<PAGE>
SCHEDULE 14A
(Rule 14a-101)
INFORMATION REQUIRED IN PROXY STATEMENT
SCHEDULE 14A INFORMATION
Proxy Statement Pursuant to Section 14(a) of the Securities Exchange Act of 1934
(Amendment No. )
Filed by the Registrant [X]
Filed by 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 Under Rule 14a-12
Fastenal Company
- --------------------------------------------------------------------------------
(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)(l) 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>
FASTENAL COMPANY
2001 Theurer Boulevard
Winona, Minnesota 55987-1500
(507) 454-5374
March 14, 2000
Dear Shareholder:
You are cordially invited to attend the Annual Meeting of Shareholders to be
held at the Company's offices at 2001 Theurer Boulevard, Winona, Minnesota,
commencing at 10 o'clock a.m., Central Daylight Savings Time, on Tuesday,
April 18, 2000.
The Secretary's Notice of Annual Meeting and the Proxy Statement which
follow describe the matters to come before the meeting. During the meeting, we
will also review the activities of the past year and items of general interest
about the Company.
We hope that you will be able to attend the meeting in person and we look
forward to seeing you. Please mark, date and sign the enclosed Proxy and
return it in the accompanying envelope as quickly as possible, even if you
plan to attend the Annual Meeting. You may revoke the Proxy and vote in person
at that time if you so desire.
Sincerely,
/s/ Robert A. Kierlin
Robert A. Kierlin
Chairman of the Board, President
and Chief Executive Officer
<PAGE>
FASTENAL COMPANY
-----------------------------------
Notice of Annual Meeting of Shareholders
to be held on April 18, 2000
-----------------------------------
The Annual Meeting of Shareholders of Fastenal Company will be held at the
Company's offices at 2001 Theurer Boulevard, Winona, Minnesota, commencing at
10 o'clock a.m., Central Daylight Savings Time, on Tuesday, April 18, 2000 for
the following purposes:
1. To elect a Board of Directors of seven directors, to serve until
the next regular meeting of shareholders or until their successors
have been duly elected and qualified.
2. To ratify the appointment of KPMG LLP as independent auditors for
the fiscal year ending December 31, 2000.
3. To transact such other business as may properly be brought before
the meeting.
The Board of Directors has fixed March 7, 2000 as the record date for the
meeting, and only shareholders of record at the close of business on that date
are entitled to receive notice of and vote at the meeting.
Your Proxy is important to ensure a quorum at the meeting. Even if you own
only a few shares, and whether or not you expect to be present, you are
urgently requested to mark, date, sign and mail the enclosed Proxy in the
postage-paid envelope that is provided. The Proxy may be revoked by you at any
time prior to being exercised, and returning your Proxy will not affect your
right to vote in person if you attend the meeting and revoke the Proxy.
By Order of the Board of Directors,
/s/ Stephen M. Slaggie
Stephen M. Slaggie
Secretary
Winona, Minnesota
March 14, 2000
<PAGE>
------------------
PROXY STATEMENT
------------------
GENERAL INFORMATION
The enclosed Proxy is being solicited by the Board of Directors of Fastenal
Company (the "Company") for use in connection with the Annual Meeting of
Shareholders to be held on Tuesday, April 18, 2000 at the Company's offices at
2001 Theurer Boulevard, Winona, Minnesota, commencing at 10 o'clock a.m.,
Central Daylight Savings Time, and at any adjournments thereof. Only
shareholders of record at the close of business on March 7, 2000 will be
entitled to vote at such meeting or adjournment. Proxies in the accompanying
form which are properly signed, duly returned to an officer of the Company and
not revoked will be voted in the manner specified. A shareholder executing a
Proxy retains the right to revoke it at any time before it is exercised by
delivering to an officer of the Company written notice of termination of the
Proxy's authority or a properly signed Proxy bearing a later date.
The address of the principal executive office of the Company is 2001 Theurer
Boulevard, Winona, Minnesota 55987-1500 and the telephone number is (507) 454-
5374. The mailing of this Proxy Statement and the Board of Directors' form of
Proxy to shareholders will commence on or about March 14, 2000.
