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 ' 240.14a-11(c) or ' 240.14a-12
Name of Registrant as Specified in its Charter: Scott's Liquid Gold-Inc.
Name of Person(s) Filing Proxy Statement, if other than the Registrant)
Payment of Filing Fee (Check the appropriate box):
$125 per Exchange Act Rules 0-11(c)(1)(ii), 14a-6(i)(1), 14a-6(i)(2) or
Item 22(a)(2) of Schedule 14A.
$500 per each party to the controversy pursuant to Exchange Act Rule 14a-
6(i)(3).
Fee computed on table below per Exchange Act Rules 14a-6(i)(4) and 0-11.
1) Title of each class of securities to which transaction applies:
2) Aggregate number of securities to which transaction applies:
3) Per unit price or other underlying value of transaction computed
pursuant to Exchange Act Rule 0-11. (Set forth the amount on which
the filing fee is calculated and state how it was determined):
4) Proposed maximum aggregate value of transaction:
5) Total fee paid:
X 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: $125.00
2) Form, Schedule, or Registration Statement No.:PRE-14A
3) Filing Party: Scott's Liquid Gold-Inc.
4) Date Filed: 2/27/96
SCOTT'S LIQUID GOLD-INC.{PRIVATE }
4880 HAVANA STREET
DENVER, COLORADO 80239
NOTICE OF ANNUAL MEETING OF
SHAREHOLDERS
TO BE HELD MAY 1, 1996
TO OUR SHAREHOLDERS:
The Annual Meeting of Shareholders of Scott's Liquid Gold-Inc., a Colorado
corporation (the "Company"), will be held at 10:00 a.m., Mountain Time, on
Wednesday, May 1, 1996 at the Company's offices, 4880 Havana Street, Denver,
Colorado for the purpose of considering and acting upon the following:
(1) The election of seven directors;
(2) An amendment to the Company's Articles of Incorporation to increase the
authorized number of shares of the Company's Common Stock to 50,000,000
shares;
(3) An amendment to the Company's Articles of Incorporation to authorize up
to 20,000,000 shares of Preferred Stock of the Company issuable in one
or more series;
(4) An amendment to the Company's Articles of Incorporation to delete a
provision on indemnification of directors and officers; and
(5) Such other matters as may properly come before the meeting or any
adjournment thereof
Only shareholders of record at the close of business on March 11, 1996 are
entitled to notice of and to vote at the meeting.
BY ORDER OF THE BOARD OF DIRECTORS
CAROLYN J. ANDERSON
Corporate Secretary
Denver, Colorado
March 22 , 1996
THE FORM OF PROXY IS ENCLOSED. TO ASSURE THAT YOUR SHARES WILL BE VOTED AT THE
MEETING, PLEASE COMPLETE AND SIGN THE ENCLOSED PROXY AND RETURN IT PROMPTLY IN
THE ENCLOSED, POSTAGE PREPAID, ADDRESSED ENVELOPE. NO ADDITIONAL POSTAGE IS
REQUIRED IF MAILED IN THE UNITED STATES. THE GIVING OF A PROXY WILL NOT AFFECT
YOUR RIGHT TO VOTE IN PERSON IF YOU ATTEND THE MEETING.
SCOTT'S LIQUID GOLD-INC.
4880 HAVANA STREET
DENVER, COLORADO 80239
PROXY STATEMENT
ANNUAL MEETING OF SHAREHOLDERS
TO BE HELD MAY 1, 1996
The enclosed Proxy is solicited by and on behalf of the Board of Directors
of Scott's Liquid Gold-Inc., a Colorado corporation (the "Company"), for use at
the Company's Annual Meeting of Shareholders to be held at 10:00 a.m., Mountain
Time, on Wednesday, May 1, 1996 at the Company's offices, 4880 Havana Street,
Denver, Colorado, or any adjournment thereof. This Proxy Statement and the
accompanying form of Proxy are first being mailed or given to the shareholders
of the Company on or about March 22 , 1996.
Any shareholder signing and mailing the enclosed Proxy may revoke it at any
time before it is voted by giving written notice of the revocation to the
Company's Corporate Secretary, by voting in person at the meeting or by filing
at the meeting a later executed proxy.
VOTING SECURITIES AND PRINCIPAL SHAREHOLDERS
All voting rights are vested exclusively in the holders of the Company's
$0.10 par value common stock. Each share of the Company's common stock is
entitled to one vote. Cumulative voting in the election of directors is not
permitted. Holders of a majority of shares entitled to vote at the meeting,
when present in person or by proxy, constitute a quorum. On March 11, 1996, the
record date for shareholders entitled to vote at the meeting, the Company had
10,030,900 shares of its $0.10 par value common stock issued and outstanding.
When a quorum is present, in the election of directors, those seven
nominees having the highest number of votes cast in favor of their election will
be elected to the Company's Board of Directors. Consequently, any shares not
voted (whether by abstention, broker non-vote or otherwise) have no impact in
the election of directors except to the extent the failure to vote for an
individual results in another individual receiving a larger number of votes.
The affirmative vote of 2/3 of the outstanding shares of the Company's common
stock entitled to vote is necessary for approval by the shareholders of the
proposed amendments to the Company's Articles of Incorporation. Thus, any
shares not voted on the amendments (whether by abstention, broker non-vote or
otherwise) have the same effect as a vote against the amendments. With respect
to any other matter which may properly come before the Meeting, unless a greater
number of votes is required by law, a matter is approved by the shareholders if
the votes cast in favor of the matter exceed the votes cast in opposition. Any
shares not voted (whether by abstention, broker non-vote or otherwise) have no
impact on the vote for these other matters so long as a quorum is present.
The following persons are the only persons known to the Company who on
March 11, 1996, owned beneficially more than 5% of the Company's common stock,
its only class of outstanding voting securities:
<TABLE>
<CAPTION>
AMOUNT AND NATURE PERCENT
OF OF CLASS
NAME AND ADDRESS OF BENEFICIAL
BENEFICIAL OWNER OWNERSHIP
<S> <C> <C>
Jerome J. Goldstein 2,502,279 (1)(2) 24.8%
4880 Havana Street
Denver, Colorado
80239
Goldie S. Goldstein 947,884 (1) 9.4%
4880 Havana Street
Denver, Colorado
80239
Scott's Liquid Gold- 1,096,562 (3) 10.9%
Inc.
Employee Stock
Ownership Plan
4880 Havana Street
Denver, Colorado
80239
</TABLE>
(1) Includes 947,884 shares owned by Mr. Goldstein's wife, Goldie S. Goldstein,
over which shares both Mr. and Mrs. Goldstein may be deemed to have shared
voting and investment power. Both the amount and percent of class of the
shares owned by Goldie S. Goldstein are included in the shares reported for
Jerome J. Goldstein.
(2) Includes 70,500 shares underlying presently exercisable incentive stock
options granted under the Company's 1986 Incentive Stock Option Plan. Does
not include 134,348 shares held by the Company's Employee Stock Ownership
Plan attributable to Mr. Goldstein's vested interest in the Plan.
(3) The committee administering the Employee Stock Ownership Plan directs the
voting of shares held under such Plan. The Company's four executive
officers are four of seven members of this committee.
