35,000 7.7% $1.515 10/21/2006 $9,319 $48,528 $108,679
James R. Wilson 35,000 7.7% $1.515 10/21/2006 $9,319 $48,528 $108,679
(1) Vesting Schedule: 10/21/96 - 30%; 10/21/97 - 47.5%; 10/21/98 - 65%; 10/21/99 - 82.5%; 10/21/00 - 100%.
(2) These assumed appreciation rates are not derived from the historical or
projected prices of the Company's Common Stock or results of operations
or financial condition and they should not be viewed as a prediction of
possible prices or value for the Company's Common Stock in the future.
</TABLE>
Aggregated Option Exercises in Last Fiscal Year and Fiscal Year-End Option
- --------------------------------------------------------------------------
Values
- ------
The following table provides information on option exercises for the
last fiscal year by the named executive officers and the value of such officers'
unexercised options as of April 30, 1997:
<TABLE>
<CAPTION>
Number of Securities Value of Unexercised
Underlying Unexercised In-the-Money Options
Shares Options at April 30, 1997 (#) at April 30, 1997 ($)(1)
Acquired on ------------------------------- -----------------------------
Name Exercise (#) Exercisable Unexercisable Exercisable Unexercisable
-------------------------- ------------ ------------- ------------- ------------- -------------
<S> <C> <C> <C> <C> <C>
Bruce L. Engel -- 394,500 24,500 $ 98,233 $ 7,289
K. Stanley Martin -- 42,300 24,500 $ 20,021 $ 7,289
Robert J. Riecke -- 45,500 24,500 $ 22,761 $ 7,289
John C. Stembridge -- 20,500 24,500 $ 3,124 $ 7,289
James R. Wilson -- 20,500 24,500 $ 3,124 $ 7,289
(1) Based on the fair market value of the Common Stock at April 30, 1997 of $1.8125 per share.
</TABLE>
8
<PAGE>
Benefits
- --------
The Company maintains an Internal Revenue Code ("IRC") Section 401(k)
Retirement Savings Plan under which employees, including executive officers, are
permitted to make salary deferral contributions. Executive officers are not
entitled to employer matching contributions pursuant to this plan.
Compensation of Directors
- -------------------------
Each of the Company's outside directors is paid an annual retainer of
$15,000 for attending up to six Board meetings, plus $750 for each additional
Board meeting or committee meeting attended and $225 for each telephone
conference meeting attended or written consent executed. Directors who are also
employees of the Company do not receive additional compensation for their
services as directors. In fiscal 1997, three outside directors each received
option grants for 25,000 shares of Common Stock under the 1996 Stock Option
Plan.
Executive Bonuses
- -----------------
Monthly discretionary bonuses are paid to the Company's executive
officers, as well as other management and administrative employees, pursuant to
the Company's profit sharing bonus plan. The bonuses are based upon net pretax
profits and are generally allocated according to base salary level. Bonuses paid
to executive officers for services rendered to the Company during the year ended
April 30, 1997 are included in the amounts shown in the "Summary Compensation
Table."
Board Compensation Committee Report on Executive Compensation
- -------------------------------------------------------------
The Compensation Committee is composed of two independent, non-employee
directors.
The Compensation Committee is responsible for recommending to the full
Board of Directors, for its approval, the base compensation for all executive
officers. Executive officers who serve on the Company's Board of Directors do
not participate in any deliberations or decisions regarding their own
compensation. The Compensation Committee receives recommendations from the chief
executive officer regarding appropriate levels of base compensation for the
other executive officers.
The Company's executive officer compensation policies are designed to
attract, motivate and retain senior management by providing an opportunity for
overall competitive compensation based on an adequate base compensation amount
and participation in a profit based bonus system in effect for all salaried
employees of the Company.
The profit sharing component of the overall compensation system is
designed to reward all salaried employees, including executive officers, in
relation to the Company's monthly performance and to encourage salaried
employees at all levels of the Company to work together for the common goal of
maximizing profits. Salaried employees at the corporate level (including all
executive officers) receive 10% of monthly consolidated pre-tax profits,
allocated according to base salary level.
