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))
DAKOTAH, INCORPORATED
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(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:
DAKOTAH, INCORPORATED
ONE NORTH PARK LANE
WEBSTER, SOUTH DAKOTA 57274-0120
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NOTICE OF ANNUAL MEETING OF STOCKHOLDERS
- --------------------------------------------------------------------------------
to be held
JUNE 12, 1997
TO THE STOCKHOLDERS OF DAKOTAH, INCORPORATED
You are cordially invited to attend the Annual Meeting of stockholders
of Dakotah, Incorporated, which will be held on Thursday, June 12, 1997 at
Webster High School, Webster, South Dakota at 5:30 p.m., for the following
purposes:
1. Electing three directors to hold office for a three year term as
described in the Proxy Statement dated May 16, 1997.
2. Ratifying the appointment of Grant Thornton LLP as independent
auditors for the current year.
3. Transacting such other business as may properly come before the
meeting.
The foregoing items of business are more fully described in the Proxy
Statement accompanying this notice.
Stockholders of record as of the close of business on May 9, 1997 are
entitled to vote at the Annual Meeting and any adjournment thereof. Please
contact the Company at (605) 345-4646 to obtain a map and/or directions to
Webster High School if you plan on attending the Annual Meeting.
YOU ARE CORDIALLY INVITED TO ATTEND THE MEETING. EVEN IF YOU PLAN TO
ATTEND THE MEETING, WE URGE YOU TO SIGN, DATE, AND RETURN THE PROXY AT ONCE IN
THE ENCLOSED ENVELOPE.
By the Order of the Board of Directors,
/s/
Troy Jones, Jr.
Chief Executive Officer
May 16, 1997
DAKOTAH, INCORPORATED
ONE NORTH PARK LANE
WEBSTER, SOUTH DAKOTA 57274-0120
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PROXY STATEMENT
- --------------------------------------------------------------------------------
Annual Meeting of Stockholders
to be held
June 12, 1997
INFORMATION CONCERNING PROXY SOLICITATION
This proxy statement and accompanying proxy are being furnished to stockholders
of Dakotah, Incorporated (the "Company") on or about May 16, 1997 in connection
with the solicitation by the Board of Directors of proxies for use at the Annual
Meeting of stockholders ("Annual Meeting") to be held at Webster High School,
Webster, South Dakota on Thursday, June 12, 1997 at 5:30 p.m. Central Time, and
all adjournments thereof, for the purposes set forth in the Notice of Meeting.
The enclosed proxy is solicited by the Board of Directors of the Company. Such
solicitation is being made by mail and may also be made by directors, officers,
and regular employees of the Company personally or by telephone. Any proxy given
pursuant to such a solicitation may be revoked by the stockholder at any time
prior to the voting thereof by filing written notice of the termination of
appointment with an officer of the Company, by appearing in person at the
meeting and voting in person or by filing a new written appointment of Proxy
with an officer of the Company. Shares represented by proxies will be voted as
specified in such proxies, and if no choice is specified, will be voted (1) in
favor of the Board of Directors' nominees named in this proxy statement, and (2)
in favor of ratifying the appointment of Grant Thornton LLP as independent
auditors for the current year. Shares represented by proxies may also be voted,
in the sole discretion of the individual(s) appointed as attorneys, agents and
proxies, on any other matters as may properly come before the meeting.
OUTSTANDING SHARES AND VOTING RIGHTS
Common Stock, $.01 par value per share, of which there were 3,499,755 shares
outstanding on the record date, constitutes the only class of outstanding voting
securities issued by the Company. Each stockholder will be entitled to cast one
vote in person or by proxy for each share of Common Stock held by the
stockholder, but in connection with the cumulative voting right applicable to
the election of directors, each stockholder is entitled to as many votes as
shall equal the number of shares held by such person as of the record date,
multiplied by the number of directors to be elected. A stockholder may cast all
of such votes for a single nominee or may apportion such votes among two or more
nominees. For example, (at the Annual Meeting, three directors are up for
election for three year terms) a holder of 100 shares may cast 300 votes for a
single nominee, or apportion 300 votes in any other manner by so noting on the
accompanying form of proxy. Only stockholders of record at the close of business
on May 9, 1997, will be entitled to vote at the meeting.
A quorum is achieved when a majority of the outstanding shares are present in
person or by proxy at the Annual Meeting. Except where the right of cumulative
voting is exercised, the affirmative vote of the majority of shares present in
person or represented by proxy is required to elect each director and to approve
the other proposals. If the right of cumulative voting is exercised, the
candidates for particular Board seats receiving the most votes shall be elected.