SECURITY OWNERSHIP OF MANAGEMENT
The following table shows as of March 11, 1996, the shares of the Company's
common stock beneficially owned by each director and executive officer of the
Company and the shares beneficially owned by all of the directors and executive
officers as a group:
<TABLE>
<CAPTION>
NAME AND AMOUNT AND NATURE OF PERCENT
ADDRESS OF BENEFICIAL OWNERSHIP OF CLASS
BENEFICIAL OWNER (1)
<S> <C> <C>
Jerome J. Goldstein 2,502,279 (2)(7) 24.8%
Mark E. Goldstein 479,782 (3)(7) 4.7%
Carolyn J. Anderson 288,460 (4)(7) 2.9%
Barry Shepard 274,500 (5)(7) 2.7%
Dennis H. Field 148,500 (6) 1.5%
James F. Keane 102,500 (6) 1.0%
Michael J. Sheets 105,000 (6) 1.0%
All Directors and 3,901,021 (7) 36.8%
executive officers
as a Group (7
persons)
</TABLE>
(1) Beneficial owners listed have sole voting and investment power with respect
to the shares shown unless otherwise indicated.
(2) Includes 947,884 shares owned by Mr. Goldstein's wife over which shares
Mr. Goldstein may be deemed to have shared voting and investment power.
Also includes 70,500 shares underlying presently exercisable stock options
granted under the Company's 1986 Incentive Stock Option Plan.
(3) Includes for Mr. Mark Goldstein 70,500 shares underlying presently
exercisable stock options granted under the Company's 1986 Incentive Stock
Option Plan. Also includes 92,892 shares held by Mr. Goldstein's wife and
minor children.
(4) Includes for Ms. Anderson 70,500 shares underlying presently exercisable
stock options granted under the Company's 1986 Incentive Stock Option Plan.
(5) Includes for Mr. Shepard 70,500 shares underlying presently exercisable
stock options granted under the Company's 1986 Incentive Stock Option Plan.
(6) Includes for Mr. Sheets, 45,000 shares, for Mr. Field 145,000 shares and
for Mr. Keane 100,000 shares underlying presently exercisable stock options
granted by the Company's Board of Directors under the Company's 1993 Stock
Option Plan for Outside Directors.
(7) Does not include shares owned by the Company's Employee Stock Ownership
Plan under which, at December 31, 1995, Jerome J. Goldstein has a vested
interest in 134,348 shares, Mark E. Goldstein has a vested interest in
76,262 shares, Carolyn J. Anderson has a vested interest in 115,816 shares,
and Barry Shepard has a vested interest in 68,120 shares.
There has been no change in control of the Company since the beginning of
the last fiscal year, and there are no arrangements known to the Company,
including any pledge of securities of the Company, the operation of which may at
a subsequent date result in a change in control of the Company.
ELECTION OF DIRECTORS AND MANAGEMENT INFORMATION
NOMINEES
The Company's Board of Directors consists currently of seven directors.
Unless authority to vote is withheld, the persons named in the enclosed form of
proxy will vote the shares represented by such proxy for the election of the
seven nominees for director named below. If, at the time of the Meeting, any of
these nominees shall have become unavailable for any reason for election as a
director, the persons entitled to vote the proxy will vote for such substitute
nominee or nominees, if any, as they determine in their discretion. If elected,
the nominees for director will hold office until the next annual meeting of
shareholders or until their successors are elected and qualified. The nominees
for director, each of whom has consented to serve if elected, are as follows:
<TABLE>
<CAPTION>
NAME OF
NOMINEE AND DIRECTOR PRINCIPAL OCCUPATION FOR
POSITION, IF ANY, AGE SINCE LAST FIVE YEARS
IN THE COMPANY
<S> <C> <C> <C>
Jerome J. Goldstein 73 1954 Chairman of the Board of the
(Chairman of the Company since August, 1990. From
Board) 1954 to 1990, President and
Chairman of the Board of the
Company.
Mark E. Goldstein 39 1983 President of the Company since
(President and Chief August, 1990. From 1982 to 1990,
Executive Officer) Vice President-Marketing of
Company. Employed by the Company
since 1978.
Carolyn J. Anderson 56 1974 Executive Vice President since
(Executive Vice 1974, Chief Operating Officer of
President, Chief the Company since 1982 and
Operating Officer Corporate Secretary since 1973.
and Corporate Employed by the Company since
Secretary) 1970.
Barry Shepard 65 1982 Treasurer and Chief Financial
(Treasurer and Chief Officer of the Company since 1981
Financial Officer) when employed by the Company.
Dennis H. Field 63 1991 Management Consultant since 1990.
From 1984 to 1990, Executive Vice
President/General Manager, Faberge
USA, Inc. (mass market health and
beauty aids).
James F. Keane 62 1993 Independent businessman since 1987
and founder and President of Engine
World Inc.(distributor of auto and
marine engines) since 1991. From
1990 to 1992, Marketing Professor
at Bentley College. From 1974 to
1987, Vice President, S.C. Johnson
& Son, Inc. (household and personal
care products).
Michael J. Sheets 65 1990 Principal, Gerald Schoenfeld, Inc.
(new product concepts) since
August, 1994. President, The
French Culinary Institute, from February
1994 to August 1994. Consultant,
October, 1990 to present. From
1975 to 1990, President of Airwick
Industries, Inc. (household
products).
</TABLE>
All of the foregoing persons are currently directors of the Company. Their
positions on standing committees of the Board of Directors are shown below under
"Directors' Meetings and Committees".
The Company's only executive officers are those who are described in the
foregoing table. The officers of the Company are elected annually at the first
meeting of the Company's Board of Directors held after each annual meeting of
shareholders and serve at the pleasure of the Board of Directors.
Mark E. Goldstein is the son of Jerome J. Goldstein. With this exception,
there are no family relationships among the executive officers or directors, and
there are no arrangements or understandings pursuant to which any of them was
elected as an executive officer or director.
DIRECTOR'S MEETINGS AND COMMITTEES
During the year ended December 31, 1995, the Company had five directors
meetings, plus four actions by unanimous written consent. The Company's Board
of Directors has both a Compensation Committee and an Audit Committee.
The primary responsibilities of the Compensation Committee include
development of an executive compensation philosophy for the Company; origination
of all executive compensation proposals; review of the appropriate mix of
variable versus fixed compensation; and review of all transactions between the
Company and any executive officer or director, whether or not involving
compensation. The Committee consists of at least two or more outside directors
of the Company and, in addition, the Chairman of the Board of the Company.
Current members of the Compensation Committee are Dennis H. Field (Chairperson),
Michael J. Sheets, and Jerome J. Goldstein (with Mr. Goldstein having no vote).
The Compensation Committee met one time during 1995.
The Audit Committee has as its primary responsibilities the recommendation
of an independent public accountant to audit the annual financial statements of
the Company, the review of internal and external audit functions, the review of
internal accounting controls, the review of annual financial statements, and a
review at its discretion of compliance with corporate policies and codes of
conduct. The Audit Committee is comprised of outside directors. The current
members of the Audit Committee are Michael J. Sheets (Chairperson), James F.
Keane, and Dennis H. Field. The Audit Committee met three times during 1995.
COMPENSATION COMMITTEE INTERLOCKS AND INSIDER PARTICIPATION
The Compensation Committee includes two persons who are or have previously
been employed by the Company or its subsidiaries. Jerome J. Goldstein is
Chairman of the Board of the Company and, prior to August 1990, was also the
President and Chief Executive Officer of the Company. Mr. Goldstein is a non-
voting member of the Committee. Dennis H. Field was President and Chief
Operating Officer of Aquafilter Corporation, a wholly-owned subsidiary of the
Company, from 1978 to 1982. After leaving Aquafilter Corporation, Mr. Field had
virtually no contact with the Company from the date of his resignation to 1991
when he was asked to join the Company's Board. Prior to 1991, he was Executive
Vice President/General Manager, U.S. Division, of Faberge. Mr. Field has a
distinguished career with significant consumer product companies.