It is the Company's practice to participate in and use, as a basis for
comparison, an analysis of executive compensation in the Northwest prepared by
the compensation consulting group of Milliman & Robertson, Inc. This analysis is
useful in establishing base salary levels and monitoring overall compensation
levels as compared to other publicly-traded companies of similar size. Executive
officers' compensation paid during fiscal year 1997, with respect to base
salary, cash bonus and total cash compensation, was below the median levels
published in the 1996/1997 Milliman & Robertson compensation survey of all
industries.
9
<PAGE>
The Company also uses long-term stock-based incentive opportunities in
the form of options to purchase the Company's Common Stock. The Company's 1996
Option Plan provides for the grant of stock options to employees of the Company.
Stock option awards are determined on a discretionary basis by the Board of
Directors. Executive officers who serve on the Company's Board of Directors do
not participate in any deliberations or decisions regarding option awards to
them.
Each executive officer was granted options for 35,000 shares of Common
Stock during the 1997 fiscal year.
The Committee believes that stock-based performance compensation
arrangements are beneficial in aligning management's and shareholders' interests
in the advancement of shareholder value.
The Company provides the same group life and health insurance coverage
to executive officers as other employees and requires all employees, including
executive officers, to pay approximately 25% of health insurance premiums by
payroll deduction.
The Company allows its executive officers and all other employees to
contribute a percentage of their compensation to the Company-sponsored 401(k)
Retirement Savings Plan. Executive officers and other salaried employees are not
generally entitled to matching contributions.
Neither the executive officers nor other employees are covered by any
other Company-sponsored retirement plans.
Chief Executive Officer Compensation
- ------------------------------------
All of the policies described above apply to Mr. Engel's compensation.
No additional benefits or requirements specifically apply to the chief executive
officer.
Mr. Engel was granted options for 35,000 shares during the 1997 fiscal
year.
Mr. Engel's base salary for fiscal year 1997 was $300,000. The median
base salary for chief executive officers of comparably sized public companies,
as published by the Milliman & Robertson compensation survey, is $400,000.
Mr. Engel received a cash bonus of $171,122 during fiscal year 1997
under the profit sharing plan described above, reflecting profitable operations
during the fiscal year. Mr. Engel's cash bonus and total cash compensation
amounts were below the published median levels; the published median levels were
$300,000 and $630,210, respectively.
Compensation Committee Members
Scott Christie
William H. Wright
10
<PAGE>
Stock Performance Graph
- -----------------------
The following graph provides a comparison of the five-year cumulative
total return (assuming reinvestment of dividends) for the Standard & Poor's 500
Index, the Standard & Poor's Paper & Forest Products Index, and the Company:
[GRAPH]
<TABLE>
<CAPTION>
Base
Period Return Return Return Return Return
Company/Index Name April 1992 April 1993 April 1994 April 1995 April 1996 April 1997
- ----------------------------- ---------- ---------- ---------- ---------- ---------- ----------
<S> <C> <C> <C> <C> <C> <C>
WTD Industries, Inc. 100 81.82 89.09 50.92 19.99 52.72
S&P 500 Index 100 109.24 115.05 135.14 175.97 220.20
Paper & Forest Products Index 100 102.58 103.01 123.86 139.31 138.89
</TABLE>
11
<PAGE>
SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT
The following table shows beneficial ownership as of June 30, 1997 of
the Company's Common Stock by (i) each director, (ii) each beneficial owner of
more than 5 percent of the Common Stock, (iii) the Named Executive Officers and
(iv) all directors and officers as a group. Except as otherwise specifically
noted, each person noted below has sole investment and voting power with respect
to shares indicated.