Shares voted as abstentions (or a "withhold authority" vote as to directors) are
considered present at the meeting for purposes of determining a quorum and,
except when the right of cumulative voting is exercised, have the effect of a
negative vote. When cumulative voting is exercised, abstentions and withhold
authority votes are not counted in determining which candidates received the
most votes. If a broker submits a "non-vote" proxy, indicating that the broker
does not have discretionary authority to vote certain shares on a particular
matter, those shares will be counted as present for purposes of determining a
quorum, but will not be considered present and entitled to vote for purposes of
calculating the vote with respect to such matter.
ELECTION OF DIRECTORS
(PROPOSAL #1)
The Bylaws of the Company provide for the number of directors to be nine and
also for three classes of directors with terms staggered so as to require the
election of only one class of directors each year. At the stockholders' Meeting,
three members are to be elected to hold office for three year terms until the
2000 Annual Meeting, or until successors are elected and have qualified.
Shares represented by executed proxies will be voted, if authority to do so is
not withheld, for, and, if necessary, exercise cumulative voting rights to
secure, the election of the nominees named herein, unless one or more of such
nominees should become unavailable for election, in which event such shares
shall be voted for the election of such substitute nominees as the Board of
Directors may propose. Each person nominated has agreed to serve if elected, and
the Company knows of no reason why any of the listed nominees would be
unavailable to serve. Following is information about the nominees and all other
directors of the Company:
<TABLE>
<CAPTION>
NAME AND AGE PRINCIPAL OCCUPATION AND BUSINESS EXPERIENCE FOR PAST DIRECTOR SINCE
FIVE (5) YEARS
DIRECTORS TO BE RE-ELECTED IN 1997 FOR A THREE YEAR TERM ENDING 2000:
<S> <C> <C>
Leo T. Reynolds(3) 51 For more than five years, Mr. Reynolds has been 1995
President of Electronic Systems, Inc., an
electronics manufacturing company.
Troy Jones, Jr.(1) 36 Mr. Jones has been Chief Executive Officer of the 1994
Company since January 1995. He served as President
of Orion Financial Corp. of South Dakota, a South
Dakota corporation, since July 1993. For more than
six years prior to that, he was Director of Finance
in the South Dakota Governor's Office of Economic
Development.
Michael G. Grosek(1,3) 42 Mr. Grosek has been the mayor of Webster, South 1991
Dakota since 1984, and for more than five years has
owned and operated Mike's Jack & Jill, a supermarket
in Webster, South Dakota.
DIRECTORS ELECTED IN 1995 FOR A THREE YEAR TERM ENDING 1998:
George C. Whyte(1) 48 Mr. Whyte is a founder of the Company and has been 1980
its Chairman of the Board of Directors since June
1988. He also has served as President from April
1991 to the present. Mr. Whyte was Chief Executive
Officer of the Company from June 1988 to January 1995.
Dorothy A. Benson(2) 52 From July 1994 to the present, Ms. Benson has been a 1986
Product Development Specialist for the Company. She
has been a Company Associate for more than five
years, working in other positions including
Pattern Maker and Data Design Specialist.
Gary L. Conradi (1,2,3) 58 Mr. Conradi is currently Vice Chairman of the Board 1984
of Directors. For more than five years, he has
served as the Vice President of Corporate Services
for Raven Industries, Inc., a manufacturer of
specialized plastics, electronics and apparel.
DIRECTORS ELECTED IN 1996 FOR A THREE YEAR TERM ENDING 1999
James D. Becker(2) 35 For more than five years, Mr. Becker has been a 1988
sewing machine mechanic for the Company.
Linda J. Laskowski(2) 47 Ms. Laskowski has been with U.S. West Communications 1994
since 1987, as Vice President and General Manager of
Information Provider Market until October 1991, as
Chief Executive Officer of CLM Associates ( a joint
venture between U.S. West Communications and France
Telecom) from October 1991 to January 1994, as Vice
President - South Dakota March 1994 to December,
1996, and as Vice President of Telephony of
Continental Cablevision (which was acquired by U.S.
West in 1996) since January, 1997.
Lee A. Schoenbeck(1,2) 39 For more than five years, Mr. Schoenbeck has been an 1994
attorney in private practice in Webster, South
Dakota. He had previously served on the Board of
Directors of the Company from July 1985 through July
1991.