Michael J. Sheets, a director and member of the Compensation Committee, is
a consultant to the Company, providing advice primarily in the areas of
marketing and advertising. Mr. Sheets became a consultant at the time of
joining the Company's Board of Directors in 1990. He is paid $1,667 per month
for his services as a consultant. Mr. Sheets was, prior to October, 1990,
President and Chief Executive Officer of Airwick Industries (Reckitt and Colman
Household Products), a large competitor of the Company, and has a distinguished
career in consumer products manufacturing, advertising and sales.
EXECUTIVE COMPENSATION
SUMMARY COMPENSATION TABLE
The following Summary Compensation Table shows the annual and other
compensation of the chief executive officer and all other executive officers of
the Company for services in all capacities provided to the Company and its
subsidiaries for the past three years.
<TABLE>
SUMMARY COMPENSATION TABLE
LONG TERM
COMPENSATI
ON
ANNUAL COMPENSATION AWARDS
<CAPTION>
NAME AND OTHER ANNUAL UNDERLYING ALL OTHER
PRINCIPAL SALARY BONUS COMPENSATION OPTIONS COMPENSATION
POSITION YEAR $ $(1) $ (NO. OF ($)(3)
SHARES)
(2)
<S> <C> <C> <C> <C> <C> <C>
Mark E. Goldstein 1995 $350,000 $104,097 $23,054 - $4,075
President and 1994 $250,000 $256,148 $16,228 20,500 $3,237
Chief Executive 1993 $250,000 $112,916 $18,464 50,000 $11,144
Officer
Jerome J. 1995 $350,000 $104,097 $93,044 - $4,075
Goldstein
Chairman of The 1994 $350,000 $256,148 $95,882 20,500 $3,237
Board
1993 $350,000 $112,916 $132,468 50,000 $11,144
Carolyn J. 1995 $300,000 $104,097 $72,867 - $4,075
Anderson
Executive Vice 1994 $275,000 $256,148 $23,912 20,500 $3,237
President,
Chief Operating 1993 $275,000 $112,916 $21,477 50,000 $11,144
Officer,
Corporate Secretary
Barry Shepard 1995 $220,000 $104,097 $37,951 - $4,075
Treasurer and 1994 $200,000 $256,148 $75,714 20,500 $3,237
Assistant Secretary 1993 $200,000 $112,916 $35,060 50,000 $11,144
</TABLE>
Note: There were no restricted stock awards or long term incentive payouts
during the last three fiscal years.
(1) The Company has adopted a bonus plan for its
executive officers for the 1996 year. The Plan provides that an amount will be
distributed to the Company's executive officers equal to 10% of the annual
before tax profit exceeding $1,000,000. Such amount, if any, for 1996 will be
divided equally among the Company's four executive officers. In no event is a
bonus paid unless pre-tax profits exceed $1,000,000 for the fiscal year, nor is
any bonus paid on the first $1,000,000 of pre-tax earnings. The Company had
substantially the same plan in 1995, 1994 and 1993.
(2) Key employees, including executive officers
(but excluding any person who serves only as a director), who from time to time
are responsible for the management, growth and protection of the business of the
Company, are eligible to be granted options under the Company's 1986 Incentive
Stock Option Plan. No option under the 1986 Plan may be exercised more than ten
years after it is granted, and the exercise price must be at least 100% of the
fair market value of the Company's stock on the date of grant. If an employee
owns more than 10% of the Company's outstanding stock, then these limitations
are five years from the date of grant and 110% of the fair market value.
Options may not be granted to any person in any year to purchase shares having
an aggregate fair market value greater than $100,000 at the date the option is
granted. Payment for shares purchased upon the exercise of any option must be
made in cash.
(3) All Other Compensation for each of the executive
officers consists of Company contributions under an Employee Stock Ownership
Plan and Trust Agreement ("ESOP") which provides that the Company may contribute
annually to the ESOP cash or common stock in an amount not to exceed 15% of all
participants' total compensation. The Board of Directors determines whether any
contributions will be made for the year. Benefits are allocated to all eligible
employees according to a formula based on compensation, except that any income
earned on assets of the Trust is allocated to ESOP participants based upon the
value that each participant's account bears to the total value of Trust assets.
There were no changes in the base salaries of the Company's four officers
from October 30, 1988 through December 31, 1994. In the aggregate, executive
officers' base salaries were increased by 13.5% for 1995.
The dollar amount of Other Annual Compensation changes from year to year
because of fluctuations in the costs of benefits and their timing. Other Annual
Compensation in the table above for 1993 through 1995 is comprised of the
following:
<TABLE>
Mark E. Jerome J.
Goldstein Goldstein
1993 1994 1995 1993 1994 1995
<S> <C> <C> <C> <C> <C> <C>
Automobile purchase (1) $ - $ - $ - $29,785 $ - $ -
Income taxes on
automobile purchase (1) - - - 23,343 - -
Other automobile
expenses 2,667 3,512 2,364 2,511 2,972 1,463
Memberships 8,116 2,472 7,505 14,711 2,885 6,655
Life insurance 2,345 2,345 2,345 35,150 39,437 35,150
Income taxes on life
insurance 1,383 1,911 2,022 23,268 28,644 34,017
Medical plan(2) 2,453 3,391 6,382 - 16,512 12,417
Other 1,500 2,597 2,436 3,700 5,432 3,342
Total other
compensation $18,464 $16,228 $23,054 $132,468 $95,88 $93,044
2
Carolyn J. Anderson Barry Shepard
1993 1994 1995 1993 1994 1995
Automobile purchase (1)
$ - $ - $25,000 $ - 24,000 -
- -
Income taxes on
automobile purchase (1)
- - $22,384 - 21,489 -
Other automobile
expenses
3,388 2,656 3,355 2,537 3,460 2,512
Memberships
4,492 824 3,052 4,040 912 3,352
Life insurance
8,220 8,220 8,220 12,956 12,956 12,956
Income taxes on life
insurance
4,582 6,680 7,089 7,644 7,907 11,174
Medical plan(2)
45 4,154 1,870 6,383 2,391 5,521
Other
750 1,378 1,897 1,500 2,599 2,436
Total other
compensation $21,477 $23,912 $72,867 $35,060 $75,71 $37,951
4
</TABLE>
(1) Commencing in 1990, the Company adopted a policy of providing $25,000 for
the purchase of an automobile every three years for each executive officer and
paying the executive officer an amount to compensate the executive for the
additional tax obligations resulting from that purchase.
(2) In addition to group life, health, hospitalization and medical
reimbursement plans which generally are available to all employees, the Company
has adopted a plan which provides for additional medical coverage of not more
than $50,000 per year to each of the Company's executive officers.
The Company maintains a Key Executive Disability Plan, which is not
reflected in the table above. The purpose of this Plan is to provide the
executive with his or her regular salary during periods of long-term disability
in excess of 90 days to age 70, or to date of death, whichever first occurs; and
to provide the Chairman of the Board with the same benefit for life. The
benefits available under this Plan will cease upon termination of employment as
an executive officer of the Company other than during a period of disability.
The Plan is partially funded by disability insurance maintained by the Company
under which the Company is the beneficiary.
OPTIONS GRANTED
No options were granted to the Company's executive officers during the last
fiscal year.
OPTIONS EXERCISES IN 1995 AND YEAR-END OPTION VALUES
The following table summarizes information with respect to options
exercised during the 1995 fiscal year by the named executive officers and the
value of each officer's unexercised stock options at December 31, 1995.
