SCHEDULE 14A
(RULE 14a-101)
INFORMATION REQUIRED IN PROXY STATEMENT
SCHEDULE 14A INFORMATION
PROXY STATEMENT PURSUANT TO SECTION 14(a) OF THE
SECURITIES EXCHANGE ACT OF 1934 (AMENDMENT NO. )
Filed by the registrant [X]
Filed by a party other than the registrant [ ]
Check the appropriate box:
[ ] Preliminary proxy statement
[X] Definitive proxy statement
[ ] Definitive additional materials
[ ] 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))
RAVEN INDUSTRIES, INC.
- --------------------------------------------------------------------------------
(Name of Registrant as Specified in Its Charter)
- --------------------------------------------------------------------------------
(Name of Person(s) Filing Proxy Statement, if other than the Registrant)
Payment of Filing Fee (Check the appropriate box):
[X] No fee required
[ ] Fee computed on table below per Exchange Act Rules 14a-6(i)(4) and 0-11.
(1) Title of each class of securities to which transaction applies:
(2) Aggregate number of securities to which transactions 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>
RAVEN INDUSTRIES, INC.
205 East 6th Street
P.O. Box 5107
Sioux Falls, South Dakota 57117-5107
------------------------------------------------------------------------------
NOTICE OF ANNUAL MEETING OF SHAREHOLDERS
MAY 26, 1999
-----------------------------------------------------------------------------
TO THE SHAREHOLDERS OF RAVEN INDUSTRIES, INC.
Please take notice that the Annual Meeting of Shareholders (the
"Meeting") of Raven Industries, Inc. (the "Company") will be held,
pursuant to due call by the Board of Directors of the Company, at the
Sheraton Sioux Falls, 1211 N. West Avenue, Sioux Falls, South Dakota,
on Wednesday, May 26, 1999 at 9:00 a.m. (C.D.T.) or any adjournments or
postponements thereof, for the following purposes:
1. To elect seven directors;
2. To transact such other business as may properly come before
the Meeting or any adjournments or postponements thereof.
Pursuant to due action of the Board of Directors, shareholders
of record on April 14, 1999 will be entitled to vote at the Meeting or
any adjournments or postponements thereof.
A PROXY FOR THE MEETING IS ENCLOSED HEREWITH. YOU ARE
REQUESTED TO FILL IN AND SIGN THE PROXY, WHICH IS SOLICITED BY THE
BOARD OF DIRECTORS, AND MAIL IT PROMPTLY IN THE ENCLOSED ENVELOPE.
By Order of the Board of Directors
Raven Industries, Inc.
Thomas Iacarella
Secretary
April 26, 1999
<PAGE>
PROXY STATEMENT
of
RAVEN INDUSTRIES, INC.
205 E. 6th Street
P.O. Box 5107
Sioux Falls, South Dakota 57117-5107
ANNUAL MEETING OF SHAREHOLDERS TO BE HELD
MAY 26, 1999
GENERAL
This Proxy Statement is furnished in connection with the solicitation
of proxies by the Board of Directors of Raven Industries, Inc. (the "Company")
to be used at the Annual Meeting (the "Meeting") of Shareholders of the Company,
which is to be held on Wednesday, May 26, 1999 at 9:00 a.m. (C.D.T.) at the
Sheraton Sioux Falls, 1211 N. West Avenue, Sioux Falls, South Dakota, or at any
adjournments or postponements thereof. The approximate date on which this Proxy
Statement and accompanying proxy were first sent or given to shareholders was
April 26, 1999. Each shareholder who signs and returns a proxy in the form
enclosed with this Proxy Statement may revoke the same at any time prior to its
use by giving notice of such revocation to the Company in writing or in open
meeting or by such shareholder giving a valid proxy bearing a later date.
Presence at the meeting by a shareholder who has signed a proxy does not alone
revoke the proxy. Only shareholders of record at the close of business on April
14, 1999 will be entitled to vote at the Meeting or any adjournments or
postponements thereof.
