SCHEDULE 14A INFORMATION
Proxy Statement Pursuant to Section 14(a) of the Securities Exchange Act of 1934
(Amendment No. ___)
Filed by the Registrant
Filed by a Party other than the Registrant
Check the Appropriate box:
Preliminary Proxy Statement Confidential, for Use of the
Commission Only (as permitted
X Definitive Proxy Statement by Rule 14a-6(e)(2))
Definitive Additional Materials
Soliciting Material Pursuant to 240.14a-11(c) or ? 240.14a-12
Scott's Liquid Gold-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):
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________________________________________________________________________
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Check box if any part of the fee is offset as provided by Exchange Act Rule
0-11(a)(2) and identify the filing for which the offsetting fee was paid
previously. Identify the previous filing by registration statement number, or
the Form or Schedule and the date of its filing.
1) Amount Previously Paid:
2) Form, Schedule, or Registration Statement No.:
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4) Date Filed:
SCOTT'S LIQUID GOLD-INC.
4880 Havana Street
Denver, Colorado 80239
NOTICE OF ANNUAL MEETING OF
SHAREHOLDERS
To Be Held May 5, 1999
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 5, 1999 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) Approval and ratification of the Scott's Liquid Gold-Inc. 1998 Stock
Option Plan;
(3) 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 10, 1999 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 26, 1999
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 5, 1999
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 5, 1999 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 26, 1999.
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 10, 1999, the
record date for shareholders entitled to vote at the meeting, the Company had
10,103,058 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.
Approval and ratification of the 1998 Stock Option Plan requires that the votes
cast in favor of the Plan exceed the votes cast in opposition. 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 the Stock Option Plan or these other matters, if any, so
long as a quorum is present.
The following persons are the only persons known to the Company who on
March 10, 1999, owned beneficially more than 5% of the Company's common stock,
its only class of outstanding voting securities:
<TABLE>
Name and Address of Amount and Nature Percent
Beneficial Owner of of Class
Beneficial
Ownership
<S> <C> <C>
Jerome J. Goldstein 2,525,174 24.8%
4880 Havana Street (1)(2)
Denver, Colorado 80239
Scott's Liquid Gold-Inc. 1,099,558 11.1%
Employee Stock (3)
Ownership Plan
4880 Havana Street
Denver, Colorado 80239
</TABLE>
(1) Includes 2,454,674 shares held by the Goldstein Family Partnership, Ltd., a
limited partnership of which the general partner is the Goldstein Family
Corporation and whose limited partners include Jerome J. Goldstein, two of
his children, his grandchildren, and certain relatives. Mr. Goldstein is
the sole stockholder and director of the Goldstein Family Corporation and
has the sole voting and disposition powers with respect to these shares.
Also includes 70,500 shares underlying incentive stock options granted
under the Company's 1998 Stock Option Plan which is subject to shareholder
approval at the 1999 Annual Meeting.
(2) Does not include 119,427 shares held by the Company's Employee Stock
Ownership Plan attributable to Mr. Goldstein's vested interest in the Plan
as of December 31, 1998.
(3) The six person committee administering the Employee Stock Ownership Plan
directs the voting of shares held under such Plan. Three of the Company's
four executive officers are members of this six-person committee.
SECURITY OWNERSHIP OF MANAGEMENT
The following table shows as of March 10, 1999, 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>
Name of Amount and Nature of Percent
Beneficial Owner Beneficial Ownership of Class
(1)
<S> <C> <C> <C>
Jerome J. Goldstein 2,525,174 (2)(6) 24.8%
Mark E. Goldstein 484,382 (3)(4)(6) 4.8%
Carolyn J. Anderson 288,460 (3)(6) 2.8%
Barry Shepard 264,500 (3)(6) 2.6%
Dennis H. Field 151,833 (5) 1.5%
James F. Keane 105,833 (5) 1.0%
Michael J. Sheets 128,333 (5) 1.3%
All Directors and executive officers 3,948,515 (6) 37.0%
as a Group (7 persons)
</TABLE>
(1) Beneficial owners listed have sole voting and disposition power with
respect to the shares shown unless otherwise indicated.
(2) Of these shares, 2,454,674 are held by the Goldstein Family Partnership,
Ltd., as to which Mr. Jerome J. Goldstein has voting and disposition
powers. See footnote 1 under the table in "Voting Securities and
Principal Shareholders." Also includes 70,500 shares underlying stock
options granted to Jerome J. Goldstein under the Company's 1998 Stock
Option Plan which is subject to shareholder approval at the 1999 Annual
Meeting.
(3) For each named executive, includes 70,500 shares underlying stock options
granted under the Company's 1998 Stock Option Plan which is subject to
shareholder approval at the 1999 Annual Meeting.
(4) Also includes 92,892 shares held by Mark Goldstein's wife and minor
children.
(5) Includes for Mr. Sheets, 48,333 shares, for Mr. Field 148,333 shares and
for Mr. Keane 103,333 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.
(6) Does not include shares owned by the Company's Employee Stock Ownership
Plan under which, at December 31, 1998, Jerome J. Goldstein had a vested
interest in 119,427 shares, Mark E. Goldstein had a vested interest in
83,130 shares, Carolyn J. Anderson had a vested interest in 123,705 shares,
and Barry Shepard had a vested interest in 74,776 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 to serve 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>
Name of Nominee and
Position
in the Company Director Principal Occupation for
Age Since Last Five Years
<S> <C> <C> <C>
Jerome J. Goldstein 76 1954 Chairman of the Board of the Company since
(Chairman of the August, 1990. From 1954 to 1990,
Board) President and Chairman of the Board of the
Company.
Mark E. Goldstein 42 1983 President and Chief Executive Officer of
(President and Chief the Company since August, 1990. From 1982
Executive Officer) to 1990, Vice President-Marketing of
Company. Employed by the Company since
1978.
Carolyn J. Anderson 60 1974 Executive Vice President since 1974, Chief
(Executive Vice Operating Officer of the Company since
President, Chief 1982 and Corporate Secretary since 1973.
Operating Officer and Employed by the Company since 1970.
Corporate Secretary)
Barry Shepard 68 1982 Treasurer and Chief Financial Officer of
(Treasurer and Chief the Company since 1981 when first employed
Financial Officer) by the Company.
Dennis H. Field 66 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 65 1993 Independent businessman since 1987. Vice
President of N. Keen & Co., retailer of
home furnishings and accessories since
1998. Founder of and advisor to Repower
Industries, Inc.(distributor of auto and
Marine engines and parts) since January
1997. From 1991 to 1997, President of
Engine World, Inc. (a predecessor of
Repower Industries, Inc.). 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 68 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.
Directors' Meetings and Committees
During the year ended December 31, 1998, the Company had four directors
meetings, plus seven 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 compensa
tion. 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), James
F. Keane, Michael J. Sheets, and Jerome J. Goldstein (with Mr. Goldstein having
no vote). Mr. Keane became a member of the Compensation Committee in February,
1998; the other three persons were members of the Compensation Committee
throughout 1998. The Compensation Committee met two times during 1998.