- -----------------------
(1) Member of Executive Committee
(2) Member of Audit Committee
(3) Member of Compensation Committee
</TABLE>
MEETINGS OF THE BOARD OF DIRECTORS AND CERTAIN COMMITTEES
The Board of Directors of the Company has standing executive, audit,
and compensation committees which have a current membership as indicated in the
foregoing section. The Board of Directors has no standing nominating committee.
The executive committee may exercise all of the powers and authority of
the Board of Directors, except as otherwise provided under the South Dakota
Business Corporation Act. During fiscal 1996, the executive committee met once.
The audit committee makes recommendations as to the selection of
auditors and their compensation, and reviews with the auditors the scope of the
annual audit, matters of internal control and procedure, the audit results and
reports and other general matters relating to the Company's accounts, records,
controls and financial reporting. The audit committee held two meetings during
fiscal 1996.
The compensation committee reviews and recommends to the Board of
Directors the compensation guidelines for executive officers and other key
employees and the composition and levels of participation in incentive
compensation plans. The compensation committee administers the Company's 1995
Stock Option Plan including determining the participants, the number of shares
subject to option and the terms and conditions of exercise. During fiscal 1996,
the compensation committee held three meetings.
During fiscal 1996 the Board of Directors of the Company met seven
times. All directors attended over 75% of the aggregate of the total number of
meetings of the Board of Directors and all committees of the Board of Directors
on which they served.
DIRECTOR COMPENSATION
Effective January 1, 1995, a new directors' compensation plan was
approved by the Executive Committee of the Board of Directors which provides
that each director who is not employed by the Company will receive $550 per
Board or committee meeting held in person, will receive $300 for any such
meeting held by telephone conference, and will receive an annual retainer of
either $1,500 (for executive committee members) or $1,000 (for other outside
directors). The retainer for 1994 was prorated to May 1, 1995 and thereafter was
or will be payable semi-annually on May 1 and November 1. Each employee director
who is not an officer receives $150 per Board or committee meeting. In addition,
all directors who are not officers of the Company received a stock option
effective May 1, 1995. The options bear an exercise price of $3.625 per share
and have a term of five years and vest in full on December 31, 1995. Pursuant to
this grant of options, the executive committee outside directors received an
option to purchase 2,000 shares, the other outside directors received an option
to purchase 1,000 shares and directors who are employees but not officers
received an option to purchase 500 shares.
Effective May 9, 1996, the Board of Directors adopted the Dakotah,
Incorporated Stock Option Plan for Directors which provides an automatic grant
of 4,000 shares to each current director who is not an officer of the Company at
the time this Plan is approved by the stockholders. Newly elected directors in
the future will also receive an initial grant of 4,000 shares at the time they
become a director. At each subsequent annual meeting of stockholders, each
director then elected will receive an additional option to purchase 2,000
shares. The exercise price will be the closing sale price of the Common Stock on
the date of the annual meeting of stockholders and will be immediately
exercisable. The options will have a term of five years.
EXECUTIVE COMPENSATION
SUMMARY COMPENSATION TABLE
The following table sets forth certain information for the Company's
fiscal years ended December 31, 1996, 1995 and 1994 regarding compensation
earned by or awarded to the Company's chief executive officer and the other
executive officers whose total annual salary and bonus exceeded $100,000 (the
"Named Executive Officers").
<TABLE>
<CAPTION>
ANNUAL COMPENSATION($)
------------------------------------- LONG-TERM
COMPENSATION
NAME AND PRINCIPAL FISCAL OTHER ANNUAL OPTION ALL OTHER
POSITION YEAR SALARY BONUS(1) COMPENSATION AWARDS(#) COMPENSATION($)
-------- ---- ------ ----- ------------ --------- ---------------
<S> <C> <C> <C> <C> <C> <C>
George C. Whyte 1996 145,000 29,000 -0- 100,000 (2)
President and 1995 141,000 58,000 -0- 25,000 1,545(3)
Chairman of the 1994 136,650 -0- -0- 184,300 309,333(4)
Board
Troy Jones, Jr.(5)
Chief Executive 1996 -0- -0- 150,000 242,745 -0-
Officer 1995 -0- -0- 200,000 100,000 -0-
Georgie Olson Harper(6)
Vice President -
National Sales 1996 94,100 17,500 -0- -0- -(2)
</TABLE>
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(1) Cash bonuses have been included as compensation for the year earned,
calculated in accordance with the terms of the individual's incentive
compensation plan, even though actually paid in the subsequent year.