VOTING SECURITIES AND PROXIES
The Company has outstanding only one class of voting securities, Common
Stock, $1.00 par value, of which 4,641,686 shares were outstanding as of the
close of business on the record date, April 14, 1999. Shareholders representing
at least 50 percent of the shares of Common Stock outstanding and entitled to
vote must be present in person or represented by proxy in order to constitute a
quorum to conduct business at the Meeting. Each shareholder has cumulative
voting rights in the election of directors and is, therefore, entitled to (i)
give one nominee a number of votes equal to the number of directors to be
elected (which is seven) multiplied by the number of votes to which such
shareholder is entitled, or (ii) distribute the same number of votes among as
many nominees as he deems advisable. Where cumulative voting is exercised, there
shall be deemed elected the candidates receiving the most votes for the places
to be filled by such election. If cumulative voting is exercised, shares of a
shareholder who either abstains, votes to withhold authority to vote for the
nominees named below or who does not otherwise vote in person or by proxy
(including broker-nominees) will not be counted for the election of directors.
If no shareholder exercises its right to cumulate votes, then directors will be
elected by the affirmative vote of a majority of shares of Common Stock
represented at the meeting and eligible to vote. For this purpose, a shareholder
who abstains with respect to the election of a director is considered to be
present and entitled to vote on the election of a director at the meeting, and
is in effect casting a negative vote, but a shareholder (including a broker) who
does not give authority to a proxy to vote, or withholds authority to vote, on
the election of a director shall not be considered present and entitled to vote
on the election of a director.
Discretionary authority to cumulate votes is being solicited by the
Board of Directors. Unless otherwise directed by a shareholder, the proxies
named in the accompanying proxy card may elect to cumulate votes cast
1
<PAGE>
pursuant to a proxy by casting all such votes for one nominee or by distributing
such votes among as many nominees as they deem desirable. If a shareholder
desires to restrict the proxies named in the accompanying proxy card in casting
votes for certain nominees, the shareholder should give such direction on the
proxy card. On all matters other than the election of directors, each share of
Common Stock is entitled to one vote.
OWNERSHIP OF COMMON STOCK
The following table sets forth as of April 14, 1999 certain information
with respect to the beneficial ownership of the Company's Common Stock by (i)
any person known by the Company to be the owner, of record or beneficially, of
more than 5% of the Company's outstanding Common Stock, (ii) each of the
executive officers, directors and nominees for election to the Company's Board
of Directors, and (iii) all executive officers and directors as a group.
NAME SHARES
OF BENEFICIAL BENEFICIALLY PERCENT OF
OWNER OWNED CLASS
- ------------- ------------ -----------
Anthony W. Bour 7,000 *
David A. Christensen 222,211(1) 4.8
Gary L. Conradi 41,304(2) *
Thomas Iacarella 8,250(3) *
Ronald M. Moquist 108,355(4) 2.3
Thomas S. Everist 500 *
Mark E. Griffin 36,676(5) *
Conrad J. Hoigaard 74,043 1.6
Kevin T. Kirby 51,800 1.1
John C. Skoglund 30,141(6) *
Dimensional Fund Advisors Inc. 270,000(7) 5.8
1299 Ocean Avenue
Santa Monica, CA 90401
Fenimore Asset Management, Inc. 889,653(8) 19.2
118 N. Grand Street
Cobleskill, NY 12043
T. Rowe Price Associates, Inc. 417,000(9) 9.0
100 E. Pratt Street
Baltimore, MD 21202
All executive officers, directors &
nominees as a group (10 persons) 580,280(10) 12.5
- --------------------------------------
* Less than 1%
2
<PAGE>
(1) Includes options to purchase 37,500 shares exercisable within 60
days of the record date. Also includes 42,022 shares owned by his wife, as to
which he disclaims beneficial ownership. Does not include 137,509 shares held by
Smith Barney Corporate Trust, as a trustee for the Company's Employee Profit
Sharing Retirement Plan.
(2) Includes options to purchase 8,250 shares exercisable within 60
days of record date. Also includes 100 shares held by spouse.
