SCHEDULE 14A
(Rule 14a - 101)
INFORMATION REQUIRED IN PROXY STATEMENT
SCHEDULE 14A INFORMATION
Proxy Statement Pursuant to Section 14(a) of the Securities
Exchange Act of 1934
Filed by the registrant [ X ]
Filed by a party other than the registrant [ ]
Check the appropriate box:
[ ]Preliminary Proxy Statement
[ ]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
Ag Services of America, 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.
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(1) Amount previously paid:
(2) Form, Schedule or Registration Statement No.:
(3) Filing Party:
(4) Date Filed:
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AG SERVICES OF AMERICA, INC.
NOTICE OF ANNUAL MEETING OF STOCKHOLDERS
TO BE HELD ON AUGUST 13, 1998
To the Stockholders of Ag Services of America, Inc.
The Annual Meeting of the Stockholders of Ag Services of America, Inc. (the
"Company"), an Iowa corporation, will be held on Thursday, August 13, 1998,
at the Company's Corporate Headquarters, 2302 West 1st Street, Cedar Falls,
Iowa, at 10:30 a.m., central standard time, for the following purposes:
1. To elect six (6) directors of the Company for a term of one year.
2. To consider and act upon the Proposal of the Board of Directors to
amend the 1995 Stock Purchase Plan.
3. To ratify the appointment of McGladrey & Pullen, LLP as the Company's
independent public accountants for the fiscal year ending
February 28, 1999.
4. To consider and act upon any other matters that may properly come
before the meeting or any adjournment
thereof.
The Board of Directors has fixed the 19th day of June, 1998, as the record date
for the determination of stockholders entitled to notice of and to vote at the
meeting or any adjournment thereof.
You are cordially invited to attend the meeting. Whether or not you plan to be
personally present at the meeting, please complete, date and sign the enclosed
Proxy and return it promptly in the enclosed envelope. If you later desire to
revoke your Proxy, you may do so at any time before it is exercised.
By Order of the Board of Directors
\s\Brad D. Schlotfeldt
Brad D. Schlotfeldt
Treasurer
July 24, 1998
Approximate Date First
Sent to Stockholders
Cedar Falls, Iowa
Your vote is important. Please date, sign and return your Proxy.
Your Proxy is in the enclosed envelope.
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AG SERVICES OF AMERICA, INC.
PROXY STATEMENT
For the Annual Meeting of Stockholders
August 13, 1998
GENERAL INFORMATION
This Proxy Statement is furnished in connection with the solicitation of the
enclosed proxy by the Board of Directors of Ag Services of America, Inc. (the
"Company") for use at the Annual Meeting of Stockholders to be held August 13,
1998 at 10:30 a.m., Central Standard Time, at the Company's Corporate
Headquarters and any adjournment thereof, for the purposes set forth in the
Notice of Annual Meeting of Stockholders.
Shares of Common Stock represented by proxies in the form solicited will be
voted in the manner directed by a stockholder. If no direction is made, the
proxy will be voted for the election of nominees for director named in this
Proxy Statement, approval of the Board of Directors proposal to amend the 1995
Stock Purchase Plan, ratification of the Board of Directors' selection
McGladrey & Pullen LLP as the Company's independent public accountants for the
1999 fiscal year, and transacting such other business as may come before the
meeting or any adjournment thereof. A stockholder may revoke his or her proxy
at any time before it is voted by delivering to the Secretary a written notice
of termination of the proxy's authority, by filing
with the Secretary another proxy bearing a later date, or by appearing and
voting at the meeting. This Proxy Statement and the form of proxy enclosed are
being mailed to shareholders commencing on or about July 24, 1998. Only the
holders of the Company's Common Stock whose names appear of record on the
Company's books at the close of business on June 19, 1998 will be entitled to
vote at the Annual Meeting. At the close of business on June 19, 1998, a total
of 5,200,804 shares of Common Stock were outstanding, each share being entitled
to one vote. There is no right of cumulative voting provided in the Company's
Articles of Incorporation or Bylaws. The affirmative vote of a majority of the
outstanding shares of the Company's Common Stock represented at the meeting in
person or by proxy, is necessary to effectuate all matters proposed to the
stockholders at the Annual Meeting.
Votes cast by proxy or in person at the Annual Meeting will be tabulated by the
inspectors of election appointed by the Company for the meeting, and the number
of stockholders present in person or by proxy will determine whether or not a
quorum is present. The inspectors of election will treat abstentions as shares
that are present and entitled to vote for purposes of determining the presence
of a quorum for all matters. Shares abstaining with respect to any matter will
be treated as unvoted. If a broker indicates on the proxy that it does not have
discretionary authority as to certain shares to vote on a particular matter,
those shares will not be considered as present and entitled to vote by the
inspectors of election with respect to that matter.