(2) For 1996 the Company contributed a total of $59,000 for all employees to
the Company's Profit Sharing Plan. As of the date of filing this report
this contribution had not been allocated and accordingly no portion of
this contribution is included herein.
(3) Consists of the value of the cash contributions to the Company's Profit
Sharing Plan allocated to the executive officer.
(4) Includes the amount earned on stock appreciation rights granted pursuant
to deferred compensation agreements. See "Stock Appreciation Rights
Plan."
(5) All compensation for Mr. Jones' service to the Company is paid to Orion
Financial Corporation of South Dakota ("Orion"). The Company has engaged
Orion to provide such services. Mr. Jones is the President and
controlling stockholder of Orion.
(6) Ms. Harper became an executive officer of the Company on February 12,
1996.
OPTIONS GRANTED DURING FISCAL 1996
The following table provides information relating to options granted to
the Named Executive Officers during the Company's fiscal year ended December 31,
1996:
<TABLE>
<CAPTION>
INDIVIDUAL GRANTS
-----------------------------------------------------------------------------------------
POTENTIAL REALIZABLE VALUE
OPTIONS PERCENT OF TOTAL EXERCISE AT ASSUMED ANNUAL RATES
GRANTED OPTIONS GRANTED IN PRICE EXPIRATION OF STOCK PRICE
NAME (#)(1) FISCAL YEAR (#/sh) ($)(2) DATE APPRECIATION FOR OPTION
TERM
5%($)(3) 10%($)(3)
-----------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C>
George C. Whyte(4) ........ 100,000 25.6% $4.75 9/16/03 131,000 290,000
Troy Jones, Jr.(5)(6)...... 242,745 62.1% 3.88 12/31/00 259,737 725,808
</TABLE>
(1) The number indicated is the number of shares of Common Stock that can be
acquired upon exercise of the option. The Company has not granted any
stock appreciation rights.
(2) Exercise prices are equal to the fair market value at the date of grant.
(3) The assumed 5% and 10% annual rates of appreciation are hypothetical
rates selected by the Securities and Exchange Commission and are not
intended to, and do not, forecast or assume actual future stock prices.
(4) The options vest annually in five equal installments beginning September
16, 1997.
(5) One third of these options are exercisable on January 1 of 1997, 1998
and 1999.
(6) These options are issued in the name of Orion.
AGGREGATED OPTION EXERCISES DURING FISCAL 1996 AND FISCAL YEAR-END OPTION VALUES
The following table provides information related to the number and
value of options held by the Named Executive Officers as of December 31, 1996.
The Company does not have any outstanding stock appreciation rights.
<TABLE>
<CAPTION>
NUMBER OF UNEXERCISED VALUE OF UNEXERCISED
SHARES OPTIONS AT FISCAL IN-THE-MONEY OPTIONS AT
ACQUIRED ON VALUE YEAR-END (#) FISCAL YEAR-END($)(1)
NAME EXERCISE(#) REALIZED($) EXERCISABLE/UNEXERCISABLE EXERCISABLE/UNEXERCISABLE
-------------- ----------- ------------------------- -------------------------
<S> <C> <C> <C> <C>
George C. Whyte ......... -0- -0- 209,300 / 100,000 17,188 / - 0 -
Troy Jones, Jr. (2) ..... -0- -0- 100,000 / 242,745 68,750 / 106,201
Georgie Olson Harper..... -0- -0- 6,000 / 34,000 4,110 / 24,540
</TABLE>
(1) Options are "in-the-money" if the fair market value of the underlying
shares at fiscal year end is greater than the exercise price.
(2) These options are issued in the name of Orion.
STOCK APPRECIATION RIGHTS PLAN
Effective January 19, 1990, the Company entered into deferred
compensation agreements with George C. Whyte and Terry G. Sampson providing for
the award of stock appreciation rights ("SARs"). In general, Messrs. Whyte and
Sampson were entitled to the appreciation in the value of the Common Stock on
the date of exercise of the SARs over the value of the Common Stock on the date
of award. The SARs were two-thirds vested as of December 31, 1993 and would have
been fully vested as of December 31, 1994.
The Company entered into agreements with Messrs. Whyte and Sampson to
terminate these deferred compensation agreements effective upon the date of the
Company's public offering which was March 23, 1994. The agreements provided that
the SARs were fully vested as of the date of the public offering and fixed the
amounts earned under the SARs based on the initial public offering price of
$5.125.
