<PAGE> 1
SCHEDULE 14A
(Rule 14a-101)
INFORMATION REQUIRED IN PROXY STATEMENT
SCHEDULE 14A INFORMATION
Proxy Statement Pursuant to Section 14(a) of the Securities
Exchange Act of 1934
Filed by the Registrant [X]
Filed by a party other than the Registrant [ ]
Check the appropriate box:
[ ] Preliminary Proxy Statement
[ ] Confidential, for use of the Commission only as permitted by Rule
14a-6(e)(2)
[X] Definitive Proxy Statement
[ ] Definitive Additional Materials
[ ] Soliciting Material Pursuant to Rule 14a-11(c) or Rule 14a-12
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)(4) and
0-11.
1) Title of each class of securities to which transaction applies:
------------------------------------------------------------------
2) Aggregate number of securities to which transaction applies:
------------------------------------------------------------------
3) Per unit price or other underlying value of transaction computed
pursuant to Exchange Act Rule 0-11:
------------------------------------------------------------------
4) Proposed maximum aggregate value of transaction:
------------------------------------------------------------------
5) Total fee paid:
---------------------------------------------------
[ ] Fee previously paid 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:
-----------------------------------------------------
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4) Date filed:
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<PAGE> 2
DAW TECHNOLOGIES, INC.
----------------------------------------
NOTICE OF ANNUAL MEETING OF SHAREHOLDERS
To Be Held May 27, 1998
----------------------------------------
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 27, 1998, 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 his
respective successor has been duly elected and qualified.
(2) To ratify the appointment of Grant Thornton LLP as independent
public accountants for the year ending December 31, 1998.
(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 17, 1998
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
/s/ Ronald W. Daw
RONALD W. DAW
Chairman of the Board
DATED: April 24, 1998
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> 3
DAW TECHNOLOGIES, INC.
2700 South 900 West
Salt Lake City, Utah 84119
---------------------
PROXY STATEMENT
---------------------
FOR ANNUAL MEETING OF SHAREHOLDERS
MAY 27, 1998
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 27, 1998, 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 24, 1998.
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 17,
1998 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 12,407,977 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.
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, 1998; 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
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<PAGE> 4
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 public
accountant 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.
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 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, Jr., 73, 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, 57, 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. 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, 46, 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
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<PAGE> 5
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, 51, has been a director of the Company since
October 1996. He currently serves as President and CEO of Encanto Networks,
Inc., a company that develops, manufactures and installs internet products and
services. Mr. Frankenberg serves as a member of the Board of Directors for
America On Line, Inc., ElectroGlas, Inc., Caere Corporation, Wall Data, Inc. and
Secure Computing, 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 broad
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, 51, 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, a retail department store
chain, where he serves on the Board's Executive Committee and Maverick Country
Stores, a convenience store chain. He is also outside General Counsel to the
Salt Lake City Olympic Organizing Committee for the Winter 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, 1997, the Board of Directors held
four meetings. Each member attended at least 75% of all board meetings and
applicable committee meetings.
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 and Robert J. Frankenberg. The Compensation
Committee met two times during 1997. 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 Charles L. Bates, Jr. and James S.
Jardine. The Audit Committee met three times during 1997. 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, 42, has been the Executive Vice President, Chief
Financial Officer and Corporate Secretary since September 1995. In October 1996,
Mr. Grow 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
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<PAGE> 6
accounting firm. Mr. Grow is a licensed Certified Public Accountant and holds a
Bachelor of Science degree in Accounting from the University of Utah.
Steven R. Burt, 42, 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. 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., 52, 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. Dr. 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.
Michael J. Shea, 37, rejoined the Company in August of 1997 as
Senior Vice President of Marketing & Sales. Mr. Shea was previously with the
Company from 1987 to 1992. Prior to his appointment, he most recently, 1995 to
1997, served as President of Scientific Air Systems (SAS), a Portland, Oregon
based manufacturer of cleanroom entry systems, fixtures and accessories. From
1992 to 1995, Mr. Shea was Senior Vice President, Marketing & Sales for Numa
Technologies, a start-up company specializing in the fabrication and
manufacturing of aluminum raised access flooring systems, which filed for
bankruptcy under Chapter 7 of the Bankruptcy Code in 1995.
