SCHEDULE 14A
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 a Party other than the Registrant: [ ]
Check the appropriate box:
[ ] Preliminary Proxy Statement
[ ] Confidential, For use of the Commission Only (as permitted by
Rule 14a-6 (e)(2))
[X] Definitive Proxy Statement
[ ] Definitive Additional Materials
[ ] Soliciting Material Pursuant to Section 240.14a-11 (c) or
Section 240.14a-12
SHELTER COMPONENTS CORPORATION
(Name of Registrant As Specified In Its Charter)
Payment of Filing Fee (Check the appropriate box):
[X] $125 per Exchange Act Rules 0-11 (c) (1) (ii), 14a-6 (i) (1), or
14a-69(j) (2) or Item 22 (a) (2) of Schedule 14a.
[ ] $500 per each party to the controversy pursuant to Exchange Act Rule
14a-6-(i) (3).
[ ] Fee computed on table below per Exchange Act Rules 14a-6-(i) (4) 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 transactions:
(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
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<PAGE>
SHELTER COMPONENTS CORPORATION
2831 Dexter Drive
Elkhart, Indiana 46514
NOTICE OF 1996 ANNUAL MEETING OF SHAREHOLDERS
To Be Held May 30, 1996
To the Shareholders of SHELTER COMPONENTS CORPORATION:
Notice is hereby given that the 1996 Annual Meeting of the Shareholders of
Shelter Components Corporation will be held at The Varsity Clubs of America
Hotel, 3800 North Main Street, Mishawaka, Indiana on Thursday, May 30, 1996 at
9:00 a.m. local time, for the following purposes:
1. To elect a class of four Class C directors to serve for a term of three
years;
2. To approve an amendment to the Corporation's Key Employee Stock Incentive
Plan, to increase the number of shares authorized for issuance thereunder
by 164,062 shares from 585,938 to 750,000;
3. To consider and ratify the selection by the Board of Directors of Price
Waterhouse LLP as certified public accountants for the Corporation for the
fiscal year ending December 31, 1996; and
4. To transact any other business that may properly come before the Meeting
and any adjournments thereof.
The Board of Directors has fixed the close of business on April 22, 1996 as
the record date for determination of shareholders entitled to notice of and
to vote at the Meeting and any adjournments thereof. A list of shareholders
entitled to vote at the meeting will be available for examination for any
purpose germane to the meeting in the Office of the Secretary of the
Corporation for a period of at least ten days prior to the meeting.
By order of the Board of Directors
/s/Mark C. Neilson
Mark C. Neilson
Secretary/Treasurer
April 25, 1996
SHAREHOLDERS WHO DO NOT EXPECT TO BE PRESENT AT THE MEETING IN
PERSON ARE URGED TO COMPLETE, DATE, SIGN AND RETURN THE ENCLOSED
PROXY IN THE ACCOMPANYING ENVELOPE, WHICH REQUIRES NO POSTAGE IF
MAILED IN THE UNITED STATES.
<PAGE>
SHELTER COMPONENTS CORPORATION
2831 Dexter Drive
Elkhart, Indiana 46514
PROXY STATEMENT
For
ANNUAL MEETING OF SHAREHOLDERS
To Be Held May 30, 1996
This Proxy Statement is being mailed on or about April 25, 1996 to shareholders
of Shelter Components Corporation (the "Corporation") in connection with the
Board of Directors' solicitation of proxies for use at the Annual Meeting of
Shareholders (the "Meeting") to be held at The Varsity Clubs of America Hotel,
3800 North Main Street, Mishawaka, Indiana on Thursday, May 30, 1996 at 9:00
a.m. local time, and at such other time and place to which the Meeting may be
adjourned.
All shares represented by valid Proxies, unless the shareholder otherwise
specifies, will be voted (i) FOR the election of the persons named herein
under "Election of Directors" as nominees for election as director of the
Corporation for the term described therein; (ii) FOR the proposal to amend the
Corporation's Key Employee Stock Incentive Plan (the "Plan") to increase the
number of shares of Common Stock authorized for issuance thereunder by 164,062
shares from 585,938 to 750,000; (iii) FOR the ratification of the selection of
Price Waterhouse LLP as the Corporation's independent auditors for the fiscal
year ending December 31, 1996; and (iv) at the discretion of the Proxyholders
with regard to any other matters that may properly come before the Meeting and
any adjournments thereof.
Any shareholder executing a Proxy retains the right to revoke it at any time
prior to exercise at the Meeting. A Proxy may be revoked by delivery of
written notice of revocation to the Secretary of the Corporation, by execution
and delivery of a later Proxy or by voting the shares in person at the
Meeting. If not revoked, all shares represented by properly executed Proxies
will be voted as specified therein or as noted above, as applicable.
The Annual Report to Shareholders for the year ended December 31, 1995
accompanies this Proxy Statement.
