<PAGE>
SCHEDULE 14A INFORMATION
Proxy Statement Pursuant to Section 14(a) of
the Securities Exchange Act of 1934
Filed by the Registrant /X/
Filed by a party other than the Registrant / /
Check the appropriate box:
/ / Preliminary Proxy Statement
/ / Confidential, for Use of the Commission Only (as permitted by Rule
14a-6(e)(2))
/X/ Definitive Proxy Statement
/ / Definitive Additional Materials
/ / Soliciting Material Pursuant to Section 240.14a-11(c) or Section
240.14a-12
DAW TECHNOLOGIES, INC.
- --------------------------------------------------------------------------------
(Name of Registrant as Specified In Its Charter)
- --------------------------------------------------------------------------------
(Name of Person(s) Filing Proxy Statement, if other than the Registrant)
Payment of Filing Fee (Check the appropriate box):
/X/ No fee required
/ / Fee computed on table below per Exchange Act Rules 14a-6(i)(1)
and 0-11
(1) Title of each class of securities to which transaction applies:
------------------------------------------------------------------------
(2) Aggregate number of securities to which transaction applies:
------------------------------------------------------------------------
(3) Per unit price or other underlying value of transaction computed
pursuant to Exchange Act Rule 0-11 (set forth the amount on which the
filing fee is calculated and state how it was determined):
------------------------------------------------------------------------
(4) Proposed maximum aggregate value of transaction:
------------------------------------------------------------------------
(5) Total fee paid:
------------------------------------------------------------------------
/ / Fee paid previously with preliminary materials.
/ / Check box if any part of the fee is offset as provided by Exchange Act Rule
0-11(a)(2) and identify the filing for which the offsetting fee was paid
previously. Identify the previous filing by registration statement number,
or the Form or Schedule and the date of its filing.
(1) Amount Previously Paid:
------------------------------------------------------------------------
(2) Form, Schedule or Registration Statement No.:
------------------------------------------------------------------------
(3) Filing Party:
------------------------------------------------------------------------
(4) Date Filed:
------------------------------------------------------------------------
<PAGE>
DAW TECHNOLOGIES, INC.
------------------------------
NOTICE OF ANNUAL MEETING OF SHAREHOLDERS
To Be Held May 28, 1997
------------------------------
To the Shareholders of
DAW TECHNOLOGIES, INC.:
The Annual Meeting of Shareholders of Daw Technologies, Inc. (the
"Company") will be held at the corporate offices of the Company, 2700 South 900
West, Salt Lake City, Utah, on Wednesday, May 28, 1997, at 2:00 p.m. The
purpose of the Annual Meeting is to consider and vote upon the following
matters, as more fully described in the accompanying Proxy Statement:
(1) To elect five members of the Board of Directors, each to serve until
the next annual meeting of shareholders and until their respective
successors have been duly elected and qualified.
(2) To ratify the appointment of Grant Thornton LLP as independent public
accountants for the year ending December 31, 1997.
(3) To consider such other matters as may properly come before the
meeting.
The Board of Directors has fixed the close of business on April 18, 1997 as
the record date for the determination of shareholders entitled to receive notice
of and to vote at the Annual Meeting or any adjournment or postponement thereof.
BY ORDER OF THE BOARD OF DIRECTORS
DATED: April 25, 1997 RONALD W. DAW
Chairman of the Board
IMPORTANT
WHETHER OR NOT YOU EXPECT TO ATTEND THE ANNUAL MEETING IN PERSON, TO ASSURE
THAT YOUR SHARES WILL BE REPRESENTED, PLEASE DATE, FILL IN, SIGN AND MAIL THE
ENCLOSED PROXY IN THE ACCOMPANYING POSTAGE PAID ENVELOPE. YOUR PROXY WILL NOT
BE USED IF YOU ARE PRESENT AT THE ANNUAL MEETING AND DESIRE TO VOTE YOUR SHARES
PERSONALLY.
<PAGE>
DAW TECHNOLOGIES, INC.
2700 South 900 West
Salt Lake City, Utah 84119
---------------------
PROXY STATEMENT
---------------------
FOR ANNUAL MEETING OF SHAREHOLDERS
MAY 28, 1997
SOLICITATION OF PROXIES
This Proxy Statement is being furnished to the shareholders of Daw
Technologies, Inc., a Utah corporation (the "Company"), in connection with the
solicitation by the Board of Directors of the Company of proxies from holders of
outstanding shares of the Company's Common Stock, $0.01 par value (the "Common
Stock"), for use at the Annual Meeting of Shareholders of the Company to be held
Wednesday, May 28, 1997, and at any adjournment or postponement thereof (the
"Annual Meeting"). This Proxy Statement, the Notice of Annual Meeting of
Shareholders and the accompanying form of proxy are first being mailed to
shareholders of the Company on or about April 25, 1997.
The Company will bear all costs and expenses relating to the solicitation
of proxies, including the costs of preparing, printing and mailing to
shareholders this Proxy Statement and accompanying material. In addition to
the solicitation of proxies by use of the mails, the directors, officers and
employees of the Company, without receiving additional compensation therefor,
may solicit proxies personally or by telephone or telegram. Arrangements
will be made with brokerage firms and other custodians, nominees and
fiduciaries for the forwarding of solicitation materials to the beneficial
owners of the shares of Common Stock held by such persons, and the Company
will reimburse such brokerage firms, custodians, nominees and fiduciaries for
reasonable out-of-pocket expenses incurred by them in connection therewith.