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 two times during 1998.
Jerome J. Goldstein did not attend meetings of the Board of Directors and
Compensation Committee held on the same day in February, 1998 due to an illness
and also was not present at a meeting of the Board of Directors in August, 1998
due to the illness of his wife. As a result, Jerome J. Goldstein attended 50%
of the total number of meetings of the Board of Directors and committees of
which he was a member during 1998. (This calculation excludes actions taken by
unanimous written consent of the Board of Directors.)
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. From 1978 to 1982. Dennis H. Field was
President and Chief Operating Officer of Aquafilter Corporation, a wholly owned
subsidiary of the Company which manufactured cigarette filters. 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 a 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
Annual Compensation
Compensation
Name and Other Securities
Principal Annual Underlying All Other
Position Salary Bonus Compensation Options Compensation
Year $ $(1) $ (#) ($)(2)
<S> <C> <C> <C> <C> <C> <C>
Mark E. Goldstein 1998 $350,000 - $23,293 50,000 $2,850
President and 1997 $350,000 $140,373 $23,142 - $2,289
Chief Executive 1996 $350,000 $32,373 $65,053 - $5,356
Officer
Jerome J. 1998 $350,000 - $115,222 50,000 $2,850
Goldstein 1997 $350,000 $140,373 $88,442 - $2,289
Chairma1997 1996 $350,000 $32,373 $82,023 - $5,356
Board
Carolyn J. 1998 $300,000 - $77,296 50,000 $2,850
Anderson 1997 $300,000 $140,373 $29,504 - $2,289
Executive Vice 1996 $300,000 $32,373 $27,656 - $5,356
President,
Chief Operating
Officer, Corporate
Secretary
Barry Shepard 1998 $220,000 - $45,585 50,000 $2,850
Treasurer and 1997 $220,000 $140,373 $106,062 - $2,289
Assistant 1996 $220,000 $32,373 $44,143 - $5,356
Secretary
</TABLE>
Note: There were no restricted stock awards or long term incentive payouts
during the last three fiscal years; nor were there any long term compensation
awards, such as an award of stock options, during 1996 and 1997. With regard to
1998, see Option Grants in Last Fiscal Year.
(1) The Company has adopted a bonus plan for its executive officers for the
1999 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
million, excluding items that are infrequent, unusual, or extraordinary. Such
amount, if any, for 1999 will be divided equally among the Company's four
executive officers. In no event is a bonus paid unless pre-tax profits,
excluding the above-mentioned items, exceed $1,000,000 for the fiscal year, nor
is any bonus paid on the first $1,000,000 of pre-tax earnings, excluding the
above mentioned items. The Company had substantially the same plan in 1998,
1997, and 1996.
(2) 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 January 1, 1995 through December 31, 1998.
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 1996 through 1998 is comprised of the
following:
<TABLE>
Mark E. Goldstein Jerome J. Goldstein
1996 1997 1998 1996 1997 1998
<S> <C> <C> <C> <C> <C> <C>
Automobile purchase (1) $20,050 $ - $ - $ - $ - $ -
Income taxes on
automobile purchases 19,302 - - - - -
Other automobile
expenses 2,426 919 1,318 989 364 1,549
Memberships 10,433 12,311 6,233 8,443 9,321 5,214
Life insurance 2,446 2,446 2,446 35,150 34,835 33,887
Income taxes on life
insurance 1,888 2,273 2,285 28,298 32,797 32,544
Medical plan (2) 6,072 2,831 2,494 5,801 8,759 35,028
Other 2,436 2,362 2,321 3,342 2,366 2,321
Total other
compensation $65,053 $23,142 $23,293 $82,023 $88,442 $115,222
Carolyn J. Anderson Barry Shepard
1996 1997 1998 1996 1997 1998
Automobile purchase (1) $ - $ - $25,000 $ - $25,000 $ -
Income taxes on
automobile purchases - - 24,068 - 24,068 -
Other automobile
expenses 1,409 2,706 806 1,557 1,929 2,809
Memberships 4,343 5,328 2,968 6,127 7,110 2,879
Life insurance 8,220 8,220 8,926 14,822 15,733 15,733
Income taxes on life 6,617 7,648 7,680 10,431 13,812 14,699
insurance
Medical plan (2) 5,170 3,239 3,091 8,770 16,045 4,368
Other 1,897 2,363 2,321 2,436 2,365 2,321
Total other
compensation $27,656 $29,504 $77,296 $44,143 $106,062 $45,585
</TABLE>
(1) Every three years, the Company provides $25,000, plus an amount to pay
resulting income taxes, to each executive officer for the purchase of an
automobile.
(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 plan further provides that, for a period of five years following an
executive officer's voluntary retirement, or involuntary retirement in the
event of a change in control of the Company, the Company will, at no cost to
the executive or his or her surviving dependents, cover the executive and/or
such dependents under the Company Health Plan and shall also provide, at
no cost to the executive, for the payment of this additional medical
coverage of up to $50,000.
The Company maintains a Key Executive Disability Plan, which is not
reflected in the table above. The purpose of this Plan is to provide the
executive with his or her regular salary during periods of long-term disability
in excess of 90 days to age 70, or to date of death, whichever first occurs; and
to provide the Chairman of the Board with the same benefit for life. The
benefits available under this Plan will cease upon termination of employment as
an executive officer of the Company other than during a period of disability.
The Plan is partially funded by disability insurance maintained by the Company
under which the Company is the beneficiary.
Option Grants in Last Fiscal Year
The following table concerns the grant of options during the year ended
December 31, 1998 to executive officers of the Company:
<TABLE>
Potential Realizable Value Term
at Assumed Annual Rates
of Stock Price Appreciation
Individual Grants for Option Term
% of Total
Number of Options
Securities Granted to Exercise or
Underlyin Employees Base Price
Name Options in ($/Share) Expiration 5%($)(1) 10%($)(1
Granted Fiscal Date
(#) (2) Year
<S> <C> <C> <C> <C> <C> <C> <C>
Mark E. 50,000 10.2% 1.86 November 23,2003 $14,500 $44,000
Goldstein
Jerome J. 50,000 10.2% 1.86 November 23,2003 $14,500 $44,000
Goldstein
Carolyn J. 50,000 10.2% 1.69 November 23,2003 $23,000 $52,500
Anderson
Barry Shepard 50,000 10.2% 1.69 November 23,2003 $23,000 $52,500
</TABLE>
(1) Assumes 5% and 10% growth per year based upon November 23, 1998 price of
$1.69/share.