4
<PAGE> 7
EXECUTIVE COMPENSATION
SUMMARY COMPENSATION TABLE
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>
<CAPTION>
LONG TERM
ANNUAL COMPENSATION COMPENSATION
-------------------------------------------------------- ---------------------
OTHER ANNUAL
NAME AND POSITION YEAR SALARY BONUS COMPENSATION(4) OPTIONS GRANTED
- ----------------------------- -------- ------------ ------------ ------------------- ---------------------
<S> <C> <C> <C> <C> <C>
Ronald W. Daw 1997 $215,000 $ 0 $ 13,508 0
Chief Executive Officer and 1996 215,000 0 9,952 30,000
President 1995 215,000 0 6,537 25,000
David R. Grow(1) 1997 150,769 15,000 7,030 0
Executive Vice President, 1996 140,000 0 4,518 40,000
Chief Operating Officer and 1995 30,831 0 900 20,000
Chief Financial Officer
Steven R. Burt 1997 140,000 0 4,950 10,000
Senior Vice President of 1996 142,500 2,059 4,275 6,500
Field Operations 1995 99,545 15,000 194 18,500
Dr. William J. Sawaya, Jr.(2) 1997 140,000 10,000 4,950 0
Senior Vice President of 1996 140,000 0 4,200 35,000
Manufacturing and Products 1995 -- -- -- --
Michael J. Shea(3) 1997 42,500 7,500 2,125 20,000
Senior Vice President of 1996 -- -- -- --
Marketing & Sales 1995 -- -- -- --
</TABLE>
- ----------
(1) Mr. Grow commenced his employment with the Company on September 27,
1995.
(2) Dr. Sawaya commenced his employment with the Company on January 2, 1996.
(3) Mr. Shea commenced his employment with the Company on August 18, 1997.
(4) Consists of car allowances paid to executive officers.
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<PAGE> 8
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, 1997.
<TABLE>
<CAPTION>
POTENTIAL REALIZABLE VALUE AT
ASSUMED ANNUAL RATES OF
PERCENT OF TOTAL STOCK PRICE APPRECIATION FOR
OPTIONS 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>
Steven R. Burt ...... 10,000 28.6% $ 3.00(2) 02/13/07 $ 18,867 $ 47,812
Michael J. Shea ..... 20,000 57.1% 1.94(3) 08/18/07 24,401 61,837
</TABLE>
- ----------
(1) Consists of nonqualified options granted throughout 1997 under the
Option Plan. Under the original terms of the options, 50% 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.
Following the repricing of the options in February 1998, the vesting
period was modified to provide that 100% of the options become
exercisable one year from the date of the repricing.
(2) The options were originally granted at an exercise price of $3.00
per share, but were subsequently repriced in February 1998 to $1.40
per share.
(3) The options were originally granted at an exercise price of $1.94
per share, but were subsequently repriced in February 1998 to $1.40
per share.
AGGREGATED OPTION EXERCISES IN LAST FISCAL YEAR AND YEAR END OPTION VALUES
The following table sets forth the aggregate value of unexercised
options to acquire shares of the Common Stock held by the Named Executive
Officers on December 31, 1997. None of the Named Executive Officers exercised
options during the year ended December 31, 1997.
<TABLE>
<CAPTION>
NUMBER OF VALUE OF UNEXERCISED
UNEXERCISED OPTIONS IN-THE-MONEY OPTIONS AT
AT FY-END(#) FY-END($)(2)
-------------------- ------------------------
EXERCISABLE/ EXERCISABLE/
NAME UNEXERCISABLE(1) UNEXERCISABLE
- ------------------------------------ -------------------- ------------------------
<S> <C> <C>
Ronald W. Daw....................... 100,000/15,000 $0/$0
David R. Grow....................... 40,000/20,000 $0/$0
Steven R. Burt...................... 36,750/13,250 $0/$0
Dr. William J. Sawaya, Jr........... 17,500/17,500 $0/$0
Michael J. Shea..................... 0/20,000 $0/$0
</TABLE>
- ----------
(1) Based on vesting schedule in force on December 31, 1997. On February
24, 1998, the vesting schedules were modified in connection with a
repricing of the options. As of February 24, 1998, all of the
options are unexercisable.