VOTING
RECORD DATE
The Board of Directors has fixed the close of business on April 18, 1997 as
the record date (the "Record Date") for determination of shareholders entitled
to notice of and to vote at the Annual Meeting. As of the Record Date, there
were issued and outstanding 12,396,730 shares of Common Stock. The holders of
record of the shares of Common Stock on the Record Date entitled to be voted at
the Annual Meeting are entitled to cast one vote per share on each matter
submitted to a vote at the Annual Meeting.
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PROXIES
Shares of the Common Stock which are entitled to be voted at the Annual
Meeting and which are represented by properly executed proxies will be voted in
accordance with the instructions indicated on such proxies. If no instructions
are indicated, such shares will be voted FOR the election of each of the five
director nominees; FOR the ratification of the appointment by the Board of
Directors of Grant Thornton LLP, as independent public accountants of the
Company for the year ending December 31, 1997; and, in the discretion of the
proxy holder, as to any other matters which may properly come before the Annual
Meeting. A shareholder who has executed and returned a proxy may revoke it at
any time prior to its exercise at the Annual Meeting by executing and returning
a proxy bearing a later date, by filing with the Secretary of the Company, at
the address set forth above, a written notice of revocation bearing a later date
than the proxy being revoked, or by voting the Common Stock covered thereby in
person at the Annual Meeting.
VOTE REQUIRED
The presence of a majority of the issued and outstanding shares of Common
Stock entitled to vote, represented in person or by properly executed proxy, is
required for a quorum at the Annual Meeting. Abstentions and broker non-votes,
which are indications by a broker that it does not have discretionary authority
to vote on a particular matter, will be counted as "represented" for the purpose
of determining the presence or the absence of a quorum. Under Utah corporate
law, once a quorum is established, shareholder approval with respect to a
particular proposal is generally obtained when the votes cast in favor of the
proposal exceed the votes cast against such proposal.
In the election of directors, shareholders will not be allowed to cumulate
their votes. The five nominees receiving the highest number of votes will be
elected. The ratification of the selection of an independent auditor and any
other matter presented for approval by the shareholders will be approved, in
accordance with Utah law, if the votes cast in favor of a matter exceed the
votes cast opposing such matter. Accordingly, abstentions and broker non-votes
will not affect the outcome of the election of directors, the ratification of
the selection of the independent public accountants or any other matter
presented for approval by the shareholders.
PROPOSAL NO. 1 -- ELECTION OF DIRECTORS
At the Annual Meeting, a board of five directors will be elected to serve
until the next annual meeting of shareholders and until their successors are
duly elected and qualified. Each of the nominees for director identified below
is currently a director of the Company. Robert J. Frankenberg and James S.
Jardine were elected as directors by the Board of Directors in October 1996 to
fill vacancies created when the Board of Directors increased the size of the
Board of Directors from five directors to seven directors. In April 1997,
Sterling W. Sessions resigned as a director of the Company and Russell W. Weiss
notified the Company that he will not stand for re-election. Because these
events occurred so close to the Annual Meeting, the Company did not have
sufficient time to identify and nominate qualified nominees for election at the
Annual Meeting to fill these vacancies. As a result, the Board has elected to
decrease the size of the Board of Directors to five directors until such time as
qualified nominees are identified and agree to serve as directors of the
Company.
Shareholders do not have cumulative voting rights in the election of
directors (each shareholder is entitled to vote one vote for each share held for
each director). Unless authority is withheld, it is the
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<PAGE>
intention of the persons named in the enclosed form of proxy to vote "FOR"
the election of each of the persons identified as nominees for directors
below. If the candidacy of any one or more of such nominees should, for any
reason, be withdrawn, the proxies will be voted "FOR" such other person or
persons, if any, as may be designated by the Board of Directors. The Board
has no reason to believe that any nominee herein named will be unable or
unwilling to serve.
NOMINEES FOR ELECTION AS DIRECTORS
The following sets forth information about each nominee for election as a
director:
CHARLES L. BATES, 72, has been a director of the Company since October
1992, and prior thereto was a director of Daw Technologies Incorporated ("DTI"),
the Company's predecessor, from 1990. Mr. Bates founded Valtek, a Utah based
company that manufactures automatic control valves, and served as its Chairman
from 1987 to 1993 and as its Chief Executive Officer from 1966 until 1987. Mr.
Bates has a Bachelor of Science degree in Mechanical Engineering from
Northeastern University.
ROBERT G. CHAMBERLAIN, 56 has been a director of the Company since 1991.
He is currently the President and Chief Executive Officer of Micromonitors,
Inc., an instrumentation company. From April 1993 to December 1995, Mr.
Chamberlain was Vice President and Manager of Operations in the semiconductor
equipment group for Watkins-Johnson Company. From July 1991 to March 1992, he
was the President of Insystems, a wafer inspection equipment company. Mr.
Chamberlain has twenty-five years of sales and marketing management experience
in the semiconductor component and semiconductor equipment fields, including
fifteen years of international management. Mr. Chamberlain holds a Masters of
Business Administration degree from Stanford University and a Bachelor of
Science degree in Engineering from Princeton University.