EXPENSES OF SOLICITATION
The Corporation will bear the cost of preparing and mailing this statement
with the accompanying proxy and other material. In addition to the use of the
mails, officers and employees of the Corporation and its subsidiaries may
solicit proxies personally or by fax, telegram or telephone. Banks, brokerage
houses, and other institutions, nominees or fiduciaries may be requested to
forward the soliciting material to their principals to obtain authorizations
for the execution of proxies. The Corporation will, upon request, reimburse
banks, brokerage houses, and other institutions, nominees and fiduciaries for
reasonable expenses in forwarding proxy material to their principals.
RECORD DATE AND VOTING SECURITIES
The record date for determining the shareholders entitled to notice of and to
vote at the Meeting and any adjournments thereof is the close of business on
April 22, 1996 (the "Record Date"), at which time 6,102,739 shares of Common
Stock were issued and outstanding. Common Stock is the only class of
outstanding voting securities of the Corporation.
<PAGE>
QUORUM AND VOTING
The presence at the Meeting, in person or by proxy, of the holders of a
majority of the Common Stock issued and outstanding and entitled to vote
thereat is necessary to constitute a quorum to transact business. Each share
represented at the Meeting in person or by proxy will be counted toward a
quorum. In deciding all questions and other matters, a holder of Common Stock
on the Record Date shall be entitled to cast one vote for each share of Common
Stock registered in such holder's name.
Approval of Proposal No. 1 requires the affirmative vote of a plurality of the
shares of Common Stock present or represented at the Meeting and entitled to
vote thereon. Votes may be cast in favor or withheld with respect to the
proposal. Votes that are withheld will be counted toward a quorum, but will
be excluded entirely from the tabulation for the proposal and therefore, will
not otherwise affect the outcome of the vote on the proposal.
Approval of Proposal No. 2 requires the affirmative vote of a majority of the
shares of Common Stock present or represented at the Meeting and entitled to
vote thereon. Abstentions on the proposal may be specified and will have the
same effect as a vote against the proposal.
Approval of Proposal No. 3 requires the affirmative vote of a majority of the
shares of Common Stock present or represented at the Meeting and entitled to
vote thereon. Abstentions on the proposal may be specified and will have the
same effect as a vote against the proposal.
The Board of Directors knows of no other matter which may come up for action
at the meeting. However, if any other matter properly comes before the
meeting, the persons named in the proxy form enclosed will vote in accordance
with their judgment upon such matter.
PROPOSAL NO. 1
ELECTION OF DIRECTORS
The Corporation's by-laws divide the Board of Directors into three classes, as
nearly equal in number as possible, each of whom serves for three years. The
term of office of one class of directors expires each year in rotation so that
one class is elected at each Annual Meeting for a full three-year term. The
terms of the three Class C directors will expire at this Annual Meeting and
one additional director has been nominated to serve as a Class C director.
These four individuals have been nominated for election for three-year terms
expiring at the Annual Meeting in 1999, or until their successors are elected
and qualified. The other seven directors will continue in office for the
remainder of their terms as indicated.
If the enclosed form of proxy is returned duly executed, it is intended that
the shares represented thereby will be voted for the nominees hereinafter
named unless authority to vote for a particular nominee or all nominees is
withheld. Should any such nominee become unavailable for election, which is
not anticipated, the persons authorized to vote the enclosed form of proxy
may vote the shares for a substitute nominee as may be selected by the Board.
The statements hereinafter contained in regard to principal occupation or
employment, other directorships and beneficial ownership of stock of the
Corporation are based on information furnished to the Corporation by the
nominees and the directors.
<PAGE>
THE BOARD OF DIRECTORS RECOMMENDS A VOTE "FOR" EACH OF THE NOMINEES LISTED
BELOW
CLASS "C" DIRECTOR NOMINEES - FOR TERM EXPIRING IN 1999
WILLIAM J. BARRETT, age 56, had been a director of Thunander Corporation, a
predecessor corporation, since 1981. He has been a Senior Vice President of
Janney Montgomery Scott Inc., investment bankers, since January 1978. Mr.
Barrett had been Chairman of the Board from August 1987 to May 1995. Mr.
Barrett is also a director of Supreme Industries, Inc., a specialized truck
body and shuttle bus manufacturer, Frederick's of Hollywood, Inc., an apparel
marketing company, Esmor Correctional Services, Inc., a private management and
operations company for federal, state, and local corrections and detention
facilities, Contempri Homes, Inc., a modular housing manufacturer, TGC
Industries, Inc., a geophysical services company and specialty packaging
manufacturer, and The Western Transmedia Company, Inc., a specialized finance
charge card company.
HERBERT M. GARDNER, age 56, had been a director of Thunander Corporation, a
predecessor corporation, since 1981. He has been a Senior Vice President of
Janney Montgomery Scott Inc., investment bankers, since January 1978. Mr.
Gardner is also a director of The Western Transmedia Company, Inc., a
specialized finance charge card company, Nu Horizons Electronics Corp., an
electronic components distributor, Chairman of the Board of Contempri Homes,
Inc., a modular housing manufacturer, Chairman of the Board and President of
Supreme Industries, Inc., a specialized truck body and shuttle bus
manufacturer, TGC Industries, Inc. a geophysical services company, and
specialty packaging manufacturer, and Hirsch International Corp., a
distributor of computerized embroidery machines and application software.
