<PAGE> 1
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
[ ] 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 Rule 14a-11(c)
or Rule 14a-12
AER ENERGY RESOURCES, 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)(1) and 0-11
(1) Title of each class of securities to which transaction applies:
(2) Aggregate number of securities to which transaction applies:
(3) Per unit price or other underlying value of transaction computed
pursuant to Exchange Act Rule 0-11 (set forth the amount on which the
filing fee is calculated and state how it was determined):
(4) Proposed maximum aggregate value of transaction:
(5) Total fee paid:
[ ] Fee paid previously with preliminary materials.
[ ] Check box if any part of the fee is offset as provided by Exchange Act
Rule 0-11(a)(2) and identify the filing for which the offsetting fee was paid
previously. Identify the previous filing by registration statement number, or
the Form or Schedule and the date of its filing.
(1) Amount Previously Paid:
(2) Form, Schedule or Registration Statement No.:
(3) Filing Party:
(4) Date Filed:
<PAGE> 2
[AER ENERGY LOGO]
March 6, 2000
Dear Shareholder:
You are cordially invited to attend the 2000 Annual Meeting of
Shareholders of AER Energy Resources, Inc. on Wednesday, April 12, 2000, at
11:00 a.m., local time, at the Sheraton-Buckhead Hotel, 3405 Lenox Road, NE,
Atlanta, Georgia 30326.
The business to be acted on during the meeting includes the election
of six directors. The accompanying proxy statement contains details on this
item. We will also review the major developments of 1999.
Your participation in the affairs of the Company is important,
regardless of the number of shares you hold. To ensure your representation at
the meeting whether or not you are able to be present, please complete and
return the enclosed proxy card as soon as possible. If you do attend the
meeting, you may revoke your proxy and vote in person if you so desire.
I look forward to seeing you on April 12. Thank you for your
continuing interest in the Company.
Sincerely yours,
/s/ DAVID W. DORHEIM
David W. Dorheim
President and Chief Executive Officer
AER Energy Resources, Inc.
<PAGE> 3
AER ENERGY RESOURCES, INC.
4600 HIGHLANDS PARKWAY, SUITE G
SMYRNA, GEORGIA 30082
NOTICE OF ANNUAL MEETING OF SHAREHOLDERS
TO BE HELD ON APRIL 12, 2000
To the Shareholders of AER Energy Resources, Inc.:
The Annual Meeting of Shareholders of AER Energy Resources, Inc. (the
"Company") will be held at the Sheraton-Buckhead Hotel, 3405 Lenox Road, NE,
Atlanta, Georgia 30326, on Wednesday, April 12, 2000, at 11:00 a.m., local time,
for the following purposes:
1. To elect six directors.
2. To transact such other business as may properly come before
the meeting.
February 11, 2000 is the record date for the determination of
shareholders entitled to notice of and to vote at such meeting or any
adjournment thereof.
Whether or not you expect to be present in person at the meeting,
please sign and date the accompanying proxy and return it promptly to our
transfer agent in the enclosed postage-paid reply envelope. This will assist us
in preparing for the meeting.
By Order of the Board of Directors
/s/ J. T. MOORE
J. T. Moore
Vice President - Chief Financial Officer,
Secretary and Treasurer
MARCH 6, 2000
SHAREHOLDERS ARE URGED TO DATE, SIGN AND RETURN PROMPTLY THE ENCLOSED
PROXY IN THE ACCOMPANYING ENVELOPE, WHICH REQUIRES NO POSTAGE IF MAILED WITHIN
THE UNITED STATES. IF A SHAREHOLDER RECEIVES MORE THAN ONE PROXY BECAUSE HE OR
SHE OWNS SHARES REGISTERED IN DIFFERENT NAMES OR ADDRESSES, EACH PROXY SHOULD BE
COMPLETED AND RETURNED. YOUR PROXY WILL BE VOTED WITH RESPECT TO THE MATTERS
IDENTIFIED THEREON IN ACCORDANCE WITH ANY SPECIFICATIONS ON THE PROXY. YOUR
COOPERATION IS APPRECIATED.
<PAGE> 4
AER ENERGY RESOURCES, INC.
4600 HIGHLANDS PARKWAY, SUITE G
SMYRNA, GEORGIA 30082
PROXY STATEMENT
ANNUAL MEETING OF SHAREHOLDERS TO BE HELD ON APRIL 12, 2000
This Proxy Statement is furnished in connection with the solicitation
of proxies by the Board of Directors of AER Energy Resources, Inc. (the
"Company") to be used at the Annual Meeting of Shareholders (the "Annual
Meeting") of the Company to be held at the Sheraton-Buckhead Hotel, 3405 Lenox
Road, NE, Atlanta, Georgia 30326, at 11:00 a.m., local time, on April 12, 2000,
and any adjournments thereof, for the purposes set forth in the accompanying
Notice of Annual Meeting of Shareholders. A copy of the Company's Annual Report
to Shareholders for the fiscal year ended December 31, 1999 is enclosed. This
Proxy Statement and accompanying form of proxy and the Company's 1999 Annual
Report to Shareholders were first sent or given to shareholders on or about
March 6, 2000.