RONALD W. DAW, 45, is the Chairman of the Board, President and Chief
Executive Officer of the Company and has served in this capacity since October
13, 1992. Prior thereto, he was the Chairman and Chief Executive Officer of DTI
from its inception in 1987. From 1984 to 1988, Mr. Daw was the President of Daw
Incorporated, an interior finish construction company, and he currently serves
as a director of that company. Since 1984, Mr. Daw has had broad experience in
the cleanroom business. Mr. Daw received his Bachelor of Science degree in
Accounting from the University of Utah.
ROBERT J. FRANKENBERG, 50, has been a director of the Company since October
1996. Mr. Frankenberg currently serves as a member of the Board of Directors
for America On Line, Inc., ElectroGlas, Inc., Caere Corporation, Wall Data, Inc.
and Secure Computings, Inc. From April 1994 to August 1996, Mr. Frankenberg was
CEO and President of Novell, Inc., a software company. Mr. Frankenberg also
served as Chairman of Novell from August 1994 to August 1996. Prior to joining
Novell, Inc., he was Vice President and General Manager of the Personal
Information Products Group at Hewlett Packard (HP) from 1990 to 1994. He has
vast experience in the high tech industry, with specific knowledge of the
semiconductor sector. Mr. Frankenberg is a former member of the San Jose State
School of Engineering Advisory Board, where he earned a Bachelor's degree in
Computer Engineering, and is a SEP graduate of Stanford's Graduate School of
Business.
JAMES S. JARDINE, 50, has been a director of the Company since October
1996. Mr. Jardine has been a practicing attorney for the law firm of Ray,
Quinney & Nebeker since 1975, and currently serves as its Managing Director. He
is presently Chairman of the Board of Trustees of the University of Utah and a
member of the Board of Directors of ZCMI, where he serves on the Board's
Executive Committee. He is also outside General Counsel to the Salt Lake City
Olympic Organizing Committee for the Winter
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Olympic Games of 2002. Mr. Jardine earned his Juris Doctor from Harvard Law
School and his Bachelor of Arts from the University of Utah.
BOARD AND COMMITTEE MEETINGS; LEGAL PROCEEDINGS
During the year ended December 31, 1996, the Board of Directors held five
meetings. Each member attended at least 75% of all board meetings and
applicable committee meetings held during the period he was a director of the
Company.
The Board of Directors has a Compensation Committee that is responsible for
determining and approving the compensation of the Company's officers, reviewing
matters pertaining to the compensation of the Company's employees, and
administering the 1993 Stock Option Plan (the "Option Plan") and the Employee
Stock Purchase Plan. The current members of the Compensation Committee are
Robert G. Chamberlain, Charles L. Bates and Robert J. Frankenberg. The
Compensation Committee met two times during 1996. The Board of Directors has an
Audit Committee that is responsible for determining the adequacy of the
Company's internal accounting and financial controls, reviewing the auditor
reports and recommendations and interviewing and making recommendations to the
Board of Directors for the selection of the Company's independent public
accountants. The current members of the Audit Committee are Russell W. Weiss
and James S. Jardine. The Audit Committee met three times during 1996. The
Board of Directors does not have a Nominating Committee.
On April 4, 1997, the Securities and Exchange Commission issued a Cease and
Desist Order against Ronald W. Daw, a director and the Chief Executive Officer
of the Company, ordering him to cease and desist from committing or causing any
violation of, and committing or causing any future violation of, Sections 13(g)
and 16(a) of the Exchange Act and Rules 13d-1, 13d-2, 16a-2 and 16a-3
promulgated thereunder.
EXECUTIVE OFFICERS
In addition to Ronald W. Daw, certain information is furnished with respect
to the following executive officers of the Company:
DAVID R. GROW, 40, has been the Executive Vice President, Chief Financial
Officer and Corporate Secretary since September 1995. In October 1996, Mr. Daw
was also appointed Chief Operating Officer of the Company. From 1992 through
September 1995, Mr. Grow was employed at WordPerfect Corporation, a software
company, which was acquired by Novell, Inc., a software company, in 1994. Prior
to the acquisition, Mr. Grow was the corporate controller of WordPerfect.
Subsequent to the acquisition, he served as the senior director of
administration for the Novell Applications Group. His experience also includes
ten years with Price Waterhouse, a national accounting firm. Mr. Grow is a
licensed Certified Public Accountant and holds a Bachelor of Science degree in
Accounting from the University of Utah.
4
<PAGE>
STEVEN R. BURT, 41, has been the Senior Vice President of Field Operations
for the Company since December 1995. From June 1994 to December 1995, he was
Vice President of Sales and Marketing for the Company. From 1993 to June 1994
he was Vice President of International Operations for the Company. From 1992
until 1993 he was Vice President of Asian/Pacific Rim Operations for the Company
and from 1991 to 1992, he served in this capacity for DTI. Mr. Burt was also
the Vice President of Design/Engineering/Testing for DTI from 1988 to 1991. His
previous experience includes project architect for FFKR Architects/Planners and
Director of Architecture for DMJM Engineers/Architects in Salt Lake City, Utah.
Mr. Burt holds a Bachelor of Science degree in Economics and a Masters of
Architecture degree from the University of Utah.
