<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
[X] 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 by
Rule 14a-6(e)(2))
[X] Definitive Proxy Statement
(Revocation of Consent)
[ ] Definitive Additional Materials
[ ] Soliciting Material Pursuant to 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)(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> 2
DAW TECHNOLOGIES, INC.
------------------------------
NOTICE OF ANNUAL MEETING OF SHAREHOLDERS
To Be Held July 28, 2000
---------------------------------
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 Friday, July 28, 2000, 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 seven 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, 2000.
(3) To consider such other matters as may properly come before the
meeting.
The Board of Directors has fixed the close of business on June 20, 2000
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
Salt Lake City, Utah
DATED: June 30, 2000 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> 3
DAW TECHNOLOGIES, INC.
2700 South 900 West
Salt Lake City, Utah 84119
---------------------
PROXY STATEMENT
---------------------
FOR ANNUAL MEETING OF SHAREHOLDERS
JULY 28, 2000
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
Friday, July 28, 2000, 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 June 30, 2000.
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 June 20, 2000
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 13,468,609 shares of Common Stock and 480
shares of the Company's Series A Convertible Preferred Stock, $0.01 par value
(the "Series A Preferred"). 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. The holders of the Series A Preferred are not entitled to vote at the
Annual Meeting, but have been invited to attend 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
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<PAGE> 4
indicated, such shares will be voted FOR the election of each of the seven
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, 2000; 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 seven 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 or the ratification of
the selection of the independent public accountants.
PROPOSAL NO. 1 - ELECTION OF DIRECTORS
At the Annual Meeting, a board of seven directors will be elected to
serve until the next annual meeting of shareholders and until their successors
are duly elected and qualified. Six of the nominees for director identified
below are currently directors of the Company. Robert G. Teresi is not currently
serving as a director of the Company, but has been nominated for election as 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, 75, 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, 60, has been a director of the Company since
1991. He is currently the President of AvantNet Semiconductor Operations of
AvantCom Network, Inc. in San Jose, CA. He was previously President and Chief
Executive Officer of Micromonitors, Inc., an instrumentation company in Central
Oregon. From April 1993 to December 1995, Mr. Chamberlain was Senior Vice
President and Manager of Operations of the Semiconductor Equipment Group (SEG)
of the Watkins-Johnson Company. Mr. Chamberlain has thirty years of sales,
marketing and general management experience in the semiconductor component and
semiconductor equipment fields, including fifteen years of international
management. Mr.
2
<PAGE> 5
Chamberlain holds a Masters of Business Administration (MBA) degree from
Stanford University and a Bachelor of Science of Engineering (BSE) from
Princeton University.
Ronald W. Daw, 48, 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. Since 1984, Mr. Daw has
had broad experience in the cleanroom business. Mr. Daw is currently a member of
the Board of Trustees of Westminster College in Salt Lake City and serves on the
National Business Advisory Board for the David Eccles School of Business at the
University of Utah. Mr. Daw received his Bachelor of Science degree in
Accounting from the University of Utah.
Robert J. Frankenberg, 53, 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
ElectroGlas, Inc., National Semiconductor, Scansoft, 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.
Virginia Gore Giovale, 56, has been a director of the Company since
July 1999. Ms. Giovale currently serves as a member of the Board of Directors
and the Compensation Committee of W.L. Gore and Assoc., Inc., a privately-held
company that develops and manufactures products for the medical, fabric and
electronic industries under the Gortex(R) brand name. Ms. Giovale has served as
a member of the Board of Trustees of Westminster College, a private liberal arts
college located in Salt Lake City, Utah, since 1977 and has served as Chair of
that Board since 1989. Ms. Giovale has also served as Co-Chair of the Flagstaff
Community Foundation since 1995 and as a Board Member of the Arizona Community
Foundation since 1996. Ms. Giovale received her Bachelor of Science degree in
mathematics from Westminster College.
James S. Jardine, 53, 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 a member of the Utah State Board of Regents. He is also outside General
Counsel to the Salt Lake Olympic 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.