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Expenses in connection with the solicitation of proxies will be paid by the
Company. In addition to solicitations by mail, the Company may request banks,
brokers, and other custodians, nominees, and fiduciaries to send Proxy materials
to beneficial owners and to request voting instructions. The Company may
reimburse them for their expenses in so doing. Directors, officers and regular
employees of the Company, who will not receive extra compensation for their
services, may solicit personally or by mail, telephone, or telegraph, if Proxies
are not promptly received.
The Annual Report of the Company, including Financial Statements for the fiscal
year ended February 28, 1998, accompanies this Proxy Statement.
ELECTION OF DIRECTORS
The Company's Bylaws provide that the Board of Directors shall be elected at
each annual meeting of stockholders. Directors are elected for a one year term
to succeed those directors whose terms then expire.
The persons named in the accompanying proxy will vote for the election of the
nominees described herein, unless authority to vote is withheld. The Board of
Directors has been informed that each of the nominees is willing to serve as a
director; however, if any of the nominees should decline or become unable to
serve as a director for any reason, the proxy may be voted for such other person
as the proxies shall, in their discretion, determine.
The following table sets forth certain information as of June 19, 1998,
concerning the nominees for election as directors of the Company:
Name Age Position with the Company
Gaylen D. Miller 49 Chairman of the Board and
Director
Henry C. Jungling, Jr. 51 President, Chief Executive
Officer and Director
Kevin D. Schipper 38 Chief Operating Officer and
Director
James D. Gerson 54 Director
Michael Lischin 47 Director
Ervin J. Mellema 52 Director
Gaylen D. Miller is a founder of the Company and has served as a director since
its formation in October 1985 and as Chairman since August 1997 and from August
1993 until August 1995. Mr. Miller served as President and Chief Executive
Officer from August 1995 until August 1997 and from May 1991 until August 1993,
as Chairman and Chief Operating Officer from August 1993 until July 1994, as
Co-President of the Company from July 1988 until May 1991 and as Vice President,
Secretary, and Treasurer from November 1985 until July 1988. Mr. Miller was
raised on a farm in Iowa and before joining the Company he held administrative
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and accounting positions with Land-O-Lakes, Inc., an agricultural cooperative,
and DEKALB Genetics Corporation, an international seed company.
Henry C. Jungling, Jr. is a founder of the Company and has served as a director
since its formation in October 1985 and as President and Chief Executive Officer
since August 1997 and from August 1993 until August 1995. Mr. Jungling served
as Chairman from August 1995 until August 1997 and from May 1991 until August
1993, as Chairman and Chief Operating Officer from May 1991 until August 1993,
as Co-President of the Company from July 1988 until May 1991 and as President
from November 1985 until July 1988. Mr. Jungling was raised on a farm in Iowa
and managed his own farming operation for 18 years. Mr. Jungling is Mr.
Schipper's uncle and Messrs Jungling and Miller are first cousins.
Kevin D. Schipper is a founder of the Company and has served as a director since
its formation in October 1985 and as Chief Operating Officer since July 1994.
Mr. Schipper served as Vice President since its formation in October 1985 until
July 1994 and as Treasurer and Secretary since July 1988 until July 1994.
Before joining the Company, Mr. Schipper was employed by Scoular Grain Company,
where he worked in product sales.
James D. Gerson has served as a director of the Company since August 1991.
Since March 1993, Mr. Gerson has been Senior Vice President of Fahnestock & Co.
Inc., a securities firm. Fahnestock & Co. Inc. is a market maker of the
Company's Common Stock and served as an underwriter for the Company's offering
of 7% Convertible Subordinated Debentures due 2003 in April 1993. Previously,
since January 1992, Mr. Gerson was Senior Vice President and Managing Director
of Corporate Finance for Reich & Co., Inc., a securities firm. For more than
five years prior to January 1992, Mr. Gerson was Vice President and Manager of
Corporate Finance at Josephthal & Co., Inc. (and successor corporations), a
securities firm. Josephthal & Co., Inc. served as the Company's underwriter for
its initial public offering completed in August 1991. Mr. Gerson was originally
appointed as a director of the Company as a designee of the Underwriter
according to the terms of the Underwriting Agreement for the Company's initial
public offering, the provision in that underwriting agreement regarding
the nomination of the underwriter's designee for director expired in August
1992. Mr. Gerson also serves as a director of American Power Conversion Corp.;
Conceptronic Inc.; Computer Outsourcing Services, Inc.; Hilite Industries, Inc.;
and Energy Research Corporation.
Michael Lischin has served as a director of the Company since April 1990. Mr.