DR. WILLIAM J. SAWAYA, JR., 51, has been Senior Vice President of
Manufacturing and Products since January 1996. He was a faculty member in
operations management at Brigham Young University from 1978 to 1996. He is
currently an adjunct professor at Brigham Young University. He has designed and
installed just-in-time production, inventory, quality, and manufacturing
information systems in several dozen companies as a consultant. Mr. Sawaya has
a Bachelor of Science degree in Engineering from the University of Wyoming and
Master of Science and Doctor of Philosophy degrees in Industrial Engineering
from Arizona State University.
5
<PAGE>
EXECUTIVE COMPENSATION
COMPENSATION OF EXECUTIVE OFFICERS
The following table provides certain summary information concerning the
compensation paid or accrued by the Company and its subsidiaries, to or on
behalf of the Company's Chief Executive Officer and each of the other executive
officers whose annual salary and bonus exceeded $100,000 (collectively the
"Named Executive Officers").
<TABLE>
LONG TERM
ANNUAL COMPENSATION COMPENSATION
------------------------------------- ------------
OTHER ANNUAL OPTIONS ALL OTHER
NAME AND POSITION YEAR SALARY BONUS COMPENSATION GRANTED COMPENSATION
- ----------------- ---- -------- -------- ------------ ------------ ------------
<S> <C> <C> <C> <C> <C> <C>
Ronald W. Daw 1996 $215,000 $ 0 $9,952 30,000 0
Chief Executive Officer 1995 215,000 0 6,537 25,000 0
and President 1994 187,500 34,620(3) 0 30,000 0
David R. Grow(1) 1996 140,000 0 4,518 40,000 0
Executive Vice 1995 30,831 0 900 20,000 0
President, Chief 1994 --- --- --- --- ---
Operating Officer and
Chief Financial Officer
Steven R. Burt 1996 142,500 2,059 4,275 6,500 0
Senior Vice President of 1995 99,545 15,000 194 18,500 0
Field Operations 1994 89,674 24,000(3) 0 10,000 0
William J. Sawaya(2) 1996 140,000 0 4,200 35,000 0
Senior Vice President 1995 --- --- --- --- ---
Manufacturing and 1994 --- --- --- --- ---
Products
</TABLE>
- -------------------------
(1) Mr. Grow commenced his employment with the Company on September 27, 1995.
(2) Mr. Sawaya commenced his employment with the Company on January 2, 1996.
(3) Bonuses earned based on performance in 1994, but paid in 1995.
6
<PAGE>
OPTION GRANTS IN LAST FISCAL YEAR
The following table sets forth individual grants of stock options made
to the Named Executive Officers during the year ended December 31, 1996.
<TABLE>
POTENTIAL REALIZABLE VALUE
AT ASSUMED ANNUAL RATES
PERCENT OF OF STOCK PRICE APPRECIATION
TOTAL OPTIONS FOR OPTION TERM
GRANTED TO ---------------------------
OPTIONS EMPLOYEES IN EXERCISE EXPIRATION
NAME GRANTED(1) FISCAL YEAR PRICE DATE 5% 10%
- -------------------- ------------- ------------ -------- ---------- ------------ -------------
<S> <C> <C> <C> <C> <C> <C>
Ronald W. Daw....... 30,000 12.9% $3.50 10/24/06 $66,034 $167,343
David R. Grow....... 20,000 8.6% 3.50(2) 03/27/01 19,340 42,736
20,000 8.6% 3.50 10/24/06 44,023 111,561
Steven R. Burt...... 6,500 2.8% 3.50(2) 03/27/01 6,285 13,889
William J. Sawaya... 20,000 8.6% 3.50(3) 01/02/01 19,340 42,736
15,000 6.5% 3.50 10/24/06 33,017 83,671
- -------------------------
(1) Consists of nonqualified options granted throughout 1996 under the Option Plan. Fifty percent of the
options become exercisable one year from the date of grant and the remaining 50% become exercisable
two years from the date of grant.
(2) The options were originally granted at an exercise price of $4.68, but were subsequently repriced.
See Repricing of Options.
(3) The options were originally granted at an exercise price of $5.88, but were subsequently repriced.
See Repricing of Options.
</TABLE>
7
<PAGE>
AGGREGATED OPTION EXERCISES IN LAST FISCAL YEAR AND YEAR END OPTION VALUES
The following table sets forth the aggregate value of unexercised
options to acquire shares of the Common Stock held by the Named Executive
Officers on December 31, 1996. None of the Named Executive Officers
exercised options during the year ended December 31, 1996.
NUMBER OF
UNEXERCISED VALUE OF UNEXERCISED
OPTIONS AT FY- IN-THE-MONEY OPTIONS
END(#) AT FY-END($)(1)
------------- --------------------
EXERCISABLE/ EXERCISABLE/
NAME UNEXERCISABLE UNEXERCISABLE
- ------------------------------- ------------- --------------------
Ronald W. Daw . . . . . . . . . 72,500/42,500 $0/$0
David R. Grow . . . . . . . . . 10,000/50,000 $0/$0
Steven R. Burt. . . . . . . . . 24,250/15,700 $0/$0
William J. Sawaya . . . . . . . 0/35,000 $0/$0
- ---------------------------
(1) Calculated based on the difference between the exercise price and the
price of a share of the Company's Common Stock on December 31, 1996.
As of December 31, 1996, the exercise prices of each of the options
held by the Named Executive Officers exceeded the price of a share of
the Company's Common Stock.
COMPENSATION COMMITTEE INTERLOCKS
Robert G. Chamberlain, Charles L. Bates, Sterling D. Sessions and
Russell W. Weiss served on the Compensation Committee during the year ended
December 31, 1996.