The affirmative vote of the holders of a majority of the outstanding shares
of Common Stock of the Company present and entitled to vote is required for
approval of each proposal included in this Proxy Statement. For this purpose,
a shareholder who abstains with respect to a proposal is considered to be
present and entitled to vote on such proposal at the meeting and is in effect
casting a negative vote, but a shareholder (including a broker) who does not
give authority to a Proxy to vote, or withholds authority to vote, on a
proposal shall not be considered present and entitled to vote on such
proposal.
DEADLINES FOR RECEIPT OF SHAREHOLDER PROPOSALS FOR 2001 ANNUAL MEETING
Any shareholder proposal intended to be presented at the 2001 Annual Meeting
of Shareholders and desired to be included in the Company's Proxy Statement
for that meeting must be received by the Company at its principal executive
office no later than November 14, 2000 in order to be included in such Proxy
Statement. If notice of any other shareholder proposal intended to be
presented at the 2001 Annual Meeting of Shareholders is not received by the
Company on or before January 28, 2001, the Proxy solicited by the Board of
Directors of the Company for use in connection with that meeting may confer
authority on the Proxies named therein to vote in their discretion on such
proposal without any discussion in the Company's Proxy Statement for that
meeting of either the proposal or how such Proxies intend to exercise their
voting discretion.
1
<PAGE>
SECURITY OWNERSHIP OF PRINCIPAL
SHAREHOLDERS AND MANAGEMENT
The following table sets forth, as of March 1, 2000, the ownership of Common
Stock of the Company by each shareholder who is known by the Company to own
beneficially more than 5% of the outstanding Common Stock of the Company, by
each director and nominee for the office of director, by each executive
officer named in the Summary Compensation Table set forth under "Executive
Compensation" below, and by all directors and executive officers as a group.
At March 1, 2000 there were 37,938,688 shares of Common Stock, par value $.01
per share, issued and outstanding, each of which is entitled to one vote.
<TABLE>
<CAPTION>
Amount and Nature Percentage of
Name and, if Required, Address of Beneficial Outstanding
of Beneficial Owner Ownership(1) Shares
------------------------------ ----------------- -------------
<S> <C> <C>
Robert A. Kierlin................. 4,309,736(2)(3) 11.36%
Route 1, Box 65D
Winona, Minnesota 55987
Stephen M. Slaggie................ 2,195,322(2)(4) 5.79
1870 Ralph Scharmer Drive
Winona, Minnesota 55987
Michael M. Gostomski.............. 833,692(2)(5) 2.20
John D. Remick.................... 1,442,401(2)(6) 3.80
Henry K. McConnon................. 940,412(2)(7) 2.48
Robert A. Hansen.................. 0 --
Willard D. Oberton................ 100,560(8) *
Daniel L. Florness................ 1,070(9) *
Albert O. Nicholas................ 2,358,200(10) 6.22
Nicholas Company, Inc.
700 North Water Street
Milwaukee, Wisconsin 53202
Brown Capital Management, Inc..... 2,071,675(11) 5.46
1201 North Calvert Street
Baltimore, Maryland 21202
Directors and executive officers
as a group (8 persons)........... 9,353,193 24.65
</TABLE>
- --------
* Less than 1%.
(1) Except as otherwise indicated in the Notes below, the listed beneficial
owner has sole voting power and investment power with respect to such
shares.
(2) Includes an aggregate of 117,000 shares held by Hiawatha Education
Foundation ("Hiawatha Foundation") and its wholly-owned subsidiary.
Each of Mr. Kierlin, Mr. Slaggie, Mr. Gostomski, Mr. Remick and Mr.
McConnon is a director and member of Hiawatha Foundation and a director
of its subsidiary and, as such, shares voting and investment power with
respect to these shares. Each such individual disclaims beneficial
ownership of the shares held by Hiawatha Foundation and its subsidiary.