(3) Includes options to purchase 3,750 shares exercisable within 60
days of record date.
(4) Includes options to purchase 18,750 shares exercisable within 60
days of record date. Also includes 21,000 shares held by spouse.
(5) Includes 28,333 shares held by John E. Griffin Trust of which Mark
E. Griffin is co-trustee and 1,359 shares held as custodian for a minor child.
(6) Includes 5,409 shares owned by spouse, as to which he disclaims
beneficial ownership.
(7) Data obtained from shareholder's most recent Schedule 13G filing
with the Securities & Exchange Commission (SEC).
(8) Data obtained from shareholder's most recent Schedule 13G filing
with the SEC.
(9) Data obtained from shareholder's most recent Schedule 13G filing
with the SEC. The shareholder stated in that filing that: "These securities are
owned by various individual and institutional investors, including T. Rowe Price
Small Capital Value Fund, Inc. (which owns 350,000 shares, representing 7.5% of
the shares outstanding, which T. Rowe Price Associates, Inc. (Price Associates)
serves as investment adviser with power to direct investments and/or sole power
to vote the securities. For purposes of the reporting requirements of the
Securities Exchange Act of 1934, Price Associates is deemed to be a beneficial
owner of such securities; however, Price Associates expressly disclaims that it
is, in fact, the beneficial owner of such securities."
(10) Includes options to purchase 68,250 shares exercisable within 60
days of the record date. Also includes 68,531 shares held by spouses of officers
and directors, as to which beneficial ownership is disclaimed.
3
<PAGE>
ELECTION OF DIRECTORS
Seven directors are to be elected at the meeting, each director to hold
the office until the next Annual Meeting of Shareholders, or until his successor
is elected and qualified. All of the nominees listed below are now serving as
directors and all of the nominees have consented, if elected, to serve as
directors. The Board of Directors proposes for election the nominees listed
below:
<TABLE>
<CAPTION>
PRINCIPAL OCCUPATION, BUSINESS EXPERIENCE
NAME AND AGE PAST FIVE YEARS AND DIRECTORSHIPS DIRECTOR
OF NOMINEE IN PUBLIC COMPANIES SINCE
- --------------- ------------------------------------------------ --------
<S> <C> <C>
Anthony W. Bour (61) Broker Associate, Commercial Real Estate, Hegg Companies, 1995
Sioux Falls, SD. Former President, Starmark, Inc., Sioux Falls, SD,
Director, U.S. Bank of South Dakota.
David A. Christensen (64) President and Chief Executive Officer of the Company 1971
since April 1971. Director of Northern States Power Co.,
Minneapolis, MN, Medcomp Software, Inc., Colorado Springs, CO,
and Wells Fargo & Co., San Francisco, CA, the latter
of which provides borrowings to the Company,
the terms of which management considers competitive
with other sources generally available to the Company.
The largest amount of such borrowings outstanding during
the year ended January 31, 1999, was $7,060,000 and
$5,500,000 remained outstanding on January 31, 1999.
Thomas S. Everist (49) President & Chief Executive Officer of L.G. Everist, Inc., Sioux 1996
Falls, SD, since 1987. Director of MDU Resources, Bismarck,
ND, Director of Power Plant Aggregates, Inc., Sioux City, IA,
Director of Standard Ready Mix, Inc., Sioux City, IA, Director of
Spencer Quarries, Inc., Spencer, SD.
Mark E. Griffin (48) President and Chief Executive Officer of Lewis Drugs, Inc., Sioux 1987
Falls, SD since November 11, 1986, where he previously served
as Executive Vice President. President & CEO of Griffson Realty Company,
Fredin Assoc. & G.E.F. Assoc., Sioux Falls, SD.
Conrad J. Hoigaard (62)(1) Chairman of the Board of the Company and President 1976
and Chairman of the Board of Hoigaard's Inc. (a retail
business), Minneapolis, MN.
