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
FILED BY THE REGISTRANT [X]
FILED BY A PARTY OTHER THAN THE REGISTRANT [ ]
CHECK THE APPROPRIATE BOX:
[ ] PRELIMINARY PROXY STATEMENT
[X] DEFINITIVE PROXY STATEMENT
[ ] DEFINITIVE ADDITIONAL MATERIAL
[ ] SOLICITING MATERIAL PURSUANT TO RULE 14a-11(c) OR RULE 14a-12
[ ] CONFIDENTIAL, FOR USE OF THE COMMISSION ONLY (AS PERMITTED BY
RULE 14a-6(e)(2))
LUND INTERNATIONAL HOLDINGS, 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-b(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>
LUND INTERNATIONAL HOLDINGS, INC.
NOTICE OF ANNUAL MEETING OF STOCKHOLDERS
TO BE HELD ON APRIL 27, 2000
The annual meeting of stockholders of Lund International Holdings, Inc. (the
"Company") will be held at The Hotel Sofitel, 5601 West 78th Street,
Bloomington, Minnesota, on Thursday, April 27, 2000 at 11:00 a.m. Central
Daylight Time, for the following purposes:
1. To set the number of directors at seven.
2. To elect six directors of the Company for the ensuing year.
3. To approve the selection by the Board of Directors of
PricewaterhouseCoopers LLP as the Company's independent accountants for its
2000 fiscal year.
4. To transact such other business as may properly come before the meeting or
any adjournment thereof.
Only stockholders of record shown on the books of the Company at the close of
business on March 10, 2000 will be entitled to vote at the meeting or any
adjournment thereof. Each stockholder is entitled to one vote per share on all
matters to be voted on at the meeting.
You are cordially invited to attend the meeting. Whether or not you plan to
attend the meeting, please sign, date and return your Proxy in the return
envelope provided as soon as possible. Your cooperation in promptly signing and
returning the Proxy will help avoid further solicitation expense to the Company.
This Notice, the Proxy Statement and the enclosed Proxy are sent to you by order
of the Board of Directors.
/s/ Carole B. Grossman
CAROLE B. GROSSMAN
Assistant Corporate Secretary
Date: April 3, 2000
Anoka, Minnesota
2
<PAGE>
LUND INTERNATIONAL HOLDINGS, INC.
- --------------------------------------------------------------------------------
PROXY STATEMENT
FOR ANNUAL MEETING OF STOCKHOLDERS
TO BE HELD APRIL 27, 2000
- --------------------------------------------------------------------------------
INTRODUCTION
Your Proxy is solicited by the Board of Directors of Lund International
Holdings, Inc. (the "Company") for use at the Annual Meeting of Stockholders to
be held on April 27, 2000, at 11:00 a.m., Central Daylight Time, at The Hotel
Sofitel, 5601 West 78th Street, Bloomington, Minnesota, and at any adjournment
thereof, for the purposes set forth in the attached Notice of Annual Meeting.
The cost of soliciting Proxies, including preparing, assembling and mailing the
Proxies and soliciting material, will be borne by the Company. Directors,
officers and employees of the Company may, without compensation other than their
regular compensation, solicit Proxies personally or by telephone.
Any stockholder giving a Proxy may revoke it at any time prior to its use at the
Meeting by giving written notice of such revocation to the Assistant Secretary
of the Company. In the absence of such specification, the Proxies will be voted
in favor of the proposals set forth in the Notice of Annual Meeting and in favor
of the number and slate of directors proposed by the Board of Directors and
listed herein.
The mailing address of the Company's principal executive offices is 911 Lund
Boulevard, Anoka, Minnesota 55303. The Company expects this Proxy Statement and
the related Proxy and Notice of Annual Meeting will first be mailed to
stockholders on or about April 3, 2000.
3
<PAGE>
OUTSTANDING SHARES AND VOTING RIGHTS
The Board of Directors of the Company has fixed March 10, 2000 as the record
date for determining stockholders entitled to vote at the Annual Meeting. At the
close of business on March 10, 2000, 7,874,381 shares of the Company's Common
Stock, 1,493,398 shares of the Company's Class B-1 Common Stock and 167,470.4
shares of the Company's Series B Preferred Stock were issued and outstanding.
The Common Stock is the only outstanding class of voting stock of the Company.
Each share of Common Stock is entitled to one vote on each matter to be voted
upon at the meeting. Holders of the Common Stock are not entitled to cumulative
voting rights in the election of directors.
The affirmative vote of a majority of the shares of Common Stock present, in
person or by proxy, and entitled to vote at the Annual Meeting, is required to
approve the matters mentioned in the foregoing Notice of Annual Meeting. LIH
Holdings, LLC, LIH Holdings II, LLC and LIH Holdings III, LLC own 21.4%, 11.1%
and 17.4%, respectively, of the outstanding shares of Common Stock and have
informed the Board of Directors that they intend to vote in favor of the
proposals. Proxies indicating abstention from a vote and broker non-votes will
be counted toward determining whether a quorum is present at the meeting;
however, abstentions and broker non-votes will not be counted toward determining
if a majority of the shares of Common Stock has voted affirmatively.
The following table provides information concerning the only persons or entities
known to the Company to be beneficial owners of more than five percent (5%) of
the Company's outstanding Common Stock as of March 10, 2000:
4
<PAGE>
PRINCIPAL STOCKHOLDERS
Name and Address of Amount and Nature of
Beneficial Owner Beneficial Ownership(1) Percent of Class
- ---------------- ----------------------- ----------------
LIH Holdings LLC
280 Park Avenue
New York NY 10017 1,686,893(2) 21.4%
LIH Holdings II LLC
280 Park Avenue
New York NY 10017 874,400(2) 11.1%
LIH Holdings III LLC
280 Park Avenue
New York NY 10017 1,368,023(2)(5) 17.4%
Old World Industries, Inc.