(3) Includes 720,700 shares held by Mr. Kierlin which are subject to stock
options granted by Mr. Kierlin to various employees of the Company. See
"Executive Compensation" below. Mr. Kierlin has voting and investment
power with respect to these shares, provided that any transferred
shares will remain subject to the options. Also includes 2,000 shares
held by a
2
<PAGE>
local secondary school (the "School"). Mr. Kierlin is a director and
member of the investment committee of the School and, as such, shares
voting and investment power with respect to these shares. Mr. Kierlin
disclaims beneficial ownership of the shares held by the School.
(4) Includes 120,000 shares held by Mr. Slaggie's wife, and 34,550 shares
held by Mr. Slaggie as custodian for his son. Also includes 22,000
shares held by the Slaggie Family Foundation (the "Slaggie Foundation").
Mr. Slaggie and members of his family (including his wife and certain of
his children) are directors and members of the Slaggie Foundation and,
as such, share voting and investment power with respect to the shares of
Common Stock of the Company held by the Slaggie Foundation. Mr. Slaggie
disclaims beneficial ownership of the shares held by the Slaggie
Foundation.
(5) Includes 556,692 shares held in Mr. Gostomski's revocable living trust,
over which Mr. Gostomski has voting and investment power, and 160,000
shares held in the revocable living trust of Mr. Gostomski's wife, over
which Mr. Gostomski's wife has voting and investment power.
(6) Includes 171,227 shares held by Mr. Remick's wife, and an aggregate of
20,000 shares held by certain of Mr. Remick's children and by Mr. Remick
as custodian for those children. Also includes 60,075 shares held in an
estate of which Mr. Remick is one of several personal representatives.
As a personal representative, Mr. Remick shares voting and investment
power with respect to the shares of Common Stock of the Company held in
the estate.
(7) Includes 160,000 shares held by Mr. McConnon's wife, and 12,000 shares
held by Mr. McConnon's father with respect to which Mr. McConnon has
investment power pursuant to a power of attorney granted to Mr. McConnon
by his father. Also includes 2,000 shares held by the School. Mr.
McConnon is a director of the School and, as such, shares voting and
investment power with respect to these shares. Mr. McConnon disclaims
beneficial ownership of the shares held by the School.
(8) Includes 17,900 shares held by Mr. Oberton's wife, and an aggregate of
3,900 shares held by Mr. Oberton and his wife as custodian for Mr.
Oberton's children.
(9) Includes 70 shares attributable to the account of Mr. Florness in the
Company's 401(k) plan. Each participant in the 401(k) plan has the right
to direct the investment of, and the voting of all shares attributable
to, such participant's plan account.
(10) According to an amendment to a Schedule 13G statement filed with the
Securities and Exchange Commission reflecting ownership as of December
31, 1999, Nicholas Company, Inc., which is a registered investment
advisor, has sole investment power with respect to 2,358,200 shares.
Mr. Nicholas, who is the chief executive officer, chairman, a director
and majority shareholder of Nicholas Company, Inc., may be deemed to
have indirect beneficial ownership of such shares by virtue of his
affiliation with Nicholas Company, Inc. Mr. Nicholas disclaims such
beneficial ownership.
(11) According to a Schedule 13G statement filed with the Securities and
Exchange Commission reflecting ownership as of December 31, 1999, Brown
Capital Management, Inc., which is a registered investment advisor, has
sole voting power with respect to 991,000 shares, shared voting power
with respect to 101,100 shares, and sole investment power with respect
to 2,071,675 shares.
3
<PAGE>
ELECTION OF DIRECTORS
Nominees and Required Vote
The Restated Bylaws of the Company provide that the business of the Company
shall be managed by or under the direction of a Board of Directors of not less
than five nor more than nine directors, which number shall be fixed from time
to time by the Board of Directors. Each director shall be elected at the
Annual Meeting of Shareholders for a term that expires at the next regular
shareholders' meeting and shall hold office for the term for which he was
elected and until a successor is elected and has qualified. The Board of
Directors has fixed the number of directors to be elected for the ensuing year
at seven and has nominated the seven persons named below for election as
directors. Proxies solicited by the Board of Directors will, unless otherwise
directed, be voted to elect the seven nominees named below to constitute the
entire Board of Directors.