CORNELIUS J. MURPHY, age 58, had been a director of Shelter Components, Inc.,
a predecessor Corporation, since 1979. Mr. Murphy had been President and a
director of Shelter since January 1979. Mr. Murphy is the former President of
Danube Carpet Mills, Inc., a major subsidiary of the Corporation and former
Vice Chairman of the Board of the Corporation.
GERALD R. STULTS, age 47, has served as the Chief Operating Officer and
Executive Vice President of the Corporation since August 1995. Mr. Stults was
the President and owner of BABSCO, Inc. from January 1981 until January 1995
when the Corporation acquired BABSCO, Inc. from him. Mr. Stults is also the
President and owner of Galleries, Ltd., a retail lighting company; a director
of Zorn Industries, Inc., a manufacturer of storage tanks; and a director and
part owner of CopperCon Wire and Cable, LLP, a manufacturer of wire products.
OTHER DIRECTORS
CLASS "A" DIRECTORS - TERM EXPIRING IN 1997
ARTHUR M. BORDEN, age 75, had been a director of Thunander Corporation, a
predecessor corporation, since 1985. He is of counsel to the law firm of
Rosenman & Colin and also a director of Scientific Industries, Inc., a
manufacturer of laboratory testing instruments and equipment.
WILLIAM B. RIBLET, age 57, is Vice President of Sales and Director of Lippert
Components, Inc., a private company supplying steel components to the
manufactured housing, office unit, and recreational vehicle industries. He
was an Executive Vice President and Vice Chairman of the Board of Directors of
Thunander Corporation, a predecessor corporation, from March 1986 until May
1990.
RICHARD E. SUMMERS, age 66, had been a director of Shelter Components, Inc., a
predecessor corporation, since 1976. He had been President and Chief
Executive Officer from August 1987 through May 1992. Mr. Summers had been
Chairman of the Board of Shelter Components, Inc., a predecessor corporation,
since 1976 and was also President and Treasurer of such company until January
1985. Mr. Summers now serves as Vice Chairman and General Counsel for the
Corporation.
CLASS "B" DIRECTORS - TERM EXPIRING IN 1998
WILLIAM N. HARPER, age 51, has been the Senior Vice President and Chief
Financial Officer of National Steel Corporation, an integrated steel company
since October 1995. Prior to that, Mr. Harper was employed as Vice President
and Controller of Clark Equipment Company, a manufacturer for 10 years. Mr.
Harper has been Chairman of the Board since May 1995 and a Director since May
1990. Mr. Harper also serves as a Director for CAPCO Automotive Products
Corp., and several subsidiaries of National Steel Corporation.
RONALD D. MINZEY, age 65, had been a director of Shelter Components, Inc., a
predecessor corporation from 1983 until 1986. For more than ten years Mr.
Minzey has been a private investor investing in companies primarily in the
Northern Indiana area. Prior to that Mr. Minzey was President of Kinder
Manufacturing, a furniture supplier to the Manufactured Housing and
Recreational Vehicle industries. He is also a director of Barger Packaging
Corporation and Director Emeritus of Society National Bank, Indiana N.A., a
banking company.
LARRY D. RENBARGER, age 57, had been a director of Shelter Components, Inc., a
predecessor corporation since 1979. He became Chief Executive Officer of
Shelter Components, Inc. in 1979. Mr. Renbarger has been President and Chief
Executive Officer of the Corporation since May 1992. Mr. Renbarger had served
as the President of Shelter Components of Indiana, Inc., a major subsidiary of
the Corporation from August 1987 through May 1992.
MARK C. NEILSON, age 37, has served as Treasurer of the Corporation since 1986
and as Secretary of the Corporation since 1990. Mr. Neilson has served as a
Director since May 1992. Prior to 1986, Mr. Neilson was employed as a CPA
with McGladrey & Pullen since 1980.
<PAGE>
MEETINGS AND COMMITTEES OF THE BOARD OF DIRECTORS
The business of the Corporation is managed under the direction of the Board of
Directors. The Board generally meets on a quarterly basis to review
significant developments affecting the Corporation and to act on matters
requiring Board approval. It also holds special meetings and acts by written
consent when important matters require Board action between scheduled
meetings. The Board of Directors met four times during 1995. During 1995,
all members of the Board of Directors participated in at least 75% of all
Board and applicable Committee meetings.
The Board of Directors has three standing committees: the Audit Committee,
the Compensation Committee and the Executive Committee. The functions of
these committees, their current members, the number of meetings held during
1995 are described below.
The Audit Committee was established to review the professional services and
independence of the Corporation's independent accountants and to review the
Corporation's financial statements, procedures and internal controls. The
Audit Committee is comprised of Directors Gardner (Chairman), Harper and
Minzey. The Audit Committee met five times during fiscal 1995.
The Compensation Committee has the responsibility of fixing annual salaries
and bonuses for the officers of the Corporation and administering the
Corporation's Key Employee Stock Incentive Plan. The Compensation Committee
is comprised of Directors Summers (Chairman), Barrett and Murphy. The
Compensation Committee met three times during 1995.