4065 Commercial Avenue
Northbrook, IL 60062 656,300(3) 8.3%
Royce & Associates, Inc.
1414 Avenue of the Americas
New York, NY 10019 602,050(4) 7.6%
Liberty Mutual Insurance Company
175 Berkeley Street
Boston, MA 02116 571,429(5) 7.3%
(1) Unless otherwise indicated, the person listed as the beneficial owner of
the shares has sole voting and sole dispositive power over the shares.
(2) Based on a Schedule 13D filed with the Securities and Exchange Commission
by LIH Holdings, LLC ("LIH"), LIH Investors, L.P., LIH Management, L.P.,
LIH, Inc., LIH Holdings II, LLC ("LIH II"), LIH Investors II, L.P., LIH
Management II, L.P., Harvest Partners III, L.P., Harvest Partners III
Beteiligungsgesellschaft Burgerlichen Rechts (Mit Haftungsbeschrankung),
Harvest Associates III, LLC, LIH Holdings III, LLC("LIH III"; LIH, LIH II
and LIH III are hereinafter referred to as "LIH Entities"), LIH Investors
III, L.P., and LIH Management III, L.P., on behalf of themselves,
indicating shared voting and dispositive power with respect to a total of
3,929,316 shares, representing an aggregate of 49.9% of the Common Stock
outstanding. LIH Holdings, LLC holds 1,686,893 shares directly, LIH
Holdings II, LLC holds 874,400 shares directly, and LIH Holdings III, LLC
holds 1,368,023 shares directly. LIH Holdings II, LLC also owns 1,493,398
shares of nonvoting Class B-1 Common Stock and LIH Holdings III, LLC also
owns 148,912 shares of nonvoting Series B Preferred Stock. Pursuant to a
Second Amended and Restated Governance Agreement, dated December 22, 1998,
among the Company, LIH, LIH II and LIH III, until September 9, 2000, the
LIH Entities have agreed that they may not own more than 49.9% of the
Company's Common Stock. At the Company's 1999 Annual Meeting, the
stockholders approved the convertibility of the Series B Preferred Stock.
LIH III owns 1,368,023 shares of Common Stock and 226,935.6 shares of
Series B Preferred Stock. LIH III tendered 78,023.6 shares of Series B
Preferred Stock for conversion to Common Stock on a ten for one basis in
accordance with the Second Amended and Restated Governance Agreement, which
limits the LIH Entities from owning more than 49.9% of the Company's Common
Stock. Other investors have the right to convert 78,336.3 shares of their
Series B Preferred Stock on a ten for one basis into voting Common Stock.
The shares of Common Stock issuable upon the conversion by LIH III (as
limited by the Second Amended and Restated Governance Agreement) are
included in the amounts set forth in the table.
(3) Based on a Schedule 13D filed with the Securities and Exchange Commission
by Old World Industries, Inc., Frederic M. Schweiger, J. Thomas Hurvis,
Riaz H. Waraich, James A. Bryan, Richard J. Jago and Mac M. Churchill, on
behalf of themselves, indicating shared voting and dispositive power.
(4) Based on a Schedule 13G/A filed with the Securities and Exchange Commission
by Royce & Associates, Inc. and Charles M. Royce, on behalf of themselves.
(5) The shares of Common Stock issuable upon conversion by LIH III (as limited
by the Second Amended and Restated Governance Agreement) and the shares of
Common Stock issuable upon conversion by Liberty Mutual Insurance Company
are included in the amounts set forth in the table.
5
<PAGE>
On September 9, 1997, LIH purchased 1,686,893 shares of Common Stock from Allan
W. Lund and certain affiliates and family members of Mr. Lund. On December 30,
1997, LIH II purchased 874,400 shares of Common Stock and 1,493,398 shares of
Series A Preferred Stock from the Company. The Series A Preferred Stock was
converted to Class B-1 Common Stock at the 1998 Annual Stockholders Meeting. On
December 23, 1998, LIH III purchased 587,787 shares of Common Stock and
179,316.6 shares of Series B Preferred Stock from the Company. On January 28,
1999, LIH III purchased an additional 47,619 shares of Series B Preferred Stock
from the Company.
The Second Amended and Restated Governance Agreement
The Amended Agreement provides that the LIH Entities will not, and will not
permit any of their Associates or Affiliates (as defined in the Amended
Agreement), to beneficially own collectively more than 3,306,792 shares (the
"Permitted Shares") of the Company's voting Common Stock until the expiration of
the Amended Agreement in September 2000 or its earlier termination in accordance
with its terms; provided, however, that this restriction will not apply in the
event of a tender or exchange offer for 50% or more of the total outstanding
voting securities of the Company that is initiated by a party other than the
Company, the LIH Entities, any of their Affiliates or Associates, or any person
acting in concert with the LIH Entities or any of their Affiliates or
Associates. The number of Permitted Shares will be increased to include the
number of shares of Common Stock into which the shares of Class B-1 Common Stock
and Series B Preferred Stock are ultimately converted, if and when such shares
of Class B-1 Common Stock and Series B Preferred Stock are converted. The
Amended Agreement also provides that the Company can issue additional shares of
its Common Stock directly to the LIH Entities or their Affiliates or Associates
with the approval of a majority of the Company's Independent Directors. In
addition, the Amended Agreement provides that, prior to its termination, the LIH
Entities, and each Affiliate or Associate thereof which acquires shares of the
Company's Common Stock pursuant to the terms of the Amended Agreement, will not
transfer beneficial ownership of such shares to any other Affiliate or Associate
unless it becomes a signatory to the Amended Agreement.