<TABLE>
AGGREGATED OPTION EXERCISES IN LAST FISCAL YEAR
AND FISCAL YEAR END OPTION VALUES
<CAPTION>
Number of In-the-Money
Securities
$ Underlying Value of
Shares Unexercised Unexercised
Acquired Options at Year End Options at Year
Value End (2)
Name Exercise Realized(1) Exercisable Unexercisable Exercisable Unexercisable
<S> <C> <C> <C> <C> <C> <C>
Mark E. 49,178 $233,058 70,500 0 $52,656 0
Goldstein
Jerome J. - - 70,500 0 $52,656 0
Goldstein
Carolyn J. - - 70,500 0 $60,937 0
Anderson
Barry 40,000 $191,875 70,500 0 $60,937 0
Shepard
</TABLE>
(1) Represents the difference between the exercise price of the option and
market prices of the Company's stock on dates of exercise.
(2) Represents the difference between the exercise price of the options and the
closing price of the Company's stock at December 31, 1995 of $2.875/share.
COMPENSATION COMMITTEE REPORT
The Compensation Committee of the Board of Directors has furnished the
following report on executive compensation:
Compensation Committee Report{PRIVATE }
Introduction and Background
The Compensation Committee of the Board of Directors was created in March,
1992 and includes two outside directors. The responsibilities of Compensation
Committee include the origination of all executive compensation proposals.
The two outside directors on the Committee were also members of a special
litigation committee which in 1991 and 1992 considered compensation issues.
With the assistance of its counsel and the Hay Group, which is a well known,
respected compensation and management consulting firm, the special litigation
committee conducted an intensive investigation and analysis of the Company's
executive compensation and concluded that compensation paid to the executive
officers from 1985 to 1991 was fair. A report issued by that committee served
as the basis for the 1992, 1993 and 1994 compensation of the executive officers,
which continued an existing base salary, a bonus plan and other benefits.
In making decisions regarding executive compensation, the Compensation
Committee considers a number of factors. The Compensation Committee has also
determined that an outside consultant on compensation matters should be used
once every three years.
Organization Philosophy
The Committee believes that the Company's organization and the specific
responsibilities of the four executive officers are an essential part of
analyzing compensation levels. The first important point concerning the
management of the Company is that the four executives subscribe to a team
concept of executive management, and operate in accordance with this concept.
Although each of the executive officers has his or her specific areas of
responsibility and each is able to and often does make independent decisions,
the executive officers operate as a collaborative team, and very few significant
decisions are made without input from the group as a whole.
Second, each executive officer is responsible for a number of distinct
areas and tasks. Each performs many tasks traditionally associated with "middle
management" in other companies in addition to their respective duties of top
level or executive management. As a result, the Company has very little "middle
management" and operates as a fairly lean organization compared to many of its
competitors. In a real sense, this management organization has saved the
Company substantial amounts of money over the years. Also the few middle
managers in the Company have virtually no role in setting Company policy or in
making significant management decisions, all of which are handled by one or more
of the four executive officers.
Jerome J. Goldstein is the founder of the Company and served as its
President, Chief Executive Officer and Chairman of the Board until August 1990.
In August 1990 he relinquished the titles of President and Chief Executive
Officer to Mark E. Goldstein, his son. Mr. Goldstein's relinquishment of the
positions of President and CEO was in no sense a retirement, nor a reduction in
his contribution to the Company and its performance. Jerome Goldstein remains
today the most important driving force behind Company policy. Finally, the
Company still relies greatly on Mr. Goldstein's entrepreneurial skills and his
talent with respect to product development and design. Since the Company's
success is driven by the quality and marketability of its current products and
the development of new products, these skills cannot be minimized when assessing
Jerome Goldstein's contributions to the Company, both presently and over time.
In 1994 and 1995, Mr. Goldstein, with Carolyn Anderson, spearheaded the
Company's physical plant expansion in Denver, a project driven by the rapid
expansion of the Company's cosmetics line.
Mark E. Goldstein's role and responsibilities in the Company have increased
dramatically since he assumed the position of President and CEO in August 1990.
First, for a period of time, he continued to perform most of the duties and
responsibilities of a vice-president of sales and marketing, which he performed
before becoming CEO. He still takes on many of those responsibilities. For
example Mark Goldstein continues to be the primary contact with the Company's
largest account, Wal-Mart Stores, Inc., and he directs the Company's advertising
and promotional efforts. He has also continued to assume a heavy, but reduced,
travel schedule as part of the sales responsibilities. Second, Mark Goldstein
has assumed all of the basic responsibilities associated with being a CEO of a
public company. He ultimately is responsible for the day-to-day operations of
the Company, although he relies on the other three executive officers for their
advice and counsel.
Carolyn J. Anderson has been employed by the Company for twenty-six years,
longer than anyone on the executive team other than Jerome Goldstein. She
became Corporate Secretary in 1973; she was promoted to Executive Vice President
in 1974; and Mrs. Anderson was given the additional title and responsibilities
of Chief Operating Officer in 1982. As Chief Operating Officer, Ms. Anderson
has the most direct responsibility and decision-making authority with respect to
the day-to-day operations of the Company's plant and facilities. Additionally,
Ms. Anderson directs the Company's research and development activities.
Ms. Anderson also plays a major role, in cooperation with Barry Shepard, with
respect to the Company's "human resources" decisions. It should be noted that
the Company does not have a director of human resources. Further, Ms. Anderson
shares the responsibility for international sales of the Company's products with
Mark Goldstein. In 1994 and 1995, Ms. Anderson was of invaluable assistance to
Jerome Goldstein in directing the Company's physical plant expansion in Denver.
Barry Shepard performs all of the traditional functions of Treasurer and
Chief Financial Officer, including negotiations and maintenance of relationships
with creditors and the trustee for the Company's bonds. The Compensation
Committee recognized that Mr. Shepard played a leading role in securing
financing during 1994 of $12 million for the Company's expansion of its
facilities. Further, he was highly instrumental in successfully listing the
Company's stock on the New York Stock Exchange. He has been with the Company
since 1981, and his role on the executive team has increased during his tenure
with the Company. Mr. Shepard supervises all of the back office functions of
the Company, including accounting, data processing, computer operations and
personnel. In addition, he is an active participant in the Company's extensive
market research program.
Factors
In determining its recommendations on executive compensation, the Committee
considered the management organization as described above and the following
factors, among others:
(a) Services performed and time devoted to the Company by the executive;
(b) Amounts paid to executives in comparable companies;
(c) The size and complexities of the business;
(d) Successes achieved by the executive;
(e) The executive's abilities;
(f) Increase in volume of business during the executive's tenure;
(g) Corporate earnings and profits;
(h) Comparison of salary with distributions to stockholders;
(i) Prevailing economic conditions;
(j) Compensation paid to other employees of the corporation; and
(k) The amount previously paid to the executive.
Utilizing these factors, the Compensation Committee recommended that the
base salaries of the Company's executive officers be increased for 1995
(although, at his request, there was no increase in the base salary of the
Chairman of the Board). The Committee also recommended that the components of
other compensation provided to the Company's executive officers remain the same
in 1995 as in 1994. These recommendations were adopted by the Company's Board
of Directors.
In making the recommendations, the Compensation Committee noted, among
other things, that: The executive officers have pioneered a new product
category (cosmetics) for the Company; the Company has obtained excellent
distribution of its new products, successfully extended its cosmetics line in
1992 through 1995, and maintained its core business in household chemical
products; and the anticipated amounts for the base salary and bonuses are
expected to be tax deductible, without being subject to a limitation on the
deductibility of certain compensation in excess of $1 million under the Internal
Revenue Code.