<TABLE>
<CAPTION>
Amount and Nature
Name and Address of Beneficial Owner of Beneficial Ownership(1) Percent of Class
---------------------------------------------------- -------------------------- ----------------
<S> <C> <C>
Quinault Corporation
P.O. Box C 2,879,000 26.0%
Aberdeen, WA 98570
Amount and Nature
Name of Directors and Executive Officers of Beneficial Ownership(2) Percent of Class
---------------------------------------------------- -------------------------- ----------------
Larry G. Black(3) 2,879,000 26.0%
Scott Christie 75,000 .7%
Richard W. Detweiler 27,500 .3%
Bruce L. Engel 394,500 3.4%
K. Stanley Martin 52,300 .5%
Robert J. Riecke 45,500 .4%
John C. Stembridge 21,800 .2%
James R. Wilson(4) 20,600 .2%
William H. Wright 75,000 .7%
All directors and executive officers as a group (10
persons) 3,605,700 30.6%
</TABLE>
- ----------
(1) As determined by reference to the beneficial owner's most recent Form 4
or 13D filing.
(2) Includes shares reserved for issuance under options exercisable within
60 days of June 30, 1997 as follows: Mr. Christie 75,000; Mr. Detweiler
27,500; Mr. Engel 394,500; Mr. Martin 42,300; Mr. Riecke 45,500; Mr.
Stembridge 20,500; Mr. Wilson 20,500; and Mr. Wright 75,000. Any
securities not outstanding that are subject to options shall be deemed
to be outstanding for the purpose of computing the percentage of
outstanding securities owned by such person, but shall not be deemed to
be outstanding for the purpose of computing the percentage of the class
owned by any other person.
(3) Mr. Black, by virtue of being president and sole director of Quinault,
may be deemed to beneficially own the shares owned by Quinault.
(4) Mr. Wilson shares with his spouse Christine R. Wilson voting and
investment power as to 100 shares beneficially owned. See Note 2 above
for details of individual option rights.
12
<PAGE>
CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS
During fiscal 1997, five of the Company's subsidiaries purchased logs
from Quinault Logging Company in the amount of $1,667,000. Mr. Larry G. Black, a
director of the Company, is president and a director of Quinault Logging Company
and is president and sole director of Quinault, owner of 26% of the Company's
Common Stock. The Company believes that the terms of such purchases were no less
favorable than the Company could have obtained from unrelated third parties.
The Company, Bruce L. Engel, Quinault and Larry G. Black entered into
an agreement dated as of June 10, 1997 (the "Agreement"). Pursuant to the terms
of the Agreement, the Company and Mr. Engel will have the right of first refusal
with respect to any shares of the Company's Common Stock sold by Quinault prior
to June 15, 1999. In addition, Quinault granted Mr. Engel an option to purchase
shares of the Company's Common Stock such that the amount of the Company's
Common Stock owned by Mr. Engel and his affiliates will equal the number of
shares owned by Quinault, Mr. Black and their affiliates. Pursuant to the
Agreement, Quinault, Mr. Black and their affiliates may not, without the prior
written consent of the Company's Board, act in a manner that would (i) remove
Mr. Engel as an officer or director of the Company or (ii) result in the
liquidation, sale, merger or other combination of the Company. The Agreement
obligates the Company to nominate Mr. Black for election as a director at the
Company's 1997 Annual Meeting of Shareholders to serve a two-year term and also
sets forth certain conditions with respect to the election of the Company's
other directors. The Agreement restricts the Company from taking certain actions
to dilute Quinault's holdings. Under the Agreement, the Company has also agreed
to remove certain voting restrictions placed on Quinault pursuant to the Oregon
Control Share Act by: (i) an affirmative vote of the Company's shareholders at
the 1997 Annual Meeting of Shareholders, or in the alternative, (ii) amending
its Bylaws to eliminate such restrictions.
DISCRETIONARY AUTHORITY
While the Notice of Annual Meeting of Shareholders provides for the
transaction of such other business as may properly come before the meeting, the
Board of Directors has no knowledge of any matters to be presented at the
meeting other than those referred to above. However, the enclosed proxy gives
discretionary authority in the event that any other matters should be presented.
SHAREHOLDER PROPOSALS
Any shareholder proposals to be considered for inclusion in proxy
material for the Company's September 1998 annual meeting must be received at the
principal executive offices of the Company not later than April 27, 1998.