Robert G. Teresi, 59, has been nominated for election as a director of
the Company. Mr. Teresi was Chairman of the Board, President and CEO of Caere
Corporation, one of the top 100 retail software companies in the world, from
1985 to March of 2000. He joined Caere at its founding in 1976 as Vice President
of Finance, Chief Financial Officer and Corporate Secretary and was promoted to
Executive Vice President before becoming President in 1985. Prior to joining
Caere, Mr. Teresi held various management positions in the areas of
manufacturing, marketing, finance and accounting at Alza Corporation and Memorex
Corporation. The Institute of American Entrepreneurs sponsored by Inc. Magazine,
Ernst and Young and Merrill Lynch named Mr. Teresi "Entrepreneur of the Year" in
1991 in the computers/peripherals category. He is an Advisory Board member of
the Leavy School of Business at Santa Clara University. He is also a member of
the Board of Directors of Cambrian Center, a HUD-funded apartment complex for
senior citizens. He was on the Governor of California's Advisory Board for
Overseas Business Development. Mr. Teresi is currently a director of Scansoft,
Inc., the company that acquired Caere Corporation in 2000. Mr. Teresi received
his MBA degree in finance and his BSC degree in accounting from Santa Clara
University.
3
<PAGE> 6
BOARD AND COMMITTEE MEETINGS; LEGAL PROCEEDINGS
During the year ended December 31, 1999, the Board of Directors held
three 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 Company's Option Plans. The current members of the
Compensation Committee are Robert G. Chamberlain and Robert J. Frankenberg. The
Compensation Committee met once during 1999. 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 and James S.
Jardine. The Audit Committee met once during 1999. 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 officer of the Company:
Michael J. Shea, 39, rejoined Daw Technologies in August of 1997 as
Senior Vice President of Marketing & Sales. As of January 1999, Mr. Shea became
the Senior Vice President of the Company's Manufacturing and Products Division.
Mr. Shea was previously employed by the Company from 1987 to 1992. From 1995 to
1997, Mr. Shea 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. Mr. Shea began his
career in the cleanroom industry in 1979 with Liebert White Cube, Inc., a
California-based company which designed, manufactured and constructed turnkey
cleanrooms. He left Liebert White Cube in 1985 to join Mechanical Planning,
Inc., a San Jose, California based mechanical HVAC consulting and engineering
firm. He served as Director of Business Development promoting engineering
services to architects and end users in the Silicon Valley.
4
<PAGE> 7
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 of the Company whose annual salary and bonus during the year ended
December 31, 1999 exceeded $100,000 (collectively the "Named Executive
Officers").
<TABLE>
<CAPTION>
LONG TERM ALL OTHER
ANNUAL COMPENSATION COMPENSATION COMPENSATION(2)
---------------------- ------------------------------
NAME AND POSITION YEAR SALARY BONUS OPTIONS GRANTED(1)
-------------------------- ----- -------- ----- ------------------------------
<S> <C> <C> <C> <C> <C>
Ronald W. Daw 1999 $201,077 $ 0 $ 0 $10,520
Chief Executive Officer 1998 215,000 0 30,000 9,432
and President 1997 215,000 0 0 10,396
David R. Grow(3) 1999 153,769 0 0 10,651
Executive Vice President 1998 166,154 0 20,000 9,368
1997 150,769 0 0 7,807
Steven R. Burt(4) 1999 139,846 0 0 8,298
Senior Vice President of 1998 140,000 0 10,000 8,731
Field Operations 1997 140,000 0 10,000 8,355
Michael J. Shea(5) 1999 132,923 0 0 7,744
Senior Vice President 1998 130,000 0 10,000 4,954
Manufacturing and 1997 51,951 0 20,000 3,664
Products
Michael J. Schifsky(6) 1999 111,096 0 0 4,601
Senior Vice President 1998 25,515 0 20,000 0
and Chief Financial 1997 0 0 0 0
Officer
</TABLE>
---------------------------
(1) Includes shares subject to options which were repriced in February
1998. See "--Ten-Year Option Repricing."
(2) Consists of matching contributions to the Company's 401(k) Plan and
health insurance premiums paid to or on behalf of the named executive
officers. For the years ended December 31, 1999, 1998 and 1997, such
amounts were as follows: Ronald W. Daw, $4,745,$4,928, and $4,745
matching contributions and $5,775,$4,504 and $5,651 insurance premiums;
David R. Grow, $4,876, $5,014 and $4,625 matching contributions and
$5,775, $4,354 and $3,182 insurance premiums; Steven R. Burt, $3,092,
4,377 and $4,153 matching contributions and $5,206, $4,354 and $4,202
insurance premiums; Michael J. Shea, $2,538, $600 and $0 matching
contributions and $5,206, $4,354 and $3,664 insurance premiums; and
Michael J. Schifsky, $4,601 insurance premiums for 1999 only.