In connection with recommending the compensation of executive officers for
1995, the Compensation Committee did engage the Hay Group for a review of
competitiveness of the Company's executive compensation levels. In summary, the
Hay Group found that, while some executive's total direct compensation levels
are relatively high and others relatively low compared to competition, in total
the compensation levels of the Company's executive officers are within
competitive ranges.
With respect to base salaries, the Committee recognized that the base
salaries of the Company's four executive officers have not changed since October
30, 1988. Their base salaries were increased in the aggregate by 13.5% for
1995. This modest increase takes into account the performance of each executive
as well as the increased responsibilities of Mark E. Goldstein as President and
Chief Executive Officer.
The Company's 1995 executive bonus plan provided for a bonus pool based on
100% of pre-tax profits for the year in excess of $1 million. The four key
executive officers shared equally the bonus awarded under the plan. The Company
had substantially the same plan in prior years. The Compensation Committee
believes that this bonus plan is an important part of the incentives for the
Company's executive officers and recognizes directly many of the factors
considered important by the Compensation Committee as are stated above.
The Company provides certain other benefits and perquisites to the
executive officers. The Committee believes that the types of benefits offered
to Company executives and the value of these benefits are similar to benefit
packages provided by competitors. While the Hay Group report in 1992 found that
the Company had a comprehensive executive benefits package, there are several
other common benefit programs that the Company does not provide to its
executives. A number of the benefits are provided by the Company not only to
the executive officers but also to other Company employees. These benefits are
appropriate for their positions, to compensate them consistent with market
levels and to facilitate performance of their jobs in a more efficient and
effective manner.
In conclusion, the factors described above remain applicable for 1995, and
the Compensation Committee believes that the levels of compensation for the
Company's four executive officers have been fair and appropriate.
COMPENSATION COMMITTEE
Dennis H. Field
Michael J. Sheets
Jerome J. Goldstein
STOCK PERFORMANCE GRAPH
There follows a graph, constructed for the Company, comparing the
cumulative total shareholder return of Scott's Liquid Gold-Inc. common stock to
the NASDAQ Market Index, to the NYSE Composite Index, and to a selected peer
group.
<TABLE>
<CAPTION>
Measurement Scott's NYSE NASDAQ Industry
Period Liquid Gold- Index Index Index
Inc.
(Fiscal year
covered)
Measurement pt.
<S> <C> <C> <C> <C>
12/31/90 $100.00 $100.00 $100.00 $100.00
Y/E 12/31/91 $146.65 $129.41 $128.38 $114.60
FYE 12/31/92 $226.64 $135.50 $129.64 $134.53
FYE 12/31/93 $906.57 $153.85 $155.50 $145.27
FYE 12/31/94 $1280.30 $150.86 $163.26 $163.18
FYE 12/31/95 $637.67 $195.61 $211.77 $219.52
</TABLE>
Fiscal year ended December 31
Assumes $100 invested on December 31, 1990 in
the Company, the Peer Group,
the NASDAQ MARKET INDEX,
The NYSE Composite Index
and assumes the reinvestment of any dividends
Note: The foregoing graph was prepared for the Company by Media General
Financial Services of Richmond, Virginia. The peer group selected by the
Company consists of (a) six companies, including Scott's Liquid Gold-Inc., which
used the standard industrial classification of specialty cleaning and sanitation
and which are publicly held, and (b) four publicly held companies which are
partially or entirely engaged in the cosmetics business. The Company believes
that, within its industry classes, the assembly of a peer group is difficult
because the Company competes with other companies which are significantly larger
than Scott's Liquid Gold-Inc., including two major companies which are not
publicly traded.
The following companies comprise the peer group: Armor All Products, Avon
Products, Inc., Clorox Co., Cosmetic Group USA, Inc., NCH CP, Nutramax
Products, Inc., Ocean Bio-Chem, Inc., Proctor and Gamble, and Stephan Co.*
*Two peer group companies, Innovet, Inc. and Neutrogena CP, included in prior
years are no longer listed on a major stock exchange and one company included
in prior years no longer has a cosmetics business. In lieu thereof, the
Company has added three other cosmetics businesses, Nutramax Products, Inc.,
Cosmetic Group USA, Inc. and Stephan Co.
COMPENSATION OF DIRECTORS
Four directors are full-time executive officers of the Company and receive
no additional compensation for services as a director. Michael J. Sheets,
Dennis H. Field, and James F. Keane are non-employee directors. The Company
pays $2,500 per month to each non-employee director for his services as
director. Mr. Michael J. Sheets is also paid $1,667 per month as a consultant
to the Company, primarily in the areas of marketing and advertising.
On January 15, 1993, the Company's Board of Directors adopted the Company's
1993 Stock Option Plan for Outside Directors (the "Plan"), which was approved by
the Company's shareholders on May 5, 1993. The Plan provides for the granting
of options to directors who are not employees of the Company. (There are
currently three outside directors, but the number of outside directors may
change in the future.) The purpose of the Plan is to further the growth and
development of the Company by providing an incentive to outside directors of the
Company, by increasing their involvement in the business and affairs of the
Company, by helping the Company to attract and retain well qualified directors
and/or by rewarding directors for their past dedication to the Company. The
Plan became effective on January 15, 1993.
A maximum of 400,000 shares of the Company's common stock are available for
issuance upon the exercise of options granted under the Plan. The number of
shares available under the Plan, the number of shares subject to outstanding
options, and the exercise price per share of such options are subject to
adjustment upon the occurrence of stock dividends, stock splits, mergers,
consolidations, recapitalizations, combinations or exchanges of stock, or other
similar circumstances. If any option under the Plan terminates or expires, the
shares allocable to the unexercised portion of the option will again be
available for purposes of the Plan.
The Plan is administered by the Board of Directors or a committee appointed
by and serving at the pleasure of the Board of Directors, consisting of no fewer
than two directors. The Plan is currently administered by the Board of
Directors. At March 11, 1996, options to purchase 390,000 shares of the
Company's common stock had been granted under the Plan, 145,000 each to Michael
J. Sheets and Dennis H. Field (with an exercise price of $1.09 for 100,000
shares and $4.87 for 45,000 shares), and 100,000 to James F. Keane (with an
exercise price per share of $1.66 for 5,000 shares, $3.00 for 50,000 shares, and
$4.87 for 45,000 shares). During 1995, Mr. Sheets exercised an option to acquire
100,000 shares of the Company's common stock at $1.095 per share. Other than
for Mr. Sheets, no options had been exercised at March 11, 1996.
TRANSACTIONS WITH MANAGEMENT
The Company has indemnification agreements with each of its directors and
executive officers. These agreements provide for indemnification and
advancement of expenses to the full extent permitted by law in connection with
any proceeding in which the person is made a party because the person is a
director or officer of the Company. They also state certain procedures,
presumptions and terms relevant to indemnification and advancement of expenses.
SECTION 16 REPORTS
Section 16(a) of the Securities Exchange Act of 1934 requires directors,
executive officers and beneficial owners of more than 10% of the outstanding
shares of the Company to file with the Securities and Exchange Commission
reports regarding changes in their beneficial ownership of shares in the
Company. To the Company's knowledge, there was full compliance with all Section
16(a) filing requirements applicable to those persons.