As a result of the agreements fixing the amount owed pursuant to the
SARs, Messrs. Whyte and Sampson were issued, effective upon the date of the
public offering, promissory notes in the principal amount of $878,666 and
$439,334, respectively. The indebtedness bears interest at six percent per annum
and is payable in varying installments through January 1998. The termination
agreements also provide for the grant of options, with terms of five years and
exercise prices of $5.125 per share, to purchase 184,300 shares and 92,150
shares of Common Stock to Messrs. Whyte and Sampson, respectively. The option
held by Mr. Sampson has terminated.
EMPLOYMENT AGREEMENTS
The Company has entered into an employment agreement with George C.
Whyte. The Agreement provides for an initial term of employment ending on
December 31, 2001, annual compensation, annual percentage increases in base
salary, and participation in bonus and benefit plans of the Company in effect
from time to time. In connection with the Agreement, Mr. Whyte was granted an
option to purchase 100,000 shares of the Company's Common Stock. The Agreement
also provides that the Company shall make available to Mr. Whyte a loan to fund
a portion of the exercise price of such options. The Agreement terminates
automatically upon the death of the employee and the Company may terminate the
agreement only for cause (as defined in the agreement). Subject to certain
conditions and exceptions, the Agreement provides that Mr. Whyte may not compete
with the Company in the United States nor solicit any of its customers or
employees for a period of one year following termination of his employment.
EMPLOYEE PROFIT SHARING PLAN
Effective January 1, 1988, the Company adopted the Dakotah,
Incorporated Employee Profit Sharing Plan (the "Plan"). In general, all
employees who are not covered by a collective bargaining agreement are eligible
to participate in the Plan after completing one year of service as defined in
the Plan. Plan benefits are 100% vested at the completion of five years of
service. Prior to the completion of five years of service there is no vesting.
The Plan also provides for 100% vesting at the normal retirement date or upon
death or disability of the participant.
Contributions to the Plan are determined each year by the Board of
Directors at its discretion, but are limited to maximum permissible amounts as
defined in the Plan. Contributions to the Plan may be made in the form of shares
of the Company's Common Stock, valued at their fair market value, or cash. The
Company may direct that contributions made in cash will be used to purchase
Company Stock in the open market. Contributions to the Plan are allocated among
eligible participants in the proportion of each participant's salary to the
total salaries of all participants for the year in which the contribution was
made, and are held in trust until each participant's retirement, disability,
death or other termination of employment. All future distributions shall be made
in Common Stock, unless the recipient elects to receive cash. The Company
administers the Plan. First American Trust is the Trustee of the Plan.
A $75,000 cash contribution was made for the year ended December 31,
1994. For 1996 and 1995, cash contributions of $59,000 and $50,000 were made
which the Company directed be used to purchase the Company's issued and
outstanding Common Stock.
COMPLIANCE WITH SECTION 16(a)
Section 16(a) of the 1934 Act requires the Company's directors,
executive officers, and persons who own more than ten percent of the Common
Stock of the Company to file with the Securities and Exchange Commission
("Commission") initial reports of beneficial ownership and reports of changes in
beneficial ownership of common shares of the Company. Directors, officers, and
greater than ten percent stockholders are required by the regulations of the
Commission to furnish the Company with copies of all Section 16(a) reports they
file. To the Company's knowledge, based solely on a review of the copies of such
reports furnished to the Company and written representations that no other
reports were required, during the fiscal year ended December 31, 1996, all
required reports were timely filed, with the exception of initial statements of
beneficial ownership for Daniel Harper and Georgie Olson Harper.
COMPENSATION COMMITTEE REPORT
The Company's executive compensation programs are designed to attract
and retain qualified executives and to motivate them to maximize stockholder
investment by achieving strategic Company goals. There are three basic
components to the Company's executive compensations program: base pay, annual
incentive bonus, and long-term, equity-based incentive compensation in the form
of stock options. Each component is established in light of individual and
Company performance, comparable compensation programs in the industry,
geographic region, equity among employees and cost effectiveness.
Base Pay. Base pay is designed to be competitive, although conservative
as compared to salary levels for equivalent positions at comparable companies in
the industry. The executive's actual salary within this competitive framework
depends on the individuals performance, responsibilities, experience, leadership
and potential future contribution.
Annual Incentive Bonus. In addition to base pay, each executive is
eligible to receive an annual cash bonus. This compensation is based primarily
on corporate earnings and other goals determined by the compensation committee.