(2) The options shown in the table above were issued under the Company's
1998 Stock Option Plan which is subject to shareholder approval at the 1999
Annual Meeting of Shareholders. Under that Plan, no option may be exercised
more than ten years after it is granted. If the option grant is for an
incentive stock option, the exercise price must be at least 100% of the fair
market value of the Company's stock on the date of grant. The exercise price
for a nonqualified stock option must be no less than 85% of the fair market
value of the Company's stock on the date of grant. If the grantee owns more
than 10% of the Company's outstanding stock, then these limitations for an
incentive stock option are five years from the date of grant and 110% of the
fair market value. No incentive option may be granted to any person in any
year to purchase shares having an aggregate fair market value greater than
$100,000 at the date of the option grant. Payment for shares purchased upon
the exercise of any option must be made in cash.
Outstanding Options
No options were exercised by any of the Company's executive officers during
1998. The following table summarizes information with respect to the value of
each officer's unexercised stock options at December 31, 1998.
<TABLE>
Fiscal Year End Option Values
Number of Securities In-the-Money
Underlying Unexercised Value of Unexercised
Options at Year End Options at Year End (1)
Name Exercisable Unexercisable Exercisable Unexercisable
<S> <C> <C> <C> <C>
Mark E. 70,500 0 0 0
Goldstein
Jerome J. 70,500 0 0 0
Goldstein
Carolyn J. 70,500 0 0 0
Anderson
Barry 70,500 0 0 0
Shepard
</TABLE>
(1) The in-the-money value of unexercised options is equal to the excess of the
per share market price of the Company's stock at December 31, 1998 over the
per share exercise price multiplied by the number of unexercised options.
However, the per share exercise price was lower than the market price of the
Company's stock at year end.
COMPENSATION COMMITTEE REPORT
Background
The Compensation Committee of the Board of Directors includes three outside
directors. (The Compensation Committee included two outside directors in
February, 1998 when action was taken on executive compensation for the 1998
year.) The responsibilities of the Compensation Committee include the
origination of all executive compensation proposals.
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.
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 has
continued to be an important driving force behind Company policy. Finally, the
Company relies greatly on Mr. Goldstein's entrepreneurial skills and his talent
with respect to product development, design, advertising and marketing. 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 in 1998 and
over time.
Mark E. Goldstein has the basic responsibilities associated with being a
CEO of a public company. He is also actively involved in the sales and
marketing efforts of the Company. For example Mark Goldstein is the primary
contact with the Company's largest account, Wal-Mart Stores, Inc., and he
directs the Company's advertising and promotional efforts. 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-nine years.
She became Corporate Secretary in 1973; she was promoted to Executive Vice
President in 1974; and Ms. 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.
Further, Ms. Anderson is, together with Mr. Shepard, the primary contact for the
Company's legal matters.
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. 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 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 to 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 remain the same in 1998 as in
1997 and that the components of other compensation provided to the Company's
executive officers also remain the same in 1998 as in 1997. 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 devote considerable time to the
Company, often more than full-time; the Company's philosophy as to its employees
in general is that good employees, who are paid well and stay with the Company,
contribute significantly to the successes of the Company's businesses; with
respect to base salaries, the base salaries of the Company's four executive
officers prior to 1995 had not changed since October 30, 1988; the Chairman of
the Board requested no increase in his base salary in 1995 and did not receive
an increase; the executive officers' base salaries were increased in the
aggregate by 13.5% for 1995; the bonus plan has been in effect for a number of
years, with a result of decreasing compensation in 1996 because of the Company's
performance; the Company's emphasis is on the bonus plan and performance and
successes achieved by executives; the levels of the bonus plan and other
components of compensation have been in effect for a number of years; the
Company's officers had not received stock options since 1994 (in late 1998 stock
options were granted to executive officers, other employees and directors); and
the anticipated amounts paid for the base salary and bonus in 1998 were and 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 terms of successes achieved by the executives in 1997, the
Compensation Committee noted, among others, the following: Alpha Hydrox sales
in 1997 increased 38% with respect to the core products and 28% overall for
Alpha Hydrox products; Alpha Hydrox sales ranked number one or very high by
Nielsen for alpha hydroxy skin care products; the Company has opened
international markets for its Alpha Hydrox products, although the sales were
relatively low; there were additions to the Company's Alpha Hydrox products; the
Company worked on an Hispanic product with alpha hydroxy acid; the Company
maintained the core sales of its household product, Scott's Liquid Gold for
wood; Touch of Scent had good distribution, although commercials for Touch of
Scent did not result in sales increases and a price decrease for Touch of Scent
was underway; Scott's Liquid Gold for wood was being added to Canada; the
Aquafilter building in Florida was sold during 1997; claims against two
insurance companies relating to the Rocky Mountain Arsenal were settled during
1997; commissions to brokers have been reduced from 5% to 3%, and one
significant account has been moved inhouse; employee relations remained good;
the financial management of the Company was significant in developing the
Company's good financial condition, including continuing to satisfy covenants
for the Company's bonds, setting aside funds to repay those bonds and
repurchasing bonds at favorable prices; and the pre-tax operating income before
unusual events (including matters relating to the Rocky Mountain Arsenal case)
increased significantly in 1997 when compared to 1996. The Committee was also
aware that the Company was to consider, and in fact did pay, a dividend of $0.10
per share of common stock in March, 1998 based on the Company's 1997
performance.
In connection with recommending the compensation of executive officers for
1995, the Compensation Committee engaged 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. As a result of the Committee's decision to engage a
consultant on compensation matters every three years, the Hay Group was asked in
1997 to assess the competitiveness of the executive compensation levels of the
Company. Their report issued in July, 1997 concluded that overall the total
direct compensation practices of the Company fall within a peer group
competitive range, with competitiveness of the pay packages varying by
executive. Base salaries were viewed as in line with competitive practices;
annual incentive awards were below competition, with the size of the annual
incentive being a direct result of Company performance; and long-term incentive
awards, such as stock options, were below competitive practices.
The Company's 1998 executive bonus plan provided for a bonus pool based on
10% of pre-tax profits (excluding items that are infrequent, unusual or
extraordinary) for a year in excess of $1 million. The four key executive
officers would have shared equally any 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 a 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 1998, 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
James F. Keane
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 NYSE Composite Index, and to a selected peer group.
<TABLE>
1993 1994 1995 1996 1997 1998
<S> <C> <C> <C> <C> <C> <C>
Scott's 100 141.22 70.34 36.7 77.98 36.02
Liquid Gold
Peer Group 100 112.47 151.76 204.23 300.09 361.8
NYSE 100 98.06 127.15 153.16 201.5 239.77
</TABLE>
Fiscal year ended December 31
Assumes $100 invested on December 31, 1993
in the Company, the Peer Group,
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 companies which use the standard industrial classification
of specialty cleaning and sanitation and which are publicly held, and other
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: Avon Products, Inc., Clorox
Co. (includes Armor All Products, acquired by Clorox Co. in 1997), NCH Corp.,
Nutramax Products, Inc., Ocean Bio-Chem, Inc. Procter & Gamble, and Stephan Co.