The Amended Agreement provides that the number of directors comprising the
Company's Board of Directors will be seven, including one individual nominated
by LIH; one individual nominated by LIH II; the Company's Chief Executive
Officer; and four Independent Directors. The LIH Entities have waived the
provision requiring seven directors with respect to the election of directors at
the Meeting, but the Company will continue to search for a qualified director to
add to the Board.
The Amended Agreement also provides that, during its term, the Company and the
LIH Entities will use their best efforts to cause the composition of the
Company's Board of Directors to continue to reflect the same proportion of
directors set forth above. In the event that the aggregate number of shares of
the Company's Common Stock owned by the LIH Entities and any of their Affiliates
or Associates falls below 50% of the number of shares of such stock originally
acquired by LIH, LIH and LIH II's right to nominate one individual to the
Company's Board of Directors terminates. If the holdings of the LIH Entities in
the Company fall below 5% of the number of shares of the Company's Common Stock,
LIH and LIH II's right to nominate an individual to the Company's Board of
Directors terminates.
Finally, the Amended Agreement provides that approval by the Company's Board of
Directors of certain corporate transactions requires the affirmative vote of a
majority of directors, which majority includes the LIH II Director. Such matters
include, but are not limited to, the following: (i) any amendment to the
Certificate of Incorporation or Bylaws of the Company; (ii) any acquisition of
another business; (iii) any extraordinary sale, lease, transfer or other
disposition of the Company's assets, the book value of which exceeds 2% of the
consolidated assets of the Company; (iv) any reclassification, combination,
split or similar event involving any debt or equity securities of the Company;
(v) any declaration or payment of any dividend or distribution with respect to
shares of the Company's capital stock; and (vi) any incurrence of indebtedness
not in the ordinary course of the Company's business, if the aggregate amount of
such indebtedness, on a consolidated basis, exceeds $5,000,000.
The Amended Agreement terminates on September 9, 2000.
6
<PAGE>
MANAGEMENT STOCKHOLDINGS
The following table sets forth the number of shares of the Company's Common
Stock beneficially owned by each director and nominee for director, each
executive officer named in the Summary Compensation Table and by all directors,
nominees and executive officers as a group, as of March 10, 2000:
Name of Persons Amount and Nature of
Identity of Group Beneficial Ownership(1) Percent of Class
- ----------------- ----------------------- ----------------
David E. Dovenberg 12,300(2) **
Ira D. Kleinman 3,937,316(3) 49.9%
Robert R. Schoeberl 12,000(4) **
Dennis W. Vollmershausen 83,000(5) **
Harvey J. Wertheim 3,937,316(3) 49.9%
Lawrence C. Day 8,000(6) **
Kenneth L. Holbrook 16,500(7) **
Stephen S. Treichel 24,000(8) **
All directors, nominees and
executive officers as a group (9 persons) 4,099,116(9) 51.1%
** less than 1%
(1) Unless otherwise indicated, the person listed as the beneficial owner of
the shares has sole voting and sole investment power over the shares.
(2) Includes options to purchase 10,000 shares, 2,000 of which are exercisable
at $13.875 per share, 2,000 of which are exercisable at $11.25 per share,
2,000 of which are exercisable at $11.375 per share, 2,000 which are
exercisable at $7.25 per share, 2,000 which are exercisable at $5.875 per
share and 2,300 shares of common stock.
(3) Includes options to purchase 8,000 shares, 2,000 of which are exercisable
at $13.875 per share, 2,000 of which are exercisable at $11.375 per share,
2,000 which are exercisable at $7.25 per share and 2,000 which are
exercisable at $5.875 per share. Messrs. Wertheim and Kleinman are
affiliates of the LIH Entities. LIH holds 1,686,893 shares directly, LIH II
holds 874,400 shares directly and LIH III holds 587,787 shares directly.
LIH II also owns 1,493,398 shares of nonvoting Class B-1 Common Stock and
LIH III also owns 148,912.0 shares of nonvoting Series B Preferred Stock.
(4) Includes options to purchase 10,000 shares, 2,000 of which are exercisable
at $11.50 per share, 2,000 of which are exercisable at $11.25 per share,
2,000 of which are exercisable at $11.375 per share, 2,000 which are
exercisable at $7.25 per share, 2,000 which are exercisable at $5.875 per
share and 2,000 shares of common stock.
(5) Consists of options to purchase 54,000 shares, 2,000 of which are
exercisable at $14.00 per share, 2,000 of which are exercisable at $11.375
per share, 50,000 shares which are exercisable at $6.125 per share and
29,000 shares of common stock.
(6) Consists of options to purchase 8,000 shares, 2,000 of which are
exercisable at $13.875 per share, 2,000 of which are exercisable at $11.375
per share, 2,000 which are exercisable at $7.25 per share and 2,000 of
which are exercisable at $5.875 per share.
(7) Consists of options to purchase 16,000 shares, which are exercisable at
$13.00 per share and 500 shares of common stock.
(8) Consists of options to purchase 24,000 shares, which are exercisable at
$13.875 per share.
(9) Notes 2-8 are incorporated herein by reference. Includes options to
purchase 144,000 shares of Common Stock.
7
<PAGE>
ELECTION OF DIRECTORS
PROPOSAL 1.
The Bylaws of the Company provide that the number of directors shall be
determined by the stockholders at each annual meeting. The Board of Directors
recommends that the number of directors be set at seven (7). Each Proxy will be
voted for or against such number or not voted at all as directed in the Proxy.
The adoption of the resolution to set the number of directors requires the
affirmative vote of a majority of the shares represented in person or by Proxy
at the meeting.
PROPOSAL 2.
In the election of directors, each Proxy will be voted for each of the nominees
listed herein unless the Proxy withholds a vote for one or more of the nominees.