Kevin T. Kirby (44) President of Kirby Investment Corp., Sioux Falls, SD, since 1989
1992. Director of H.F. Financial Corp. & Home Federal Savings
Bank, Sioux Falls, SD. Executive V. P. and Treasurer of Western Surety
Company, 1979-1992.
John C. Skoglund (66)(1) Chairman of the Board of Skoglund Communications, Inc., 1978
Minneapolis, MN.
</TABLE>
(1) Mr. Hoigaard & Mr. Skoglund are first cousins.
All shares represented by proxies will be voted FOR the election of the
foregoing nominees; provided, however, that if any such nominee should withdraw
or otherwise become unavailable for reasons not presently known, such shares may
be voted for another person in place of such nominee in accordance with the best
judgement of the persons named in the proxies.
4
<PAGE>
EXECUTIVE COMPENSATION
The following table ("Summary Compensation Table") sets forth the cash
and non-cash compensation earned for each of the last three fiscal years by the
President and Chief Executive Officer of the Company and each of the executive
officers of the Company:
SUMMARY COMPENSATION TABLE
<TABLE>
<CAPTION>
- ------------------------------------------------------------------------------------------------------------------------------------
LONG -TERM
COMPENSATION
------------
AWARDS
------------
ANNUAL COMPENSATION SECURITIES ALL OTHER
---------------------------------------------- UNDERLYING COMPENSATION(2)
NAME & PRINCIPAL YEAR SALARY ($) BONUS ($) OTHER ANNUAL (1) OPTIONS (#) ($)
POSITION (a) (b) (c) (d) COMPENSATION ($) (e) AWARDS (g) (i)
- ------------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C>
David A. Christensen 1999 338,600 40,632 188,025 10,000 11,425
President & Chief 1998 328,700 39,444 157,670 15,000 19,373
Executive Officer 1997 316,000 99,569 142,172 15,000 26,133
Gary L. Conradi 1999 102,500 6,150 47,528 3,000 3,261
Vice President 1998 98,500 5,910 43,648 4,000 5,363
Corporate Services 1997 94,700 18,769 36,392 4,000 6,244
Thomas Iacarella(3) 1999 94,500 7,565 29,362 3,000 3,038
Vice President-Finance
Secretary & Treasurer
Ronald M. Moquist 1999 170,300 17,030 70,158 5,000 5,261
Executive Vice 1998 165,300 4,991 55,123 7,500 8,647
President 1997 159,000 25,850 51,849 7,500 10,807
</TABLE>
5
<PAGE>
(1) Other Annual Compensation - column (e) ($)
<TABLE>
<CAPTION>
1999 1998 1997
---- ---- ----
<S> <C> <C> <C>
David A. Christensen
- --------------------
Tax reimbursement on stock option exercise. 105,000 72,844 62,125
Life insurance premiums. 21,642 21,642 21,642
Company provided auto. 15,848 15,951 16,500
Other taxable fringe benefits. 11,453 12,412 9,046
Tax reimbursement on taxable fringe benefits. 34,082 34,821 32,859
------- ------- -------
188,025 157,670 142,172
======= ======= =======
Gary L. Conradi
- ---------------
Tax reimbursement on stock option exercise. 21,000 14,569 12,425
Life insurance premiums. 8,200 8,200 8,200
Other taxable fringe benefits. 9,720 9,974 7,990
Tax reimbursement on taxable fringe benefits. 8,608 10,905 7,777
------- ------- -------
47,528 43,648 36,392
======= ======= =======
Thomas Iacarella
- ----------------
Tax reimbursement on stock option exercise. 10,500
Life insurance premiums. 4,130
Other taxable fringe benefits. 8,705
Tax reimbursement on taxable fringe benefits. 6,027
-------
29,362
=======
Ronald M. Moquist
- ------------------
Tax reimbursement on stock option exercise. 52,500 36,422 31,062
Life insurance premiums. 6,995 6,995 6,995
Other taxable fringe benefits. 4,050 4,029 5,259
Tax reimbursement on taxable fringe benefits. 6,613 7,667 8,533
------- ------- -------
70,158 55,123 51,849
======= ======= =======
</TABLE>
(2) Represents the Company's contribution to the individual's account in
the Company's Profit Sharing Plan.