Compensation of Directors
Four directors are full-time executive officers of the Company and receive
no additional compensation for service 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 area 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. 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 on account 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 10, 1999, options to purchase 399,999 shares of the
Company's common stock had been granted under the Plan; and except for the
exercise of options for 100,000 shares by Mr. Sheets, no options had been
exercised at March 10, 1999. The outstanding options are held as follows by the
non-employee directors:
<TABLE>
Year End Option Values
Number of Securities In-the-Money
Underlying Unexercised Value of Unexercised
Options at Year End Options at Year End (1)
Name Exercisable Unexercisable Exercisable Unexercisable
<S> <C> <C> <C> <C>
Dennis H. 148,333 0 $34,750 0
Field
James F. 103,333 0 0 0
Keane
Michael J. 48,333 0 0 0
Sheets
</TABLE>
(1) The in the money value of unexercised options is equal to the excess of the
per share market price of the Company's stock at December 31, 1998 over the
per share exercise price multiplied by the number of unexercised options.
In August and October, 1998, the Board of Directors of the Company extended
the expiration date of the options held by James F. Keane for 5,000 shares from
August 19, 1998 to August 19, 2001 and for 50,000 shares from October 13, 1998
to October 13, 2001. Also, as part of the repricing of options held by
employees, officers and directors, the Board of Directors on November 24, 1998
granted options to three non-employee directors which replaced canceled options
at higher prices. All but one of the canceled options were near their
expiration date, and the one option with a longer term had been extended for
Mr. Keane in August, 1998 as indicated above. The Board recognized that the
higher price of the Company's common stock earlier was based upon anticipated
growth of the Company and that the Company instead experienced decreases in
sales in 1998. The Board of Directors wishes to have the employees and
executive officers, as well as directors, motivated for the growth and success
of the Company. The Board believes that motivation is an important factor for
personnel and directors of the Company. It is also believed that options assist
the Company in retaining employees and directors and that options provide a
reward for service to the Company. The following table summarizes the repricing
of these options:
<TABLE>
Length of
Number of Market Original
Securities Price of Exercise Option Term
Underlying Stock at Price at New Remaining at
Options Time of Time of Exercise Date of
Repriced Repricing Repricing Price Repricing
Name Date (#) ($) ($) ($)
<S> <C> <C> <C> <C> <C> <C>
Dennis H. 11/24/98 45,000 $1.69 $4.87 $1.69 3 months
Field
James F. 11/24/98 45,000 $1.69 $4.87 $1.69 3 months
Keane
James F. 11/24/98 50,000 $1.69 $3.00 $1.69 2 years 11
Keane months
Michael J. 11/24/98 45,000 $1.69 $4.87 $1.69 3 months
Sheets
</TABLE>
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.
Until January, 1999, the Company, Neoteric Cosmetics, Inc. (a wholly-owned
subsidiary), and the Company's Chairman, Jerome J. Goldstein, were defendants in
a lawsuit in the federal District Court for the District of Colorado brought by
Leslee Brooks (a daughter of Mr. Jerome J. Goldstein), her husband, Dr. Norman
Brooks (a California dermatologist), and a related corporation. The lawsuit
involved a claim for compensation by the Brooks relating to Alpha Hydrox
products. On July 24, 1998, a jury unanimously found in favor of the Company,
its subsidiary, and Jerome J. Goldstein. The jury found that there was no
liability as to each claim of the plaintiffs. Subsequently, the plaintiffs in
the Brooks case filed an appeal of the judgment to the United States Tenth
Circuit Court of Appeals. On January 21, 1999, the Company entered into a
settlement agreement with the plaintiffs in the Brooks case, under which the
Company paid $225,000 to the plaintiffs. The settlement results in a dismissal
of the appeal of that case and a release regarding the Company and the other
defendants in the case. The Company continues to believe that the claims of the
plaintiffs in the Brooks case were groundless. The settlement allowed the
Company to avoid the cost, time, and any uncertainty involved in an appeal of
the case. The Company and Jerome J. Goldstein engaged the same counsel for the
defense of the Brooks case, and all legal fees and costs of the Brooks case,
including the settlement amount, were paid by the Company, amounting to a total
of approximately $970,000. In February, 1999, the Board of Directors approved
and authorized the indemnification of Jerome Goldstein for attorneys' fees,
costs and the settlement amount in the Brooks case to the extent they may be
considered expenses or costs of Mr. Goldstein. Also in February, 1999, the
Company settled its claim against the insurer under the Company's directors and
officers liability insurance for reimbursement of $550,000 of the legal expenses
and settlement amount paid by the Company with respect to the Brooks case.
APPROVAL OF 1998 STOCK OPTION PLAN
On November 9, 1998, the Company's Board of Directors adopted the Company's
1998 Stock Option Plan (the "Plan"), subject to approval and ratification by the
Company's shareholders. The Plan provides for the granting of options to
employees and directors of the Company. (The word "Company" as used in the Plan
refers to Scott's Liquid Gold-Inc. and its Subsidiaries.) Under the Plan, the
Board, in its sole discretion, may issue either Nonqualified Stock Options
(those which do not qualify as Incentive Stock Options under Section 422 of the
Internal Revenue Code of 1986 - the "Code") or Incentive Stock Options (those
which qualify for favorable federal income tax treatment under the Code). With
respect to non-employee directors of the Company, stock option awards are
limited to Nonqualified Stock Options. The purpose of the Plan is to further the
growth and development of the Company through affording the opportunity for
stock ownership to selected employees. The effective date of the Plan is
November 9, 1998.
A copy of the Plan appears as Exhibit A to this Proxy Statement. The major
features of the Plan are summarized below, but such summary is qualified in its
entirety by the full text of the Plan.
Shares Available for Issuance
A maximum of 350,000 shares of the Company's Common Stock is 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 on account of stock dividends, stock splits, mergers, consolidations,
recapitalizations, combinations or exchanges of stock, or other similar
occurrences effecting a change in the outstanding shares without the receipt of
additional consideration by the Company. 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.
Administration of the Plan
The Plan is administered by the Company's Board of Directors or a committee
appointed by and serving at the pleasure of the Board, consisting of no fewer
than two directors. The Plan is currently administered by the Board of
Directors. The Board or committee, whichever is appointed to administer the
Plan, is called the "committee". Subject to the terms of the Plan, after
considering the recommendation of any administering committee, the Board of
Directors determines which Company employees and directors will receive options,
the type of options to be awarded (whether Incentive Stock Options or
Nonqualified Stock Options), the exercise price of the options, the number of
shares to be subject to each option, and other terms of the options. The Board
has full authority to interpret the Plan and to prescribe rules for its
administration.
Eligibility
Under the Plan, all full-time employees of the Company and non-employee
members of the Company's Board of Directors are eligible to receive options.