(3) Mr. Grow resigned as an executive officer of the Company in February
2000.
(4) Mr. Burt's employment was terminated by the Company in April 2000.
(5) Mr. Shea commenced his employment with the Company in August 1997.
(6) Mr. Schifsky resigned as an executive officer of the Company in March
2000. Mr. Schifsky was employed by the Company for only 4 months of
1998.
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OPTION GRANTS IN LAST FISCAL YEAR
Under the Company's 1993 Stock Option Plan and 1999 Omnibus Stock
Incentive Plan, no options were granted to the named Executive Officers during
the year ended December 31, 1999.
AGGREGATED OPTION EXERCISES IN LAST FISCAL YEAR AND YEAR END OPTION VALUES
The following table sets forth the aggregate value of unexercised
options to acquire shares of the Common Stock held by the Named Executive
Officers on December 31, 1999. None of the Named Executive Officers exercised
options during the year ended December 31, 1999.
<TABLE>
<CAPTION>
NUMBER OF VALUE OF UNEXERCISED
UNEXERCISED OPTIONS IN-THE-MONEY OPTIONS AT
AT FY-END(#) FY-END($)(1)
------------------- -----------------------
EXERCISABLE/ EXERCISABLE/
NAME UNEXERCISABLE UNEXERCISABLE
---------------------------- ------------------ -----------------------
<S> <C> <C>
Ronald W. Daw............... 130,000/15,000 $0/$0
David R. Grow............... 70,000/10,000 $0/$0
Steven R. Burt.............. 55,000/5,000 $0/$0
Michael J. Shea............. 25,000/5,000 $0/$0
Michael J. Schifsky......... 10,000/10,000 $0/$0
</TABLE>
---------------------------
(1) Calculated based on the difference between the exercise price and the
price of a share of the Common Stock on December 31, 1999. As of
December 31, 1999, the exercise prices of each of the options held by
the Named Executive Officers exceeded the price of a share of the
Common Stock ($0.625).
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<PAGE> 9
TEN-YEAR OPTION REPRICINGS
The following table sets forth information with respect to the
repricings of outstanding stock options that were effected on October 24, 1996
and on February 24, 1998. See "--Report of the Compensation Committee--Repricing
of Options."
<TABLE>
<CAPTION>
NUMBER OF
SECURITIES MARKET PRICE LENGTH OF ORIGINAL
UNDERLYING OF STOCK AT EXERCISE PRICE OPTION TERM (mos)
OPTIONS/SARS TIME OF AT TIME OF NEW REMAINING AT DATE
REPRICED OR REPRICING OR REPRICING OR EXERCISE OF REPRICING OR
NAME DATE AMENDED AMENDMENTS AMENDMENT E PRICE AMENDMENT
----------------------- ----------- ------------ ------------ -------------- -------- ------------------
<S> <C> <C> <C> <C> <C> <C>
Ronald W. Daw 10/24/96 30,000 $3.50 $3.56 $3.5 85
President and Chief 10/24/96 30,000 3.50 5.75 3.5 97
Executive Officer 10/24/96 25,000 3.50 6.63 3.5 109
02/24/98(1) 30,000 1.40 3.50 1.4 69
02/24/98(1) 30,000 1.40 3.50 1.4 81
02/24/98(1) 25,000 1.40 3.50 1.4 93
02/24/98 30,000 1.40 3.50 1.4 104
David R. Grow 10/24/96 20,000 3.50 7.38 3.5 107
Executive Vice 10/24/96 20,000 3.50 4.68 3.5 113
President 02/24/98(1) 20,000 1.40 3.50 1.4 91
02/24/98(1) 20,000 1.40 3.50 1.4 97
02/24/98 20,000 1.40 3.50 1.4 104
Steven R. Burt 10/24/96 10,000 3.50 5.75 3.5 97
Senior Vice President 10/24/96 3,500 3.50 6.25 3.5 108
of Field Operations 10/24/96 15,000 3.50 6.63 3.5 109
10/24/96 6,500 3.50 4.68 3.5 113
02/24/98(1) 10,000 1.40 3.50 1.4 81
02/24/98(1) 3,500 1.40 3.50 1.4 92
02/24/98(1) 15,000 1.40 3.50 1.4 93
02/24/98(1) 6,500 1.40 3.50 1.4 97
02/24/98 10,000 1.40 3.00 1.4 108
Michael J. Shea 10/24/96 20,000 3.50 -- 3.5 106
Senior Vice President 02/24/98(1) 20,000 1.40 3.50 1.4 90
Manufacturing and
Products
</TABLE>
---------------------------
(1) Reflects options previously repriced on October 24, 1996 which were
repriced again on February 24, 1998.