DIRECTOR'S COMPENSATION
The Company's non-employee directors are paid $1,000 for each meeting of
the Board of Directors (or committee thereof) attended in person, $400 for
each meeting of the Board of Directors at which such director participates by
telephone, and $300 for each meeting of a committee of the Board of Directors
at which such director participates by telephone. All of the directors are
reimbursed for their expenses for each Board and committee meeting attended.
In addition, each non-employee director of the Company receives annually
options to purchase 5,000 shares of Common Stock.
REPRICING OF OPTIONS
REPORT OF COMPENSATION COMMITTEE.
In October 1996, the Compensation Committee reviewed the status of stock
options that were granted under the Option Plan to directors, executive
officers and key employees. The Compensation Committee determined that
options with exercise prices significantly in excess of the current market
value of the Common Stock do not serve as a meaningful performance incentive
to the officers and key employees that hold them. Moreover, the Committee
concluded that (i) the recent downturn in the semiconductor industry, a
factor beyond the control of the option holders, has had a significant
adverse
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effect on the market value of the Common Stock, and (ii) the option holders
had made significant efforts to improve the operations of the Company and
maintain profitability in 1996 during the semiconductor industry downturn.
In addition, the Committee concluded that the efforts of the executive
officers and other key employees who were granted such options are critical
to the success of the Company and that the existing options represented no
inducement for executive officers and key employees who have been, or who may
be, presented with other employment opportunities to continue their
employment with the Company.
Accordingly, on October 24, 1996, the Compensation Committee determined
to reprice all of the outstanding options at an exercise price of $3.50,
which was the fair market value of the Common Stock at the time as determined
in accordance with the terms of the Incentive Plan. The repricing did not
change any of the other terms of the options. The Board of Directors
similarly determined to reprice the options granted to non-employee directors
under the terms of the Option Plan. The table below sets forth information
with respect to the repricing of the options granted to the executive
officers of the Company. No other options have been repriced since the
Company became a public company.
COMPENSATION COMMITTEE
Charles L. Bates
Robert G. Chamberlain
Robert J. Frankenberg
TEN-YEAR OPTION REPRICINGS
<TABLE>
Number of Length of Original
Securities Option Term
Underlying Market Price of Exercise Price Remaining at Date
Options/SARs Stock at Time at Time of New of Repricing or
Repriced or of Repricing or Repricing or Exercise Amendment
Name Date Amended(#) Amendments($) Amendments($) Price($) (months)
- ------------------------ ---- ------------ --------------- ------------- -------- ------------------
<S> <C> <C> <C> <C> <C> <C>
Ronald W. Daw 10/24/96 30,000 $3.50 $3.56 $3.50 24
President and Chief 10/24/96 30,000 3.50 5.75 3.50 37
Executive Officer 10/24/96 25,000 3.50 6.63 3.50 49
David R. Grow 10/24/96 20,000 3.50 7.38 3.50 47
Executive Vice- 10/24/96 20,000 3.50 4.68 3.50 53
President, Chief
Operating Officer and
Chief Financial Officer
Steven Burt 10/24/96 5,000 3.50 3.56 3.50 24
Senior Vice-President of 10/24/96 10,000 3.50 5.75 3.50 37
Field Operations 10/24/96 3,500 3.50 6.25 3.50 48
10/24/96 15,000 3.50 6.63 3.50 49
10/24/96 6,500 3.50 4.68 3.50 53
William J. Sawaya 10/24/96 20,000 3.50 5.88 3.50 50
Senior Vice President of
Manufacturing and
Products
</TABLE>
9
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REPORT OF THE COMPENSATION COMMITTEE
NOTWITHSTANDING ANYTHING TO THE CONTRARY SET FORTH IN ANY OF THE
COMPANY'S PREVIOUS FILINGS UNDER THE SECURITIES ACT OF 1933, AS AMENDED, OR
THE SECURITIES EXCHANGE ACT OF 1934, AS AMENDED, THAT INCORPORATE BY
REFERENCE, IN WHOLE OR IN PART, SUBSEQUENT FILINGS INCLUDING, WITHOUT
LIMITATION, THIS PROXY STATEMENT, THE FOLLOWING REPORT OF THE COMPENSATION
COMMITTEE AND THE PERFORMANCE GRAPH SET FORTH ON PAGE 13 HEREOF SHALL NOT BE
DEEMED TO BE INCORPORATED BY REFERENCE INTO ANY SUCH FILINGS.
The Securities and Exchange Commission's ("SEC") rules addressing
disclosure of executive compensation in proxy statements require a report
from the Compensation Committee of the Board of Directors (the "Committee")
addressing, with respect to the most recently completed fiscal year, (a) the
Company's policies regarding executive compensation generally, (b) the
factors and criteria considered in setting the compensation of the Company's
Chief Executive Officer, Ronald W. Daw, and (c) any relationship between such
compensation and the Company's performance.
COMPENSATION COMMITTEE
This report was prepared by the Committee, which is composed of
independent directors who are not employees of the Company. The current
members of the Committee are Robert G. Chamberlain, Charles L. Bates and
Robert J. Frankenberg. Sterling Sessions and Russell Weiss also served on
the Committee in 1996. The Committee has the responsibility for (i)
reviewing, developing and establishing the Company's executive compensation
policies, (ii) all compensation matters for the Company's executive officers,
including reviewing and establishing the amount and type of compensation
provided to the Company's Chief Executive Officer, and (iii) administering
the Option Plan.