SOLICITATION OF PROXIES
This proxy solicitation will be conducted principally by mail, and the
cost will be paid by the Company. Proxies may also be solicited by officers and
regular employees of the Company personally or by telephone, but such persons
will not be specifically compensated for such services. Banks, brokers,
nominees, and other custodians and fiduciaries will be requested to forward
proxy solicitation material to their principals and customers where appropriate,
and the Company will reimburse such banks, brokers, nominees, custodians and
fiduciaries for their reasonable out-of-pocket expenses in sending the proxy
material to beneficial owners of the shares.
ACTIONS TO BE TAKEN UNDER THE PROXY
In voting on the election of directors (Proposal 1), shareholders may
vote in favor of all nominees or withhold their votes as to some or all
nominees. Unless other instructions are indicated on the proxy card, all
properly executed proxies received by the Company will be voted FOR Proposal 1,
the election of all the nominees for director set forth below under "Election of
Directors". Some proxies may be broker non-votes (marked to indicate that the
shares are not being voted).
The presence, in person or by proxy, of at least a majority of the
total number of outstanding shares is necessary to constitute a quorum at the
Annual Meeting. Any proxy authorized to be voted at the Annual Meeting on any
matter (including on routine matters pursuant to the discretionary authority
granted in management's proxy), whether or not the proxy is marked to withhold
authority or abstain or to effect a broker non-vote on any proposal, will be
counted in establishing a quorum.
The election of directors will require the affirmative vote of a
plurality of the shares voted at the Annual Meeting in person or by proxy. Votes
withheld and broker non-votes will not be included in vote totals for director
nominees and will have no effect on the outcome of the vote.
Any shareholder giving a proxy may revoke it at any time before it is
exercised by giving written notice of revocation, or a duly executed proxy
bearing a later date, to the Secretary of the Company. In order to be effective,
such notice or later dated proxy must be received by the Company prior to the
exercise of the earlier proxy. A shareholder may attend the Annual Meeting,
revoke his proxy, and vote in person.
VOTING SECURITIES
Only holders of record as of the close of business on February 11,
2000 of the Company's common stock, no par value ("AER Common Stock"), are
entitled to vote at the Annual Meeting. On that date, there were 24,850,263
shares of AER Common Stock outstanding, each entitled to one vote.
1
<PAGE> 5
SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT
Security Ownership of Certain Beneficial Owners
The following table sets forth, as of February 11, 2000, certain
information with respect to the only persons known by the Company to be the
beneficial owners, as determined pursuant to Rule 13d-3 ("Rule 13d-3")
promulgated by the Securities and Exchange Commission ("SEC"), of more than 5%
of the outstanding AER Common Stock. Except as otherwise indicated, the holders
listed below have sole voting and investment power with respect to all shares
beneficially owned by them. The following table is based in part upon
information from SEC Schedule 13Ds and 13Gs furnished to the Company.
<TABLE>
<CAPTION>
PERCENT OF
AMOUNT OF OUTSTANDING
NAME AND ADDRESS OF BENEFICIAL OWNER BENEFICIAL OWNERSHIP COMMON STOCK
- ------------------------------------ -------------------- -------------
<S> <C> <C>
Jon A. Lindseth 6,599,645(1) 25.2%
12651 Elmwood Avenue
Cleveland, OH 44111
Jon A. Lindseth, Trustee under Jon A. Lindseth Trust 6,469,645(1) 24.7%
Agreement dated April 25, 1986, as modified
12651 Elmwood Avenue
Cleveland, OH 44111
AER Partners 3,189,915(1) 12.2%
12651 Elmwood Avenue
Cleveland, OH 44111
Elmwood Partners II 3,158,500(1) 12.1%
12651 Elmwood Avenue
Cleveland, OH 44111
Odyssey Partners, L.P. 2,177,055(2) 8.3%
31 West 52nd Street
New York, NY 10019
Keystone, Inc. 1,095,500(3) 4.2%
201 Main Street, Suite 3100
Fort Worth, TX 76102
FW AER Partners L.P. 2,419,158(3) 9.0%
201 Main Street, Suite 3100
Fort Worth, TX 76102
</TABLE>
- ----------
(1) The Jon A. Lindseth Trust Agreement dated April 25, 1986, as modified
(the "Trust"), is a revocable trust created to manage and invest
certain assets for the benefit of Mr. Lindseth. The Trust's 24.7%
interest in AER Common Stock is owned indirectly through the Trust's
50% ownership interests in AER Partners and Elmwood Partners II and
30% ownership interest in Battery Partners. Elmwood Partners II and
AER Partners are investment partnerships that are composed of
substantially the same partners. Battery Partners is a partnership
which owns 121,230 shares or 0.5% of the outstanding AER Common Stock.