Non-employee directors are only eligible to receive Nonqualified Stock Options
and can elect not to be eligible for grants of options during any period of
time.
Option Exercise Price and Other Terms
Options may be granted under the Plan through November 8, 2008. The
option price per share for Incentive Stock Options granted under the Plan must
be not less than 100% of the fair market value (as of the date of grant) of the
shares subject to the option. The option price for Nonqualified Stock Options
granted under the Plan must not be less than 85% of the fair market value (as of
the date of grant) of the shares subject to the option. The fair market value is
determined by reference to closing prices on the public market. The full price
for shares must be paid in cash at the time the option is exercised. Each
option must expire no later than ten years after the date it is granted. In the
case of incentive stock options granted to employees who own more than 10% of
the outstanding voting stock of the Company, the exercise price must be at least
110% of the fair market value on the date of grant and the term of the incentive
stock option cannot exceed five years.
Upon termination of employment or a director's service for reasons other
than death, disability or for cause, an optionee may at any time within three
months after the date of termination, and prior to any expiration of the option,
exercise the option. A period of one year is permitted for exercise by the
optionee's heirs if the optionee's employment or service as a director is
terminated due to death or disability. Options terminate immediately upon
termination of employment for cause.
Options may include vesting restrictions on the exercise based on the
passage of time, the achievement of goals or the occurrence of events. Options
granted under the Plan may be not be transferred other than by will or the laws
of descent and distribution.
Amendment and Termination
The Company's Board of Directors may at any time amend, suspend or
terminate the Plan except that no action by the Board may impair outstanding
options. No amendment to the Plan may be made without shareholder approval that
would increase the total number of shares under the Plan (except for any
adjustments as described above for stock dividends and other events), reduce the
minimum exercise price of options or materially modify the eligibility
requirements. Subject to the terms of the Plan, the Board may modify, extend or
renew any outstanding option under the Plan, accept the surrender of outstanding
options, and authorize the grant of substitute options.
Federal Income Tax Consequences
The grant of an Incentive Stock Option under the Plan does not produce
taxable income to the optionee or a tax deduction to the Company. Upon exercise
of an Incentive Stock Option, the employee will not realize taxable income and
the Company will not be entitled to a compensation deduction; however, the
excess of the fair market value over the exercise price may be taxed to the
employee under the alternative minimum tax provisions of the Code. The Code
imposes a statutory holding period for Incentive Stock Options, which is the
later of (1) one year after the shares were transferred to an employee upon
exercise of an option or (2) two years after the date of grant. If an employee
sells or otherwise disposes of shares acquired upon the exercise of an Incentive
Stock Option prior to meeting the statutory holding period requirements, all or
a portion of any gain will be taxed as ordinary income to the employee; in that
case, the Company will be entitled to deduct an equal amount as a compensation
expense. The amount of ordinary income is the lesser of (1) the difference
between the fair market value at the date of exercise and the exercise price, or
(2) the gain on the sale (the amount realized less the exercise price).
Otherwise, an optionee's disposition of shares acquired upon the exercise of an
Incentive Stock Option (including a disposition after the expiration of the
statutory holding period) will result in short-term or long-term capital gain or
loss measured by the difference between the disposition price and the employee's
tax basis in the shares (the tax basis is generally the exercise price plus the
amount previously recognized as ordinary income).
The grant of a Nonqualified Stock Option under the Plan does not produce
taxable income to the optionee or a tax deduction to the Company. Upon exercise
of a Nonqualified Stock Option, the excess of the fair market value of the
shares acquired over the exercise price will be taxable to the optionee as
ordinary income and will be deductible by the Company as a compensation expense.
Existing Grant of Options
At March 10, 1999, 301,800 options had been granted under the Plan by the
Company's Board of Directors to replace expired options and one set of options
that would have expired in February, 1999, all of which were previously granted
under other option plans. Of the 301,800 options granted, 200,000 were granted,
on November 24, 1998, to the Company's four executive officers, 50,000 to each
of Carolyn J. Anderson and Barry Shepard at a price of $1.69 per share and
50,000 to each of Jerome J. Goldstein and Mark E. Goldstein at a price of $1.86
per share; and 101,800 were granted on January 11, 1999, of which 82,000 were
granted to the four executive officers, 20,500 to each of Ms. Anderson and
Mr. Shepard at a price of $1.56 per share and 20,500 to each of Jerome J.
Goldstein and Mark E. Goldstein at a price of $1.72 per share. One employee
also received on January 11, 1999, an option for 19,800 shares at an exercise
price of $1.56 per share.. The grant of these options did not increase the
number of shares under option to each officer from the number outstanding last
year at this time. The 1998 Plan is subject to shareholder approval and
ratification of the Plan. The options granted under the 1998 Plan are not
subject to any vesting requirements and expire 200,000 on November 23, 2003 and
101,800 on January 8, 2004. No option granted was granted at a price lower than
the closing price for the Company's common stock on the New York Stock Exchange
on the day before the grant.
The Board of Directors recommends a vote "FOR" approval and ratification of
the 1998 Plan. Proxies solicited by the Board of Directors will be voted "FOR"
approval and ratification of the Scott's Liquid Gold-Inc. 1998 Stock Option
Plan.
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, except for filings by the
Employee Stock Ownership Plan for purchases of common stock of the Company in
March and August, 1998 with proceeds from a dividend paid by the Company in
March, 1998. These purchases were for a total of 27,350 shares, were reported
in a year-end filing but may have been required to be reported on forms for the
months of March and August, 1998.
.
COMPANY ACCOUNTANTS
Arthur Andersen LLC were selected by the Board of Directors as the
Company's independent auditors for the fiscal year ended December 31, 1998. The
Company selected the same firm as the Company's independent auditors for the
fiscal year ending December 31, 1999. A representative of Arthur Andersen LLC 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 26, 1999. Also, persons named in the proxy
solicited by the Board of Directors of the Company for its year 2000 annual
meeting of shareholders may exercise discretionary authority on any proposal
presented by a shareholder of the Company at that meeting if the Company has not
received notice of the proposal by February 11, 2000.
1998 ANNUAL REPORT ON FORM 10-K
THE COMPANY'S FORM 10-K REPORT FOR 1998 CONSISTS PRIMARILY OF CROSS
REFERENCES 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, 1998 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.
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 also 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.
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 26, 1999
EXHIBIT A
SCOTT'S LIQUID GOLD-INC.
1998 STOCK OPTION PLAN
SECTION 1: PURPOSE
The purpose of the Scott's Liquid Gold-Inc. 1998 Stock Option Plan (the
"Plan") is to further the growth and development of Scott's Liquid Gold-Inc.
(the "Company") by affording an opportunity for stock ownership to selected
employees and Directors of the Company and its Subsidiaries who are responsible
for the performance of various duties for the Company or its Subsidiaries and/or
who are involved in endeavors significant to the success of the Company or its
Subsidiaries.