Long-Term, Equity-Based Incentive Compensation. The long-term,
equity-based compensation program is tied directly to stockholder return. Under
the current program, long-term incentive compensation consists of stock options
that are exercisable based upon criteria established by the stock option
committee. Stock options are awarded with an exercise price equal to the fair
market value of the Company's common shares on the date of grant. Accordingly,
the executive is rewarded only if the stockholders receive the benefit of
appreciation in the price of the Common Stock.
Because long-term options vest over time, the Company periodically
(generally once year) grants new options to provide continuing incentive for
future performance. The size of previous grants and the number of options held
are considered by the Stock Option Committee, but are not entirely determinative
of future grants. Each executive's actual grants are based upon the individual's
performance, responsibilities, experience, leadership and potential future
contribution and any other factors deemed relevant by the Committee.
Stock options are designed to align the interests of the Company's
executives with those of stockholders by encouraging executives to enhance the
value of the Company, and, hence, the price of the Common Stock and the
stockholders' investment. In addition, through deferred vesting, this component
of the compensation system is designed to create an incentive for the executive
to remain with the Company.
Annual Reviews. Each year the Committee reviews its executive
compensation policies and programs and determines what changes, if any, are
appropriate for the following year. In addition, the Compensation Committee
reviews the initial performance of the Chief Executive Officer and the Chairman
of the Board.
Chief Executive Officer. The Chief Executive Officer's compensation is
established by the Compensation Committee based on a subjective consideration of
his performance and the extent to which the Company achieves its strategic and
economic goals established at the beginning of the year and his current level of
compensation in comparison with the level of compensation paid the chief
executive officers of comparable companies in the industry and regional are.
With respect to grants of additional stock options, the Stock Option Committee
will consider the number of shares of the Company's Common Stock and options he
currently owns. The Compensation Committee also considers the Chief Executive
Officer's level of compensation as it relates to other executive officers of the
Company and to the Company's employees in general.
Limits on Deductible Compensation Payable to Executive Officers. The
Ominibus Reconciliation Act of 1993 added Section 162(m) to the Internal Revenue
Code of 1986, as amended (the "Code") limiting corporate deductions to
$1,000,000 for certain compensation paid to the chief executive officer and each
of the four other most highly compensated executives of publicly held companies.
The Company does not believe it will pay "compensation" within the meaning of
Section 162(m) to such executive officers in excess of $1,000,000 in the
foreseeable future. Therefore, the Company does not have a policy at this time
regarding qualifying compensation paid to its executive officers for
deductibility under Section 162(m), but will formulate a policy if compensation
levels ever approach $1,000,000.
The foregoing report is submitted by Gary Conradi, Mike Grosek and Leo
Reynolds, the members of the Compensation Committee.
STOCK PERFORMANCE GRAPH
Shown below is a line graph comparing the yearly percentage change in
the cumulative total stockholder return on the Company's Common Stock with the
cumulative total return of the NASDAQ Stock Market (U.S.) Index and a peer group
consisting of four publicly-traded corporations engaged principally in the
manufacture and sale of home furnishing textile products. The corporations
included in the peer group are Crown Crafts, Inc., Fieldcrest Cannon, Inc.,
Springs Industries, Inc. and Pillowtex Corporation. The graph and table assume
the investment of $100 in each of the three investment alternatives at the close
of trading on the day of the Company's initial public offering and the
reinvestment of all dividends.
COMPARISON OF CUMULATIVE TOTAL RETURN
[GRAPH]
<TABLE>
<CAPTION>
3/23/94 12/31/94 12/31/95 12/31/96
------------ --------------- --------------- --------------
<S> <C> <C> <C> <C>
Dakotah, Incorporated 100 51 72 80
- ------------------------------------------------ ------------ --------------- --------------- --------------
Peer Group 100 79 75 83
- ------------------------------------------------ ------------ --------------- --------------- --------------
NASDAQ Stock Market (U.S.) Index 100 95 134 165
- ------------------------------------------------ ------------ --------------- --------------- --------------
</TABLE>
APPOINTMENT OF INDEPENDENT AUDITORS
(PROPOSAL #2)
Based on the recommendation of the Audit Committee, the Board of
Directors has appointed Grant Thornton LLP to serve as independent auditors for
the Company for fiscal year 1997 and is submitting its appointment to the
stockholders for ratification. Grant Thornton LLP has served as the Company's
independent auditors since 1981. If the appointment is not ratified, the Board
of Directors will reconsider its selection. Representatives of Grant Thornton
LLP will be present at the meeting, will have the opportunity to make a
statement and will be available to respond to appropriate questions.