The Executive Committee has the responsibility of acting in lieu of the full
Board in matters requiring action on day to day operations when the full Board
is not required or available. The Executive Committee is comprised of Messrs.
Renbarger, Riblet and Summers. The Executive Committee met twice during the
year.
DIRECTOR COMPENSATION
Directors who are also employees of the Corporation or its subsidiaries
receive no compensation in their capacities as directors. Beginning in
November 1995, nonemployee directors receive an annual retainer of $6,000 plus
a fee of $1,500 for each Board meeting attended and $250 for each Committee
meeting in which the director participates. The Chairman of the Board and of
the Board's Committees receive $1,800 and $300 respectively, for each meeting
attended. Prior to November 1995, nonemployee directors received an annual
retainer of $6,000 plus a fee of $1,000 for each Board meeting attended, with
no additional fees for Committee meetings. All directors are reimbursed for
expenses connected with attendance at Board or Committee meetings. Commencing
in 1996, each nonemployee director will receive annual automatic grants of
stock options to purchase 2,000 shares of Common Stock based on market prices
at the date of the grant.
<PAGE>
PRINCIPAL SHAREHOLDERS AND MANAGEMENT OWNERSHIP
The following tables set forth, as of February 29, 1996, information
concerning the only parties known to the Corporation having beneficial
ownership of more than 5% of its outstanding Common Stock and information with
respect to the stock ownership of all directors and executive officers of the
Corporation as a group.
Five Percent Beneficial Ownership
Name and Address Amount and Nature Percent
of Beneficial Owner of Beneficial Ownership of Class
FMR Corp. (Fidelity Investments) 598,525 9.8%
82 Devonshire Street
Boston, MA 02109
William D. Witter 368,200 6.0
1 Citicorp Center
153 East 53rd Street
New York, NY 10022
Larry D. Renbarger 356,000(1) 5.8
Post Office Box 4026
Elkhart, Indiana 46515
Wellington Management Company 343,700 5.6
75 State Street
Boston, MA 02109
Gerald R. Stults 327,058(2) 5.4
Post Office Box 4026
Elkhart, Indiana 46515
Beneficial Ownership of Directors and Officers
Amount and Nature Percent
Name of Beneficial Ownership of Class
Larry D. Renbarger 356,000(1) 5.8%
Gerald R. Stults 327,058(2) 5.4
Cornelius J. Murphy 135,916(3) 2.2
William J. Barrett 101,427(4) 1.7
Herbert M. Gardner 82,969(5) 1.4
Mark C. Neilson 39,125(6) *
Richard E. Summers 20,290 *
Arthur M. Borden 12,069 *
William N. Harper 3,125 *
William B. Riblet 1,850 *
Ronald D. Minzey 1,275 *
All officers and directors
as a group (12 persons) 1,091,104 17.9%
(* Less than 1% of class of stock owned.)
(1) Includes option to purchase 12,500 shares, not yet exercised and 50,000
shares owned jointly with Mrs. Renbarger.
(2) Includes option to purchase 12,500 shares, not yet exercised.
(3) Includes 54,500 shares owned by Mrs. Murphy, to which Mr. Murphy
disclaims any beneficial ownership.
(4) Includes 1,125 shares owned by Mrs. Barrett, to which Mr. Barrett
disclaims any beneficial ownership.
(5) Includes 6,093 shares owned by Mrs. Gardner, to which Mr. Gardner
disclaims any beneficial ownership.
(6) Includes option to purchase 20,000 shares, not yet exercised.
<PAGE>
EXECUTIVE COMPENSATION
Summary Compensation Table
The following Summary Compensation Table shows compensation paid by the
Corporation for services rendered during fiscal years 1995, 1994 and 1993 for
the person who was Chief Executive Officer at the end of the last fiscal year
and the other most highly compensated executive officers of the Corporation
whose salary and bonus exceeded $100,000 in 1995.
Long-Term
Compensation
Annual Compensation Awards
All Other
Name and Year Salary Bonus Compensation Options
Principal Position ($) (1) ($) (2) ($) (3) (#)
----- ---------- --------- ----------- -----------
Larry D. Renbarger 1995 $161,000 $165,000 $8,239 12,500
CEO and President 1994 161,000 165,000 8,210 0
1993 150,000 238,000 8,116 0
Gerald R. Stults (4)
Executive Vice 1995 $120,000 $ 41,000 $ 743 12,500
President and COO
Mark C. Neilson
Secretary-Treasurer 1995 $ 77,000 $ 77,000 $7,039 20,000
1994 77,000 77,000 6,950 0
1993 70,000 70,000 6,788 0
(1) Compensation deferred at the election of the Executive, pursuant to the
Corporation's 401(k) plan, is included in the year earned.
(2) Cash bonuses for services rendered in fiscal year 1995, 1994 and 1993
have been listed in the year earned, but in some cases were paid in
the subsequent year. Bonuses were calculated based on the consolidated
earnings attained by the operations of the Corporation.
(3) Comprised of automobile allowance and the Corporation's contribution to
the Executive's 401(k) account.
(4) Appointed to Executive Vice President and COO in August 1995.
Compensation reflects full year of 1995.