All of the nominees named below are current directors of the Company. Each
nominee has been previously elected as a director by the Company's
shareholders, except Robert A. Hansen and Willard D. Oberton who were elected
directors by the Board of Directors effective June 10, 1999. Each nominee has
indicated a willingness to serve as a director for the ensuing year, but, in
case any nominee is not a candidate at the meeting for any reason, the Proxies
named in the enclosed form of Proxy may vote for a substitute nominee in their
discretion.
The following table sets forth certain information as to each nominee for
the office of director:
<TABLE>
<CAPTION>
Name Age Position
---- --- --------
<S> <C> <C>
Robert A. Kierlin................. 60 Chairman of the Board, President,
Chief Executive Officer and Director
Stephen M. Slaggie................ 60 Secretary and Director
Michael M. Gostomski.............. 59 Director
John D. Remick.................... 63 Director
Henry K. McConnon................. 60 Director
Robert A. Hansen.................. 56 Director
Willard D. Oberton................ 41 Vice-President, Chief Operating Officer
and Director
</TABLE>
Mr. Kierlin has been the Chairman of the Board, President and Chief
Executive Officer of the Company and has served as a director of the Company
since the Company's incorporation in 1968. Mr. Kierlin has also served as a
Minnesota State Senator since April 1999.
Mr. Slaggie has been the Secretary of the Company and has served as a
director of the Company since 1970. He became a full-time employee of the
Company in December 1987, at which time he assumed the additional duties of
Shareholder Relations Director and Insurance Risk Manager. From 1970 through
June 1996, Mr. Slaggie also served as Treasurer of the Company.
Mr. Gostomski has served as a director of the Company since 1973. For more
than the past five years, Mr. Gostomski has been the President and Chief
Executive Officer of Winona Heating & Ventilating Co., a sheet metal and
roofing contractor located in Winona, Minnesota.
Mr. Remick has served as a director of the Company since the Company's
incorporation in 1968. For more than the past five years, Mr. Remick has been
the President and Chief Executive Officer of Rochester Athletic Club, Inc., an
athletic club located in Rochester, Minnesota.
4
<PAGE>
Mr. McConnon has served as a director of the Company since the Company's
incorporation in 1968. For more than the past five years, Mr. McConnon has
been the President of Wise Eyes, Inc., an eyeglass retailer and wholesaler
located in State College, Pennsylvania.
Mr. Hansen has served as a director of the Company since June 1999. For more
than the past five years, Mr. Hansen has been an Associate Professor of
Marketing with the Carlson School of Management at the University of
Minnesota.
Mr. Oberton has served as a director of the Company since June 1999, and has
been Vice-President and Chief Operating Officer of the Company since March
1997. From June 1986 through March 1997, Mr. Oberton was the general
operations manager of the Company.
None of the above nominees is related to any other nominee or to any
executive officer of the Company.
Board and Committee Meetings
The Company has an Audit Committee consisting of Robert A. Hansen, John D.
Remick and Michael M. Gostomski. The Audit Committee held two meetings during
1999. The Audit Committee has the authority to (a) make recommendations to the
Board of Directors as to the engagement of independent auditors, (b) review
with the independent auditors the scope and results of audit engagements, (c)
review the scope, frequency and results of internal audits and examinations,
(d) review the adequacy of the Company's accounting policies and system of
internal accounting controls, and (e) review all related party transactions
for potential conflict-of-interest situations. The Company does not have a
Nominating Committee or a Compensation Committee, or any other committee of
the Board of Directors performing equivalent functions.
The Board of Directors held two meetings during 1999.