(3) Mr. Iacarella was named Vice President - Finance, Secretary & Treasurer
on August 1, 1998. Compensation information in the table includes the
entire fiscal year.
6
<PAGE>
The following table sets forth information regarding the stock options
that were granted during fiscal 1999 to the executive officers named in the
Summary Compensation Table and the potential realizable value of such options if
the value of the Company's Common Stock appreciated during the term of such
options at assumed rates of growth:
STOCK OPTIONS GRANTED FISCAL YEAR ENDED 1/31/99
<TABLE>
<CAPTION>
POTENTIAL REALIZABLE VALUE
AT ASSUMED ANNUAL RATES OF
STOCK PRICE APPRECIATION FOR
% OF TOTAL OPTIONS OPTION TERM(2)
OPTIONS GRANTED TO EMPLOYEES EXERCISE EXPIRATION -----------------------------------
NAME GRANTED(#)(1) IN FY PRICE ($/SH) DATE 5%($) 10%($)
- -----------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C>
David A. Christensen 10,000 21.6 15.875 10-27-03 43,860 96,918
Gary L. Conradi 3,000 6.5 15.875 10-27-03 13,158 29,076
Thomas Iacarella 3,000 6.5 15.875 10-27-03 13,158 29,076
Ronald M. Moquist 5,000 10.8 15.875 10-27-03 21,930 48,459
</TABLE>
(1) All options granted expire after five years and may be exercised at
the rate of 25% per year after one year from the date of grant. The option price
may be paid in cash or by delivery of shares of the Company's common stock
valued at the market price on the date of the option exercise. In connection
with the exercise of non-qualified stock options, the Company pays a
reimbursement cash bonus of 35% of the exercise price of the option to assist in
payment of income taxes payable by the employee as a result of the option
exercise. The plan also allows for the payment of withholding taxes on the
exercise of non-qualified stock options through the surrender of shares of the
Company's common stock at market value.
(2) Amounts for the executives shown in these columns have been derived by
multiplying the exercise price by the annual appreciation rate shown (compounded
for the term of the options), multiplying the result by the number of shares
covered by the options, and subtracting the aggregate exercise price of the
options. The dollar amounts set forth under this heading are the result of
calculations at the 5% and 10% rates set by the SEC and therefore are not
intended to forecast possible future appreciation, if any, of the Company's
stock price.
The following table shows the stock options that were exercised during
fiscal 1999 by the executive officers named in the Summary Compensation Table,
the value realized by them as a result of exercising options, the number of
unexercised options at the end of fiscal 1999 and the value of unexercised
in-the-money options at the end of fiscal 1999:
AGGREGATED OPTION EXERCISES IN LAST FISCAL YEAR AND FY-END OPTION VALUE
<TABLE>
<CAPTION>
NUMBER OF VALUE OF UNEXERCISED
UNEXERCISED OPTIONS IN-THE-MONEY OPTIONS
SHARES AT FY END AT FY END
ACQUIRED ON VALUE ----------------------------- ------------------------------
NAME EXERCISE (#) REALIZED ($) EXERCISABLE UNEXERCISABLE EXERCISABLE UNEXERCISABLE
- ------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C>
David A. Christensen 15,000 32,813 37,500 32,500 0 1,250
Gary L. Conradi 3,000 (6,563) 8,250 8,750 0 375
Thomas Iacarella 1,500 3,281 3,750 5,250 0 375
Ronald M. Moquist 7,500 16,406 18,750 16,250 0 625
</TABLE>
7
<PAGE>
The graph below compares the cumulative total shareholder return on the
Company's Common Stock over the last five years with the total return of the
Russell 2000, the S&P 500 and the S&P group of diversified manufacturers.