Lischin is an attorney admitted to the bar in New York and Kentucky. His area
of concentration is livestock asset based financing. He has served as a
director and officer of a variety of companies that provide financing in the
agricultural industry.
Ervin J. Mellema has served as a director of the Company since May 1991. Since
1976, Mr. Mellema has been an operating principal of Campbell Mellema Insurance
Inc., a property and casualty insurance agency, and Campbell Mellema Realty, a
real estate brokerage firm.
Messrs. Jungling, Miller and Schipper served as officers of the Company pursuant
to their respective employment agreements with the Company (See "Executive
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Compensation and other Related Information"). The Board of Directors intends to
alternate the officer positions of Messrs. Jungling and Miller every two years
so that commencing after the adjournment of the 1999 Annual Meeting of
Stockholders, Mr. Miller will serve as President and Chief Executive Officer and
Mr. Jungling will serve as Chairman of the Board.
Committees and Meetings of the Board of Directors
The Board of Directors of the Company has an Audit Committee consisting of
Messrs. Gerson and Mellema. The Audit Committee reviews and makes
recommendations to the Board of Directors with respect to designated financial
and accounting matters.
The Board of Directors met five times in fiscal year 1998. All incumbent
directors attended at least 75% of the respective meetings of the Board and
Audit Committee, if they were directors or committee members.
Directors' Fees
The Company currently pays director's fees to its non-employee directors in the
amount of $1,000 per board meeting and $250 per committee meeting plus
reimbursement for expenses incurred in connection with the performance of their
duties.
Compensation Committee Interlocks and Insider Participation
At present, the entire Board of Directors is responsible for approving the
compensation program and salaries for the executive officers. Gaylen D. Miller,
Henry C. Jungling, Jr. and Kevin D. Schipper who are members of the Board of
Directors were also executive officers of the Company during fiscal 1998.
However, the executive officers who are also members of the board are not
present when their own compensation is under consideration. There were no
director interlocks with other companies or related party transactions in
fiscal 1998.
SECURITY OWNERSHIP OF CERTAIN BENEFICIAL
OWNERS AND MANAGEMENT
The following table sets forth as of June 19, 1998, information about the
beneficial ownership of Common Stock of the Company by each stockholder who is
known by the Company to own beneficially more than five percent of the
outstanding Common Stock of the Company, by each director, by each executive
officer named in the Summary Compensation Table, and by all officers and
directors as a group:
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<TABLE>
<CAPTION>
Number of
Shares Percentage
Name and Address of Beneficially of Shares
Beneficial Owner Owned(1)(2) Outstanding
- ------------------- ------------ -----------
<S> <C> <C>
Gaylen D. Miller 350,384 (3) 6.69%
Henry C. Jungling, Jr. 349,434 (3) 6.67%
Kevin D. Schipper 348,134 (3) 6.64%
James D. Gerson 169,166 (4) 3.25%
Michael Lischin 10,000 (5) 0.19%
Ervin J. Mellema 9,540 (5) 0.18%
All Directors and Officers
as a Group (10 persons) 1,321,978 (6) 24.45%
<FN>
( 1 )The persons or entities identified in the above table have sole voting and
investment power with respect to all shares shown as beneficially owned
by them unless otherwise indicated. The number of shares beneficially
owned includes
shares of Common Stock issuable upon exercise of options exercisable during
the next 60 days.
( 2 )Includes shares held by spouses and minor children sharing the same home.
( 3 )Includes options to purchase 40,000 shares of Common Stock exercisable
within 60 days.
( 4 )Includes options to purchase 1,500 shares of Common Stock exercisable
within 60 days.
( 5 )Includes options to purchase 6,000 shares of Common Stock exercisable
within 60 days.
( 6 )Includes options to purchase 205,500 shares of Common Stock exercisable
within 60 days.
</TABLE>
EXECUTIVE COMPENSATION AND OTHER RELATED INFORMATION
The following table sets forth the cash and certain other compensation paid or
accrued by the Company for services rendered in all capacities during the fiscal
years ended February 28, 1998, 1997, and 1996 to all executive officers of the
Company who's total aggregate compensation was greater than $100,000.