Each of these entities is controlled by Mr. Lindseth. Mr. Lindseth
claims beneficial ownership of all shares of AER Common Stock
indirectly owned by the Trust. Mr. Lindseth also controls The
Kindt-Collins Company ("Kindt-Collins") which owns 100,000 shares of
AER Common Stock. Mr. Lindseth's adult children and their spouses
together hold approximately a 15% interest in each of AER Partners,
Elmwood Partners II and Kindt-Collins and a 26% interest in Battery
Partners. Mr. Lindseth disclaims beneficial ownership of the interest
of his children and their spouses in AER Partners, Elmwood Partners
II, Kindt-Collins and Battery Partners. Giving effect to the shares
owned directly and by AER Partners, Elmwood Partners II, Kindt-Collins
and Battery Partners, Mr. Lindseth
2
<PAGE> 6
and his wife currently control approximately 25.2% of the outstanding
AER Common Stock.
(2) Messrs. Stephen Berger, Leon Levy, Jack Nash, Joshua Nash and Brian
Wruble, by virtue of being general partners of Odyssey Partners, L.P.,
a privately-held investment partnership ("Odyssey"), may be deemed to
beneficially own the shares of AER Common Stock owned by Odyssey. Each
of such partners disclaims any such beneficial ownership (within the
meaning of Rule 13d-3) which exceeds the proportionate interest in the
AER Common Stock which he may be deemed to own as a general partner of
Odyssey. No other persons exercise (or may be deemed to exercise) any
voting or investment power over the shares of AER Common Stock owned
by Odyssey.
(3) Shares reported as beneficially held by Keystone, Inc. ("Keystone")
include 1,000,000 shares held by Keystone; 77,500 shares held jointly
by David G. Brown, Vice President and Chief Financial Officer of
Keystone, and his spouse, Maureen Brown; and 18,000 shares held by
Mark A. Wolfson, Vice President of and Consultant to Keystone.
Robert M. Bass as President and sole director of Keystone may,
pursuant to Rule 13d-3, be deemed to be the beneficial owner of the
1,000,000 shares of AER Common Stock owned by Keystone. In May 1996,
FW AER Partners L.P. ("FW Partners") acquired 1,584,158 shares plus
warrants to purchase an additional 835,000 shares. Group 31, Inc. as
sole general partner of FW Partners and J. Taylor Crandall as
President of Group 31, Inc. may, pursuant to Rule 13d-3, be deemed to
be the beneficial owners of the 1,584,158 shares of AER Common Stock
and warrants to purchase an additional 835,000 shares of AER Common
Stock owned by FW Partners. The above individuals, together with
Keystone, FW Partners and Group 31, Inc. jointly filed a Schedule 13D
reporting the acquisition of an aggregate of 3,514,658 shares of AER
Common Stock because they may be deemed to constitute a "group" within
the meaning of Rule 13d-3. The Schedule 13D filing did not include
14,750 shares received subsequent to the filing by David G. Brown
pursuant to the Company's 1993 Non-Employee Directors' Restricted
Stock Award Plan.
3
<PAGE> 7
Security Ownership of Directors and Management
The following table sets forth, as of February 11, 2000, certain
information concerning the beneficial ownership, as defined in Rule 13d-3, of
shares of AER Common Stock by the directors, the Named Executive Officers (as
defined in the Executive Compensation section below), and all executive
officers and directors as a group. Except as otherwise indicated, the persons
listed below have sole voting and investment power with respect to all shares
beneficially owned by them.
<TABLE>
<CAPTION>
PERCENT OF
AMOUNT OF OUTSTANDING
NAME OF BENEFICIAL BENEFICIAL COMMON
OWNER POSITION OWNERSHIP STOCK
- ----- -------- --------- -----
<S> <C> <C> <C>
Jon A. Lindseth Chairman of the Board 6,599,645(1)(2) 25.2%
David W. Dorheim Director, President and Chief
Executive Officer 192,360(3) *
David G. Brown Director 92,250(2)(4) *
James W. Dixon Director 29,250(2) *
William L. Jackson Director 35,250(2) *
John L. Wilkes Director 42,250(2) *
R. Dennis Bentz Vice President - Product and
Process Development 123,010(3) *
Frank M. Harris Vice President - Marketing and
Licensing 122,460(3) *
J. T. Moore Vice President - Chief Financial
Officer, Secretary and Treasurer -- *
Lawrence A. Tinker Vice President - Advanced
Technology 113,747(3) *
All executive officers and
Directors as a group
(10 persons) 7,350,222(5) 27.7%
</TABLE>
- ----------
* Less than 1.0%
(1) Includes 3,189,915 shares held by AER Partners, 3,158,500 shares held
by Elmwood Partners II, 121,230 shares held by Battery Partners and
100,000 shares held by Kindt-Collins.