SECTION 2: DEFINITIONS
Unless otherwise indicated, the following words when used herein shall
have the following meanings:
(a) "Board of Directors" shall mean the Board of Directors of the Company.
(b) "Code" shall mean the Internal Revenue Code of 1986, as amended from
time to time.
(c) "Common Stock" shall mean the Company's common stock (par value $0.10
per share) and any share or shares of the Company's capital stock
hereafter issued or issuable in substitution for such shares.
(d) "Director" shall mean a member of the Board of Directors.
(e) "Incentive Stock Option" shall mean any option granted to an eligible
employee under the Plan, which the Company intends at the time the
option is granted to be an Incentive Stock Option within the meaning
of Section 422 of the Code.
(f) "Nonqualified Stock Option" shall mean any option granted to an
eligible employee or Director under the Plan which is not an Incentive
Stock Option.
(g) "Option" shall mean and refer collectively to Incentive Stock Options
and Nonqualified Stock Options.
(h) "Option Agreement" shall mean the agreement specified in Section 7.2.
(i) "Optionee" shall mean any employee or Director who is granted an
Option under the Plan. "Optionee" shall also mean the personal
representative of an Optionee and any other person who acquires the
right to exercise an Option by bequest or inheritance.
(j) "Parent" shall mean a parent corporation of the Company as defined in
Section 424(e) of the Code.
(k) "Subsidiary" shall mean a subsidiary corporation of the Company as
defined in Section 424(f) of the Code.
(l) "Termination for Cause" shall mean an involuntary severance of
employment on account of: (1) refusal to obey written or verbal
directions of a lawful and/or moral nature issued by a supervisor or
corporate officer or by the Board of Directors; (2) fraud or
dishonesty directed against the Company or any of its Subsidiaries;
(3) breach of any material obligation of nondisclosure or
confidentiality owed to the Company or any of its Subsidiaries,
including any such breach pertaining to rules and regulations of the
Securities and Exchange Commission; (4) commission of any criminal
offense which constitutes a felony in the jurisdiction in which the
offense is committed; or (5) violation of any Company rules or
regulations, such as those pertaining to attendance, which constitutes
grounds for dismissal.
SECTION 3: EFFECTIVE DATE
The effective date of the Plan is November 9, 1998; provided, however, that
the adoption of the Plan by the Board of Directors is subject to approval and
ratification by the shareholders of the Company within twelve months of the
effective date. Options granted under the Plan prior to approval of the Plan by
the shareholders of the Company shall be subject to approval of the Plan by the
shareholders of the Company.
SECTION 4: ADMINISTRATION
4.1 Administrative Committee. The Plan shall be administered by a Committee
appointed by and serving at the pleasure of the Board of Directors, consisting
of not fewer than two Directors (the "Committee"). The Committee may, but need
not, be the existing Compensation Committee of the Board of Directors. The
Board of Directors may from time to time remove members from or add members to
the Committee, and vacancies on the Committee, howsoever caused, shall be filled
by the Board of Directors.
4.2 Committee Meetings and Actions. The Committee shall hold meetings at such
times and places as it may determine. A majority of the members of the
Committee shall constitute a quorum, and the acts of the majority of the members
present at a meeting or a consent in writing signed by all members of the
Committee shall be the acts of the Committee.
4.3 Powers of Committee and Board of Directors. The Committee shall recommend
to the Board of Directors specific Option grants and the terms and conditions of
Options granted under the Plan. The Committee shall recommend to the Board of
Directors rules and regulations for administration of the Plan. In recommending
Option grants, the Committee shall take into consideration the contribution the
Optionee has made or may make to the success of the Company or its Subsidiaries
and such other factors as the Committee shall determine. The Board of
Directors, after considering recommendations by the Committee, shall have the
full and exclusive right to grant and determine terms and conditions of all
Options granted under the Plan and to prescribe, amend, and rescind rules and
regulations for administration of the Plan. The actions of the Board of
Directors with respect to the Plan shall be final, binding and conclusive upon
all persons, including the Company, its Subsidiaries, its shareholders, and all
persons having any interest in Options which may be or have been granted
pursuant to the Plan.
4.4 Interpretation of Plan. The determination of the Board of Directors as to
any disputed question arising under the Plan, including questions of
construction and interpretation, shall be final, binding and conclusive upon all
persons, including the Company, its Subsidiaries, its shareholders, and all
persons having any interest in Options which may be or have been granted
pursuant to the Plan.
4.5 Indemnification. Each person who is or shall have been a member of the
Committee or of the Board of Directors shall be indemnified and held harmless by
the Company against and from any loss, cost, liability or expense that may be
imposed upon or reasonably incurred in connection with or resulting from any
claim, action, suit or proceeding to which such person may be a party or in
which such person may be involved by reason of any action taken or failure to
act under the Plan and against and from any and all amounts paid in settlement
thereof, with the Company's approval, or paid in satisfaction of a judgment in
any such action, suit or proceeding against him, provided such person shall give
the Company an opportunity, at its own expense, to handle and defend the same
before undertaking to handle and defend it on such person's own behalf. The
foregoing right of indemnification shall not be exclusive of, and is in addition
to, any other rights of indemnification to which any person may be entitled
under the Company's Articles of Incorporation or Bylaws, as a matter of law, or
otherwise, or any power that the Company may have to indemnify them or hold them
harmless.
SECTION 5: STOCK SUBJECT TO THE PLAN
5.1 Number. The aggregate number of shares of Common Stock which may be issued
under Options granted pursuant to the Plan shall not exceed 350,000 shares.
Shares which may be issued under Options may consist, in whole or in part, of
authorized but unissued stock or treasury stock of the Company not reserved for
any other purpose.
5.2 Unused Stock. If any outstanding Option under the Plan expires or for any
other reason ceases to be exercisable, in whole or in part, other than upon
exercise of the Option, the shares which were subject to such Option and as to
which the Option had not been exercised shall continue to be available under the
Plan.
5.3 Adjustment for Change in Outstanding Shares. If there is any change,
increase or decrease, in the outstanding shares of Common Stock which is
effected without receipt of additional consideration by the Company, by reason
of a stock dividend, recapitalization, merger, consolidation, stock split,
combination or exchange of stock, or other similar circumstances, then in each
such event, the Board of Directors shall make an appropriate adjustment in the
aggregate number of shares of stock available under the Plan, the number of
shares of stock subject to each outstanding Option and the Option prices in
order to prevent the dilution or enlargement of any Optionee's rights. In
making such adjustments, fractional shares shall be rounded to the nearest whole
share. The determinations of the Board of Directors in making adjustments shall
be final and conclusive.