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Summary Compensation Table
<TABLE>
<CAPTION>
Annual Compensation Long-Term Compensation
--------------------- ---------------------------
Awards Payouts
----------------- ----------
Securities
Restricted Underlying
Name and Fiscal Stock Options LTIP All
Principal Position Year Salary Bonus Other Awards SARs Payouts Other
(a) (b) (c) (c)
- ------------------ ------ ------ ----- ----- ------ ------- ------- ------
<S> <C> <C> <C> <C> <C> <C> <C> <C>
Gaylen D. Miller 1998 $200,603 $118,046 $0 $0 0 $0 $4,435(f)
Chairman of the 1997 192,562 88,811 0 0 0 0 4,389(f)
Board 1996 185,000 50,523 0 0 0 0 4,718(f)
Henry C. Jungling Jr. 1998 $200,603 118,046 $0 $0 0 0 $4,470(g)
President and Chief 1997 192,562 88,811 0 0 0 0 4,424(g)
Executive Officer 1996 185,000 50,523 0 0 0 0 4,753(g)
Kevin D. Schipper 1998 $200,603 118,046 $0 $0 0 0 $4,092(h)
Chief Operating 1997 192,562 88,811 0 0 0 0 4,046(h)
Officer 1996 185,000 50,253 0 0 0 0 4,375(h)
________________
<FN>
(a) The table excludes noncash compensation for the use of an automobile, which
did not exceed the lesser of $50,000 or 10% of the base compensation paid
to each officer.
(b) No restricted stock awards were made in any of the periods presented.
(c) No stock options or stock appreciation rights were granted or paid in any
periods presented.
(d) The Company did not have a long-term incentive compensation plan for any
of the periods presented.
(e) Reflects incentive compensation accrued in fiscal 1998, 1997, and 1996
to the officers of the Company of $118,046, $88,811 and $50,253, each,
respectively, accordingly to their respective employment agreements.
(f) Reflects premiums paid by the Company for $250,000 term life insurance
coverage in fiscal 1998, 1997 and 1996 of $635, $635 and $635,
respectively, and $3,800, $3,754 and $4,083, respectively, contributed to
the Company's 401(k) plan by the Company on behalf of the officer listed
above.
(g) Reflects premiums paid by the Company for $250,000 term life insurance
coverage in fiscal 1998, 1997 and 1996 of $670, $670, and $670,
respectively, and $3,800, $3,754 and $4,083, respectively, contributed to
the Company's 401(k) plan by the Company on behalf of the officer listed
above.
(h) Reflects premiums paid by the Company for $250,000 term life insurance
coverage in fiscal 1998, 1997 and 1996 of $292, $292, and $292,
respectively, and $3,800, $3,754 and $4,083, respectively, contributed to
the Company's 401(k) plan by the Company on behalf of the officer listed
above.
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Stock Option Grants
No stock options or stock appreciation rights were granted to the Executive
Officers of the Company in fiscal 1998 who's total aggregate compensation was
greater than $100,000.
Aggregated Option/SAR Exercises
in Fiscal 1998 and Year-End Option/SAR Values
</TABLE>
<TABLE>
<CAPTION>
Number of Securities Value of
Underlying Unexercised
Unexercised In-the-Money
Shares Options/SARS at Options/SARS at
Acquired February 28, 1998 February 28, 1998(c)
----------------- --------------------
On Value Exer- Unexer Exer- Unexer-
Name Exercise(a) Realized(a) cisable cisable(b) cisable cisable
- --------------- ----------- ----------- ------- ---------- ------- -------
<S> <C> <C> <C> <C> <C> <C>
Gaylen D. Miller 0 $0 40,000 0 $555,000 $0
Henry C. Jungling, Jr. 0 $0 40,000 0 $555,000 $0
Kevin D. Schipper 0 $0 40,000 0 $555,000 $0
<FN>
(a) No stock options were exercised in fiscal 1998. There were no stock
appreciation rights outstanding or exercised in fiscal 1998.
(b) Includes stock options granted on May 30, 1991, under the 1991 Stock Option
Plan of the Company based primarily on performance during prior years.
(c) Reflects market value of underlying shares of Common Stock of the Company
on February 28, 1998, minus the exercise price.
Employment Agreements
Effective July 1, 1991, Messrs. Jungling, Miller and Schipper entered into
separate five-year employment agreements with the Company, each of which
provide for (i) a base salary of $155,200, subject to adjustment upward upon
annual review by the Board of Directors on March 1 of each year the agreement
is in effect, (ii) payment of an annual bonus to each of these persons in the
amount of 2% of the Company's pre-tax, pre-bonus income in excess of $2,500,000,
(iii) $250,000 in term life insurance coverage and (iv) receipt of other
Company benefits including use of an automobile. If the respective employment
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agreement is terminated by the Company without "cause," the Company must
continue to pay the person salary and bonus for up to two years. "Cause" is
defined to include repeated neglect in performance, breach of the employment
agreement or indictment or conviction of a felony or misdemeanor involving moral
turpitude. In April 1995 the Board of Directors approved a four year extension
through July 2000 for each of Messrs. Jungling, Miller and Schipper. The Board
of Directors approved a base salary of $200,603 for each of the three persons
for fiscal year 1999.