Each director of the Company receives an annual retainer of $1,000 for his
services as a director, and, if he is not an employee of the Company, $3,000
(plus reimbursement of reasonable expenses) for attendance at each meeting of
the Board. Each member of the Audit Committee who is not an employee of the
Company receives $2,000 (plus reimbursement of reasonable expenses) for
attendance at each Audit Committee meeting. The Company established a
Development Committee in June 1999. Each member of the Development Committee
who is not an employee of the Company receives $3,000 (plus reimbursement of
reasonable expenses) for attendance at each Development Committee meeting. All
directors attended more than 75% of the aggregate number of meetings of the
Board, Audit Committee and Development Committee on which they served during
1999.
5
<PAGE>
EXECUTIVE COMPENSATION
Summary of Compensation
Set forth in the following table is information with respect to the
compensation of the President, Vice-President and Treasurer of the Company for
each fiscal year of the Company in the three fiscal year period ended December
31, 1999:
SUMMARY COMPENSATION TABLE
<TABLE>
<CAPTION>
Annual
Compensation
Name and ---------------------
Principal Position Year Salary($) Bonus($)
- ------------------ ---- --------- --------
<S> <C> <C> <C>
Robert A. Kierlin.................................... 1999 $117,000(1) --
Chairman of the Board, President 1998 $102,500(1) --
and Chief Executive Officer 1997 $122,500(1) --
Willard D. Oberton................................... 1999 $193,083(2) $30,841
Vice-President and 1998 $110,000 $82,120
Chief Operating Officer 1997 $ 99,479(3) $40,155
Daniel L. Florness................................... 1999 $ 92,916 $24,492
Treasurer, Chief Financial Officer 1998 $ 84,375 $18,641
and Chief Accounting Officer 1997 $ 73,542 $13,456
</TABLE>
- --------
(1) Includes $2,000, $2,500 and $2,500 paid to Mr. Kierlin during 1999, 1998
and 1997, respectively, in his capacity as a director and member of the
Audit Committee of the Company. See "Board and Committee Meetings" above.
Mr. Kierlin ceased being a member of the Audit Committee in June 1999.
(2) Includes $1,000 paid to Mr. Oberton during 1999 in his capacity as a
director of the Company. See "Board and Committee Meetings" above. Mr.
Oberton became a director of the Company in June 1999.
(3) Mr. Oberton became an executive officer of the Company in March 1997. Mr.
Oberton's 1997 compensation includes compensation for the full fiscal
year.
Mr. Kierlin, Mr. Oberton and Mr. Florness are the only persons who were
executive officers of the Company during the fiscal year ended December 31,
1999 and whose total salary and bonus for such fiscal year was $100,000 or
more.
Employee Stock Option Plan
Effective January 3, 2000, Robert A. Kierlin adopted a stock option plan for
employees of the Company and granted under the plan to a broad group of
employees options to purchase up to an aggregate of 720,700 shares of Common
Stock of the Company currently owned by Mr. Kierlin. In general, the options
expire on December 31, 2002 and are exercisable during the six-month period
ending on that date. The benefits to the Company of the stock option plan are
three-fold. First, the plan aligns the interest of the employees of the
Company with the long-term interests of the Company's public shareholders.
Second, the plan allows employees of the Company the potential to accumulate
some wealth. Third, since the options are backed by outstanding shares of
Common Stock owned by Mr. Kierlin, no new shares will be issued by the Company
when the options are exercised and the options will result in no dilution of
the Company's outstanding Common Stock.
6
<PAGE>
Compensation Committee Interlocks and Insider Participation
As indicated under "Board and Committee Meetings" above, the Company does
not have a Compensation Committee or any other committee of the Board of
Directors performing equivalent functions. Decisions regarding compensation of
executive officers of the Company are made by the Board of Directors. Three of
the Company's executive officers, Robert A. Kierlin, Stephen M. Slaggie and
Willard D. Oberton, are directors of the Company. Mr. Kierlin and Mr. Slaggie
each participated in all deliberations of the Board during the fiscal year
ended December 31, 1999 concerning executive officer compensation.
Board Report on Executive Compensation
As required by the rules established by the Securities and Exchange
Commission, the Board of Directors has prepared, for inclusion in this Proxy
Statement, the following report on the compensation policies of the Board
applicable to the Company's executive officers. The Company's executive
officers during 1999 were its President (who is the Chief Executive Officer
and a director of the Company), its Secretary (who is a director of the
Company), its Vice-President (who is a director of the Company) and its
Treasurer.