(2) Includes shares awarded pursuant to the Company's 1993 Non-Employee
Directors' Restricted Stock Award Plan, which are subject to
restrictions on transfer that lapse over five years.
(3) Includes 140,000, 70,000, 70,000, and 90,000 shares subject to options
immediately exercisable at $3.19 per share held by Messrs. Dorheim,
Bentz, Harris, and Tinker respectively.
(4) Includes 77,500 shares held jointly by Mr. Brown and his spouse.
(5) Includes a total of 370,000 shares subject to options.
PROPOSAL 1
ELECTION OF DIRECTORS
Pursuant to the Bylaws of the Company, six directors will be elected
to serve for a term of one year and until their successors are elected and
qualified. It is the intention of the persons named in the accompanying proxy
to vote for the election of the nominees identified below. Should any nominee
be unable or fail to accept nomination or election, which is not anticipated,
it is the intention of the persons named in the proxy, unless otherwise
instructed in the proxy, to vote for the election in his stead of such other
person as management may recommend.
4
<PAGE> 8
The following table sets forth certain information concerning persons
nominated as directors.
<TABLE>
<CAPTION>
POSITION WITH COMPANY DIRECTOR OF
NAME AGE AND PRINCIPAL OCCUPATION COMPANY SINCE
- ---- --- ------------------------ -------------
<S> <C> <C> <C>
Jon A. Lindseth 65 Chairman of the Board. Chairman of Kindt-Collins 1989
(foundry supply company)
David W. Dorheim 50 Director, President and Chief Executive Officer 1989
David G. Brown 43 Director. Managing partner of Oak Hill Venture 1996
Partners; Vice President and Chief Financial
Officer of Keystone; limited partner of FW
Partners; principal of Arbor Investors, LLC (all
are investment companies). Mr. Brown also
serves on the Board of Directors of Bell &
Howell Company.
James W. Dixon 52 Director. Chief Executive Officer of Broadreach 1997
Consulting, Inc. (formerly The Reohr Group)
(internet professional services company). Mr.
Dixon also serves on the Board of Directors
of US Data, Inc.
William L. Jackson 73 Director. Retired Chairman of Tupperware, Inc. 1993
(consumer product manufacturer)
John L. Wilkes 74 Director. Retired Senior Vice President of 1993
Technology Worldwide of Duracell Battery
Company (battery manufacturer)
</TABLE>
Each nominee for director has been principally employed in his present
capacity or a similar capacity with the same organization for at least the last
five years except as follows: from 1988 to 1996, Mr. Dixon served as Chairman
and Chief Executive Officer of CompuCom Systems, Inc., a national computer
reseller and services company.
Each of the Company's directors serves for a one-year term and until
his successor is elected and qualified or until his earlier death, resignation
or removal.
MEETINGS OF THE BOARD OF DIRECTORS
The Board of Directors met seven times during 1999 and each director
attended at least 75% of such meetings. During 1999, each director serving on a
committee of the Board attended at least 75% of the meetings of each committee
on which such director served.
COMMITTEES OF THE BOARD OF DIRECTORS
The Board of Directors has standing Audit and Compensation Committees,
which are composed of three members each. The Board of Directors does not have
a nominating committee.
The Audit Committee, composed of Messrs. Lindseth, Jackson and Wilkes,
met one time in 1999. The functions of the Audit Committee are to recommend to
the Board each year the accounting firm to be retained as the Company's
independent auditors, consider the fee arrangement and scope of the audit,
review the financial statements and the independent auditors' report and the
accompanying management letter, and consult with the independent auditors with
regard to the adequacy of the Company's overall accounting and financial
controls.
The Compensation Committee, composed of Messrs. Lindseth, Brown, and
Jackson, met one time in 1999. The purpose of the Compensation Committee is to
approve compensation policies and programs for the Company's employees and
executive officers and to grant options to employees and executive officers
under the Company's 1992 Stock Option Plan (the "Stock Option Plan").
5
<PAGE> 9
SHAREHOLDER VOTE
The election of the six nominees named above will require the
affirmative vote of the holders of a plurality of the shares of AER Common
Stock voted at the Annual Meeting, assuming a quorum is present. THE BOARD OF
DIRECTORS RECOMMENDS THAT YOU VOTE "FOR" THE ELECTION OF THE SIX NOMINEES NAMED
ABOVE.
EXECUTIVE COMPENSATION
REPORT ON EXECUTIVE COMPENSATION BY THE COMPENSATION COMMITTEE OF THE BOARD OF
DIRECTORS
The Compensation Committee (the "Committee") of the Board of Directors
of the Company is composed of directors who are not employees of the Company.
The Board of Directors has delegated to the Committee the authority:
1. To determine the compensation of David W. Dorheim, President
and Chief Executive Officer of the Company.
2. To approve, upon recommendation by Mr. Dorheim, the
compensation arrangements of executive officers of the
Company, other than Mr. Dorheim, including the executive
officers named in the Summary Compensation Table below.