Stock Option Grants Table
The following table reflects information with respect to options for the
Corporation's Common Stock granted under the Corporation's Key Employees'
Stock Incentive Plan for the executive officers named above.
Option Grants in 1995
% of Total Exercise Expi- Potential
Options Options Price ration Realizable
Granted Granted to ($/share) Date Value(1)
Name (#) (2) Employees (3) 5% 10%
Larry D. Renbarger 12,500 6.5% $11-1/2 8/8/00 $39,715 $87,761
Gerald R. Stults 12,500 6.5 11-1/2 8/8/00 39,715 87,761
Mark C. Neilson 20,000 10.4 11-1/2 8/8/00 63,545 140,417
(1) The potential realized value portion of the foregoing table illustrates the
value that might be realized upon exercise of the options immediately
prior to the expiration of their term, assuming the specified compounded
rates of appreciation on the Common Stock over the exercise price of the
options over the term of the options. These amounts do not take into
account provisions providing for termination of options following
termination of employment, nontransferability or vesting over periods of
up to four years.
(2) Options vest with respect to one-fourth of the shares covered thereby
annually, beginning on the first anniversary of the date of grant. In
the event of a change in control of the Corporation, however, any
unexercisable portion of the options will become immediately exercisable.
(3) The exercise price was equal to the fair market value of the Common Stock on
the date of grant.
Stock Option Exercises and Values Table
The following table shows information with respect to options for the
Corporation's Common Stock either exercised during 1995 or having value
outstanding at December 31, 1995 under the Corporation's Key Employees Stock
Incentive Plan.
Aggregated Option Exercises in Fiscal 1995 and Year End Option Values
Number of
Securities Under- Value of Unexercised
Options lying Unexercised In-the-Money
Exercised Options at Options at
in 1995 December 31, 1995 December 31, 1995(*)
---------------- ------------------- --------------------
Shares
Acquired
on Value Exer- Unexer- Exer- Unexer-
Name Exercise Realized cisable cisable cisable cisable
Larry D. Renbarger --- --- --- 12,500 --- $60,938
Gerald R. Stults --- --- --- 12,500 --- 60,938
Mark C. Neilson 9,375 $116,671 --- 20,000 --- 97,500
* Amounts reflecting gains on outstanding options are based on the
December 31, 1995, closing stock price, which was $16-3/8.
<PAGE>
COMPENSATION COMMITTEE REPORT ON EXECUTIVE COMPENSATION
The Compensation Committee of the Board of Directors is comprised of Messrs.
Barrett, Murphy and Summers and has overall responsibility to review and
approve broad based compensation plans of the Corporation as well as to
recommend specific salary levels for corporate officers including the
President and Chief Executive Officer, the Executive Vice President and Chief
Operating Officer, the Secretary/Treasurer, and any corporate vice presidents.
The Compensation Committee is also charged with the responsibility of
approving specific compensation plans for the heads of subsidiaries or
divisions.
The Corporation's compensation programs are designed to attract, retain, and
motivate the finest talent possible and the Compensation Committee and
management of the Corporation are committed to the principle that compensation
should be commensurate with performance of the Corporation. As a result, a
large part of executive compensation can be in the form of bonuses based on
criteria established by the Compensation Committee and which, for the most
part, relate to a combination of benchmarks such as return on equity, overall
earnings, and the responsibility of particular executives for specified
operations.
In 1993, Congress enacted the Omnibus Reconciliation Act of 1993 (OBRA) which,
among other things, establishes certain requirements in order for compensation
exceeding $1 million earned by certain senior executives to be deductible.
The Committee will attempt to conform executive compensation programs and
payments to OBRA's deductibility requirements.
Salaries
The executive salaries are reviewed annually. In setting executive salaries,
the Compensation Committee considered various national surveys of companies of
comparable size and the salary levels of executives with similar
responsibilities at comparable companies as well as the average level of
compensation compiled from the national surveys. The committee fixed the
salaries for the CEO and other executive officers at levels in the lower range
of such companies and then devised a "bonus plan" which would allow those
persons to earn significant bonuses based on the required performance under
the plan.
Annual Incentive
The bonus plan for executive officers gives them the opportunity to earn
significant additional compensation based on the performance of the
Corporation. At the beginning of the year, the Compensation Committee
establishes certain performance benchmarks which the committee feels should be
attained before bonuses are paid and after the attainment of those benchmarks,
bonuses are paid on various levels of profitability of the Corporation. In
1995, there was a limit to the amount of bonus that could be earned by
executive officers of 100% of their salary. In 1996, the bonus criteria and
the benchmarks for earning bonuses were changed to require that criteria other
than profitability be met and the limit of 100% of base salary has been
removed.