At the first meeting of the Board of Directors in 1999, the Board
established the maximum total compensation (base salary and, if applicable,
bonus) to be paid to the Company's President and Secretary for the year. As
shown in the table set forth under "Security Ownership of Principal
Shareholders and Management" above, each of the Company's President and
Secretary holds a significant portion of the Company's Common Stock, which was
acquired by such officer at the time of the Company's incorporation. It is the
philosophy of the Board of Directors that the President and Secretary should
be modestly compensated by the Company, and that financial rewards for those
officers should come in large part from increases in the value of the
Company's stock held by them. Consistent with that philosophy, the Board set
the maximum compensation of the Company's President and Secretary for 1999 at
the same level as 1998.
The President's compensation in 1999 consisted solely of base salary. The
compensation of the Company's other executive officers in 1999 consisted of
base salary and the potential for a bonus. The actual base salary paid to each
of the President and Secretary was, within the limits established by the Board
of Directors, determined by such officer based on such factors as such officer
deemed appropriate, provided that the base salary paid to the Company's
Secretary was subject to the review and approval of the President. The base
salary paid to the Company's other executive officers was determined by the
Board of Directors. The bonus paid to the Company's Secretary was paid under
the Company's general employee bonus program for non-sales personnel. Under
the bonus program, an aggregate bonus is calculated for each of the Company's
departments based on the department achieving certain pre-determined cost
containment goals. The aggregate bonus, if any, for each department is then
allocated among the department's employees in a manner determined by the
department's supervisor based on the level of responsibility of each employee,
provided that such allocation is subject to the review and approval of the
Company's President. The Company's Secretary was the supervisor of his
department in 1999. The bonuses paid to the Company's Vice-President and
Treasurer were paid under individual bonus arrangements. The Vice-President's
bonus was calculated based on the amount by which the Company's pre-tax income
in 1999 exceeded its pre-tax income in 1998. The bonus paid to the Company's
Treasurer was calculated based on the amount by which net income in 1999
exceeded a percentage of net sales in 1999.
7
<PAGE>
There has been no net increase (from the level paid in 1987, the year of the
Company's initial public offering) in the annual base salary paid to the
Company's President in the last thirteen completed fiscal years. There has
been no increase in the annual base salary paid to the Company's Secretary
since he became a full-time employee of the Company in 1987. The salary paid
to the Company's President in 1999, determined by him within the limits
established by the Board of Directors, was 57.5% of the maximum compensation
authorized for payment to him by the Board.
With the exception of the bonus arrangements described above, the
compensation policies and practices of the Board of Directors applicable to
the Company's executive officers are not subject to specific criteria. The
factors considered by the Board in setting the maximum compensation of the
President and Secretary and the base salary of the Company's other executive
officers, and by the President and Secretary in determining their actual base
salary within the limits established by the Board, were subjective, such as
the level of compensation paid by the Company to its other employees. The
Board is aware of the executive compensation historically paid by members of
the peer group selected in connection with the preparation of the stock
performance graph set forth below. However, the Board did not consider the
compensation paid by the companies in the peer group to their chief executive
officers in setting the maximum compensation of the Company's President for
1999, since the higher level of compensation present at those companies does
not reflect the philosophy of the Board that the President should be modestly
compensated. The Company's performance was not a factor considered by the
Board of Directors in setting the maximum compensation of the President and
Secretary or the base salary of the Company's other executive officers, nor
did the Board require the President and Secretary to consider the Company's
performance in determining their actual base salary. However, the Board of
Directors believes (based on a comparison of executive compensation published
in a national business periodical) that the compensation of the Company's
executive officers in 1999 was low by national and regional standards,
particularly in light of the Company's historical financial results; and that,
as a result of their share ownership and the bonus arrangements described
above, the interests of the Company's executive officers are closely aligned
with the long-term interests of the Company and its public shareholders.