Board Report on Executive Compensation
At present, the entire Board of Directors is responsible for approving the
compensation program and salaries for the executive officers. However,
executive officers who are also members of the board are not present when their
own compensation is under consideration.
Compensation Philosophy. It is the philosophy of the Company to ensure that
executive compensation is directly linked to sustained improvements in
corporate performance and increases in stockholder value as measured by the
Company's stock price. The following objectives have been adopted by the Board
of Directors as guidelines for compensation decisions:
Provide a competitive total compensation package that enables the
Company to attract and retain key executive talent needed to
accomplish its corporate goals.
Integrate all pay programs with the Company's annual and long-term
business objectives and strategy, and focus executive behavior on the
fulfillment of those objectives.
Provide variable compensation opportunities that are directly linked
with performance of the Company and that align executive remuneration
with the interests of stockholders.
At present, the Company's executive compensation is comprised of (i) a base
salary, (ii) an annual cash incentive bonus, (iii) additional incentive
compensation in the form of stock options, and (iv) other benefits typically
provided to executives of comparable companies, all described further below.
For each such component of compensation, the Company's compensation levels are
compared with those of comparable companies. For purpose of establishing these
comparable compensation levels, the Company compares itself to a national group
of companies selected by management and its consultants. This group consists
primarily of public and non-public companies that have revenue levels similar
to the Company's. This group does not include the companies used by the
Company in the industry peer group index in the performance graph appearing
elsewhere herein, as several of the members of the industry peer group are
considerably larger in size with executive compensation well above that of the
Company.
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Base Salary. The salary of each executive officer, including the Chief
Executive Officer, is based on the officer's level of responsibility and
comparisons to prevailing salary levels for similar positions at the Company
and at comparable companies. The Board seeks to provide the Company's executive
officers with salaries that are at least commensurate with the median
salary levels at comparable companies. Each executive officer's compensation is
linked to individual employment agreements as discussed above, which are
consistent with the Company's compensation philosophy.
After taking into account the Company's increase in its revenue and earnings
growth, the Board sought to establish the fiscal 1998 salaries of each of its
executive officers at the median salary levels for similarly-situated executives
of comparable companies. In an effort to ensure that the base salary of the
Company's Chief Executive Officer remain at the median level, his base salary
was increased 4% in fiscal 1998.
Annual Bonus. Each executive officer's annual bonus is linked to individual
employment agreements as discussed above, which are consistent with the
Company's compensation philosophy. The employment agreements establish target
performance levels and the amount of bonus payable if these targets are met,
which is defined in terms of pre-tax, pre-bonus income of the Company. The
Board evaluates the annual bonus through review of information furnished by its
consultants as to the bonus practices among comparable companies. The annual
bonuses paid to the Company's executive officers have typically been less than
the median annual bonuses paid by comparable companies.
As a result of the Company exceeding its income target in fiscal 1998, each
executive officer, including the Chief Executive Officer, received a cash
incentive bonus equal to 2% of pre-tax, pre-bonus income in excess of
$2,500,000.
Stock Options. The Company's 1991 and 1993 stock option plans authorize the
Board to grant stock options to key personnel. The Board's philosophy with
respect to stock option incentive awards is to strengthen the relationship
between compensation and increases in the market price of the Common Stock and
thereby ally the executive officers' financial interests with those of the
Company's stockholders. The Board determines the size of option grants based on
information furnished by consultants regarding stock option practices among
comparable companies. The Board also takes into account the number of
outstanding unexercised options held by the executive officers. In fiscal 1998
the Board determined that the number of outstanding unexercised options issued
to the executive officers who's total aggregate compensation was greater
than $100,000, including the Chief Executive Officer, was adequate and elected
to issue no further options.
Other Benefits. The Company maintains a 401(k) plan which the executive
officers are generally permitted to participate on terms substantially similar
to those relating to all other participants, subject to certain legal
limitations on the amounts that may be contributed or benefits payable
thereunder.
Additionally, the Company makes available to its executive officers a
supplemental life insurance plan and the use of an automobile.