COMPENSATION OBJECTIVES AND POLICIES
In determining the amount and composition of compensation for the
Company's executive officers and in administering the Option Plan, the
Committee is guided by the following fundamental objectives and philosophies:
- Providing a competitive compensation package which will allow the
Company to attract and retain qualified and outstanding executive
officers.
- Providing a compensation package that is based on the performance of
the Company as well as the individual contributions of the Company's
executive officers.
- Ensuring that a portion of an executive officer's compensation is
variable and at risk, to be earned only if the Company and the
executive officer meet projected performance levels.
- Facilitating the acquisition of Common Stock of the Company by the
executive officers through the granting of stock options in order to
align the interests of stockholders and the executive officers.
10
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COMPENSATION COMPONENTS
The Company's compensation to its executive officers consists of three
major components: (i) base salary; (ii) short-term cash incentive awards;
and (iii) long-term incentive awards in the form of stock options.
BASE SALARY. The Committee establishes base salary based primarily on
its subjective judgment taking into consideration both qualitative and
quantitative factors. Among the factors considered by the Committee are: (i)
salaries provided by other companies in the industry and companies of a
comparable size to the Company located in the geographic area where the
Company's headquarters are located as determined by the Committee based on
its review of available industry and geographic compensation surveys; (ii)
the qualifications and performance of each executive officer; (iii) the
financial performance of the Company as measured by such factors as revenue
growth, market share growth and earnings per share; and (iv) for officers
other than the Chief Executive Officer, the recommendations of the Chief
Executive Officer as to salary levels. The Committee does not assign any
specific weights to these factors in determining salaries, but it does place
a greater emphasis on the salaries provided by other companies in order to
ensure that the salaries provided by the Company are competitive and enable
the Company to attract and retain qualified and outstanding executive
officers.
CASH INCENTIVE AWARDS. The Company also provides its executive officers
with the opportunity to earn short-term cash incentive awards. In 1996 the
Company implemented a new cash incentive program. Under this program, the
Committee established a targeted level of Company performance for the year as
measured by earnings per share. In addition, certain performance goals for
each of the Company's executive officers were established at the beginning of
the year. A bonus range was then established, with the actual amount of the
bonus being determined by the extent to which the targeted earnings per share
and performance goals had been met or exceeded. The Committee also has the
right to adjust the bonus levels at the end of the year based on its
subjective determination as to the individual performance of each of the
executive officers. The performance goals for the executive officers, other
than the Chief Executive Officer, are proposed by the Chief Executive Officer
and reviewed and approved or adjusted by the Committee. The Committee is
responsible for establishing the performance goals for the Chief Executive
Officer of the Company.
STOCK OPTIONS. The Committee believes it is essential for all executive
officers to receive stock options under the Option Plan, thereby aligning the
long-term interests of executive officers with those of the shareholders. In
1993, the Company adopted the Option Plan, charging the Committee with the
responsibility of administering the Option Plan. The Committee awards stock
options under the Option Plan each year to the executive officers based on a
subjective determination by the Committee concerning the position of the
executive officer, the value of the executive officer's contributions to the
performance of the Company, and the responsibilities associated with the
executive officer's position. The Committee believes that the grant of
options to executive officers is an important component of the Company's
compensation package because it provides an incentive for executive officers
to maximize the growth and profitability of the Company in order to increase
their compensation, and provides an incentive for officers to continue their
employment with the Company.
CHIEF EXECUTIVE OFFICER COMPENSATION FOR 1996.
Based upon the Committee's subjective review of chief executive
officers' salaries in the industry and in the intermountain region, the
Company's financial performance in 1995, as measured by earnings per share,
revenue growth and market share growth, and the individual performance of
Ronald W. Daw,
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the Committee maintained Mr. Daw's base salary at $215,000 in 1996. Based on
the actual performance of the Company for 1996 compared to the targeted level
of performance under the cash incentive program, no bonus was awarded to Mr.
Daw in 1996 under the Company's cash incentive program. The Committee
granted 30,000 stock options to Mr. Daw in 1995. The number of stock options
granted to Mr. Daw is lower than the Committee would normally grant to a
Chief Executive Officer because the Committee believes Mr. Daw already has a
significant ownership position in the Company which aligns his interests with
the long-term interests of the Company's shareholders.
COMPENSATION COMMITTEE
Charles L. Bates
Robert G. Chamberlain
Robert J. Frankenberg
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PERFORMANCE GRAPH
Set forth below is a graph comparing the cumulative shareholder return on
Daw Technologies, Inc.'s Common Stock against the cumulative total return on
the CRSP Index for NASDAQ Stock Market (US Companies) and the CRSP Index for
Nasdaq Stocks (SIC 3550-3559 US Companies) (an index composed of companies in
the special industry machinery, except metalworking machinery, standard
industrial classification) for the periods indicated. The graph assumes an
initial investment of $100.00 with dividends reinvested over the periods
indicated.