Each person elected as a director shall serve for a term of one year and until
his successor is duly elected and qualified. All of the nominees are members of
the present Board of Directors. If any of the nominees should be unable to serve
as a director by reason of death, incapacity or other unexpected occurrence, the
Proxies solicited by the Board of Directors shall be voted by the Proxy
representative for such substitute nominee as is selected by the Board or, in
the absence of such selection, for such fewer number of directors as results
from such death, incapacity or other unexpected occurrence. The election of each
nominee requires the affirmative vote of a majority of the shares represented in
person or by Proxy at the meeting.
The Board of Directors has proposed a slate of six nominees. It intends to
identify a seventh nominee and, through Board action, to elect such person to
the vacant director position. The composition of the Company's Board of
Directors is subject to the Amended Agreement. The Amended Agreement provides
that LIH, LIH II, LIH III and the Company shall use their best efforts to
maintain a seven-member Board of Directors, consisting of one LIH director
(Mr.Kleinman); one LIH II director (Mr. Wertheim); the Company director (Mr.
Vollmershausen, Chief Executive Officer); and four independent directors
(currently, Messrs. Day, Dovenberg, and Schoeberl).
The following table provides certain information with respect to the nominees
for director:
<TABLE>
<CAPTION>
Current Position(s) Director Principal Occupation(s) During
Name of Nominee Age with Company Since The Past Five Years
- --------------- --- ------------ ----- -------------------
<S> <C> <C> <C> <C>
Lawrence C. Day 50 Director 1997 Chief Operating Officer of TBC Corp., a
distributor of tires to the automotive
industry, since April 1998; Chief Executive
Officer and Director of Monroe Muffler and
Brake, an auto service retailer, from July
1993 to March 1998.
David E. Dovenberg 55 Director 1994 Chief Financial Officer of Universal
Hospital Services, a provider of movable
medical equipment through Pay-Per-Use
Equipment Management Programs, from
May 1988 to March 1998, then Chief
Executive Officer.
Ira D. Kleinman 43 Director 1997 General Partner of Harvest Partners, Inc., a
private equity investment firm, since 1982.
Robert R. Schoeberl 64 Director 1997 Retired executive of Montgomery Ward
since 1994, where he spent 35 years.
Member of the Board of Directors of the
Automotive Foundation for the Aftermarket
and member of the Automotive Parts and
Accessories Association.
</TABLE>
8
<PAGE>
<TABLE>
<S> <C> <C> <C> <C>
Dennis W. Vollmershausen 56 Director, 1997 President and Chief Executive Officer of
President and Lund International Holdings, Inc. and its
Chief Executive subsidiaries since October 1998; Chairman
Officer of the Board of London Machinery, Inc., an
equipment manufacturing company, since January
1990; Executive Vice President of Champion
Road Machinery Limited, a construction
equipment manufacturing company, from August
1996 to June 1997 and, from June 1997 to
August 1998, President and Chief Executive
Officer.
Harvey J. Wertheim 60 Director 1997 Chief Executive Officer of Harvest Partners,
Inc., a private equity investment firm, since
1981.
</TABLE>
COMMITTEE AND BOARD MEETINGS
The Company's Board of Directors has an Audit Committee which reviews with the
Company's independent accountants, the annual financial statements and the
results of the annual audit. The Audit Committee members currently are David E.
Dovenberg, Robert R. Schoeberl and Harvey J. Wertheim. The Audit Committee met
four times during the year ended December 31, 1999.
The Company's Board of Directors has a Compensation Committee which makes
recommendations to the Board of Directors as to (i) the salaries of certain
executive officers and (ii) bonuses and other incentive arrangements. It also
reviews and approves, or makes recommendations to the Board of Directors on, any
proposed plan or program for the benefit of any of the Company's executive
officers. The Compensation Committee members currently are Robert R. Schoeberl,
Lawrence C. Day and David E. Dovenberg. The Compensation Committee met three
times during the year ended December 31, 1999.
The Board does not have a nominating committee.
During the year ended December 31, 1999, the Board held four meetings. Each
incumbent director attended 75% or more of the meetings of the Boards and of the
meetings of Committees of which he was a member.
CERTAIN TRANSACTIONS
Messrs. Kleinman and Wertheim are affiliates of Harvest Partners, Inc.
("Harvest"), which has performed various financial advisory and investment
banking services for the Company pursuant to the terms of a Services Agreement,
dated as of September 9, 1997. In 1999, payment by the Company to Harvest
pursuant to the Services Agreement totaled $287,500, plus payment by the Company
to Harvest for the reimbursement of certain travel and other expenses incurred
on behalf of the Company.
SECTION 16(a) BENEFICIAL OWNERSHIP REPORTING COMPLIANCE
Section 16(a) of the Securities Exchange Act of 1934 (the "Exchange Act")
requires the Company's directors and executive officers and persons who own more
than ten percent of a registered class of the Company's equity securities, to
file with the Securities and Exchange Commission ("SEC") initial reports of
ownership and changes in ownership of Common Stock and other equity securities
of the Company. Officers, directors and greater than ten percent stockholders
are required by SEC regulation to furnish the Company with all Section 16(a)
forms they file.
9
<PAGE>
To the Company's knowledge, based solely on review of the copies of such reports
furnished to the Company and written representation that no other reports were
required, all Section 16(a) filing requirements applicable to officers,
directors and greater than ten percent stockholders were satisfied for the year
ended December 31, 1999.
EXECUTIVE OFFICERS AND KEY EMPLOYEES
The executive officers and key employees of the Company as of March 10, 2000 are
as follows:
DENNIS W. VOLLMERSHAUSEN, 56, joined the Company in October 1998 as President
and Chief Executive Officer. From August 1996 to June 1997, Mr. Vollmershausen
was the Executive Vice President of Champion Road Machinery, Ltd., a
manufacturer of construction equipment and from June 1997 to August 1998 was
President and Chief Executive Officer. Since January 1990, Mr. Vollmershausen
has also served as Chairman of London Machinery, Inc., a manufacturer of transit
mixers.