Total Return on $100 Investment Assuming Reinvestment of Dividends
[PLOT POINTS GRAPH]
<TABLE>
<CAPTION>
Source: S&P Compustat Base year = 100: 1/31/94
Company Name Jan-94 Jan-95 Jan-96 Jan-97 Jan-98 Jan-99
------------ ------ ------ ------ ------ ------ ------
<S> <C> <C> <C> <C> <C> <C>
RAVEN INDUSTRIES INC 100.00 95.59 100.49 120.39 123.99 90.74
RUSSELL 2000 100.00 93.99 122.14 145.28 171.54 172.12
MANUFACTURING (DIVERS)-500 100.00 99.97 146.53 193.98 227.66 269.55
S&P-500 100.00 100.52 139.33 175.94 223.26 295.79
</TABLE>
The Company has chosen the Russell 2000 Index of small - capitalization
stocks to compare its total return to, rather than the S&P 500.
These smaller stocks more closely match the market capitalization of
the company than those in the S&P 500. Comparison to the S&P 500 will be dropped
next year. The Company will, however, continue to compare its total return to
the S&P's diversified manufacturers index.
BOARD COMPENSATION COMMITTEE REPORT ON EXECUTIVE COMPENSATION
Decisions on compensation of the Company's executives since October 21,
1992 have been made by the Compensation Committee of the Board of Directors.
Each member of the Compensation Committee is a non-employee director. All
decisions by this Committee relating to the compensation of the Company's
executive officers are reviewed by the full Board of Directors. Pursuant to
recently adopted rules designed to enhance disclosure of companies' policies
toward executive compensation, set forth below is a report prepared by the
Compensation Committee addressing the Company's, and its subsidiaries',
compensation policies for the fiscal year ended January 31, 1999, as they
affected the Company's executive officers.
The Compensation Committee's executive compensation policies are
designed to provide competitive levels of compensation that integrate pay with
the Company's annual goals, reward above average corporate performance,
recognize individual initiative and achievements, and assist the Company in
attracting and retaining qualified executives. The Committee has retained the
services of an independent compensation consultant for the purpose of reviewing
compensation policies and making recommendations to the Committee.
The Committee compared the entire compensation program with companies
of comparable size in similar industries. Although the Company's program fell
within the low to medium range for each individual executive, the committee
believes that the Company's compensation program is sufficiently competitive to
retain competent personnel. Comparisons were made with companies which are not
necessarily included in the performance graph above. The above graph is based on
broad industry averages while the compensation program was compared to a
relatively limited number of specific companies to which the Company relates in
size or industry type.
There are three elements in the Company's executive compensation
program, all determined by individual and corporate performance.
8
<PAGE>
o Base salary compensation
o Annual incentive compensation
o Stock options
Base salary compensation, while largely subjective, is determined by
the potential impact the individual has on the Company, the skills and
experience required by the job, and the performance and potential of the
incumbent in the job.
Annual incentive compensation for executives of the Company is based
primarily on corporate operating earnings. For the fiscal year ended January 31,
1999, operating earnings were targeted at a minimum level of $7.8 million and
maximized at $9.0 million after providing for all incentive payments. Mr.
Christensen had the potential of earning up to 48% of his base salary as
incentive compensation based on the company achieving operating earnings of $9.0
million. The incentive based on operating earnings begins at $7.8 million, with
no incentive paid until this level has been reached. The incentive payment based
on earnings is calculated in proportion to the ratio of earnings exceeding the
minimum target level to the total range used for the calculations. For example,
if earnings totaled $8.4 million, 50% of the incentive payment based on earnings
would have been paid under the plan. Based on expense control targets
established by the Compensation Committee, Mr. Christensen could also earn up to
12% of his base salary.
Other executives under the plan could have earned from 32% of base
salary up to 40% of base salary based on the same criteria as Mr. Christensen
for operating earnings. They also had other specific incentives for achieving
individual goals set by the Committee which allowed incentive payments ranging
from 6% to 10% of base salary.
No incentive compensation is awarded unless the minimum levels of
performance are met. The Committee has not made any adjustment to predetermined
formulas nor has it made any provision for discretionary adjustment or awards of
compensation. The criteria and basis for incentive compensation described above
is similar to that used in each of the three years for which executive
compensation is disclosed.