(2) Calculated based on the difference between the exercise price and
the price of a share of the Company's Common Stock on December 31,
1997. As of December 31, 1997, 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.
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<PAGE> 9
COMPENSATION COMMITTEE INTERLOCKS
Robert G. Chamberlain and Robert J. Frankenberg served on the
Compensation Committee during the year ended December 31, 1997.
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. In 1997, Robert J.
Frankenberg was also paid $500 for certain consulting, strategy and business
planning services provided to the Company.
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<PAGE> 10
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 10 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 and Robert J. Frankenberg. 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:
o Providing a competitive compensation package which will
allow the Company to attract and retain qualified and
outstanding executive officers.
o 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.
o 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.
o 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.
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,
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<PAGE> 11
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. 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 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 significant 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 1997. 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
1996, as measured by earnings per share, revenue growth and market share growth,
and the individual performance of Ronald W. Daw, the Committee maintained Mr.
Daw's base salary at $215,000 in 1997. Based on the actual performance of the
Company for 1997 compared to the targeted level of performance under the cash
incentive program, no bonus was awarded to Mr. Daw in 1997 under the Company's
cash incentive program. The Committee did not grant any stock options to Mr. Daw
in 1997. 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
Robert G. Chamberlain
Robert J. Frankenberg
9
<PAGE> 12
PERFORMANCE GRAPH
Set forth below is a graph comparing the cumulative shareholder
return on the Company's Common Stock against the cumulative total return on the
CRSP Index for Nasdaq 0Stock 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.
[Pursuant to the provisions of Regulation S-T, the performance graph contained
in this proxy statement is being presented in tabular format in the Edgar
version of the proxy statement.]
CRSP INDEX
<TABLE>
<CAPTION>
CRSP INDEX FOR NASDAQ STOCK CRSP INDEX FOR NASDAQ STOCK
DATE DAW TECHNOLOGIES, INC. MARKET (US COMPANIES) (SIC 3550--3559 US COMPANIES)
---- ---------------------- --------------------- -----------------------------
<S> <C> <C> <C>
07/30/93 $100.000 $100.000 $100.000
09/30/93 95.000 108.301 109.213
12/31/93 160.008 110.430 118.081
03/31/94 265.014 105.787 131.114
06/30/94 215.010 100.841 125.121
09/30/94 225.011 109.189 143.196
12/29/94 230.012 107.943 135.629
03/31/95 255.013 117.678 172.609
06/30/95 320.017 134.606 254.104
09/29/95 285.015 150.822 296.245
12/29/95 230.012 152.660 222.308
03/29/96 185.009 159.779 194.973
06/28/96 200.010 172.822 189.890
09/30/96 145.007 178.971 181.527
12/31/96 110.005 187.765 224.425
03/31/97 102.505 177.589 250.201
06/30/97 87.504 210.143 344.145
09/30/97 92.504 245.697 468.700
12/31/97 72.504 230.467 288.460
</TABLE>
<TABLE>
<CAPTION>
SYMBOL INDEX DESCRIPTION 7/30/93 12/31/93 12/30/94 12/29/95 12/31/96 12/31/97
------ ----------------- ------- -------- -------- -------- -------- --------
<S> <C> <C> <C> <C> <C> <C>
________ Daw Technologies, Inc............. $100 $160.0 $230.0 $230.0 $110.0 $72.5
__ __ __ CRSP Index for Nasdaq Stock $100 $110.4 $107.9 $152.7 $187.8 $230.5
Market (US Companies).............
........ CRSP Index for NASDAQ $100 $118.1 $135.6 $222.3 $224.4 $288.5
Stocks (SIC 3550-3559 US
Companies)........................
</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.
10
<PAGE> 13
SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT
The following table sets forth as of April 1, 1998, 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.