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; however no options were granted in 1999.
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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 Company's option plans.
COMPENSATION OBJECTIVES AND POLICIES
In determining the amount and composition of compensation for the
Company's executive officers and in administering the option plans, 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 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, 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.
8
<PAGE> 11
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 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 bonuses 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. No executive bonuses were paid in 1999.
STOCK OPTIONS. The Committee believes it is essential for all executive
officers to receive stock options, thereby aligning the long-term interests of
executive officers with those of the shareholders. The Committee awards stock
options 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. No stock options were granted to
executive officers in 1999.
CHIEF EXECUTIVE COMPENSATION FOR 1999
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 1999, 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. However, as
a part of a short term strategy to reduce the Company's cost structure as
announced in a September 1999 press release, Mr. Daw voluntarily reduced his
annual base compensation to $160,000, an approximate 26% decrease. Based on the
actual performance of the Company for 1999 compared to the targeted level of
performance under the cash incentive program, no bonus was awarded to Mr. Daw in
1999 under the Company's cash incentive program. The Company did not grant stock
options to Mr. Daw in 1999.
REPRICING OF OPTIONS
In February 1998, the Committee reviewed the status of outstanding
stock options under the Company's 1993 Stock Option Plan which had been granted
to directors, executive officers and key employees. Notwithstanding the
repricing of some of these options in October 1996, the Committee determined
that with the continued industry downturn and decline in the market value of the
Common Stock, outstanding options were not providing any meaningful incentive to
their holders. The Committee also considered the significant efforts of option
holders to continue the operations of the Company during a very difficult period
and that the executive officers and key employees possess unique experiences and
skills that are critical to the Company's future success such that their
retention, through ownership of options which represent a meaningful inducement
to continue their employment, was determined to be in the best interest of the
Company.
Accordingly, on February 24, 1998, all options, with exception of those
granted to non-employee directors of the Company, with an exercise price greater
than $1.40 were repriced to $1.40, which was the market price of the Common
Stock on that date and vesting was increased by one year for all options
repriced. The table on page seven of this Proxy Statement sets forth information
with respect to repricing of options granted to the executive officers of the
Company in October 1996 and February 1998.
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 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>
<CAPTION>
SYMBOL INDEX DESCRIPTION 12/30/94 12/30/95 12/29/96 12/31/97 12/31/98 12/31/99
------------ ------------------------------- ------------- ------------- ------------ ------------- ------------ -----------
<S> <C> <C> <C> <C> <C> <C> <C>
______ Daw Technologies, Inc. $100 $100 $48 $32 $20 $11
- - - CRSP Index for Nasdaq Stock $100 $141 $174 $213 $300 $557
Market (US Companies)
.......... CRSP Index for Nasdaq Stocks $100 $156 $142 $179 $198 $493
(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 December 30, 1994.
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 June 20, 2000, information with
respect to the Common Stock and Series A Preferred 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. 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
NAME OF BENEFICIAL OWNERS BENEFICIAL OWNERSHIP OF CLASS(1)
------------------------- ------------------- ----------
<S> <C> <C>
COMMON STOCK
------------
J. Weston Daw(2) 2,209,643 16.4%
Beverly Daw
2700 South 900 West
Salt Lake City, Utah 84119
Ronald W. Daw(2) 2,016,699(3) 14.8%
Tracey Daw
2700 South 900 West
Salt Lake City, Utah 84119
Charles L. Bates, Jr. 30,000(4) **
Michael J. Shea 25,000(5) **
Robert G. Chamberlain 25,000(6) **
Robert J. Frankenberg 20,000(7) **
James S. Jardine 20,000(8) **
David R. Grow 1,500(9) **
Ginger Gore Giovale - 0 - **
All Officers and Directors 2,138,199(10) 15.6%
as a Group (8 Persons)