THE BOARD OF DIRECTORS RECOMMENDS THAT STOCKHOLDERS VOTE "FOR"
RATIFICATION OF THE APPOINTMENT OF GRANT THORNTON LLP AS INDEPENDENT AUDITORS.
SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS,
DIRECTORS AND EXECUTIVE OFFICERS
The following table sets forth the number of shares of Common Stock
beneficially owned by: (i) each person or entity known by the Company to own 5%
or more of the Company's Common Stock; (ii) each director of the Company (iii)
each named Executive Officer; and (iv) all executive officers and directors as a
group. All persons named in the table have sole voting and investment power with
respect to all shares of Common Stock owned unless otherwise noted. The number
of shares listed is as of March 24, 1997.
<TABLE>
<CAPTION>
NUMBER OF
SHARES PERCENT OF
BENEFICIALLY OUTSTANDING
NAME AND ADDRESS OWNED SHARES
- ---------------- ----- ------
<S> <C> <C>
Dakotah Incorporated Employee Profit Sharing Plan 1,669,969 42.7%
First American Trust, Trustee
One North Park Lane
Webster, South Dakota 57274
Heartland Advisors, Inc. 368,000 9.4%
790 North Milwaukee Street
Milwaukee, Wisconsin 53202
George C. Whyte(1,2) 396,597 10.1%
One North Park Lane
Webster, South Dakota 57274
Troy Jones, Jr.(3) 180,915 4.6%
One North Park Lane
Webster, South Dakota 57274
James D. Becker(1,4) 9,409 .2%
One North Park Lane
Webster, South Dakota 57274
Dorothy A. Benson(1,5) 13,568 .3%
One North Park Lane
Webster, South Dakota 57274
Gary L. Conradi(6) 7,200 .2%
205 East Sixth
Sioux Falls, South Dakota 57102
Michael G. Grosek(7) 6,000 .2%
P.O. Box 543
Webster, South Dakota 57274
Linda J. Laskowski(8) 6,000 .2%
One North Park Lane
Webster, South Dakota 57274
Leo T. Reynolds(9) 4,000 .1%
One North Park Lane
Webster, South Dakota 57274
Lee A. Schoenbeck(10) 18,400 .5%
One North Park Lane
Webster, South Dakota 57274
Georgie Olson Harper(11) 47,548 1.2%
One North Park Lane
Webster, South Dakota 57274
All executive officers and directors as a group 672,970 17.1%
(11 persons)(1,2,3,4,5,6,7,8,9,10,11)
</TABLE>
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(1) Includes shares allocated to the person's or group's account in the
Employee Profit Sharing Plan.
(2) Includes 209,300 shares issuable upon exercise of outstanding options,
58,831 shares allocated to Mr. Whyte in the Employee Profit Sharing
Plan, 2,233 shares owned directly by Mr. Whyte's wife and 25,488 shares
allocated to Mr. Whyte's wife in the Employee Profit Sharing Plan.
(3) Includes 180,915 shares issuable upon exercise of an outstanding option.
(4) Includes 4,500 shares issuable upon exercise of an outstanding option,
and 4,832 shares allocated to Mr. Becker in the Employee Profit Sharing
Plan.
(5) Includes 4,500 shares issuable upon exercise of an outstanding option,
and 7,915 shares allocated to Ms. Benson in the Employee Profit Sharing
Plan.
(6) Includes 6,000 shares issuable upon exercise of an outstanding option.
(7) Includes 6,000 shares issuable upon exercise of an outstanding option.
(8) Includes 5,000 shares issuable upon exercise of an outstanding option.
(9) Includes 4,000 shares issuable upon exercise of an outstanding option.
(10) Includes 6,000 shares issuable upon exercise of an outstanding option,
11,000 shares held in Mr. Schoenbeck's IRA and 600 shares held by Mr.
Schoenbeck as custodian for his children.
(11) Includes 6,000 shares issuable upon exercise of outstanding options,
38,091 shares allocated to Ms. Harper in the Employee Profit Sharing
Plan and 1,000 shares owned directly by Ms. Harper's spouse.
STOCKHOLDER PROPOSALS
The Company will consider any stockholder proposals for inclusion in
the proxy materials for the 1998 Annual Meeting of stockholders if such
proposals are received by the Company no later than February 11, 1998.
Proposals must also comply with all applicable statutes and regulations.