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Mr. Henry C. Jungling, Jr. Mr. James Gerson
Mr. Gaylen D. Miller Mr. Michael Lischin
Mr. Kevin D. Schipper Mr. Ervin J. Mellema
Stock Option Plans
1991 Stock Option Plan. The Company's 1991 Stock Option Plan, which was
approved by the Board of Directors and stockholders effective May 30, 1991
(the "1991 Stock Option Plan"), provides for the grant of options to purchase
shares of Common Stock to directors, officers, employees or other persons or
entities. A total of 300,000 shares of Common Stock have been reserved for
issuance under the 1991 Stock Option Plan. Options granted under the 1991
Stock Option Plan may be either "incentive stock options" or "nonqualified
stock options." As designated by the Board of Directors, the 1991 Stock
Option Plan is administered by a committee comprised of the officers of the
Company, who designate the type of option to be granted, the number of options
to be granted, the number of shares of Common Stock to be covered by each option
(subject to a specified maximum number of shares of Common Stock which may be
purchased under all options granted), the exercise price, the period during
which the options are exercisable, the method of payment and certain other
terms. The exercise price for each share of Common Stock covered by an option
is determined by the committee, except (i) the exercise price for an incentive
stock option may not be less than the fair market value, at the time the option
is granted, of the stock subject to the option and (ii) the exercise price for
a nonqualified stock option may not be less than 85% of the fair market
value, at the time the option is granted, of the stock subject to the option.
The exercise price for an incentive stock option granted to any individual who
owns stock, at the time of grant, possessing more than 10% of the voting power
of the capital stock of the Company may not be less than 110% of such fair
market value on the date of the grant. No more than $100,000 of stock vesting
during any calendar year per person will qualify for incentive stock option
treatment. Options are nontransferable, other than by will or the laws of
descent and distribution, and may be exercised only by the optionee while
employed by or providing services to the Company or within three months after
termination of employment by reason of retirement or six months following
termination of employment resulting from death or permanent disability. Options
expire no later than ten years from the date of grant, provided that incentive
stock options granted to employees owning stock possessing more than 10% of the
total combined voting power of all classes of stock of the Company or any of its
subsidiaries expire five or fewer years from the date of grant. At February 28,
1998, 15,350 shares remained available for future grants under the 1991 Stock
Option Plan.
1993 Stock Option Plan. The Company's 1993 Stock Option Plan, which was
approved by the Board of Directors and stockholders effective August 3, 1993
(the "1993 Stock Option Plan"), provides for the grant of options to purchase
shares of Common Stock to directors, officers, employees or other persons or
entities. A total of 400,000 shares of Common Stock have been reserved for
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issuance under the 1993 Stock Option Plan. Options granted under the 1993
Stock Option Plan may be either "incentive stock Options" or "nonqualified stock
options." As designated by the Board of Directors, the 1993 Stock
Option Plan is administered by a committee comprised of the officers of the
Company, who designate the type of option to be granted, the number of options
to be granted, the number of shares of Common Stock to be covered by each option
(subject to a specified maximum number of shares of Common Stock which may be
purchased under all options granted), the exercise price, the period during
which the options are exercisable, the method of payment and certain other
terms. The exercise price for each share of Common Stock covered by an option
is determined by the committee, except (i) the exercise price for an incentive
stock option may not be less than the fair market value, at the time the option
is granted, of the stock subject to the option and (ii) the exercise price for
a nonqualified stock option may not be less than 85% of the fair market
value, at the time the option is granted, of the stock subject to the option.
The exercise price for an incentive stock option granted to any individual who
owns stock, at the time of grant, possessing more than 10% of the voting power
of the capital stock of the Company may not be less than 110% of such fair
market value on the date of the grant. No more than $100,000 of stock vesting
during any calendar year per person will qualify for incentive stock option
treatment. Options are nontransferable, other than by will or the laws of
descent and distribution, and may be exercised only by the optionee while
employed by or providing services to the Company or within three months after
termination of employment by reason of retirement or six months following
termination of employment resulting from death or permanent disability. Options
expire no later than ten years from the date of grant, provided that incentive
stock options granted to employees owning stock possessing more than 10% of the
total combined voting power of all classes of stock of the Company or any of its
subsidiaries expire five or fewer years from the date of grant. At February 28,
1998, 111,225 shares remained available for future grants under the 1993 Stock
Option Plan.
The following table summarizes the options to purchase shares of the Company's
Common Stock:
</TABLE>
<TABLE>
<CAPTION>
Stock Options
-------------------------------------
Weighted Average
Outstanding Exercise Price
----------- --------------
<S> <C> <C>
Balance at February 28, 1995 466,700 $6.14
Granted 79,900 $8.89
Exercised (22,050) $4.51
Canceled (26,150) $8.07
Balance at February 28, 1996 498,400 $6.55
Granted 25,000 $14.35
Exercised (35,400) $7.97
Canceled (19,400) $8.84
Balance at February 28, 1997 468,600 $6.76
Granted 43,300 $17.51
Exercised (40,035) $8.65
Canceled (29,225) $11.77
Balance at February 28, 1998 442,640 $7.31
</TABLE>
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<TABLE>
<CAPTION>
Number of Options
1998 1997 1996
<S> <C> <C> <C>
Exercisable, end of year 349,190 328,175 303,150
Weighted-average fair value per option
of options granted during the year $7.40 $6.67 $4.11
Options are exercisable over varying periods ending on February 28, 2008.