3. To grant options to employees of the Company under the Stock
Option Plan and to carry out the duties and responsibilities
of the Board of Directors with respect to the Company's
incentive plans.
Compensation Policies
The Company's compensation policies for executive officers are
designed to provide competitive levels of compensation allowing the Company to
attract and retain highly qualified executive officers whose contributions are
essential to the success of the Company. The Committee approves salary
increases of executive officers. The Company's compensation policies for
executive officers have two principal components: (1) a significant portion of
an individual executive officer's compensation depends on the performance of
the individual, and (2) compensation in the form of stock options is contingent
upon continued employment of the executive officer over a specified period of
time because options typically do not fully vest for five years. The Committee
believes that ownership of the Company's stock by its executive officers is
important, and the Company's compensation policies and plans are designed to
encourage such stock ownership. Specific information concerning the
implementation of these policies in connection with the compensation of Mr.
Dorheim and the other executive officers is provided below.
Annual Salaries
The annual salaries of executive officers are fixed initially at
amounts that are deemed sufficient to induce them to accept employment with the
Company. Salaries of executive officers are reviewed annually, and increases,
if any, are made based on the individual's and the Company's performance. To
the extent any salary increases have been granted, they have been based on a
subjective evaluation of the performance of the recipient.
The Company currently intends that all compensation paid to executive
officers shall qualify for deductibility under Section 162(m) of the Internal
Revenue Code (the "Code"), which provides that compensation paid to certain
executive officers of public corporations in excess of $1,000,000 per year is
not deductible for federal income tax purposes.
Payment of Bonuses
No bonuses were paid in 1999 to the executive officers, except Mr.
Dorheim as described below.
6
<PAGE> 10
Compensation of Chief Executive Officer
Using the criteria discussed above and in recognition of his continued
efforts in implementing a new corporate strategy, Mr. Dorheim's salary was
$207,040 for 1999, an increase of $8,194 (4%) over the prior year. Pursuant to
an understanding between the Company and Mr. Dorheim when he was hired in 1989,
Mr. Dorheim receives a $6,000 per year automobile allowance. In addition, Mr.
Dorheim received a $33,000 bonus payment in 1999.
Stock Options
Under the Stock Option Plan, in 1993, 1994 and 1995, the Committee
awarded to executive officers options to purchase AER Common Stock. These
options become exercisable at 20% per year following the date of grant, expire
in ten years, and were originally priced at 100% of the fair market value of
the AER Common Stock at the date of each grant. These options were repriced
effective March 22, 1996 to the closing market price on that date. In
connection with the repricing, each option holder agreed that each of the
repriced options could not be exercised for a period of one year. In 1999,
under the Stock Option Plan, the Committee awarded to executive officers and
all other employees options to purchase AER Common Stock. These options become
exercisable in 2001 if certain performance goals are met by the Company; if the
goals are not met, the options will fully vest five years from the date of
grant. All of the options granted by the Company encourage executive officers
and employees to remain employed by the Company, and the value of the options
depends on increases in the market value of AER Common Stock.
Submitted by the Compensation Committee of the Board of Directors.
JON A. LINDSETH
DAVID G. BROWN
WILLIAM L. JACKSON
7
<PAGE> 11
EXECUTIVE COMPENSATION
Compensation Summary. The following table shows, for the last three
fiscal years of the Company, annual compensation paid, earned or awarded by the
Company to the President and Chief Executive Officer and each of the four most
highly compensated executive officers of the Company (the "Named Executive
Officers").
SUMMARY COMPENSATION TABLE (1)
<TABLE>
<CAPTION>
LONG-TERM
COMPENSATION
--------------
AWARDS
------
ANNUAL COMPENSATION NUMBER OF
------------------------------------------------------- SECURITIES
OTHER ANNUAL UNDERLYING
NAME AND PRINCIPAL POSITION YEAR SALARY ($) BONUS ($) COMPENSATION ($) OPTIONS(#)(2)
- --------------------------- ---- ----------- ---------- --------------------- --------------
<S> <C> <C> <C> <C> <C>
David W. Dorheim 1999 207,040 33,000 6,000 (3) 75,000
President and Chief 1998 198,846 33,000 6,000 (3) / 18,568(4) --
Executive Officer 1997 223,598 45,000 6,000 (3) / 18,568(4) --
R. Dennis Bentz 1999 156,874 -- -- 60,000
Vice President - Product 1998 150,840 -- 18,568(4) --
and Process Development 1997 144,533 15,000 18,568(4) --
Frank M. Harris 1999 156,874 -- -- 60,000
Vice President - 1998 150,840 -- 18,568(4) --
Marketing and Licensing 1997 145,811 15,000 18,568(4) --
J. T. Moore 1999 110,917 -- -- 60,000
Vice President - 1998 35,397(5) -- -- --
Chief Financial Officer, 1997 -- -- -- --
Secretary and Treasurer
Lawrence A. Tinker 1999 149,221 -- -- 60,000
Vice President - 1998 133,452 -- 16,917(4) --
Advanced Technology 1997 128,858 15,000 16,917(4) --
</TABLE>
- ----------------
(1) The Company does not maintain a "long-term incentive plan," as defined
by rules of the SEC, and has not made any awards of stock appreciation
rights ("SARs").