JAMES P. CHICK, 44, joined the Company in March 1998, following the acquisition
of Deflecta-Shield Corporation. In July 1999, he was appointed Vice President of
Smittybilt, Inc. Mr. Chick was appointed President of Trailmaster Products,
Inc., the Company's Suspension Division, in February 1996, a position he
continues to hold. From July 1994 until February 1996, he was the Marketing
Manager of Mr. Gasket Co., a performance automotive parts company.
JOHN A. DANIELS, 63, joined the Company in March 1998, following the acquisition
of Deflecta-Shield Corporation, as the President of Belmor Autotron, the Heavy
Truck Division of the Company. From June 1990 until January 1996, he was the
Vice President and General Manager of Belmor Autotron, a subsidiary of
Deflecta-Shield and in January 1996 he was named President.
CAROLE B. GROSSMAN, 49, joined the Company in 1990 as Corporate Counsel on a
part-time basis, and was named full-time Corporate Counsel in September 1999.
Prior to her full-time appointment, Ms. Grossman also worked as an attorney for
Grossman & Millard and in 1997 she was hired by Burk & Seaton, P.A. Both law
firms exclusively represent corporations and other business entities for
employment and labor law matters.
KENNETH L. HOLBROOK, 44, joined the Company in March 1998 as Vice President of
Sales and in June 1999, was named President of the Light Truck Division. From
February 1992 until February 1998, Mr. Holbrook was the Vice President of OEM
and Aftermarket Sales for Bestop, Inc., a manufacturer of sport utility vehicle
soft and hard top systems, associated accessories and seating systems.
EDMUND J. SCHWARTZ, 50, joined the Company in August 1999 as its Chief Financial
Officer. Prior to joining the Company, Mr. Schwartz was with Electrolux
Corporation, a manufacturer of floor care products from 1984 to 1999 and served
as its Chief Financial Officer from 1990 to 1999.
STEPHEN S. TREICHEL, 55, joined the Company in October 1995 as Vice President of
Information Systems. From 1993 to October 1995, Mr. Treichel was the President
of Process Management International, a management consulting firm.
J. TIMOTHY YUNGERS, 43, joined the Company in September 1998 as Director of
Human Resources and in March 1999 was named Vice President of Human Resources.
From November 1995 to September 1998, Mr. Yungers was the Director of Human
Resources for Century Circuits & Electronics, Inc., a manufacturer of flexible
circuit boards. From 1988 to 1990, Mr. Yungers was the Assistant Controller for
Anagram, International, Inc., a manufacturer of consumer products and industrial
packaging and, from 1990 to 1995, he was the Manager of Human Resources.
10
<PAGE>
COMPENSATION OF EXECUTIVE OFFICERS
The following summary Compensation Table shows certain compensation information
for the Chief Executive Officer and other executive officers that received total
annual salary and bonuses in excess of $100,000 in the year ended December 31,
1999. This information includes the dollar value of base salaries and bonus
awards and certain other compensation, if any. The Company changed its fiscal
year end from June 30 to December 31 of each year, beginning December 31, 1997.
Information is provided for the calendar years ended December 31, 1999, 1998 and
1997.
<TABLE>
<CAPTION>
Restricted Securities All Other
Name and Principal Salary Bonus Stock Underlying Compensation
Position at 12/31/99 Year ($) ($) Awards($) Options/SARs(#) ($)
- -------------------- ---- --- --- --------- --------------- ---
<S> <C> <C> <C> <C> <C> <C>
Dennis W. Vollmershausen 1999 250,000 -- --
President and Chief 1998 62,664 (1) -- -- 250,000
Executive Officer
Kenneth L. Holbrook 1999 158,823 -- -- 43,000
President Light Truck 1998 126,973 (3) -- -- 40,000 51,066 (2)
Division
John A. Daniels 1999 132,000 28,000 (5) -- 30,000 10,957 (4)
President Heavy Truck 1998 131,308 272,500 (6) -- 30,000 1,154 (4)
Division 1997 121,923 40,000 (7) -- --
Richard A. Tucker 1999 133,762 232,857 (5) -- 48,000 --
General Manager -
Auto Ventshade Company
James S. Scarborough 1999 133,762 232,857 (5) -- 48,000 --
Vice President Sales and
Marketing - Auto Ventshade Company
</TABLE>
(1) Mr. Vollmershausen joined the Company in October 1998.
(2) The Company reimbursed Mr. Holbrook the amount shown with respect to moving
and relocation expenses.
(3) Mr.Holbrook joined the Company in March 1998.
(4) Amounts paid as a car allowance.
(5) The bonus amount shown was earned in 1998, but paid in 1999.
(6) The bonus amount shown relates to a payment associated with the sale of
Deflecta-Shield Corporation of which Mr. Daniels was President prior to the
Lund acquisition.
(7) The bonus amount shown was earned in 1996, but paid in 1997 when Mr.
Daniels was an employee of Deflecta-Shield Corporation.
DIRECTOR COMPENSATION
In 1999, all non-employee directors (with the exception of Messrs. Kleinman and
Wertheim, who received only the reimbursement of their out-of-pocket expenses)
received $2,500 per quarter, $700 per meeting attended in person, $300 per
meeting attended telephonically and $500 per committee meeting attended in
person, in addition to out-of-pocket expenses incurred on behalf of the Company.
Directors who served on the last day of a fiscal year received options to
purchase 2000 common shares, at the fair market value on the date of grant.
EMPLOYMENT AND SEVERANCE
AGREEMENTS
EMPLOYMENT, SEVERANCE AND NON-COMPETE AGREEMENTS
The Company has employment agreements with Dennis W. Vollmershausen, Kenneth L.