Stock Options
In addition to the foregoing, current medium and long-term incentive plans,
namely, incentive stock options are based on the value of the Corporation's
common stock which closely aligns the interest of the executives with the
long-term interest of the shareholders. During 1995, executive officers of
the Corporation were granted options (at the market value on the date of the
grant) as follows:
Name/Title #Options
Larry D. Renbarger/President and Chief Executive Officer 12,500
Gerald R. Stults/Executive Vice President & Chief Operating Officer 12,500
Mark C. Neilson/Vice President of Finance, Secretary & Treasurer 20,000
James E. DeCraene/Vice President of Planning and Development 10,000
<PAGE>
Senior Management Compensation
In the early part of each year, the Compensation Committee reviews with the
Chief Executive Officer an annual salary plan for the Corporation and its
subsidiaries' and divisions' senior executives. This salary plan is based on
industry, peer group and performance judgments as to the past and expected
future contributions of the individual senior executives. The Chief Executive
Officer makes recommendations to the Compensation Committee which then
approves or revises such salary plans.
Interlocks and Insider Participation in Compensation Decisions
Mr. Summers, who is Chairman of the Corporation's Compensation Committee, was
President and Chief Executive Officer of the Corporation until May of 1992.
Subsequent to that date, he has been General Counsel of the Corporation and
Vice Chairman of the Board.
The Compensation Committee of the Board of Directors of
Shelter Components Corporation:
William J. Barrett
Richard E. Summers
Cornelius J. Murphy
SHARE OWNER RETURN PERFORMANCE PRESENTATION
Set forth below is a line graph comparing the yearly change in the cumulative
total share owner return on the Corporation's common stock against the
S&P Homebuilding Index, which is considered to be a peer group to the
Corporation, and the total return of the S&P Composite 500 Stock Index.
SHELTER COMPONENTS CORPORATION
Comparison of Five Year Cumulative Total Return *
Among Shelter Components Corporation, the S&P 500 Index
and the S & P Homebuilding Index
12/90 12/91 12/92 12/93 12/94 12/95
Shelter Components Corporation $100 $148 $709 $832 $822 $1,188
S&P Homebuilding Index 100 188 231 304 176 251
S&P 500 Index 100 130 140 155 157 215
* $100 invested on 12/31/90 in stock or index -
including reinvestment of dividends.
Fiscal year ending December 31.
<PAGE>
PROPOSAL NO. 2
AMENDMENTS TO KEY EMPLOYEES STOCK INCENTIVE PLAN (THE "PLAN")
The Board of Directors and the Compensation Committee (referred to
collectively as the "Board of Directors" with respect to this proposal)
unanimously approved amendments to the Key Employees Stock Incentive Plan
(the "Plan") subject to approval by the shareholders, to increase the number
of shares of Common Stock issuable pursuant to the Plan by 164,062 shares
from 585,938 to 750,000.
The Corporation has a Key Employee Stock Incentive Plan (the "Plan") with
respect to 585,938 shares of its Common Stock. The Plan authorizes either
the Board of Directors or a Stock Incentive Committee (the "Committee")
comprised of at least three board members appointed by the Board of Directors
of the Corporation, to grant options, (incentive or nonqualified) with each
option exercisable at a price equal to at least 100% (incentive) (110% in the
case of an incentive option awarded to a person who owns stock, possessing
more than 10% of the total combined voting power of the Corporation) or 75%
(nonqualified) of the fair market value of the shares on the date of grant, to
those key employees or eligible directors of the Corporation designated by the
Board or the Committee.
The options are to have a duration of not more than five years and may be
exercised only if the employee remains in the employ of the Corporation,
except in the event of death or disability, in which case they will be
exercisable for a period of six months from the date of death or disability
with respect to the number of shares purchasable at the time of death or
disability, or as a result of termination without cause by the Corporation, in
which event they will be exercisable in the 90-day period following such
termination with respect to the number of shares purchasable at the time of
termination or as a result of termination under any deferred compensation
agreement or retirement plan of the Corporation. Options issued under the
Plan as incentive stock options will not be exercisable prior to the exercise
of outstanding incentive stock options previously granted to the employee by
the Corporation or any subsidiary of the Corporation. The options will
contain such other terms as the Board or the Committee may determine,
including whether they are exercisable installments and the amounts of such
installments. Grants of incentive stock options to an employee are limited to
$100,000 fair value of the shares plus fifty percent of the $100,000
limitation not utilized in the prior two years. The Plan also authorizes the
Board or Committee to award stock appreciation rights with respect to options
granted. The following reflects activity under the Plan since its inception:
(All options have been adjusted to reflect the effects of all stock splits.)
Options Options Options
Options Options (Expired or Outstanding Option Price Available
Year Granted (Exercised) Cancelled) End of Year Range End of Year
1985 --- --- --- --- N/A 585,938
1986 234,375 --- --- 234,375 $1.92 - 2.56 351,563
1987 --- --- --- 234,375 1.92 - 2.56 351,563
1988 --- --- --- 234,375 1.92 - 2.56 351,563
1989 9,375 --- --- 243,750 1.92 - 2.56 342,188
1990 18,750 --- (117,188) 145,312 1.92 - 2.56 440,625
1991 145,313 --- (117,188) 173,437 1.93 - 2.53 412,500
1992 --- (19,921) (5,625) 147,891 1.93 - 2.53 418,125
1993 148,500 (30,237) (8,439) 257,715 1.93 - 8.67 278,064
1994 --- (19,907) --- 237,808 1.93 - 8.67 278,064
1995 193,000 (83,388) --- 347,420 1.93 - 11.50 85,064
<PAGE>
Summary of Certain Federal Income Tax Consequences Relating to Incentive Stock
Options.