(2) Consists of options issued pursuant to the Stock Option Plan.
(3) Automobile allowance.
(4) Consists of the forgiveness of notes receivable and related interest
and the reimbursement of related income taxes.
(5) Mr. Moore was hired in September 1998. His annual salary in 1998 was
$110,000.
8
<PAGE> 12
OPTION GRANTS IN 1999
The following table shows individual grants of stock options, under
the Stock Option Plan, made during 1999 to the Named Executive Officers.
<TABLE>
<CAPTION>
POTENTIAL REALIZABLE VALUE AT
ASSUMED ANNUAL RATES OF STOCK
INDIVIDUAL GRANTS PRICE APPRECIATION FOR OPTION TERM
----------------------------------------- -----------------------------------
NUMBER OF PERCENT OF
SECURITIES TOTAL OPTIONS EXERCISE
UNDERLYING GRANTED TO OF BASE
OPTIONS EMPLOYEES IN PRICE EXPIRATION
NAME GRANTED (#) FISCAL YEAR ($/SH) DATE 5% ($) 10% ($)
- ---- ----------- ----------- -------- ---------- ------ -------
<S> <C> <C> <C> <C> <C> <C>
David W. Dorheim 75,000 11% 0.25 7/1/09 11,792 29,883
R. Dennis Bentz 60,000 9% 0.25 7/1/09 9,433 23,906
Frank M. Harris 60,000 9% 0.25 7/1/09 9,433 23,906
J. T. Moore 60,000 9% 0.25 7/1/09 9,433 23,906
Lawrence A. Tinker 60,000 9% 0.25 7/1/09 9,433 23,906
</TABLE>
EXERCISES OF OPTIONS IN 1999 AND AGGREGATE YEAR-END OPTION VALUES
Shown below is information with respect to the year-end values of all
options held by the Named Executive Officers. No Named Executive Officer
exercised any options in 1999.
AGGREGATED OPTION EXERCISES IN LAST FISCAL YEAR
AND FY-END OPTION VALUES
<TABLE>
<CAPTION>
NUMBER OF SECURITIES
SHARES UNDERLYING VALUE OF UNEXERCISED
ACQUIRED UNEXERCISED OPTIONS IN-THE-MONEY OPTIONS
ON VALUE AT FY-END (#) AT FY-END ($) (1)
EXERCISE REALIZED EXERCISABLE/ EXERCISABLE/
NAME (#) ($) UNEXERCISABLE UNEXERCISABLE
- ---- --- --- ------------- ------------
<S> <C> <C> <C> <C>
David W. Dorheim N/A N/A 140,000 / 95,000 0 / 1,170
R. Dennis Bentz N/A N/A 70,000 / 70,000 0 / 936
Frank M. Harris N/A N/A 70,000 / 70,000 0 / 936
J. T. Moore N/A N/A 0 / 60,000 0 / 936
Lawrence A. Tinker N/A N/A 90,000 / 70,000 0 / 936
</TABLE>
- ----------
(1) Equal to the net value of the option as of December 31, 1999, i.e.,
the closing market price of $0.266 per share of AER Common Stock on
December 31, 1999, less the applicable per share exercise price of the
option, multiplied by the number of shares subject to the option.
LONG-TERM INCENTIVE PLAN AWARDS IN 1999
The Company has no "long-term incentive plan" as defined in the SEC's
proxy statement disclosure rules.
PENSION PLAN
The Company has no defined benefit or actuarial plan.
9
<PAGE> 13
DIRECTOR COMPENSATION
The Company historically has paid no cash compensation to its
directors, except reimbursement for reasonable expenses. In 1993, the Board of
Directors adopted the Company's 1993 Non-Employee Directors' Restricted Stock
Award Plan (the "Restricted Stock Plan"), pursuant to which non-employee
directors are granted restricted stock awards. The Restricted Stock Plan was
approved by the Company's shareholders at the Company's 1994 Annual Meeting of
Shareholders. Under the Restricted Stock Plan, every five years each
non-employee director receives a restricted stock award covering 15,000 shares
of AER Common Stock. Restrictions on such shares lapse 20% per year for each
year the non-employee director serves on the Board of Directors. Awards are
pro-rated for non-employee directors selected between annual meetings of the
shareholders. As of February 11, 2000, 155,750 outstanding shares had been
awarded pursuant to the Restricted Stock Plan.
PERFORMANCE MEASUREMENT COMPARISON
The following chart shows total shareholder returns for the periods
indicated for each of (i) AER Common Stock, (ii) the Nasdaq Stock Market-U.S.