</TABLE>
Retirement and Savings Plan
The Company has established a Retirement and Savings Plan (the "401(k) plan")
which became effective June 1, 1992. Currently, all employees of the Company,
including the officers, are eligible to participate in the 401(k) Plan.
Benefits provided under the 401(k) Plan are funded by a qualified retirement
trust administered by Norwest Bank Iowa, N.A. as trustee.
Participants may contribute an amount of their compensation, including base
salary and overtime, to the 401(k) Plan, which can be no more than 15% of the
participant's compensation or, if less, the maximum dollar limit allowed by
law on a pre-tax basis. The Company makes a matching contribution to the 401(k)
Plan subject to certain limitations, equal to 40% of each participant's pre-tax
contribution on an amount of up to 7% of each participant's compensation. The
plan year ends each February 28th.
The participants may direct the investment of their account balances among
several equity funds. Distributions from a participant's account (including
earnings) are made after the participant's termination of employment for any
reason and, in certain circumstances, participants may receive a distribution
during employment. All employee contributions (including earnings) are fully
vested at all times. Employer matching contributions vest over five years at
a rate of 20% per year from the date an employee becomes eligible to
participate in the 401(k) Plan. The distributions of a participant's vested
account balances will be made in the form of a lump sum or periodic
installments.
For the years ended February 28, 1998, 1997 and 1996, $19,125, $18,482 and
$19,750, respectively, were contributed to the accounts of the Company's
executive officers.
Stock Purchase Plan
In August 1995, the Company's Board of Directors approved the "1995 Stock
Purchase Plan" which allows directors, officers and all other employees of the
Company to purchase common stock directly from the Company, subject to certain
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restrictions. Common stock may be purchased at (i) the closing price of the
stock on the trading day immediately preceding the purchase date or (ii) the
cost at which the common stock may be purchased in the open market, exclusive
of brokerage commissions and fees. An aggregate of 150,000 authorized but
unissued shares of the Company's common stock are reserved for issuance under
the plan. The 1995 Stock Purchase Plan is administered by the Company and is
subject to termination or amendment by the Board of Directors at any time. At
February 28, 1998, 147,300 shares remained available for purchase
under the 1995 Stock Purchase Plan.
The Board of Directors strongly believes that total stockholder returns can be
enhanced when all employees have an opportunity to share in the Company's
success. To augment the Company's other equity incentive plans, the Board of
Directors has recommended and the Board has approved, subject to shareholder
approval, an amendment to the 1995 Stock Purchase Plan. The amendment to the
plan will provide substantially all employees the opportunity to invest in the
common stock of the Company at a discount of up to 15% of fair market value.
The Board believes that this is a valuable employee benefit that will increase
interest in stock price and total stockholder return and, as such, urges
tockholders to approve the amendment to the plan.
Performance Graph
The following graph compares the cumulative total stockholder return on the
Common Stock of the Company with that of the NASDAQ Stock Market Index (U.S.
Companies), a broad market index prepared for the NASDAQ by the Center for
Research in Securities Prices ("CRSP") at the University of Chicago, and the
Agricultural Input Supply Index, an agricultural input supply
index prepared for the Company by CRSP made up of the following NASDAQ and NYSE
companies; Dekalb Genetics Corp., Pioneer Hi-Bred Int'l, Inc., Biosys Inc.,
Pioneer Financial Services, and Terra Industries, Inc. The comparison for each
of the periods assumes that $100 was invested on February 28, 1993, in each of
the Common Stock of the Company, the stocks included in the NASDAQ Stock Market
Index (U.S. Companies) and the stocks included in the Agricultural Input
Supply Index. These indexes, which reflect formulas for dividend reinvestment
and weighting of individual stocks, do not necessarily reflect returns that
could be achieved by individual investors.
<TABLE>
<CAPTION>
Comparison of Cumulative Total Return
Since the Company's IPO Among the Company,
the NASDAQ Stock Market Index (U.S. Companies)
and the Agricultural Input Supply Index
[ Graphic included with hard copy ]
Fiscal Year End February 28,
1993 1994 1995 1996 1997 1998
<S> <C> <C> <C> <C> <C> <C>
Ag Services of America, Inc. 100.0 123.4 109.4 135.9 215.6 217.2
NYSE Stock Market (U.S.) Index 100.0 108.7 115.0 153.2 188.7 252.4
Agricultural Input Supply Index 100.0 142.7 140.3 215.1 289.7 446.6
</TABLE>
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PROPOSAL TO AMEND THE 1995 STOCK PURCHASE PLAN
The Board of Directors strongly believes that total stockholder returns can be
enhanced when all employees have an opportunity to share in the Company's
success. As such, the Board of Directors approved an amendment to the 1995
Stock Purchase Plan, subject to stockholder approval at the 1998 Annual Meeting.