ANNUAL REPORTS
The Company's 1996 Annual Report, including financial statements, is
being mailed with this proxy statement to stockholders entitled to notice of the
Annual Meeting. THE COMPANY WILL FURNISH WITHOUT CHARGE TO STOCKHOLDERS A COPY
OF THE COMPANY'S ANNUAL REPORT ON FORM 10-K FOR FISCAL YEAR 1996, AS FILED WITH
THE SECURITIES AND EXCHANGE COMMISSION UPON RECEIPT OF WRITTEN REQUEST ADDRESSED
TO: CORPORATE SECRETARY, DAKOTAH, INCORPORATED, ONE NORTH PARK LANE, WEBSTER,
SOUTH DAKOTA 57274-0120.
OTHER MATTERS
At the date of this Proxy Statement, management has no knowledge of any
business other than that described herein that will be presented for
consideration at the meeting. In the event any other business is presented at
the meeting, it is intended that the persons named in the enclosed proxy will
have authority to vote such proxy in accordance with their judgment on such
business.
Please sign and return promptly the enclosed proxy in the envelope
provided. The signing of a proxy does not prevent your attending the meeting and
terminating such proxy by voting in person.
By Order of the Board of Directors
/s/
Troy Jones, Jr.
Chief Executive Officer
Dated May 16, 1997
Webster, South Dakota
PROXY
DAKOTAH, INCORPORATED
PROXY SOLICITED BY THE BOARD OF DIRECTORS
FOR ANNUAL MEETING OF STOCKHOLDERS -- JUNE 12, 1997
The undersigned stockholder of Dakotah, Incorporated (the "Company") hereby
appoints Troy Jones, Jr. and George C. Whyte, or either of them, as agents,
attorneys and proxies of the undersigned with full power of substitution in each
of them, to vote in the name and on behalf of the undersigned at the Annual
Meeting of Stockholders of the Company to be held on June 12, 1997 at 5:30 p.m.
at Webster High School, Webster, South Dakota, and at all adjournements thereof,
all of the shares of Common Stock of the Company which the undersigned would be
entitled to vote if personally present, with all pwoers of the undersigned would
possess if personally present.
Item 1. Authority to vote for the election of the following nominees as
directors: Leo T. Reynolds, Troy Jones, Jr. and Michael G. Grosek.
YOU MAY WITHHOLD AUTHORITY TO VOTE FOR ANY INDIVIDUAL NOMINEE BY
STRIKING A LINE THROUGH THE NOMINEE'S NAME. TO CUMULATE VOTES AS TO A
PARTICULAR NOMINEE(S) AS EXPLAINED IN THE PROXY STATEMENT DATED MAY 16,
1997, INDICATE THE NAME(S) AND NUMBER OF VOTES TO BE GIVEN TO SUCH
NOMINEE(S).
[ ] GRANT [ ] WITHHOLD
Item 2. Ratifying the appointment of Grant Thornton LLP as independent auditors
for the current fiscal year.
[ ] FOR [ ] AGAINST [ ] ABSTAIN
Item 3. In their discretion upon such other business as may properly come before
the meeting.
All as described in the Notice of Annual Meeting of Stockholders and Proxy
Statement, receipt of which is hereby acknowledged.
(CONTINUED, AND TO BE COMPLETED AND SIGNED ON THE REVERSE SIDE)
ALL SHARES WILL BE VOTED AS SPECIFIED. IF NO CHOICE IS SPECIFIED, THE SHARES
WILL BE VOTED FOR THE NOMINEES, TO APPROVE THE APPOINTMENT OF GRANT THORNTON LLP
AND IN ACCORDANCE WITH THE PROXIES DISCRETION IN CONNECTION WITH SUCH OTHER
BUSINESS AS MAY PROPERLY COME BEFORE THE MEETING. Either of said attorneys or
their substitutes who shall be present and act, or if only one shall attend,
then that one, shall have and may exercise all the powers of said attorneys
hereunder.
Dated:__________________________, 1997
______________________________________
Print Names(s) of Shareholder(s)
______________________________________
Signature of Shareholder
______________________________________
Signature of Joint Owner
[Signature should agree with stenciled
names(s).] When signing as attorney,
guardian, executor, administrator or
trustee, please give title. EACH joint
owner must sign. If the signer is a
corporation, give full corporate name
and sign by duly authorized officer,
showing officer's title.
PLEASE EXECUTE AND RETURN THIS PROXY PROMPTLY. YOUR COOPERATION IS SINCERELY
APPRECIATED.