Holbrook, John A. Daniels, Richard A. Tucker, and James S. Scarborough. The
agreements include certain non-disclosure
11
<PAGE>
provisions and provide that if the Company terminates the employee without
cause, the employee under certain conditions may be entitled to a payment equal
to between six and twelve months' base salary. Mr. Vollmershausen's compensation
package is detailed in the Compensation Committee Report, below.
In connection with the commencement of his service as Vice President of Sales,
Mr. Holbrook and the Company entered into an Employment Agreement dated February
10, 1998 (the "Holbrook Employment Agreement"). The Holbrook Employment
Agreement provides for (i) a base salary of $150,000 per annum; (ii) an annual
bonus in accordance with the Company's Short Term Incentive Plan for each year,
as approved by the Company's Board of Directors; (iii) three weeks of paid
vacation per annum; (iv) participation in the Company's employee benefit plans
as applicable to its executive officers; (v) an automobile allowance in
accordance with the Company's regular policy for senior executive officers; (vi)
reimbursement for relocation expenses in accordance with the Company's
relocation policy; and (vii) a grant of options to purchase 40,000 shares of
Company Common Stock at fair market value in accordance with the terms and
conditions of the Company's Plan.
In connection with his employment by Belmor Autotron, a wholly owned subsidiary
of the Company, Mr. John Daniels, President of Belmor Autotron, entered into an
Employment Agreement dated March 10, 1998 (the "Daniels Employment Agreement"),
after the Company acquired Deflecta-Shield Corporation. The Daniels Employment
Agreement provides for (i) base salary of $132,000 per annum; (ii) an annual
bonus in accordance with the Company's Short Term Incentive Plan for each year,
as approved by the Company's Board of Directors; (iii) four weeks of paid
vacation per annum; (iv) participation in the Company's employee benefit plans
as applicable to its executive officers; and (v) a grant of options to purchase
30,000 shares of Company Common Stock at fair market value in accordance with
the terms and conditions of the Company Plan.
In connection with his employment with Auto Ventshade Company, a wholly owned
subsidiary of the Company, Mr. Richard Tucker, General Manager for Auto
Ventshade Company, entered into an Employment Agreement dated July 1, 1998 (the
"Tucker Employment Agreement"). The Tucker Employment Agreement provides for (i)
a base salary of $115,000 per annum; (ii) a potential annual bonus; (iii)
vacation benefits in accordance with the terms and conditions of the Auto
Ventshade Company vacation policy; (iv) participation in Auto Ventshade
Company's employee benefits plans with the payment of up to $10,000 annually in
non-reimbursed medical expenses; (v) a vehicle, including all related expenses;
and (vi) an annual physical exam.
In connection with his employment with Auto Ventshade Company, a wholly owned
subsidiary of the Company, Mr. James S. Scarborough, Vice President of Sales and
Marketing for Auto Ventshade Company, entered into an Employment Agreement dated
July 1, 1998 (the "Scarborough Employment Agreement"). The Scarborough
Employment Agreement provides for (i) a base salary of $115,000 per annum; (ii)
a potential annual bonus; (iii) vacation benefits in accordance with the terms
and conditions of the Auto Ventshade Company vacation policy; (iv) participation
in Auto Ventshade Company's employee benefits plans with the payment of up to
$10,000 annually in non-reimbursed medical expenses; (v) a vehicle, including
all related expenses; and (vi) an annual physical exam.
NON-COMPETE AGREEMENTS
Mr. Asa Phillips, former President and CEO of the Auto Ventshade Company, has a
non-compete agreement with the Auto Ventshade Company which has a term of five
years beginning January 1, 2000. In accordance with this agreement, Mr. Phillips
is to receive $675,000 in equal quarterly installments of $33,750 over the
five-year term. Also as part of this agreement Mr. Phillips is entitled medical
insurance in accordance with his coverage prior to his retirement during the
five-year term of this agreement.
12
<PAGE>
AGGREGATED OPTION EXERCISES IN LAST FISCAL YEAR AND
FISCAL YEAR END OPTION VALUES
<TABLE>
<CAPTION>
Number of Securities Value of Unexercised
Value Underlying Unexercised in-the-Money Options
Shares Acquired Realized Options at Fiscal Year End(#) at Fiscal Year-End($)
Name on Exercise(#)(1) ($)(1) Exercised/Unexercisable Exercisable/Unexercisable(2)
- ---- ----------------- ------ ----------------------- ----------------------------
<S> <C> <C> <C> <C>
Dennis W. Vollmershausen -- -- 54,000 exercisable --
200,000 unexercisable --
Kenneth L. Holbrook -- -- 8,000 exercisable --
75,000 unexercisable --
Edmund J. Schwartz -- -- 0 exercisable --
70,000 unexercisable --
John A. Daniels -- -- 6,000 exercisable --
54,000 unexercisable --
Richard A. Tucker -- -- 0 exercisable --
48,000 unexercisable --
James S. Scarborough -- -- 0 exercisable --
48,000 unexercisable --
Stephen S. Treichel -- -- 24,000 exercisable --
18,000 unexercisable --
</TABLE>
(1) No options were exercised by the named executive officers in the year ended
December 31, 1999.
(2) As of December 31, 1999, none of such options were in-the-money.
- --------------------------------------------------------------------------------
COMPENSATION COMMITTEE REPORT
- --------------------------------------------------------------------------------
The Compensation Committee of the Company's Board of Directors, which is
composed entirely of independent, outside directors, establishes the general
compensation policies of the Company and specific compensation for each
executive officer of the Company. The Compensation Committee intends to
undertake a comprehensive review of the Company's compensation policies in 2000,
including review of executive compensation levels, review of the short term
bonus plan and the development of a comprehensive option grant program.
There are three major current components of the Company's compensation program:
Base Salary, Short Term Incentive Awards and Long Term Incentive Compensation.