<TABLE>
<CAPTION>
AMOUNT AND NATURE OF PERCENTAGE OF
NAME AND ADDRESS OF BENEFICIAL OWNERS BENEFICIAL OWNERSHIP CLASS(1)
- ------------------------------------------------ --------------------------------- --------------------
<S> <C> <C>
J. Weston Daw(2) 2,201,679 17.7%
Beverly Daw
602 Walnut Brook
Murray, Utah 84107
Ronald W. Daw(2) 1,901,699(3) 15.3%
Tracey Daw
2700 South 900 West
Salt Lake City, Utah 84119
Dimensional Fund Advisors Inc. 647,900(4) 5.2%
1299 Ocean Avenue, 11th Floor
Santa Monica, California 90401
Steven R. Burt 2,178(5) **
David R. Grow 12,137(6) **
Charles L. Bates, Jr. 20,000(7) **
Robert G. Chamberlain 20,000(8) **
Dr. William J. Sawaya, Jr. 1,611(9) **
James S. Jardine 5,000(10) **
Robert J. Frankenberg 5,000(10) **
Michael J. Shea 0 ---
All Officers and Directors
as a Group (9 Persons) 1,967,625(11) 15.8%
</TABLE>
- ----------
** Less than 1%.
(1) Based on 12,407,977 shares of Common Stock outstanding as of April 1,
1998.
(2) Ronald W. Daw is the son of J. Weston Daw.
(3) Includes 1,226,499 shares owned jointly by Ronald and Tracey Daw,
219,300 shares owned by the Ronald Daw Family Limited Partnership,
455,200 shares held by Ronald Daw, 100 shares held by Tracey Daw, and
600 shares held by trusts for the benefit of Mr. Daw's children.
(4) Information is based on a Schedule 13G filed by Dimensional Fund
Advisors Inc. dated February 9, 1998. Dimensional Fund Advisors Inc.
("Dimensional"), a registered investment advisor, is deemed to have
beneficial ownership of 647,900 shares of the Company stock as of
December 31, 1997, all of which shares are held in portfolios of DFA
Investment Dimensions Group Inc., a registered open-end investment
company, or in series of the DFA Investment Trust Company, a Delaware
business trust, or the DFA Group Trust and DFA Participation Group
Trust, investment vehicles for qualified employee benefit plans, all of
which Dimensional Fund Advisors Inc. serves as investment manager.
Dimensional disclaims beneficial ownership of all such shares.
(5) Includes 200 shares held jointly with his spouse.
(6) Includes 500 shares held jointly with his spouse.
(7) Includes 20,000 shares underlying presently exercisable options.
(8) Includes 15,000 shares underlying presently exercisable options.
(9) Includes 200 shares held jointly with his spouse.
(10) Includes 5,000 shares underlying presently exercisable options.
(11) Includes 45,000 shares underlying presently exercisable options.
11
<PAGE> 14
SECTION 16(a) BENEFICIAL OWNERSHIP REPORTING COMPLIANCE
Section 16(a) of the Exchange Act requires the Company's executive
officers and directors and certain beneficial owners of the Company's Common
Stock to file initial reports of ownership and reports of changes in ownership
with the SEC. These executive officers, directors and beneficial owners 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 Company is not aware of any late filings.
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,
1998 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. Grant Thornton LLP has acted as independent public
accountants of the Company since 1992. 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 1998.
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 1999 ANNUAL MEETING
Shareholders desiring to submit proposals for the Proxy Statement for
the 1999 Annual Meeting will be required to submit them to David R. Grow,
Executive Vice President, Chief Operating Officer, Chief Financial Officer and
Corporate Secretary of the Company, at the Company's executive offices, 2700
South 900 West, Salt Lake City, Utah 84119, in writing on or before December 31,
1998. 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, 1997 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.
12
<PAGE> 15
APPENDIX A
FORM OF PROXY
DAW TECHNOLOGIES, INC.
PROXY 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 17, 1998 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 27, 1998, 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 all
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 JR. ROBERT G. CHAMBERLAIN RONALD W.DAW
ROBERT J.FRANKENBERG JAMES S. JARDINE
2. PROPOSAL TO RATIFY the appointment of Grant Thornton LLP as the
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 THE DIRECTOR NOMINEES NAMED ABOVE AND FOR THE
RATIFICATION OF THE APPOINTMENT OF GRANT THORNTON LLP AS THE INDEPENDENT PUBLIC
ACCOUNTANTS OF THE COMPANY. Please complete, sign and date this proxy where
indicated and return it promptly in the accompanying prepaid envelope.
Date: _______________________, 1998 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.)
13