Pursuant to the amendment to the Plan, an employee may authorize deductions of
pay under the Employee Incentive Compensation Program for the purchase of shares
of common stock of the Company at eighty-five percent of the market value of the
Company's common stock at May 14 of each year. Market value will be determined
by using the closing price of the Company's common stock. The Board believes
that this Plan will encourage employees to increase their interest in the future
growth and prosperity of the Company and will reward employees for their
contributions to the success of the Company.
The Plan does not meet the requirements of Section 423 of the Internal Revenue
Code. No income will be recognized for Federal income tax purposes by
participants when they purchase shares under the Plan. The Company receives no
deduction at any time under the Plan. If the shares acquired by a participant
are disposed of more than two years after they are acquired, the participant
will recognize ordinary income to the extent of the lessor of: (a) the amount
by which the fair market value of the shares at the date of issuance exceeded
the price paid for the shares, of (b) the amount by which the fair market value
of the Stock at the time of disposition exceeded the price paid for the shares.
Additional gain, if any, will be treated as gain resulting from the sale of a
capital asset held for more than one year.
A copy of the proposed Amendment to the 1995 Stock Purchase Plan is included at
the end of this proxy statement as Exhibit A.
The affirmative votes of a majority of the votes cast in person or by proxy at
the meeting will be required to approve the proposed amendment of the 1995 Stock
Purchase Plan. The Board of Directors recommends that the stockholders vote FOR
the amendment of the Plan.
RATIFICATION OF APPOINTMENT OF
INDEPENDENT PUBLIC ACCOUNTANTS
The Stockholders are being requested to approve the resolution ratifying the
action of the Board of Directors in appointing McGladrey & Pullen, LLP as the
Company's independent public accountants for the fiscal year ending
February 28, 1999.
It is not expected that a member of McGladrey & Pullen, LLP will be present at
the Annual Meeting. However, we will forward any questions that arise to
McGladrey & Pullen, LLP, who will have the opportunity to respond.
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OTHER MATTERS
The Board of Directors of the Company knows of no other matters which may come
before the meeting. However, if any matters other than those referred to above
should properly come before the meeting calling for a vote of the stockholders,
it is the intention of the persons named in the enclosed proxy to vote such
proxy in accordance with their best judgment.
DEADLINE FOR SUBMISSION OF STOCKHOLDER
PROPOSALS FOR 1999 ANNUAL MEETING
Proposals of Stockholders to be presented at the Company's 1999 Annual
Stockholders' Meeting must be received at the Company's corporate headquarters
no later than February 15, 1999, for inclusion in the agenda for the 1999
Annual Meeting.
By Order of the Board of Directors
/s/ Brad D. Schlotfeldt
Brad D. Schlotfeldt
Treasurer
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EXHIBIT A
PROPOSED AMENDMENT TO SECTION 4 OF THE
AG SERVICES OF AMERICA, INC.
1995 STOCK PURCHASE PLAN.
Section 4: Participation and Payment for the Stock Purchased. Any Eligible
Participant may from time to time, by written notice to the Administrator of
the Plan together with payment of the Purchase Price (as defined below) (the
"Notice/Payment"), elect to purchase shares of Stock under the Plan. Unless
otherwise permitted at the discretion of the Administrator of the
Plan, shares of Stock must be purchased in round lots of 100 shares. The
"Purchase Price" for the shares of Stock purchased under the Plan will be (i)
the closing price of the common stock on the trading day immediately proceeding
the date of the Notice/Payment, in the case of newly issued shares of Stock
under the Plan, (ii) the cost at which the shares of Stock may be purchased on
the open market, exclusive of commissions and brokerage fees, in the case of
shares of Stock acquired through open market brokerage purchase, or (iii) 85%
of the closing price of the common stock on or about May 14 of each year, in the
case of newly issued shares, if an election to purchase common stock is made in
connection with the Employee Incentive Compensation Program. The Notice/Payment
shall specify the number of shares to be purchased, the maximum Purchase Price
and the exact name in which the Stock purchased is to be issued. Each
Notice/Payment shall be irrevocable unless otherwise determined by the
Administrator. If there is any delay in the purchase of shares of Stock under
the Plan and the shares can no longer be purchased at or less than the Purchase
Price designated by the Eligible Participant, the Administrator will so notify
the Eligible Participant and neither the Company nor the Administrator shall
have any liability to the Eligible Participant.
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