5.4 Reorganization or Sale of Assets. If the Company is merged or consolidated
with another corporation and the Company is not the surviving corporation, or if
all or substantially all of the assets of the Company are acquired by another
entity, or if the Company is liquidated or reorganized (each of such events
being referred to hereinafter as a "Reorganization Event"), the Board of
Directors shall, as to outstanding Options, either: (1) make appropriate
provision for the protection of any such outstanding Options by the substitution
on an equitable basis of appropriate stock of the Company, or of the merged,
consolidated or otherwise reorganized corporation, which will be issuable in
respect of the Common Stock, provided that no additional benefits shall be
conferred upon Optionees as a result of such substitution, and provided further
that the excess of the aggregate fair market value of the shares subject to the
Options immediately after such substitution over the purchase price thereof is
not more than the excess of the aggregate fair market value of the shares
subject to such Options immediately before such substitution over the purchase
price thereof; or (2) upon written notice to all Optionees, which notice shall
be given not less than twenty days prior to the effective date of the
Reorganization Event, provide that all unexercised Options must be exercised
within a specified number of days (which shall not be less than ten) of the date
of such notice or such Options will terminate. In response to a notice provided
pursuant to clause (2) of the preceding sentence, an Optionee may make an
irrevocable election to exercise the Optionee's Option contingent upon and
effective as of the effective date of the Reorganization Event. The Board of
Directors may, in its sole discretion, accelerate the exercise dates of
outstanding Options in connection with any Reorganization Event.
SECTION 6: ELIGIBILITY
All full-time employees of the Company and its Subsidiaries shall be
eligible to receive both Incentive Stock Options and Nonqualified Stock Options
under the Plan. For purposes of this Section 6, a full-time employee shall be
any employee of the Company or any of its Subsidiaries who is regularly
scheduled to work at least forty hours per week. Directors who are not
employees of the Company or its Subsidiaries shall be eligible to receive
Nonqualified Stock Options, but not Incentive Stock Options, under the Plan.
Any Director who is otherwise eligible to participate, who makes an election in
writing not to receive any grants under the Plan, shall not be eligible to
receive any such grants during the period set forth in such election.
SECTION 7: GRANT OF OPTIONS
7.1 Grant of Options. The Board of Directors may from time to time in its
discretion determine which of the eligible employees and Directors of the
Company or its Subsidiaries should receive Options, the type of Options to be
granted (whether Incentive Stock Options or Nonqualified Stock Options), the
number of shares subject to such Options, and the dates on which such Options
are to be granted. No employee may be granted Incentive Stock Options to the
extent that the aggregate fair market value (determined as of the time each
Option is granted) of the Common Stock with respect to which any such Incentive
Stock Options are exercisable for the first time during a calendar year (under
all incentive stock option plans of the Company and its Parent and Subsidiaries)
would exceed $100,000.
7.2 Option Agreement. Each Option granted under the Plan shall be evidenced by
a written Option Agreement setting forth the terms upon which the Option is
granted. Each Option Agreement shall designate the type of Options being
granted (whether Incentive Stock Options or Nonqualified Stock Options), and
shall state the number of shares of Common Stock, as designated by the Board of
Directors, to which that Option pertains. More than one Option may be granted
to an eligible person.
7.3 Option Price. The option price per share of Common Stock under each Option
shall be determined by the Board of Directors and stated in the Option
Agreement. The option price for Incentive Stock Options granted under the Plan
shall not be less than 100% of the fair market value (determined as of the day
the Option is granted) of the shares subject to the Option. The option price
for Nonqualified Stock Options granted under the Plan shall not be less than 85%
of the fair market value (determined as of the day the Option is granted) of the
shares subject to the Option. Notwithstanding the foregoing, in no event shall
the option price per share be less than the par value of the Common Stock.
7.4 Determination of Fair Market Value. If the Common Stock (which is currently
listed on the New York Stock Exchange) is listed upon an established stock
exchange, then the fair market value per share shall be deemed to be the quoted
closing price of the Common Stock on such stock exchange on the day for which
the determination is made, or if no sales of the Common Stock shall have been
made on the stock exchange on that day, on the next preceding day on which there
was such a sale. If the Common Stock is listed upon more than one established
stock exchange, the fair market value per share shall be deemed to be the
average of the quoted closing prices of the Common Stock on all such stock
exchanges on the day for which the determination is made, determined for each
such stock exchange in accordance with the preceding sentence. If the Common
Stock is not listed upon any established stock exchange but is traded in the
NASDAQ National Market System, the fair market value per share shall be deemed
to be the closing price of the Common Stock in the National Market System on the
day for which the determination is made, or if there shall have been no trading
of the Common Stock on that day, on the next preceding day on which there was
such trading. If the Common Stock is not listed upon any established stock
exchange and is not traded in the National Market System, the fair market value
per share shall be deemed to be the mean between the dealer "bid" and "ask"
closing prices of the Common Stock on the NASDAQ System on the day for which the
determination is made, or if there shall have been no trading of the Common
Stock on that day, on the next preceding day on which there was such trading.
If none of these conditions apply, the fair market value per share shall be
deemed to be an amount as determined in good faith by the Board of Directors by
applying any reasonable valuation method.
7.5 Duration of Options. Each Option shall be of a duration as specified in
the Option Agreement; provided, however, that the term of each Option shall be
no more than ten years from the date on which the Option is granted and shall be
subject to early termination as provided herein.
7.6 Additional Limitations on Grant. No Incentive Stock Option shall be
granted to an employee who, at the time the Incentive Stock Option is granted,
owns stock (as determined in accordance with Section 424(d) of the Code)
representing more than 10% of the total combined voting power of all classes of
stock of the Company or of any Parent or Subsidiary, unless the option price of
such Incentive Stock Option is at least 110% of the fair market value
(determined as of the day the Incentive Stock Option is granted) of the stock
subject to the Incentive Stock Option and the Incentive Stock Option by its
terms is not exercisable more than five years from the date it is granted.
7.7 Other Terms and Conditions. The Option Agreement may contain such other
provisions, which shall not be inconsistent with the Plan, as the Board of
Directors shall deem appropriate, including, without limitation, provisions that
relate the Optionee's ability to exercise an Option to the passage of time or
the achievement of specific goals established by the Board of Directors or the
occurrence of certain events specified by the Board of Directors.
SECTION 8: EXERCISE OF OPTIONS
8.1 Manner of Exercise. Subject to the limitations and conditions of the Plan
or the Option Agreement, an Option shall be exercisable, in whole or in part,
from time to time, by giving written notice of exercise to the Secretary of the
Company, which notice shall specify the number of shares of Common Stock to be
purchased and shall be accompanied by: (1) payment in full to the Company of the
purchase price of the shares to be purchased; plus (2) payment in full of such
amount as the Company shall determine to be sufficient to satisfy any liability
it may have for any withholding of federal, state or local income or other taxes
incurred by reason of the exercise of the Option; and (3) a representation
meeting the requirements of Section 11.2 if requested by the Company.
8.2 Payment of Purchase Price. Payment for shares and withholding taxes shall
be in the form of either: (1) cash; or (2) a personal check to the order of the
Company; or (3) in any combination thereof.