SERIES A PREFERRED STOCK
------------------------
Deephaven Private Placement Trading 175(11) 36.5%
Limited
130 Cheshire Lane
Minnentonka, Minnesota 55305
West End Maccabee Fund, L.P. 140(11) 29.2%
110 Colabaugh Pond Road
Croton-on-Hudson, New York 10520
J. Weston Daw 100(11) 20.8%
2700 South 900 West
Salt Lake City, Utah 84119
Ronald W. Daw 30(11) 6.2%
2700 South 900 West
Salt Lake City, Utah 84119
WETI Global Fund Limited 25(11) 5.2%
P.O. Box 1109 GT, Mary Street
Grand Cayman, Cayman Islands, BWI
West End Maccabee Offshore Fund Ltd. 10(11) 2.1%
P. O. Box 1109 GT, Mary Street
Grand Cayman, Cayman Islands, BWI
</TABLE>
11
<PAGE> 14
----------------------
** Less than 1%.
(1) Based on 13,468,609 shares of Common Stock outstanding as of June20,
2000.
(2) Ronald W. Daw is the son of J. Weston Daw.
(3) Includes 1,211,499 shares owned jointly by Ronald W. and Tracey Daw,
219,900 shares owned by the Ronald Daw Family Limited Partnership,
440,200 shares held by Ronald W. Daw, 100 shares held by Tracey Daw,
145,000 shares underlying presently exercisable options.
(4) Includes 30,000 shares underlying presently exercisable options.
(5) Includes 25,000 shares underlying presently exercisable options.
(6) Includes 25,000 shares underlying presently exercisable options.
(7) Includes 20,000 shares underlying presently exercisable options.
(8) Includes 20,000 shares underlying presently exercisable options.
(9) Includes 1,500 shares held by David R. Grow and Morgan Grow. Mr.
Grow resigned as an executive officer of the Company in February 2000.
(10) Includes 265,000 shares underlying presently exercisable options.
(11) The Series A Preferred is currently convertible into shares of Common
Stock at a rate equal to a fraction, the numerator of which is equal to
$10,000 plus all accrued dividends, and the denominator of which is
equal to the lesser of (i) $1.32 and (ii) 80% of the average of the
five lowest consecutive per share market values during the twenty-five
trading days proceeding the conversion date. As of May 30, 2000, the
outstanding shares of Series A Preferred were convertible for
approximately 10,569,696 shares of Common Stock.
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 Company believes the following reports filed by certain directors
and executive officers of the Company were delinquent: Steven Burt was
delinquent in filing a Form 5 due in February 1999. The delinquent report was
filed in February 2000. Virginia Gore Giovale was required to file a Form 3 on
August 10, 1999. The Form 3 was filed on August 11, 1999.
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.
In the regular course of its business, the Company periodically engages
in constructed-related transactions with Daw Incorporated, an interior finish
construction company of which Ronald W. Daw, the Chief Executive Officer of the
Company, is an officer and principal shareholder. These transactions include the
Company's purchase of construction-related supplies and equipment and the
Company's engagement of Daw Incorporated to perform construction services. The
total amount paid by the Company to Daw Incorporated during the year ended
December 31, 1999 was approximately $70,000. Management believes the terms of
its transactions with Daw Incorporated have been at least as favorable as could
be obtained from unaffiliated third parties.
12
<PAGE> 15
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,
2000 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 THE
FISCAL YEAR ENDING DECEMBER 31, 2000.
13
<PAGE> 16
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 2001 ANNUAL MEETING
Shareholders desiring to submit proposals for the Proxy Statement for
the 2001 Annual Meeting will be required to submit them to the Company in
writing on or before April 1, 2001. 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, 1999 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.
14
<PAGE> 17
PROXY
DAW TECHNOLOGIES, INC.
THIS PROXY IS SOLICITED ON BEHALF OF THE BOARD OF DIRECTORS
The undersigned hereby appoints Ronald W. Daw and Michael J. Shea, 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 June 20, 2000, at the Annual Meeting of Stockholders (the "Annual
Meeting") to be held at the corporate offices of the Company, 2700 South 900
West, Salt Lake City, Utah, on July 28, 2000, 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 J. JARDINE VIRGINIA GORE GIOVALE
ROBERT G. TERESI
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 HEREON
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: _______________________, 2000. Signature: ____________________________
Signature if held jointly: ____________________________________________________
(Please sign the 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.)