Section 162(m) of the Internal Revenue Code of 1986 limits the deductibility
of compensation over $1,000,000 paid by a company to its executive officers.
Since the Company's executive compensation is paid in cash and is set at
levels such that each executive officer will receive compensation well below
the $1,000,000 limit, the Board of Directors has determined that it is not
necessary at this time to take any position with respect to the non-
deductibility of compensation in excess of $1,000,000.
The Board of Directors
Robert A. Kierlin
Stephen M. Slaggie
Michael M. Gostomski
John D. Remick
Henry K. McConnon
Robert A. Hansen
Willard D. Oberton
8
<PAGE>
Performance Graph
Set forth below is a graph comparing, for a period of five years ended
December 31, 1999, the yearly cumulative total shareholder return on the
Company's Common Stock with the yearly cumulative total shareholder return of
the NASDAQ Market Index and an index of a group of peer companies selected by
the Company.
The companies in the peer group are Lawson Products, Inc. ("Lawson"), Noland
Company ("Noland"), MSC Industrial Direct Co., Inc. ("MSC") and W.W. Grainger,
Inc. ("Grainger"). The Company is not included in the peer group.
In calculating the yearly cumulative total shareholder return of the peer
group index, the shareholder returns of the companies included in the peer
group are weighted according to the stock market capitalizations of such
companies at the beginning of each period for which a return is indicated. Of
the companies included in the peer group, the stock of Lawson, Noland and
Grainger has been publicly traded for the entire five-year period covered by
the performance graph, and the stock of MSC has been publicly traded since
December 1995. The shareholder returns of MSC are first included in the
calculation of cumulative total shareholder return of the peer group index for
the year 1996.
The comparison of total shareholder returns in the performance graph assumes
that $100 was invested on December 31, 1994 in each of the Company, the NASDAQ
Market Index and the peer group index, and that dividends were reinvested when
and as paid.
9
<PAGE>
Comparison of Five Year Cumulative Total Return
Among Fastenal Company, NASDAQ Market Index and Peer Group Index
[GRAPH]
Fastenal NASDAQ Peer
Company Market Index Group
1994 $100.00 $100.00 $100.00
1995 206.92 129.71 114.01
1996 224.18 161.18 139.57
1997 187.53 197.16 169.76
1998 215.82 278.08 152.45
1999 220.64 490.46 159.34
10
<PAGE>
RELATIONSHIP WITH AND APPOINTMENT
OF INDEPENDENT AUDITORS
The Board of Directors has selected KPMG LLP to serve as the Company's
independent auditors for the fiscal year ending December 31, 2000, subject to
ratification by the shareholders. While it is not required to do so, the Board
of Directors is submitting the selection of that firm for ratification in
order to ascertain the view of the shareholders. If the selection is not
ratified, the Board of Directors will reconsider its selection. Proxies
solicited by the Board of Directors will, unless otherwise directed, be voted
to ratify the appointment of KPMG LLP as independent auditors for the Company
for the fiscal year ending December 31, 2000.
A representative of KPMG LLP will be present at the Annual Meeting of
Shareholders and will be afforded an opportunity to make a statement if such
representative so desires and will be available to respond to appropriate
questions during the meeting.
SECTION 16(a) BENEFICIAL OWNERSHIP REPORTING COMPLIANCE
Section 16(a) of the Securities Exchange Act of 1934 requires the Company's
directors and officers to file initial reports of share ownership and reports
of changes in share ownership with the Securities and Exchange Commission.
Directors and officers are required by Commission regulations to furnish the
Company with copies of all Section 16(a) forms they file. Based solely on a
review of the copies of such forms furnished to the Company and written
representations from the Company's directors and officers, all Section 16(a)
filing requirements were met for the year ended December 31, 1999.
11
<PAGE>
ADDITIONAL MATTERS
The Annual Report of the Company for the fiscal year ended December 31,
1999, including financial statements, is being mailed with this Proxy
Statement.