PROPOSED AMENDMENTS TO THE COMPANY'S ARTICLES OF INCORPORATION
(1) TO INCREASE AUTHORIZED COMMON STOCK,
(2) TO AUTHORIZE PREFERRED STOCK AND
(3) TO DELETE AN INDEMNIFICATION PROVISION
The Board of Directors has unanimously approved three amendments to the
Company's Articles of Incorporation as follows: (1) The amendment of Article III
to increase to 50,000,000 from 20,000,000 the number of shares of Common Stock,
par value $.10 per share, which the Company is authorized to issue without
further approval of the shareholders of the Company; (2) an additional amendment
of Article III to authorize the issuance by the Company of up to 20,000,000
shares of Preferred Stock, without par value, in one or more series, from time
to time, and having such rights, preferences, privileges, designations and other
terms, as the Board of Directors may determine without further approval of the
shareholders of the Company; and (3) to delete Article XI, eliminating the
section in the Articles of Incorporation stating a non-exclusive right of
indemnification for the Company's directors and officers.
The shareholders will be requested to consider and vote upon each of these
three amendments separately at the Annual Meeting. These proposed amendments
are attached as Exhibit A to this Proxy Statement. The Board of Directors
recommends that the shareholders approve these amendments.
Proposal to Amend the Company's Articles of Incorporation to Increase the Number
of Authorized Shares of Common Stock
The Company's Articles of Incorporation currently authorize 20,000,000
shares of Common Stock. Of the 20,000,000 shares of Common Stock currently
authorized for issuance, approximately 9,264,842 shares are unissued and
unreserved for issuance. The proposed amendment would increase the number of
authorized shares of the Company's Common Stock to 50,000,000.
If the proposed amendment to the Articles of Incorporation is approved, the
authorized shares of Common Stock in excess of those issued and reserved will be
available for issuance at such times and for such corporate purposes as the
Board of Directors may deem advisable without further action by the Company's
shareholders, unless such action is required in a specific case by applicable
laws or regulations or stock exchange rules. (As part of the criteria for
continued listing of the Common Stock with the New York Stock Exchange, the
Company is required to obtain shareholder approval of certain issuances of
stock.)
The Board of Directors believes that it is in the Company's best interests
to increase the number of authorized shares of Common Stock in order to have
additional authorized shares available for issuance to meet business needs as
they may arise. The Board of Directors believes that the availability of such
additional shares will provide the Company with the flexibility to issue Common
Stock for proper corporate purposes which may be identified by the Board of
Directors in the future, including stock splits, stock dividends, financings or
acquisitions. For example, it might be desirable in the future to implement a
stock split, which would not be possible on even a two-for-one basis with the
current level of authorized shares of Common Stock. Management currently has no
arrangements, agreements, understandings or plans for the issuance of the
additional shares of Common Stock proposed to be authorized.
The issuance of additional Common Stock could have the effect of diluting
voting power per share or the book value per share of the outstanding Common
Stock. Holders of the Company's Common Stock do not have preemptive rights to
purchase shares in future issuances. Also, the existence of unissued and
unreserved Common Stock could, in certain instances, render more difficult or
discourage a merger, tender offer, or proxy contest, and thus potentially have
an "anti-takeover" effect. An issuance of stock can make acquisition of a
company more difficult or more costly. An issuance of stock could deter the
types of transactions that may be proposed or could discourage or limit the
shareholders' participation in certain types of transactions that might be
proposed (such as a tender offer), whether or not such transactions were favored
by the majority of the shareholders, and could enhance the ability of officers
and directors to retain their positions.
The Board of Directors of the Company will, however, consider any proposals
to acquire control of the Company that may arise in the future in accordance
with their fiduciary duties and their judgment as to the best interests of the
shareholders of the Company at that time. The Company's Articles of
Incorporation and Bylaws do not presently contain provisions having an anti-
takeover effect. The proposed amendments to increase the authorized Common
Stock and to authorize Preferred Stock are not part of a plan by management of
the Company to adopt a series of anti-takeover measures, and management has no
present intention or plans to propose anti-takeover measures in future proxy
solicitations.
The Board of Directors does not intend to issue any Common Stock except on
terms which the Board deems to be in the best interests of the Company and its
then-existing shareholders.
If approved by the shareholders, the proposed amendment to Article III of
the Company's Articles of Incorporation regarding its Common Stock will become
effective upon filing of Articles of Amendment with the Secretary of State of
Colorado, which is expected to be accomplished on May 1, 1996, or as soon
thereafter as practicable. THE BOARD OF DIRECTORS RECOMMENDS A VOTE FOR THE
PROPOSAL TO AMEND ARTICLE III OF THE COMPANY'S ARTICLES OF INCORPORATION TO
INCREASE THE AUTHORIZED COMMON STOCK.
Proposal to Amend the Company's Articles of Incorporation to Authorize the
Issuance of Shares of Preferred Stock In One Or More Series
No preferred stock is presently authorized by the Company's Articles of
Incorporation. The proposed amendment would authorize the Board of Directors,
without any further shareholder action (unless such action is required in a
specific case by applicable laws or regulations or stock exchange rules), to
issue from time to time shares of Preferred Stock as one class without series
or in one or more series and to fix by resolution the designations,
preferences,limitations and relative rights of such class or each such series.
The class as a whole or any series of Preferred Stock could, as determined by
the Board of Directors at the time of issuance, rank, with respect to dividends,
limited voting rights, redemption and liquidation rights, senior to the
Company's Common Stock.
Under the proposed amendment, the Preferred Stock would have no voting
rights except for the following: (a) voting rights required by applicable law
(which currently provides for a vote of a class or series for certain amendments
to the articles of incorporation affecting the class or series); (b) voting
rights which the Board of Directors may grant to the class or a series of the
Preferred Stock with respect to any amendment of the Company's Articles of
Incorporation which adversely affects any right, preference or a limitation of
the class or series; and (c) voting rights which the Board of Directors may
grant to the class or a series of the Preferred Stock to elect a certain number
of directors of the Company if there is a failure to pay dividends on the class
or series for a period of time or to make a mandatory redemption payment when
due for the class or series. The terms, conditions and limitations of any such
voting rights will be determined by the Board of Directors, including the number
of directors to be elected and the time period for which there must be a failure
to pay any dividends for voting rights to occur. The Board of Directors of the
Company believes that the Common Stock should be the only class with unlimited
voting power.
In the Board of Directors' opinion, the primary reason for authorizing the
Preferred Stock is to provide flexibility for the Company's capital structure.
The Board of Directors believes that this flexibility is necessary to enable it
to tailor the specific terms of a class or series of Preferred Stock that may be
issued to meet market conditions and financing opportunities as they arise,
without the expense and delay that would be entailed in calling a shareholders
meeting to approve the specific terms of the class or any series of Preferred
Stock.
The Preferred Stock may be used by the Company for any proper corporate
purpose. Such purpose might include, without limitation, issuance as part or
all of the consideration required to be paid by the Company in the acquisition
of other businesses or properties, or issuance in public or private sales for
cash as a means of obtaining additional capital for use in the Company's
business and operations. The Company currently has no arrangements, agreements,
understandings or plans for the issuance of any Preferred Stock.
It is not possible to state the precise effects of the authorization of the
Preferred Stock upon the rights of the holders of the Company's Common Stock,
until the Board of Directors determines the respective preferences, limitations,
and relative rights of the holders of the class as a whole or of any series of
the Preferred Stock. Such effects might include: (a) reduction of the amount
otherwise available for the payment of dividends on Common Stock, to the extent
dividends are payable on any issued Preferred Stock; (b) restrictions on
dividends on the Common Stock; (c) voting rights of any series or the class of
Preferred Stock to vote separately, or to vote with the Common Stock, on limited
matters as indicated above; (d) conversion of the Preferred Stock into Common
Stock at such prices as the Board determines, which could include issuance at
below the fair market value or original issue price of the Common Stock,
diluting the book value per share of the outstanding Common Stock; and (e) the
holders of Common Stock not being entitled to share in the Company's assets upon
liquidation until satisfaction of any liquidation preference granted to holders
of the Preferred Stock.