BASE SALARY
A competitive base salary is vital to support the philosophy of management
development and career orientation of executives and is consistent with the
long-term nature of the Company's business.
Salary levels and adjustments to salaries are a result of competitive
positioning (how the Company's salary structure for comparable positions
compares with that of other companies), individual annual reviews, as well as
business performance and general economic factors. There is no specific
weighting of these factors. The Compensation Committee believes that the base
salaries of the Company's executive officers are competitive. Executive officers
receive an annual performance review and, based upon such review, may receive an
adjustment in base salary.
13
<PAGE>
SHORT TERM INCENTIVE AWARDS
Short-term incentive awards to executives are granted in cash pursuant to the
Company's Short Term Incentive Plan, which recognizes each executive's
contributions to the business. The Short Term Incentive Plan, which is adopted
annually, sets profitability goals at both minimum and maximum levels.
In adopting the Short Term Incentive Plan, the Compensation Committee considered
several factors, including the Company's competitive position, the risks and
rewards inherent in expanding the Company's product offering and any improvement
in the Company's performance.
The specific bonus an executive receives is primarily dependent on individual
business unit performance. While assessment of an individual's relative
performance is made annually based on a number of factors which include
initiative, business judgment, technical expertise and management skills, the
Company's philosophy has been that all executive officers should be focused on
the business unit's performance. The Company believes qualities such as team
building, rather than particularism, should be rewarded.
Cash awards earned in the Company's 1999 Short Term Incentive Plan were accrued
for at year end and will be paid in the first quarter of 2000 upon completion of
audited financial statements. There was $1,118,348 accrued for under the
Company's Short Term Incentive Plan for 1999 to be paid in the first quarter of
2000. Under the plan, Messrs. Daniels, Tucker and Scarborough will be paid
$15,700, $134,380 and $134,380, respectively.
LONG TERM INCENTIVE COMPENSATION
Aligning the interests of the Company's executive officers with those of the
stockholders is accomplished through stock options, which provide longer-term
incentives directly related to improvement in long-term stockholder value. The
Compensation Committee believes that it is important for the Company's executive
officers to focus not just on short term achievements, but on the long term
financial health and development of the Company. Accordingly, 498,500 options
were granted under the employee stock option plan in the year ended December 31,
1999, of which, 169,000 were granted to five executive officers as follows:
Kenneth Holbrook, 43,000; John Daniels, 30,000; Richard Tucker, 48,000; and
James S. Scarborough, 48,000.
MR. VOLLMERSHAUSEN'S COMPENSATION
In connection with the commencement of his service as President and Chief
Executive Officer of the Company, the Compensation Committee recommended, and
the Board of Directors approved, a compensation package for Mr. Vollmershausen
which consists of the following provisions: (i) a three year term ("initial
term") with a base salary of $250,000 which may be increased at any time during
his employment term by approval by the Board of Directors; (ii) an annual bonus
which shall not be less than an amount equal to 10% of Mr. Vollmershausen's base
salary based upon certain minimum financial results achieved by the Company;
(iii) four weeks of paid vacation per year; (iv) participation in the Company's
employee benefit plans as applicable to its executive officers, with the Company
paying all premiums, co-payments and deductible expenses; (v) an automobile
allowance in accordance with the Company's regular policy for senior executive
officers; (vi) reimbursement for the costs of complete annual physical
examinations; (vii) reimbursement for the cost of preparing his income tax
returns for the U.S. and Canada, where Mr. Vollmershausen is a resident, and
one-time fees for estate planning consultation as a result of his U.S. and
Canadian tax status; (viii) the rental expense for a period of six months for
the use of an apartment in Minnesota; and (ix) a grant of options to purchase
250,000 shares of Company Common Stock at fair market value, as defined in the
Company's 1998 Stock Option Incentive Plan. Mr. Vollmershausen's employment
agreement also contains certain confidentiality and non-competition
restrictions. At the end of the initial term, the employment agreement will be
renewed automatically for successive periods of one (1) year.
In addition, the agreement provides that upon termination of Mr.
Vollmershausen's employment, other than by reason of his voluntary resignation,
non-renewal of his employment agreement or termination for Cause (as defined in
his agreement), he will be paid severance equal to his base salary for the
greater of the 12 month period
14
<PAGE>
immediately following the termination date, or the remainder of the initial term
or renewal term of the agreement. After reviewing local, regional and national
compensation ranges for Chief Executives Officers of similarly sized companies,
the Compensation Committee determined that Mr. Volmershausen's 1999 base salary
was competitive.
Robert R. Schoeberl, Chairman
Lawrence C. Day
David E. Dovenberg
- --------------------------------------------------------------------------------
SHARE INVESTMENT PERFORMANCE
- --------------------------------------------------------------------------------
The following graph shows changes over the past five-year period in the value of
$100 invested in (1) the Company's Common Stock; (2) The NASDAQ Index; and (3)
an industry group consisting of 54 companies (including the Company) with the
same Standard Industrial Classification Code as the Company.
The year-end values of each investment are based on share price appreciated plus
dividends paid in cash, assuming the reinvestment of dividends. The calculations
exclude trading commissions and taxes.
COMPARE 5-YEAR CUMULATIVE TOTAL RETURN
AMONG LUND INTERNATIONAL HOLDINGS, INC.,
NASDAQ MARKET INDEX AND SIC CODE INDEX
[PLOT POINTS CHART]
FISCAL YEAR ENDING
<TABLE>
<CAPTION>
COMPANY/INDEX/MARKET 12/30/94 12/29/95 12/31/96 12/31/97 12/31/98 12/31/99
- -------------------- -------- -------- -------- -------- -------- --------
<S> <C> <C> <C> <C> <C> <C>
Lund Intl Holdings 100.00 72.73 74.24 71.97 51.52 35.61
Motor Vehicle Parts 100.00 109.70 135.35 174.85 174.25 141.01
NASDAQ Market Index 100.00 129.71 161.18 197.16 278.08 490.46
</TABLE>
ASSUMES $100 INVESTED ON JAN. 01,1995
ASSUMES DIVIDEND REINVESTED
FISCAL YEAR ENDING DEC. 31, 1999
15
<PAGE>
RATIFICATION OF SELECTION OF INDEPENDENT ACCOUNTANTS
PROPOSAL 3.