Awards of stock options under the Stock Option Plan are designed to
promote the identity of long-term interests between the Company's executives and
its shareholders and assist in the retention of executives. The Stock Option
Plan also permits the Committee to grant stock options to key personnel. Options
become exercisable based upon criteria established by the Compensation
Committee. Awards of options are generally granted on the same criteria as base
salaries are determined without regard to prior year awards.
Based on recommendations of the Compensation Committee, the Board of
Directors in fiscal 1999 granted stock options to officers and key employees.
While the value realizable from exercisable options is dependent upon the extent
to which the Company's performance is reflected in the market price of the
Company's common stock at any particular point in time, the decision as to
whether such value will be realized in any particular year is primarily
determined by each individual executive and not by the Compensation Committee.
The fiscal 1999 base cash compensation of Mr. Christensen was $338,600
which represented a 3.0% increase from his fiscal 1998 annual base salary.
Annual incentive payments for each year are based on achieving earnings targets
as described above (80% of the maximum incentive payment), and maintaining
corporate administrative costs at a certain ratio of total sales. The maximum
total annual incentive payment is 60% of base compensation. No subjective
factors are used in determining annual incentive payments for Mr. Christensen or
the other executives.
Submitted by the Compensation Committee of the Company's Board of
Directors:
Mark E. Griffin Conrad J. Hoigaard John C. Skoglund
9
<PAGE>
EMPLOYMENT AGREEMENTS AND CHANGE IN CONTROL AGREEMENTS
Each of Messrs. Christensen, Conradi, Iacarella and Moquist (the
"Executives") has entered into an employment agreement with the Company
(collectively, the "Employment Agreements"). These Employment Agreements can be
terminated upon 30 days notice. The Employment Agreements provide that the
Executives are entitled to participate in all employee benefit plans and fringe
benefit programs maintained by the company for its executive officers. In the
event of death or other termination of employment without "cause" (as defined in
the Employment Agreements) during the term of the Employment Agreements, each
Executive who has reached specified retirement criteria is entitled to
continuation of certain benefits. These benefits will be "grossed-up" to cover
anticipated income taxes payable by the Executive on the benefits.
Each Executive has also entered into a Change in Control Agreement with
the Company (collectively, the "Control Agreements"). The Control Agreements
contain provisions designed to encourage the Executives to carry out their
employment duties in the event of a change of control (as defined below). Such
provisions state that, if the Executive's employment is terminated by the
Company or the Executive within two years after the change in control, the
Executive will receive a severance payment in an amount of twice his annual
salary and incentive payment, and certain other benefits. These payments will be
"grossed-up" to cover anticipated income and excise taxes.
A "change in control" is deemed to occur when and if (i) any person
becomes the "beneficial owner" of at least 30% of the Company's stock or (ii) a
majority of the Board of Directors become individuals other than "Incumbent
Members" (as defined in the Control Agreements).
PROPOSALS OF SHAREHOLDERS
Any stockholder who desires to submit a proposal for action by the
stockholders at the next annual meeting must submit such proposal in writing to
David A. Christensen, President & CEO, Raven Industries, Inc., P.O. Box 5107,
Sioux Falls, South Dakota 57117, by December 29, 1999. Due to the complexity of
the respective rights of the stockholders and the Company in this area, any
stockholder desiring to propose such an action is advised to consult with his or
her legal counsel with respect to such rights. It is suggested that any such
proposal be submitted by certified mail, return receipt requested.
On May 21, 1998, the SEC adopted an amendment to Rule 14a-4, as
progmulgated under the Securities and Exchange Act of 1934. The amendment to
14a-4(c)(1) governs the Company's use of its discretionary proxy voting
authority with respect to a stockholder proposal which the stockholder has not
sought to include in the Company's proxy statement. The new amendment provides
that if a proponent of a proposal fails to notify the Company at least 45 days
prior to the month and day of mailing of the prior year's proxy statement, then
the management proxies will be allowed to use their discretionary voting
authority when the proposal is raised at the meeting, without any discussion of
the matter in the proxy statement.