As of the date of this Proxy Statement, management knows of no matters that
will be presented for determination at the meeting other than those referred
to herein. If any other matters properly come before the meeting calling for a
vote of shareholders, it is intended that the shares represented by the
Proxies solicited by the Board of Directors will be voted by the Proxies named
therein in accordance with their best judgment.
The Company will pay the cost of soliciting Proxies in the accompanying
form. In addition to solicitation by the use of mails, certain directors,
officers and regular employees of the Company may solicit Proxies by
telephone, telegram or personal interview, and may request brokerage firms and
custodians, nominees and other record holders to forward soliciting materials
to the beneficial owners of stock of the Company and will reimburse them for
their reasonable out-of-pocket expenses in so forwarding such materials.
Shareholders who wish to obtain a copy of the Company's 10-K Annual Report
filed with the Securities and Exchange Commission for the fiscal year ended
December 31, 1999 may do so without charge by writing to Stephen M. Slaggie,
Secretary, at the Company's offices, 2001 Theurer Boulevard, Winona, Minnesota
55987-1500.
By Order of the Board of Directors,
/s/ Stephen M. Slaggie
Stephen M. Slaggie
Secretary
Dated: March 14, 2000
12
<PAGE>
FASTENAL COMPANY
ANNUAL MEETING OF SHAREHOLDERS
Tuesday, April 18, 2000
10:00 a.m., Central Daylight Savings Time
Fastenal Company Headquarters
2001 Theurer Boulevard
Winona, Minnesota
- --------------------------------------------------------------------------------
Fastenal Company
2001 Theurer Boulevard, Winona, Minnesota 55987-1500 Proxy
- --------------------------------------------------------------------------------
This proxy is solicited by the Board of Directors for use at
the Annual Meeting of Shareholders to be held on April 18,
2000 and at any adjournment thereof.
By signing this proxy, you revoke all prior proxies and appoint Stephen M.
Slaggie, John D. Remick and Willard D. Oberton, and each of them, as Proxies,
each with full power of substitution, to vote, as designated on the reverse side
and below, at the Annual Meeting of Shareholders to be held on April 18, 2000,
and at any adjournment thereof, all shares of Common Stock of Fastenal Company
registered in your name at the close of business on March 7, 2000.
This proxy when properly executed will be voted as specified on the reverse
side, but, if no direction is given, this proxy will be voted FOR Items 1 and 2.
Notwithstanding the foregoing, if this proxy is to be voted for any nominee
named on the reverse side and such nominee is unwilling or unable to serve, this
proxy will be voted for a substitute in the discretion of the Proxies. The
Proxies are authorized to vote in their discretion upon such other matters as
may properly come before the Annual Meeting or any adjournment thereof.
See reverse for voting instructions.
<PAGE>
FASTENAL COMPANY
----------------------------------
INDUSTRIAL & CONSTRUCTION SUPPLIES
\|/ Please detach here \|/
- --------------------------------------------------------------------------------
The Board of Directors Recommends a Vote FOR Items 1 and 2.
1. Election of Directors: 01 Robert A. Kierlin [ ] Vote FOR
02 Stephen M. Slaggie all nominees
03 Michael M. Gostomski (except as marked)
04 John D. Remick
05 Henry K. McConnon [ ] Vote WITHHELD
06 Robert A. Hansen from all nominees
07 Willard D. Oberton
(Instructions: To withhold authority to vote for any --------------------------
indicated nominee, write the number(s) of the
nominee(s) in the box provided to the right.) --------------------------
2. Ratification of the appointment of KPMG LLP as [ ] For [ ] Against
independent auditors for the 2000 fiscal year. [ ] Abstain
Address Change? Mark Box [ ] Indicate changes below: Dated:______________, 2000
--------------------------------------------
--------------------------------------------
Signature(s) in Box
Please sign exactly as your name(s) appear
on proxy. Jointly owned shares will be voted
as directed if one owner signs unless
another owner instructs to the contrary, in
which case the shares will not be voted.
Trustees, administrators, etc., should
include title and authority. Corporations
should provide full name of corporation and
title of authorized officer signing the
proxy.