THE COMPANY WILL PROVIDE, WITHOUT CHARGE, ON THE WRITTEN REQUEST OF ANY
BENEFICIAL OWNER OF SHARES OF THE COMPANY'S COMMON STOCK ENTITLED TO VOTE AT THE
ANNUAL MEETING OF SHAREHOLDERS, A COPY OF THE COMPANY'S ANNUAL REPORT ON FORM
10-K AS FILED WITH THE U.S. SECURITIES AND EXCHANGE COMMISSION FOR THE COMPANY'S
FISCAL YEAR ENDED APRIL 30, 1997. WRITTEN REQUESTS SHOULD BE MAILED TO THE
SECRETARY, WTD INDUSTRIES, INC., P.O. BOX 5805, PORTLAND, OREGON 97228.
By Order of the Board of Directors
Robert J. Riecke
Secretary
August 15, 1997
13
<PAGE>
WTD INDUSTRIES, INC.
PROXY SOLICITED BY THE BOARD OF DIRECTORS
ANNUAL MEETING
OCTOBER 7, 1997
The undersigned, revoking all prior proxies, hereby appoints Bruce L.
Engel and Robert J. Riecke, and each of them, as proxies, with full power of
substitution, to vote on behalf of the undersigned at the Annual Meeting of
Shareholders of WTD Industries, Inc. (the "Company") to be held on Tuesday,
October 7, 1997, or at any adjournments thereof, all shares of the undersigned
in the Company. The proxies are instructed to vote as indicated on the reverse
hereof.
The shares represented by this proxy will be voted in accordance with
the instructions given.
This proxy is solicited on behalf of the Company's Board of Directors.
The Board of Directors recommends a vote FOR all the Nominees and FOR the
Proposals.
This proxy when properly executed will be voted as directed or, if no
direction is given, the shares will be voted for the Nominees, for the
Proposals, and on any other business that may properly come before the meeting
or any adjournments thereof in accordance with the recommendations of
management.
(Continued and to be signed on other side)
- --------------------------------------------------------------------------------
FOLD AND DETACH HERE
WTD INDUSTRIES, INC.
ANNUAL MEETING OF SHAREHOLDERS
TIGARD COURTYARD MARRIOTT
15686 SW SEQUOIA PARKWAY
TIGARD, OREGON
MONDAY, OCTOBER 7, 1997
10:00 A.M. PACIFIC TIME
<PAGE>
<TABLE>
<CAPTION>
<S> <C>
1. ELECTION OF DIRECTORS Nominees: Larry G. Black, Scott Christie, 2. PROPOSAL TO RATIFY THE APPOINTMENT
Richard W. Detweiler, OF MOSS ADAMS LLP AS INDEPENDENT
Bruce L. Engel, K. Stanley Martin, AUDITORS
Robert J. Riecke,
William H. Wright
FOR all WITHHOLD
the AUTHORITY (To withhold your vote for any individual
nominees to vote nominees, strike a line through the FOR AGAINST ABSTAIN
listed for all nominee's name in the list above.)
(except as nominees
marked to listed
the
contrary)
------- ------- ----- ------- -------
3. PROPOSAL TO RESTORE CONTROL SHARE VOTING RIGHTS I plan to attend
FOR AGAINST ABSTAIN the meeting
----- ------- ------- -------
Please sign exactly as your name
appears on this card. Persons signing
as executor, administrator, trustee,
guardian or in any other official or
representative capacity should sign
their full title.
Date:
,1997
--------------------
--------------------------------------
Signature(s)
--------------------------------------
Please mark, date, sign and return the
proxy promptly.
</TABLE>
- --------------------------------------------------------------------------------
FOLD AND DETACH HERE
WTD INDUSTRIES, INC.
ANNUAL MEETING OF SHAREHOLDERS
TIGARD COURTYARD MARRIOTT
15686 SW SEQUOIA PARKWAY
TIGARD, OREGON
TUESDAY, OCTOBER 7, 1997
10:00 A.M. PACIFIC TIME