In addition, the existence of unissued Preferred Stock could, in certain
instances, render more difficult or discourage a merger, tender offer, or proxy
contest and thus potentially have an "anti-takeover" effect, especially if stock
was issued in response to a potential takeover. Issuances of stock, including
preferred stock with conversion rights, can and have been implemented by some
companies in a manner intended to make acquisition of the companies more
difficult or more costly. Please see a further discussion of such effects under
"Proposal to Amend the Company's Articles of Incorporation to Increase the
Number of Authorized Shares of Common Stock."
If approved by the shareholders, this proposed additional amendment to
Article III, with respect to Preferred Stock, will become effective upon filing
Articles of Amendment with the Secretary of State of Colorado, which is expected
to be accomplished on May 1, 1996, or as soon thereafter as practicable. THE
BOARD OF DIRECTORS RECOMMENDS A VOTE FOR THE PROPOSAL TO AMEND ARTICLE III TO
AUTHORIZE THE ISSUANCE OF PREFERRED STOCK.
Proposal to Amend the Company's Articles of Incorporation to Delete an
Indemnification Provision
The deletion of Article XI of the Company's Articles of Incorporation will
eliminate the section in the Articles of Incorporation stating a non-exclusive
right of indemnification for the Company's directors and officers. The existing
Article XI, which would be deleted, is attached as Exhibit B to this Proxy
Statement.
Article XI of the Company's Articles of Incorporation requires the Company
to indemnify the Company's directors and officers against expenses and
liabilities incurred in connection with any action, suit or proceeding to which
they are made a party by reason of their position, with certain exceptions. The
exceptions concern a person who has been adjudged liable for fraud or misconduct
and also liabilities under securities laws. Article XI also provides that the
right of indemnification stated in the Article does not exclude other rights to
which a person indemnified may be entitled, and thus the Board of Directors
believes that Article XI is non-exclusive. The proposed amendment would delete
Article XI in its entirety.
The Board of Directors believes that the indemnification provisions of
Article XI are outdated and unnecessary. The indemnification rights stated in
Article XI were adopted in 1969. Since that time, the standards for
indemnification, as well as statutory exclusions from indemnification, have
changed. Under current Colorado law, a director or officer may be indemnified
by a corporation if the person acted in good faith and the person reasonably
believed (a) in the case of conduct in an official capacity, that the person's
conduct was in the corporation's best interests and (b) in all other cases, that
his or her conduct was at least not opposed to the best interests of the
corporation. In a criminal proceeding, the person must have no reasonable cause
to believe that his or her conduct was unlawful. A person may not be
indemnified, under current Colorado law, by a corporation in connection with a
proceeding by or in the right of a corporation in which the person was adjudged
liable to the corporation or in a proceeding in which the person is adjudged
liable on the basis that he or she derived an improper personal benefit unless a
court specifically finds that the person is fairly and reasonably entitled to
indemnification. Also, the validity of any indemnification with respect to
liabilities under securities laws is not a well-settled issue, and such
indemnification might be permitted by a court under certain circumstances.
Accordingly, Article XI is, to an extent, inconsistent with existing law.
Further, while Article XI is viewed as a non-exclusive means for
indemnification, as indicated above, its deletion will eliminate any potential
conflict with other statutory or contractual indemnification provisions. The
Board believes that indemnification is best handled by agreements and bylaw
provisions which refer to applicable law as in effect from time to time.
The indemnification of directors and officers has been an important factor
in recent years in the efforts of corporations, including the Company, to
attract and retain qualified directors and officers. The Company currently has
indemnification agreements with each of its directors and officers, as well as
Bylaw sections, which provide for indemnification and advancement of expenses to
the full extent permitted by law. See "Election of Directors and Management
Information - Transactions With Management." These agreements and the Bylaw
provisions will continue unchanged after the deletion of Article XI.
If approved by the shareholders, the proposed deletion of Article XI will
become effective upon the filing of articles of amendment with the Secretary of
State of Colorado, which is expected to be accomplished on May 1, 1996, or as
soon thereafter as practicable. THE BOARD OF DIRECTORS RECOMMENDS A VOTE FOR
THE PROPOSAL TO DELETE ARTICLE XI OF THE COMPANY'S ARTICLES OF INCORPORATION.
COMPANY ACCOUNTANTS
Arthur Andersen LLP was selected by the Board of Directors as the Company's
independent auditors for the fiscal year ended December 31, 1995, and it is
anticipated that the Company may select the same firm as the Company's
independent auditors for the fiscal year ending December 31, 1996. A
representative of Arthur Andersen LLP is expected to be present at the Annual
Meeting of Shareholders and to have the opportunity to make a statement if he so
desires. Such representative also is expected to be available to respond to
appropriate questions at that time.
SHAREHOLDER PROPOSALS
Shareholder proposals for inclusion in the Company's proxy materials
relating to the next annual meeting of shareholders must be received by the
Company on or before November 23, 1996.
1995 ANNUAL REPORT ON FORM 10-K
THE COMPANY'S FORM 10-K REPORT FOR 1995 CONSISTS PRIMARILY OF
TO INFORMATION IN THE COMPANY'S ANNUAL REPORT TO SHAREHOLDERS AND
THIS PROXY STATEMENT AND IS FILED ELECTRONICALLY WITH THE SECURITIES AND
EXCHANGE COMMISSION. SHAREHOLDERS WHO WISH TO OBTAIN, WITHOUT CHARGE, A COPY OF
THE COMPANY'S FORM 10-K REPORT FOR THE YEAR ENDED DECEMBER 31, 1995 IN THE FORM
FILED WITH THE SEC SHOULD ADDRESS A WRITTEN REQUEST TO CAROLYN J. ANDERSON,
CORPORATE SECRETARY, SCOTT'S LIQUID GOLD-INC., 4880 HAVANA STREET, DENVER,
COLORADO 80239-2400.
SOLICITATION OF PROXIES
The Company will pay the cost of soliciting proxies in the accompanying
form. In addition to solicitation by mail, proxies may be solicited by officers
and other regular employees of the Company by telephone, telegraph or by
personal interview for which employees will not receive additional compensation.
Arrangements may be made with brokerage houses and other custodians, nominees
and fiduciaries to forward solicitation materials to beneficial owners of the
shares held of record by such persons, and the Company may reimburse such
persons for reasonable out-of pocket expenses incurred by them in so doing.
Also, D.F. King & Co., Inc. has been retained to assist with the solicitation of
proxies for a fee of $5,000, an additional fee of $3 per each incoming and
outgoing shareholder telephone contact (if any), plus reimbursement of
reasonable expenses,
OTHER BUSINESS
As of the date of this Proxy Statement, Management was not aware that any
business not described above would be presented for consideration at the
meeting. If any other business properly comes before the meeting, it is
intended that the shares represented by proxies will be voted in respect thereto
in accordance with the judgment of the persons voting them.
The above Notice and Proxy Statement are sent by order of the Board of
Directors.
CAROLYN J. ANDERSON
Corporate Secretary
Denver, Colorado
March 22,1996
EXHIBIT A
TO PROXY STATEMENT
DATED MARCH 22, 1996
Text of Proposed Amendments to Articles of Incorporation
(1) Article III is hereby amended in its entirety to read as follows:
"The corporation shall have the authority to issue 50,000,000 shares
of common stock, each having a par value of $0.10 per share, which shall
have unlimited voting rights and shall be entitled to receive net assets of
the corporation upon dissolution."