SECTION 9: EFFECT OF TERMINATION OF EMPLOYMENT
9.1 Termination of Employment Other Than Upon Death or Disability and Other
Than Termination for Cause. Upon termination of an Optionee's employment with
the Company or a Subsidiary other than upon death or disability (within the
meaning of Section 22(e)(3) of the Code) and other than a Termination for Cause,
an Optionee may, at any time within three months after the date of termination
but not later than the date of expiration of the Option, exercise the Option to
the extent the Optionee was entitled to do so on the date of termination. Any
Options not exercisable as of the date of termination and any Options or
portions of Options of terminated Optionees not exercised within the period
specified herein shall terminate.
9.2 Termination By Death of Optionee. If an Optionee shall die while in the
employ of the Company or a Subsidiary or within a period of three months after
the termination of employment with the Company or a Subsidiary under
circumstances to which Section 9.1 applies, the personal representatives of the
Optionee's estate or the person or persons who shall have acquired the Option
from the Optionee by bequest or inheritance may exercise the Option at any time
within the year after the date of death but not later than the expiration date
of the Option, to the extent the Optionee was entitled to do so on the date of
death. Any Options not exercisable as of the date of death and any Options or
portions of Options of deceased Optionees not exercised within the period
specified herein shall terminate.
9.3 Termination By Disability of Optionee. Upon termination of an Optionee's
employment with the Company or a Subsidiary by reason of the Optionee's
disability (within the meaning of Section 22(e)(3) of the Code), the Optionee
may exercise the Option at any time within one year after the date of
termination but not later than the expiration date of the Option, to the extent
the Optionee was entitled to do so on the date of termination. Any Options not
exercisable as of the date of termination and any Options or portions of Options
of disabled Optionees not exercised within the period specified herein shall
terminate.
9.4 Termination of Directors. For purposes of this Section 9, a termination of
employment shall be deemed to include the termination of a Director's service as
a member of the Board of Directors.
9.5 Other Terminations. Upon termination of an Optionee's employment with the
Company or a Subsidiary under circumstances other than those set forth in
Sections 9.1, 9.2 or 9.3, including without limitation a Termination for Cause,
Options granted to the Optionee shall terminate immediately.
9.6 Extension of Option Termination Date. No Option granted under this Plan
may be extended by either the Committee or the Board of Directors.
SECTION 10: NON-TRANSFERABILITY OF OPTION
Options granted pursuant to the Plan are not transferable by the Optionee
other than by Will or the laws of descent and distribution and shall be
exercisable during the Optionee's lifetime only by the Optionee. Upon any
attempt to transfer, assign, pledge, hypothecate or otherwise dispose of the
Option contrary to the provisions hereof, or upon the levy of any attachment or
similar process upon the Option, the Option shall immediately become null and
void.
SECTION 11: ISSUANCE OF SHARES
11.1 Transfer of Shares to Optionee. As soon as practicable after the Optionee
has given the Company written notice of exercise of an Option and has otherwise
met the requirements of Section 8.1, the Company shall issue or transfer to the
Optionee the number of shares of Common Stock as to which the Option has been
exercised and shall deliver to the Optionee a certificate or certificates
therefor, registered in the Optionee's name. In no event shall the Company be
required to transfer fractional shares to the Optionee, and in lieu thereof, the
Company may pay an amount in cash equal to the fair market value (as determined
in accordance with Section 7.4) of such fractional shares on the date of
exercise. If the issuance or transfer of shares by the Company would for any
reason, in the opinion of counsel for the Company, violate any applicable
federal or state laws or regulations, the Company may delay issuance or transfer
of such shares to the Optionee until compliance with such laws can reasonably be
obtained. In no event shall the Company be obligated to effect or obtain any
listing, registration, qualification, consent or approval under any applicable
federal or state laws or regulations or any contract or agreement to which the
Company is a party with respect to the issuance of any such shares.
11.2 Investment Representation. Upon demand by the Company, the Optionee shall
deliver to the Company a representation in writing that the purchase of all
shares with respect to which notice of exercise of the Option has been given by
the Optionee is being made for investment only and not for resale or with a view
to distribution, and containing such other representations and provisions with
respect thereto as the Company may require. Upon such demand, delivery of such
representation promptly and prior to the transfer or delivery of any such shares
and prior to the expiration of the option period shall be a condition precedent
to the right to purchase such shares.
SECTION 12: AMENDMENTS
The Board of Directors may at any time and from time to time alter, amend,
suspend or terminate the Plan or any part thereof as it may deem proper, except
that no such action shall diminish or impair the rights under an Option
previously granted. Unless the shareholders of the Company shall have given
their approval, the total number of shares for which Options may be issued under
the Plan shall not be increased, except as provided in Section 5.3, and no
amendment shall be made which reduces the price at which the Common Stock may be
offered under the Plan below the minimum required by Section 7.3, except as
provided in Section 5.3, or which materially modifies the requirements as to
eligibility for participation in the Plan. Subject to the terms and conditions
of the Plan, the Board of Directors may modify outstanding Options granted under
the Plan, or accept the surrender of outstanding Options to the extent not
theretofore exercised and authorize the granting of new Options in substitution
therefor, except that no such action shall diminish or impair the rights under
an Option previously granted without the consent of the Optionee.
SECTION 13: TERM OF PLAN
This Plan shall terminate on November 8, 2008; provided, however, that the
Board of Directors may at any time prior thereto suspend or terminate the Plan.
SECTION 14: RIGHTS AS STOCKHOLDER
An Optionee shall have no rights as a stockholder of the Company with
respect to any shares of Common Stock covered by an Option until the date of the
issuance of the stock certificate for such shares.
SECTION 15: NO EMPLOYMENT RIGHTS
Nothing contained in this Plan or in any Option granted under the Plan
shall confer upon any Optionee any right with respect to the continuation of
such Optionee's employment by the Company or any Subsidiary or interfere in any
way with the right of the Company or any Subsidiary, subject to the terms of any
separate employment agreement to the contrary, at any time to terminate such
employment or to increase or decrease the compensation of the Optionee from the
rate in existence at the time of the grant of the Option.
SECTION 16: GOVERNING LAW
This Plan, and all Options granted under this Plan, shall be construed and
shall take effect in accordance with the laws of the State of Colorado, without
regard to the conflicts of laws rules of such State.
APPENDIX
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 5, 1999
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 5, 1999, 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) Approval and ratification of the Scott's Liquid Gold-Inc. 1998 Stock Option
Plan.
FOR AGAINST ABSTAIN
(3) In their discretion, the Proxies are authorized to vote upon such other
business as properly may come before the meeting.
(back of card)
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" APPROVAL
AND RATIFICATION OF THE SCOTT'S LIQUID GOLD-INC. 1998 STOCK OPTION PLAN.
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 ________________________________________________, 1999
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.