No taxable income is realized by a Participant and no tax deduction is
available to the Corporation upon either the grant or exercise of an incentive
stock option. If a Participant holds the shares acquired upon the exercise of
an incentive stock option for more than one year after the issuance of the
shares upon exercise of the incentive stock option and more than two years
after the date of the grant of the incentive stock option (the "holding
period"), the difference between the exercise price and the amount realized
upon the sale of the shares will be treated as a long-term capital gain or
loss and no deduction will be available to the Corporation. If the shares are
transferred before the expiration of the holding period, the Participant will
realize ordinary income and the Corporation will be entitled to a deduction on
the portion of the gain, if any, equal to the difference between the incentive
stock option exercise price and the fair market value of the shares on the
date of exercise or, if less, the difference between the amount realized on
the disposition and the adjusted basis of the stock; provided that the
deduction will not be allowed if such amount exceeds the annual $1,000,000
limitation on the deduction that an employer may claim for compensation of
certain executives pursuant to Section 162(m) of the Code (the "Deduction
Limitation") and does not satisfy an exception to the Deduction Limitation.
Any further gain or loss from an arm's length sale or exchange will be taxable
as a long-term or short-term capital gain or loss depending upon the holding
period before disposition. Certain special rules apply if an incentive stock
option is exercised by tendering stock. The difference between the incentive
stock option exercise price and the fair market value, at the time of exercise
of the Common Stock acquired upon the exercise of an incentive stock option
may give rise to alternative minimum taxable income subject to an alternative
minimum tax.
Issuance of Options under the Key Employee's Stock Incentive Plan
The following table sets forth certain information regarding options received
under the Plan from its inception through the Record Date by (i) the
Corporation's Chief Executive Officer, (ii) each of the Corporation's other
most highly compensated executive officers for 1995 individually, (iii) all
current executive officers as a group, and (iv) all employees, excluding
executive officers as a group.
Aggregate Amount of Common Stock Subject to
the Plan Granted from Inception through
Name of Individual or Group the Record Date
Larry D. Renbarger 12,500
Gerald R. Stults 12,500
Mark C. Neilson 29,375
James E. DeCraene 10,000
All current executive officers as a group 64,375
All employees, (excluding executive officers) as a group 436,499
The number of options that would be granted to the individuals or groups named
in the table above under the Plan as proposed to be amended are not
determinable at this time.
Vote Required
Approval of the amendments to the Key Employees' Stock Incentive Plan requires
the affirmative vote of a majority of the shares of Common Stock present or
represented at the Meeting and entitled to vote thereon. If approved by the
shareholders, such amendments will be effective as of May 1, 1996. Unless
otherwise instructed or restricted, it is the intent of the persons named in
the Proxy to vote all Proxies "FOR" the adoption of this proposal.
THE BOARD OF DIRECTORS RECOMMENDS A VOTE "FOR" THE PROPOSED AMENDMENT TO THE
KEY EMPLOYEES' STOCK INCENTIVE PLAN.
<PAGE>
TRANSACTIONS WITH MANAGEMENT AND DIRECTORS
Some of the subsidiaries of the Corporation lease office and warehouse
facilities from ELJO Investments, a partnership of which Directors Minzey,
Murphy, Renbarger and Summers are partners. The Corporation also leases
office and warehouse facilities from Stults Realty, Inc. of which Gerald R.
Stults, the Corporation's Executive Vice President and Chief Operating Officer
is the sole owner. Such leases are described in the Notes to Consolidated
Financial Statements which are a part of the 1995 Annual Report to
Shareholders which accompanies this Proxy. The Corporation believes that the
terms of these leases are at least as favorable to the Corporation as those
which could have been obtained from unrelated parties. Also, the Corporation
exercised its option to purchase certain of these facilities from ELJO
Investments and Stults Realty, Inc. upon the expiration of the existing leases
during the first quarter of 1996.
The Corporation paid a fee of approximately $48,000 in 1995 to the firm of
Janney Montgomery Scott Inc., by whom Directors Barrett and Gardner are
employed, for investment banking services in connection with the placement of
$15 million in senior notes as described in the Notes to Consolidated
Financial Statements which are part of the 1995 Annual Report to Shareholders
which accompanies this Proxy.
The Corporation also made purchases during 1995 of electrical products for
resale totalling approximately $3 million from CopperCon Wire and Cable, LLP,
a manufacturer of electrical wire products of which Mr. Stults is a 16% owner.
These purchases are believed to have been at a price and terms equal to or
better than general market prices and terms for similar products.
EMPLOYEES' SAVINGS AND INVESTMENT PLAN
The Corporation has a contributory defined contribution plan which qualifies
under Section 401(k) of the Internal Revenue Code. The plan covers
substantially all employees and the Corporation contributes to the plan on a
discretionary basis. Expenses under the plan aggregated $259,000, including
administrative expenses of the plan, for the year ended December 31, 1995.