Index, and (iii) the Chase Hambrecht & Quist Growth Index (a subset of the
Chase Hambrecht & Quist Technology Index).
COMPARISON OF SIXTY MONTH CUMULATIVE TOTAL RETURN ON INVESTMENT AMONG
AER ENERGY RESOURCES, INC., THE NASDAQ STOCK MARKET U.S. INDEX AND THE
CHASE HAMBRECHT & QUIST GROWTH INDEX
[CHART]
<TABLE>
<CAPTION>
12/31/94 12/31/95 12/31/96 12/31/97 12/31/98 12/31/99
-------- -------- -------- -------- -------- --------
<S> <C> <C> <C> <C> <C> <C>
AER Energy Resources 100.00 63.89 48.61 25.00 16.67 5.90
Chase H&Q Growth 100.00 166.89 174.68 179.41 260.24 729.00
Nasdaq Market-U.S. 100.00 141.33 173.89 213.07 300.25 542.43
</TABLE>
10
<PAGE> 14
COMPENSATION COMMITTEE INTERLOCKS AND INSIDER PARTICIPATION
Effective May 7, 1993, the Board of Directors established a
Compensation Committee of which no executive officers or former executive
officers are or have been members. Prior to May 1993, the Board of Directors as
a whole, including Mr. Dorheim, participated in determining executive officer
compensation.
Mr. Lindseth is Chairman of the Board and founder of the Company.
Prior to the Company's initial public offering in 1993, entities controlled by
Mr. Lindseth, which consist of Kindt-Collins, Battery Partners, Elmwood
Partners II and AER Partners (the "Lindseth Entities"), purchased or acquired
at various times since the Company's inception an aggregate of 5,169,645 shares
of AER Common Stock for a total cost of $7,186,979. These shares were purchased
at the same prices and on the same terms as AER Common Stock purchased by other
shareholders at the same times. Kindt-Collins purchased an additional 100,000
shares of AER Common Stock in the Company's initial public offering in July
1993. Elmwood Partners II purchased an additional 350,000 shares of AER Common
Stock in the Company's public offering in November 1994. In December 1994,
Kindt-Collins distributed 800,000 shares of AER Common Stock to its
shareholders as a dividend. In January 1995, the 800,000 shares were
subsequently contributed by the Kindt-Collins shareholders, who are also the
partners of Elmwood Partners II, to Elmwood Partners II. In October 1995, Mr.
Lindseth transferred his interests in Battery Partners, Elmwood Partners II and
AER Partners to Jon A. Lindseth, Trustee under Jon A. Lindseth Trust Agreement
dated April 25, 1986, as modified. In February 1996, Kindt-Collins sold to
Elmwood Partners II 1,058,500 shares of AER Common Stock acquired prior to the
Company's initial public offering for a total cost of $1,998,500 or
approximately $1.89 per share. In February 1996, Elmwood Partners II purchased
950,000 shares of AER Common Stock in the public market.
CERTAIN TRANSACTIONS
The Company is party to a 1989 License Agreement (the "DEMI License")
with Dreisbach Electromotive, Inc. ("DEMI") and Mike Cheiky, a founder of DEMI,
its former principal inventor and a former director of DEMI. During 1999, 1998
and 1997, respectively, the Company recorded total royalty expense of $0.05
million, $0.10 million, and $0.10 million related to the DEMI License. During
1999, all minimum royalty payments under this agreement were completed and paid
in full. DEMI has also agreed to the terms of a proposed original equipment
manufacturer ("OEM") air manager license agreement to be entered into by the
Company and any OEMs licensing the air manager system. The DEMI License
basically provides for royalties of 4% payable to DEMI on net sales of zinc-air
batteries incorporating DEMI's technology made by the Company or its
sublicensees. The OEM air manager license basically provides that 4% of the
royalties the Company receives from sublicensing the air manager system will be
payable to DEMI.
Mr. Dorheim is a director of DEMI. At the time the DEMI License was
executed, all of the shareholders of DEMI were shareholders in the Company. The
Company is unable to determine how many DEMI shareholders (other than the
Lindseth Entities) currently own AER Common Stock. As of December 31, 1999, the
Lindseth Entities owned approximately 13% of the stock of DEMI.
Messrs. Dorheim, Harris, Bentz and Tinker, all current executive
officers of the Company, acquired a total of 156,375 shares of AER Common Stock
in exchange for a total of $160,375 in cash and promissory notes when they
began employment. In December 1994, the notes were amended to include full
recourse against the borrowers in the event of nonpayment and to add a
provision whereby the Company would forgive the entire indebtedness contingent
on the continued employment of each such employee. On each of the days December
1, 1997 and 1998, pursuant to the forgiveness provisions, an aggregate of
$41,912 of outstanding principal and related interest were forgiven and
recorded as compensation expense for each of the years then ended. Upon the
debt forgiveness on December 1, 1998, no notes remained outstanding. In
addition, in each of these years, the Company reimbursed Messrs. Dorheim,
Harris, Bentz and Tinker income taxes related to the additional compensation in
the aggregate amount of $31,760.