[GRAPH]
<TABLE>
- ---------------------------------------------------------------------------------------
SYMBOL INDEX DESCRIPTION 7/30/93 12/31/93 12/30/94 12/29/95 12/31/96
- ---------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C>
_____ Daw Technologies, Inc.......... $100 $160.0 $230.0 $230.0 $110.0
- ---------------------------------------------------------------------------------------
- ----- CRSP Index for Nasdaq Stock
Market (US Companies).......... $100 $110.4 $107.9 $152.7 $187.8
- ---------------------------------------------------------------------------------------
..... CRSP Index for Nasdaq Stocks
(SIC 3550-3559 US Companies)... $100 $118.1 $135.6 $222.3 $224.1
- ---------------------------------------------------------------------------------------
</TABLE>
Notes:
A. The lines represent quarterly index levels derived from compounded daily
returns that include all dividends.
B. If the quarterly interval is not a trading day, the preceding trading day
is used.
C. The index level for all series was set to 100.0 on July 30, 1993. The
Common Stock of the Company was registered under Section 12(g) of the
Exchange Act, effective July 19, 1993. The price of the Company's Common
Stock for the period July 30, 1993 to December 2, 1993 is based on the
average of the high and low bid prices from the OTC Bulletin Board and the
Pink Sheets. The price of the Company's Common Stock for periods after
December 2, 1993 is based on the closing price of the Common Stock on the
NASDAQ Stock Market (National Market System).
D. The indexes are reweighted daily, using the market capitalization on the
previous trading day.
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SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT
The following table sets forth as of April 1, 1997, information with
respect to the Company's Common Stock owned beneficially by each director or
nominee for director, by the Named Executive Officers, by all officers and
directors as a group and by each person known by the Company to be a
beneficial owner of more than 5% of the outstanding Common Stock of the
Company. Except as otherwise indicated below, each person named has sole
voting and investment power with respect to the shares indicated.
AMOUNT AND NATURE OF PERCENTAGE
NAME AND ADDRESS OF BENEFICIAL OWNERS BENEFICIAL OWNERSHIP OF CLASS(1)
- ------------------------------------- -------------------- -----------
J. Weston Daw(2) 2,178,593 17.6%
Beverly Daw
2700 South 900 West
Salt Lake City, Utah 84119
Ronald W. Daw(2) 1,993,699(3) 16.0%
Tracey Daw
2700 South 900 West
Salt Lake City, Utah 84119
Steven R. Burt 28,206(4) **
David R. Grow 25,300(5) **
Charles L. Bates 15,000(6) **
Robert G. Chamberlain 15,000(7) **
William J. Sawaya, Jr. 11,611(8) **
Russell W. Weiss 10,000(7) **
James S. Jardine 0 --
Robert J. Frankenberg 0 --
All Officers and Directors
as a Group (8 Persons) 2,098,816(9) 16.7%
_____________
** Less than 1%.
(1) Based on 12,396,730 shares of Common Stock outstanding as of April 1, 1997.
(2) Ronald W. Daw is the son of J. Weston Daw.
(3) Includes 1,245,999 shares owned jointly by Ronald and Tracy Daw, 219,300
shares owned by the Ronald Daw Family Limited Partnership, 455,200 shares
held by Ronald Daw, 100 shares held by Tracy Daw, and 600 shares held by
trusts for the benefit of Mr. Daw's children. Also includes 72,500 shares
underlying presently exercisable options.
(4) Includes 27,500 shares underlying presently exercisable options and 200
shares held in the names of Steven R. Burt and Janet Burt.
(5) Includes 1,500 shares held by David R. Grow and Morgan Grow and 20,000
shares underlying presently exercisable options.
(6) Includes 15,000 shares underlying presently exercisable options.
(7) Includes 10,000 shares underlying presently exercisable options.
(8) Includes 10,000 shares underlying presently exercisable options and 200
shares held in the names of William J. Sawaya and Shelly K. Sawaya.
(9) Includes 165,000 shares underlying presently exercisable options.
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<PAGE>
COMPLIANCE WITH SECTION 16(a) OF THE EXCHANGE ACT
Section 16(a) of the Exchange Act requires the Company's executive
officers and directors to file initial reports of ownership and reports of
changes in ownership with the SEC. Executive officers and directors are
required by SEC regulations to furnish the Company with copies of all Section
16(a) forms they file. Based solely on a review of the copies of such forms
furnished to the Company and written representations from the Company's
executive officers and directors, the following officers and directors filed
late reports as indicated: (i) Ronald W. Daw, Chief Executive Officer of the
Company, filed four late reports on Form 4 relating to six transactions in
1993, one transaction in 1994 and one transaction in 1995, four late reports
on Form 5 relating to nine transactions and one late amendment to Form 3; and
(ii) J. Weston Daw, a 10% shareholder and former director of the Company,
filed six late reports on Form 4 relating to fourteen transactions; three late
reports on Form 5 relating to five transactions and one late amendment to
Form 3.
Tracey B. Daw, the spouse of Ronald W. Daw, filed a late Form 3 and four
late reports on Form 4 and Form 5 relating to 65 transactions, and Beverly
Daw, the spouse of J. Weston Daw, filed a late report on Form 3 and five late
reports on Form 4 and Form 5 relating to 55 transactions. All but one of
these transactions had been previously reported by Ronald W. Daw and J. Weston
Daw. The filings were made by Tracey B. Daw and Beverly Daw because they
might be deemed to be the beneficial holders of more than 10% of the
outstanding shares of the Company because they are the spouses of Ronald W.
Daw and J. Weston Daw, respectively, and they hold shares jointly with their
husbands.