PROPOSAL NO. 3
INDEPENDENT ACCOUNTANTS
Upon the recommendation of the Audit Committee and subject to ratification by
the shareholders at the Meeting, the Board of Directors has selected Price
Waterhouse LLP to audit the consolidated financial statements of the
Corporation for 1996. Price Waterhouse LLP has served the Corporation in this
capacity since October 1995. Representatives of Price Waterhouse LLP are
expected to be present at the Meeting, will have the opportunity to make a
statement if they desire to do so, and will be available to respond to
appropriate questions.
In October 1995, the Audit Committee of the Corporation's Board of Directors
replaced its previous auditors, Coopers & Lybrand L.L.P. by engaging Price
Waterhouse LLP as its independent accountants. There were no disagreements
between the Corporation and Coopers & Lybrand L.L.P. during the 1993 and 1994
audit engagements nor during 1995 on any matter of accounting principles or
practices, financial statement disclosure, or auditing scope or procedure
which would have caused them to make reference thereto in their reports.
<PAGE>
PROPOSALS OF SHAREHOLDERS
Proposals of shareholders intended to be presented at the 1997 Annual Meeting
of shareholders must be received by the Secretary of the Corporation no later
than January 1, 1997 for consideration for inclusion in the proxy statement
and form of proxy for that meeting.
SECTION 16 REQUIREMENTS
Section 16(a) of the Exchange Act requires the Corporation's directors and
officers, and persons who own more than 10% of a registered class of the
Corporation's equity securities, to file reports of ownership and changes of
ownership with the Commission. Based solely on its review of the copies of
such forms received by it, and written representations from certain reporting
persons, the Corporation believes that during 1995 all filing requirements
applicable to its directors, officers and greater than 10% beneficial owners
were complied with.
OTHER BUSINESS
The Corporation is not aware of any other matters which may be presented for
action at the Annual Meeting other than the matters set forth herein. Should
any other matters be presented for a vote of the shareholders, the proxy in
the enclosed form provides for discretionary voting authority upon the persons
voting such proxy.
FINANCIAL INFORMATION
A copy of the Corporation's Annual Report on Form 10-K will be provided
without charge to shareholders upon written request to:
Investor Relations
Shelter Components Corporation
2831 Dexter Drive
Elkhart, Indiana 46514
By Order of the Board of Directors
/s/ Mark C. Neilson
Mark C. Neilson
Secretary/Treasurer
April 25, 1996
<PAGE>
[PROXY CARD]
P
R
O
X
Y
SHELTER COMPONENTS CORPORATION
PROXY FOR THE ANNUAL MEETING OF SHAREHOLDERS
MAY 30, 1996
THIS PROXY IS SOLICITED ON BEHALF OF THE BOARD OF DIRECTORS
The undersigned hereby appoints Larry D. Renbarger or Mark C. Neilson, or
either of them, as proxies, with full power to appoint their substitutes, and
hereby authorizes them to represent and to vote, as designated below, all the
shares of Common Stock held of record by the undersigned at the Annual Meeting
of Shareholders of Shelter Components Corporation to be held on May 30,1996 at
9:00 A.M. Local Time, at The Varsity Club Hotel, 3800 N. Main St., Mishawaka,
Indiana, or any adjournment thereof.
To elect a class of four Class C directors to serve (change of address)
for a term of three years, Nominees: ________________________
________________________
William J. Barrett, Herbert M. Gardner, ________________________
Cornelius J. Murphy, and Gerald R. Stults ________________________
(If you have written in the
above space, please mark
the corresponding box on
the reverse side of this
card.)
You are encouraged to specify your choices by marking the appropriate boxes,
SEE REVERSE SIDE, but you need not mark any boxes if you wish to vote in
accordance with the Board of Directors' recommendations. The Proxies cannot
vote your shares unless you sign and return this Card.
THE BOARD RECOMMENDS A VOTE "FOR" PROPOSALS 1, 2 & 3 AS LISTED
ON THE REVERSE SIDE OF THIS PROXY.
SEE REVERSE
SIDE
DETACH CARD
<PAGE>
[X] Please mark your
votes as in this
example. SHARES IN YOUR NAME REINVESTMENT SHARES
1. Election of FOR WITHHELD Nominees: William J. Barrett
Directors [ ] [ ] Herbert M. Gardner
(see reverse) Cornelius J. Murphy
Gerald R. Stults
For, except vote withheld from the following nominee(s):
_____________________________________________________
FOR AGAINST ABSTAIN
2. To approve an amendment to the [ ] [ ] [ ]
Corporation's Key Employee Stock
Incentive Plan as set forth in
the proxy statement;
3. To ratify the selection of Price [ ] [ ] [ ]
Waterhouse LLP as certified public
accountants for the Corporation for
the fiscal year ending December 31,
1996;
4. To transact any other business that may properly come before the Meeting
and any adjournments thereof.
Change of Address [ ]
Attend Meeting [ ]
SIGNATURE(S) ____________________ DATE ________
SIGNATURE(S) ____________________ DATE ________
NOTE: Please sign exactly as name appears hereon. Joint owners should each
sign. When signing as attorney, executor, administrator, trustee or
guardian, please give full title as such.
DETACH CARD