11
<PAGE> 15
SECTION 16(A) BENEFICIAL OWNERSHIP REPORTING COMPLIANCE
Section 16(a) of the Securities Exchange Act of 1934, as amended,
requires the Company's officers and directors, and persons who own more than
ten percent of the outstanding AER Common Stock, to file reports of ownership
and changes of ownership with the SEC. Officers, directors and greater than ten
percent shareholders are also required to furnish the Company with copies of
all Section 16(a) forms they file. Based solely on the Company's review of
copies of such forms furnished to the Company, or written representations that
no Form 5s were required, the Company believes that during 1999 its officers,
directors and greater than ten percent shareholders complied with all
applicable Section 16(a) filing requirements.
RELATIONSHIP WITH INDEPENDENT PUBLIC AUDITORS
The Board of Directors, upon recommendation of the Audit Committee,
has selected Ernst & Young LLP as independent auditors of the Company for 2000.
Ernst & Young LLP have been the independent public auditors for the Company
since 1989. Representatives of Ernst & Young LLP are expected to be present at
the Annual Meeting and will have an opportunity to make a statement if they
desire to do so and will be able to respond to appropriate questions.
SHAREHOLDERS' PROPOSALS FOR 2001 ANNUAL MEETING
A shareholder who wishes to submit a proposal for action at the 2001
Annual Meeting of Shareholders and have the proposal included in the proxy
statement for such meeting must send his proposal sufficiently in advance so
that it is received at the Company's executive offices by January 15, 2001.
Further, a shareholder proposal received after January 15, 2001 will be
considered untimely and the form of proxy accompanying this proxy statement may
confer discretionary authority to the Company to vote on any such proposal. The
shareholder should also notify the Company in writing regarding his intention
to appear personally at the meeting to present his proposal at the time he
submits his proposal.
OTHER MATTERS
Management of the Company is not aware of any other matters to be
presented for action at the Annual Meeting other than those mentioned herein.
If any other matters come before the meeting, it is the intention of the
persons named in the enclosed proxy to vote on such matters in accordance with
their judgment.
By Order of the Board of Directors
/s/ J. T. MOORE
J. T. Moore
Vice President - Chief Financial Officer,
Secretary and Treasurer
12
<PAGE> 16
[X] PLEASE MARK VOTE
AS IN THIS EXAMPLE
REVOCABLE PROXY
AER ENERGY RESOURCES, INC.
ANNUAL MEETING OF SHAREHOLDERS
APRIL 12, 2000
THIS PROXY IS SOLICITED ON BEHALF OF THE BOARD OF DIRECTORS
The undersigned hereby appoints David W. Dorheim and Jon A. Lindseth,
or either of them, each with full power of substitution, acting jointly or by
either one of them if only one be present and acting, attorney and proxy to
vote in the manner specified below (according to the number of shares which the
undersigned would be entitled to cast if then personally present) at the annual
meeting of shareholders of AER Energy Resources, Inc. to be held on April 12,
2000, including adjournments.
With- For All
For hold Except
1. The election as directors of all [ ] [ ] [ ]
nominees listed below (except
as marked to the contrary):
DAVID G. BROWN, JAMES W. DIXON, DAVID W. DORHEIM, WILLIAM L. JACKSON, JON A.
LINDSETH AND JOHN L. WILKES
INSTRUCTION: TO WITHHOLD YOUR VOTE FOR ANY NOMINEE(S), MARK "FOR ALL EXCEPT"
AND WRITE THAT NOMINEE'S NAME ON THE LINE BELOW.
2. In their discretion upon such other business as may properly come
before the meeting.
THIS PROXY SHALL BE VOTED AS DIRECTED. IF NO DIRECTION TO THE CONTRARY
IS INDICATED, IT WILL BE VOTED FOR THE PROPOSAL LISTED ABOVE, AS INDICATED IN
THE ENCLOSED PROXY STATEMENT. DISCRETIONARY AUTHORITY IS HEREBY CONFERRED AS TO
ALL OTHER MATTERS THAT MAY COME BEFORE THE MEETING.
Date
PLEASE BE SURE TO SIGN AND DATE THIS
PROXY IN THE BOX BELOW.
---------------------------
- --------------------------------- ------------------------------------
Shareholder sign above Co-holder (if any) sign above
DETACH ABOVE CARD, SIGN, DATE AND MAIL IN POSTAGE-PAID ENVELOPE PROVIDED.
AER ENERGY RESOURCES, INC.
Please sign exactly as your name appears on this proxy card. When signing as
attorney, executor, administrator, trustee or guardian, please give your full
title. If shares are held jointly, each holder should sign.
PLEASE ACT PROMPTLY
SIGN, DATE & MAIL YOUR PROXY CARD TODAY