RELATED PARTY TRANSACTIONS
James S. Jardine is a practicing attorney and Managing Director of the
law firm of Ray, Quinney & Nebeker which provides legal services to the
Company.
PROPOSAL NO. 2 -- RATIFICATION OF APPOINTMENT OF
INDEPENDENT PUBLIC ACCOUNTANTS
Ratification of the appointment by the Board of Directors of the
independent public accountants for the Company for the year ending December
31, 1997 is to be voted upon at the Annual Meeting. The Board of Directors
recommends shareholder ratification of the appointment of Grant Thornton LLP,
whose appointment has been approved, subject to shareholder approval, by the
Board of Directors. Representatives of Grant Thornton LLP are expected to be
present at the Annual Meeting to answer any questions shareholders may have
and will be given the opportunity to make a statement if they desire to do so.
The affirmative vote of a majority of the votes cast on this proposal
shall constitute ratification of the appointment of Grant Thornton LLP.
THE BOARD OF DIRECTORS RECOMMENDS A VOTE FOR THE RATIFICATION OF THE
APPOINTMENT OF GRANT THORNTON LLP AS INDEPENDENT PUBLIC ACCOUNTANTS FOR 1997.
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OTHER MATTERS
OTHER BUSINESS
The Board of Directors does not know of any matter to be presented at the
Annual Meeting that is not listed in the Notice of Annual Meeting and discussed
above. If other matters should come before the Annual Meeting, however, the
proxy holders will vote in accordance with their best judgment.
PROPOSALS OF SECURITY HOLDERS FOR 1998 ANNUAL MEETING
Shareholders desiring to submit proposals for the Proxy Statement for the
1998 Annual Meeting will be required to submit them to the Company in writing on
or before December 31, 1997. Any shareholder proposal must also be proper in
form and substance, as determined in accordance with the Securities Exchange Act
of 1934 and the rules and regulations promulgated thereunder.
ADDITIONAL INFORMATION
A copy of the Company's Annual Report on Form 10-K for the year ended
December 31, 1996 will be furnished without charge upon receipt of a written
request. The exhibits to that Report will also be provided upon request and
payment of copying charges. Requests should be directed to the Corporate
Secretary, Daw Technologies, Inc., 2700 South 900 West, Salt Lake City, Utah
84119.
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APPENDIX
Form of Proxy
17
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PROXY
DAW TECHNOLOGIES, INC.
2700 SOUTH 900 WEST
SALT LAKE CITY, UTAH 84119
THIS PROXY IS SOLICITED ON BEHALF OF THE BOARD OF DIRECTORS
The undersigned hereby appoints Ronald W. Daw and David R. Grow, and each
of them, as proxies, with full power of substitution, and hereby authorizes them
to represent and vote, as designated below, all shares of the Common Stock of
Daw Technologies, Inc., a Utah corporation (the "Company"), held of record by
the undersigned on April 18, 1997 at the Annual Meeting of Shareholders (the
"Annual Meeting") to be held at the corporate offices of the Company, 2700 South
900 West, Salt Lake City, Utah, on May 28, 1997, at 2:00 P.M., local time, or at
any adjournment or postponement thereof, upon the matters set forth below, all
in accordance with and as more fully described in the accompanying Notice of
Annual Meeting of Shareholders and Proxy Statement, receipt of which is hereby
acknowledged.
1. ELECTION OF DIRECTORS, each to serve until the next Annual Meeting of
Shareholders of the Company or until their respective successors shall have
been duly elected and qualified.
/ / FOR all nominees listed below (except as marked to the contrary).
/ / WITHHOLD AUTHORITY to vote for all nominees listed below.
(INSTRUCTION: TO WITHHOLD AUTHORITY TO VOTE FOR ANY INDIVIDUAL
NOMINEE, STRIKE A LINE THROUGH THE NOMINEE'S NAME IN THE LIST BELOW.)
CHARLES L. BATES ROBERT G. CHAMBERLAIN RONALD W. DAW
ROBERT J. FRANKENBERG JAMES S. JARDINE
2. PROPOSAL TO RATIFY the appointment of Grant Thornton LLP as independent
public accountants of the Company.
/ / FOR / / AGAINST / / ABSTAIN
3. In their discretion, the proxies are authorized to vote upon such other
business as may properly come before the Annual Meeting.
THIS PROXY, WHEN PROPERLY EXECUTED, WILL BE VOTED IN THE MANNER DIRECTED
HEREIN BY THE UNDERSIGNED SHAREHOLDER. IF NO DIRECTION IS MADE, THIS PROXY WILL
BE VOTED FOR THE ELECTION OF ALL OF THE DIRECTOR NOMINEES NAMED ABOVE AND FOR
THE RATIFICATION OF THE APPOINTMENT OF GRANT THORNTON LLP AS INDEPENDENT PUBLIC
ACCOUNTANTS OF THE COMPANY.
Please complete, sign and date this proxy where indicated and return it
promptly in the accompanying prepaid envelope.
DATED: _______________________, 1997
Signature
Signature if held jointly
(Please sign above exactly as the shares are issued. When shares are held
by joint tenants, both should sign. When signing as attorney, executor,
administrator, trustee or guardian, please give full title as such. If a
corporation, please sign in full corporate name by president or other authorized
officer. If a partnership, please sign in partnership name by authorized
person.)
18