Subject to approval by the stockholders, the Board of Directors has selected the
firm of PricewaterhouseCoopers LLP as the Company's independent accountants for
the current year. PricewaterhouseCoopers LLP has served as the Company's
independent accountants since 1996.
Representatives of PricewaterhouseCoopers LLP are expected to be present at the
Annual Meeting. They will have the opportunity to make a statement if they
desire to do so and will also be available to respond to appropriate questions
from stockholders.
If the stockholders do not approve the selection of PricewaterhouseCoopers LLP
as the Company's independent accountants, the selection of such auditors will be
reconsidered by the Board of Directors.
THE BOARD OF DIRECTORS RECOMMENDS THAT THE STOCKHOLDERS VOTE FOR THE APPROVAL OF
THE SELECTION OF PRICEWATERHOUSECOOPERS LLP TO SERVE AS THE COMPANY'S
INDEPENDENT ACCOUNTANTS FOR THE CURRENT FISCAL YEAR. THE AFFIRMATIVE VOTE OF A
MAJORITY OF THE SHARES REPRESENTED IN PERSON OR BY PROXY AT THE ANNUAL MEETING
IS REQUIRED FOR APPROVAL.
STOCKHOLDER PROPOSALS
Any appropriate proposal submitted by a stockholder of the Company and intended
to be presented at the 2001 Annual Meeting must be received by the Company at
its office by December 7, 2000, to be considered for inclusion in the Company
proxy statement and related proxy for the 2001 Annual Meeting.
OTHER BUSINESS
The Board of Directors knows of no other matters to be presented at the meeting.
If any other matter does properly come before the meeting, the appointees named
in the Proxies will vote the Proxies in accordance with their best judgment.
ANNUAL REPORT
A copy of the Company's Annual Report on Form 10-K for the year ended December
31, 1999, including financial statements, accompanies this Notice of Annual
Meeting and Proxy Statement. No portion of the Annual Report is incorporated
herein or is to be considered proxy-soliciting material, except for such
financial statements.
REQUESTS SHOULD BE SENT TO THE ASSISTANT CORPORATE SECRETARY, LUND INTERNATIONAL
HOLDINGS, INC., 911 LUND BOULEVARD, ANOKA, MINNESOTA 55303.
Dated: April 3, 2000
Anoka, Minnesota
<PAGE>
THIS PROXY IS SOLICITED ON BEHALF OF THE BOARD OF DIRECTORS OF
LUND INTERNATIONAL HOLDINGS, INC.
ANNUAL MEETING OF STOCKHOLDERS, APRIL 27, 2000
The undersigned hereby appoints Edmund J. Schwartz and Carole B. Grossman, or
either of them, the attorneys and proxies of the undersigned, with full power of
substitution, to attend the annual meeting of stockholders of Lund International
Holdings, Inc., a Delaware corporation, (hereinafter referred to as the
"Company"), to be held on Thursday, April 27, 2000 at 11:00 a.m., Central
Daylight Time, and any adjournment thereof, and thereat to vote the
undersigned's shares in the Company.
(Continued, and to be signed, on reverse side)
[ARROW] FOLD AND DETACH HERE [ARROW]
<PAGE>
THIS PROXY, WHEN PROPERLY EXECUTED, WILL BE VOTED IN THE Please mark
MANNER SPECIFIED HEREIN BY THE UNDERSIGNED STOCKHOLDER. IF your votes as [X]
NO SPECIFICATION IS MADE, THIS PROXY WILL BE VOTED FOR indicated in
PROPOSALS 1-3. this example
THE BOARD OF DIRECTORS RECOMMENDS THAT YOU VOTE "FOR" THE FOLLOWING PROPOSALS:
1. TO SET THE NUMBER OF DIRECTORS 2. ELECTION OF DIRECTORS:
AT SEVEN (7):
FOR all nominees listed WITHHOLD AUTHORITY
(except as marked to vote for all
FOR AGAINST ABSTAIN to the contrary) nominees listed
[ ] [ ] [ ] [ ] [ ]
3. TO APPROVE THE SELECTION OF PRICEWATERHOUSECOOPERS LLP AS
THE COMPANY'S INDEPENDENT ACCOUNTANTS.
FOR AGAINST ABSTAIN
[ ] [ ] [ ]
To elect Ira D. Kleinman, David E. Dovenberg, Robert R. Schoeberl,
Dennis W. Vollmershausen, Harvey J. Wertheim and Lawrence C. Day
(INSTRUCTION: To withhold authority to vote for any individual nominee, write
that nominee's name in the space provided below.)
- --------------------------------------------------------------------------------
In their discretion, the Proxies are authorized to vote upon such other business
as may properly come before the meeting.
The undersigned hereby acknowledges receipt of Notice of said Annual Meeting and
the accompanying Proxy Statement, for the year 2000.
Please mark, sign, date and return the Proxy Card promptly using the enclosed
envelope.
SIGNATURE________________________SIGNATURE________________________DATE__________
Please sign exactly as name appears hereon. When shares are held by joint
tenants, both should sign. When signing as attorney, executor, administrator,
trustee, or guardian, please give full title as such. If a corporation, please
sign in full corporate name by President or other authorized officer. If a
partnership, please sign in partnership name by authorized person.
[ARROW] FOLD AND DETACH HERE [ARROW]