With respect to the Company's fiscal 2000 Annual Meeting of
stockholders, if the Company is not provided notice of a stockholder proposal
which the stockholder has not previously sought to include in the Company's
proxy statement by December 29, 1999, the management proxies will be allowed to
use their discretionary authority as outlined above.
OTHER MATTERS
BOARD OF DIRECTORS AND COMMITTEES. The Board of Directors held six
meetings during the last fiscal year. The Company has an Audit Committee and
Compensation Committee, in addition to its Executive Committee. Directors who
are not full-time employees of the Company are paid an annual retainer fee of
$6,600, a fee of $1,200 per meeting (other than telephonic meetings) and $600
per telephonic meeting. Committee members will receive $600 per meeting
attended. The Chairman of the Board receives compensation at the rate of $1,000
per month in addition to the annual retainer fee of $6,600.
The Company's Audit Committee, which consisted of Messrs. Kirby,
Everist and Bour, had two meetings during the fiscal year ended January 31,
1999. The Audit Committee recommended to the full Board the engagement of
independent accountants, reviewed the audit plan and results of the audit
engagement, reviewed the independence of the auditors, and reviewed the adequacy
of the Company's system of internal accounting controls.
The Compensation Committee, which consists of Messrs. Hoigaard,
Skoglund and Griffin, had three meetings during the fiscal year ended January
31, 1999. The Compensation Committee reviewed the Company's remuneration
policies and practices, and made recommendations to the Board in connection with
all compensation matters affecting the Company.
No member of the Compensation Committee of the Board of Directors was
an officer, former officer or associate of the Company or its subsidiaries
during fiscal 1999. No executive officer of the Company served as a member of
the Compensation Committee or Board of Directors of another entity in which one
of whose executive officers served on the Company's Compensation Committee or
Board of Directors during fiscal 1999.
INDEPENDENT AUDITORS. The Board of Directors selected the firm of
PricewaterhouseCoopers LLP as auditors to the Company for the year ended January
31, 1999. PricewaterhouseCoopers LLP, independent certified public accountants,
have audited the Company's financial statements for the past 38 years. A
representative of PricewaterhouseCoopers LLP is expected to be present at the
Annual Meeting and will have an opportunity to make a statement and/or respond
to appropriate questions from stockholders.
10
<PAGE>
COMPLIANCE WITH SECTION 16(a) OF THE SECURITIES EXCHANGE ACT OF 1934.
Section 16(a) of the Securities Exchange Act of 1934 requires the Company's
officers and directors, and persons who own more than ten percent of a
registered class of the Company's equity securities, to file reports of
ownership and changes in ownership with the SEC and Nasdaq. Officers, directors
and greater than ten percent shareholders are required by SEC regulation to
furnish the Company with copies of all Section 16(a) forms they file. Based
solely on review of the copies of such forms furnished to the Company, or
written representations that no Form 5's were required, the Company believes
that during the year ended January 31, 1999 all Section 16(a) filing
requirements applicable to its officers, directors and greater than ten-percent
beneficial owners were complied with.
SOLICITATION. The Company will bear the cost of preparing, assembling
and mailing the proxy, Proxy Statement, Annual Report and other material which
may be sent to the shareholders in connection with this solicitation. Brokerage
houses and other custodians, nominees and fiduciaries may be requested to
forward soliciting material to the beneficial owners of stock, in which case
they will be reimbursed by the Company for their expenses in doing so. Proxies
are being solicited primarily by mail, but, in addition, officers and regular
employees of the Company, without extra compensation, may solicit proxies
personally, by telephone, by telegram or by special letter.
The Board of Directors does not intend to present to the meeting any
other matter not referred to above and does not presently know of any matter
that may be presented to the meeting by others. However, if other matters come
before the meeting, it is the intention of the persons named in the enclosed
proxies to vote the proxy in accordance with their best judgment.
By Order of the Board of Directors
Raven Industries, Inc.
Thomas Iacarella, Secretary
11