(2) Article III is hereby further amended by the addition of the following
three paragraphs:
"In addition, the corporation shall have the authority to issue
20,000,000 shares of preferred stock, without par value. Such preferred
stock may be issued in series. Notwithstanding the rights of common stock
stated above, the entitlement of the Company's common stock to receive net
assets of the corporation upon dissolution, and the voting rights of common
stock of the Company, shall be subject to the voting and other rights, if
any, provided to the holders of preferred stock by these Articles of
Incorporation. Except for and subject to those rights expressly granted to
the holders of the preferred stock, or except as may be provided by law,
the holders of common stock shall have exclusively all other rights of
shareholders.
This corporation's Board of Directors shall have the authority,
without shareholder action, to determine the preferences, limitations
and relative rights of any preferred stock (whether in a series or as
a class), including without limitation the following: (i) the
designation of any series or class of preferred stock; (ii) the number
of shares constituting the series or class; (iii) voting rights, if
any, complying with the limitations on voting rights stated in this
Article III for preferred stock, except that no condition, limitation,
or prohibition on voting shall eliminate any right to vote required by
Colorado law; (iv) any redemption rights and, if provided, the terms
and conditions of such redemption, including without limitation the
date or dates upon or after which any preferred stock shall be
redeemable, and the amount per share payable in case of redemption,
which amount may vary under different conditions and at different
redemption dates; (v) any sinking fund for the redemption or purchase
of shares of a series or class, and, if provided, the terms and amount
of such sinking fund; (vi) conversion rights and, if provided, the
terms and conditions of such conversion, including provision for
adjustment of the conversion rate in such events as the Board of
Directors shall determine; (vii) distribution rights, including
without limitation a dividend rate and the determination of whether
such rights are cumulative, noncumulative or partially cumulative; and
(viii) preference rights over any other class or series of shares with
respect to distributions, including without limitation any priority as
to dividends and as to distributions upon the dissolution of the
corporation.
The preferred stock of the corporation shall have no voting
rights except (I) the preferred stock shall have voting rights required by
applicable law (which required voting rights may be set forth in the
preferences, limitations and relative rights of a class or series), (ii)
any preferred stock of a class or series may have voting rights with
respect to any amendment, alteration or repeal of any provisions of the
corporation's Articles of Incorporation which adversely affects any right,
preference or limitation of the class or series, and (iii) any preferred
stock of a class or series may have voting rights to elect a certain number
of directors of the corporation in the event of the corporation's failure
to pay dividends on the class or series for a period of time or to make a
mandatory redemption payment when due for the class or series. The Board
of Directors shall, in accordance with the authority granted to Board of
Directors in this Article III, determine whether any such voting rights,
not required by applicable law, shall exist and shall also determine the
terms, conditions and limitations of any such voting rights, including
without limitation the number of and time period for any such failures to
pay dividends necessary for voting rights to occur and the number of
directors to be elected by a class or series after such an event.''
(3) Article XI, concerning indemnification, is deleted in its
entirety, and subsequent Articles shall be renumbered accordingly.
EXHIBIT B
TO PROXY STATEMENT
DATED MARCH 22, 1996
Text of Existing Article XI
The following is the existing Article XI which is proposed to be deleted
from the Articles of Incorporation of the Company:
ARTICLE XI
The corporation shall indemnify each director and each director and each
officer, his heirs, executors and administrators against expenses reasonably
incurred or liability incurred by him in connection with any action, suit or
proceeding to which he may be made a party by reason of his being or having been
a director or officer of the corporation, except in relation (i) to matters as
to which he shall be finally adjudged in such action, suit or proceeding to be
liable for fraud or misconduct, and (ii) to liabilities under the Securities Act
of 1933, as amended, the securities laws of Colorado or other applicable
securities laws. In the event of a settlement before or after action or suit,
indemnification shall be provided only in connection with such matters covered
by the
settlement as to which the corporation is advised by counsel that the person to
be indemnified was not guilty of such fraud or misconduct. The foregoing right
of indemnification shall not exclude other rights to which a person indemnified
may be entitled.
PROXY CARD
PROXY SCOTT'S LIQUID GOLD-INC. PROXY
Proxy Solicited by the Board of Directors for the Annual Meeting of Shareholders
To be held May 1, 1996
The undersigned hereby appoints Jerome J. Goldstein, Mark E. Goldstein,
Carolyn J. Anderson, or Barry Shepard, and each of them, proxies of the
undersigned, with full power of substitution, to vote all shares of common stock
of Scott's Liquid Gold-Inc., which the undersigned is entitled to vote, at the
Annual Meeting of Shareholders to be held on May 1, 1996, at 10:00 a.m. and at
any and all adjournments thereof for the following purposes:
(1) Election of Directors:
___ FOR all nominees listed below (except as marked to the contrary below)
___ WITHHOLD AUTHORITY to vote for all nominees listed below
Jerome J. Goldstein Mark E. Goldstein Carolyn J.
Anderson Barry Shepard Dennis H. Field James F. Keane
Michael J. Sheets
(INSTRUCTION: TO WITHHOLD AUTHORITY TO VOTE FOR ANY INDIVIDUAL NOMINEE, WRITE
THE NOMINEE'S NAME ON THE LINE IMMEDIATELY BELOW.)
(2) Amendment to the Company's Articles of Incorporation to increase the
authorized number of shares of the Company's common stock to 50,000,000
shares.
___ FOR ___ AGAINST ___ ABSTAIN
(3) Amendment to the Company's Articles of Incorporation to authorize up to
20,000,000 shares of preferred stock issuable in one or more series.
___ FOR ___ AGAINST ___ ABSTAIN
(4) Amendment to the Company's Articles of Incorporation to delete a provision
on indemnification of directors and officers.
___ FOR ___ AGAINST ___ ABSTAIN
(5) In their discretion, the Proxies are authorized to vote upon such other
business as properly may come before the meeting.
THIS PROXY WHEN PROPERLY EXECUTED WILL BE VOTED IN THE MANNER DIRECTED HEREIN BY
THE UNDERSIGNED SHAREHOLDER(S). IF NO DIRECTION IS INDICATED, THE SHARES
REPRESENTED BY THIS PROXY WILL BE VOTED AT THE MEETING "FOR" ELECTION OF THE
NOMINEES FOR DIRECTOR AS SELECTED BY THE BOARD OF DIRECTORS AND "FOR" ITEMS 2, 3
AND 4 CONCERNING AMENDMENTS TO THE COMPANY'S ARTICLES OF INCORPORATION.
The undersigned hereby acknowledges receipt of the Notice of Annual Meeting of
Shareholders and the Proxy Statement furnished therewith. The undersigned
hereby revokes any proxies given prior to the date reflected below.
Dated , 1996
SIGNATURE(S) OF SHAREHOLDER(S)
Please complete, date and sign exactly
as your name appears hereon. If shares
are held jointly, each holder should
sign. When signing as attorney,
executor, administrator, trustee,
guardian or corporate official, please
add your title.
THIS PROXY IS SOLICITED ON BEHALF OF THE BOARD OF DIRECTORS. PLEASE SIGN AND
RETURN THIS PROXY IN THE ENCLOSED ENVELOPE. THE GIVING OF A PROXY WILL NOT
AFFECT YOUR RIGHT TO VOTE IN PERSON IF YOU ATTEND THE MEETING.
