<PAGE>
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SCHEDULE 14A INFORMATION
Proxy Statement Pursuant to Section 14(a) of the Securities
Exchange Act of 1934 (Amendment No. )
Filed by the Registrant [X]
Filed by a Party other than the Registrant [_]
Check the appropriate box:
[_] Preliminary Proxy Statement [_] Confidential, for Use of the
Commission Only (as permitted by
Rule 14a-6(e)(2))
[X] Definitive Proxy Statement
[_] Definitive Additional Materials
[_] Soliciting Material Pursuant to Section 240.14a-11(c) or Section 240.14a-12
Glacier Water Services, 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:
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(2) Aggregate number of securities to which transaction applies:
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(3) Per unit price or other underlying value of transaction computed
pursuant to Exchange Act Rule 0-11 (Set forth the amount on which
the filing fee is calculated and state how it was determined):
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(4) Proposed maximum aggregate value of transaction:
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(5) Total fee paid:
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[_] 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:
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(2) Form, Schedule or Registration Statement No.:
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(3) Filing Party:
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(4) Date Filed:
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Notes:
<PAGE>
GLACIER WATER SERVICES, INC.
2261 COSMOS COURT
CARLSBAD, CALIFORNIA 92009
___________________________
NOTICE OF ANNUAL MEETING
TO BE HELD AT THE CENTURY PLAZA HOTEL AND TOWER
2025 AVENUE OF THE STARS
LOS ANGELES, CALIFORNIA 90067-4696
JUNE 3, 1997
To Our Stockholders:
NOTICE is hereby given that the Annual Meeting of Stockholders (the "Annual
Meeting") of Glacier Water Services, Inc. (the "Company") will be held at 10:00
a.m. (Los Angeles time) on Tuesday, June 3, 1997, at the Century Plaza Hotel and
Tower, 2025 Avenue of the Stars, Los Angeles, California, 90067-4696 for the
following purposes:
1. To elect seven directors to serve for a term of one year until the next
Annual Meeting of Stockholders and until their respective successors
have been duly elected and qualified;
2. To approve an amendment to the 1994 Stock Compensation Program to
increase the maximum number of shares of the Company's common stock
issuable under the Program;
3. To ratify the appointment of Arthur Andersen LLP as independent
auditors of the Company for the 1997 fiscal year; and
4. To consider and vote upon such other business as may properly come
before the Annual Meeting or any adjournment thereof.
Holders of the Company's common stock, par value $.01 per share, as of the
close of business on April 14, 1997, the record date fixed by the Board of
Directors, are entitled to notice of and to vote at the Annual Meeting. The
Company's Board of Directors and officers urge that all stockholders of record
exercise their right to vote at the Annual Meeting personally or by proxy.
Accordingly, we are sending you the enclosed Proxy Statement and proxy card, as
well as the 1996 Annual Report.
WHETHER OR NOT YOU PLAN TO ATTEND THE ANNUAL MEETING, PLEASE INDICATE YOUR
VOTE ON THE ACCOMPANYING PROXY CARD AND SIGN, DATE AND RETURN IT AS PROMPTLY AS
POSSIBLE IN THE ENCLOSED SELF-ADDRESSED, POSTAGE-PAID ENVELOPE.
Your prompt response will be appreciated.
By Order of the Board of Directors
/s/ Jerry A. Gordon
Jerry A. Gordon
President and Chief Operating Officer
Carlsbad, California
April 23, 1997
<PAGE>
GLACIER WATER SERVICES, INC.
2261 COSMOS COURT
CARLSBAD, CALIFORNIA 92009
___________________________
ANNUAL MEETING OF STOCKHOLDERS
TO BE HELD JUNE 3, 1997
___________________________
PROXY STATEMENT
The accompanying proxy is solicited by the Board of Directors of Glacier
Water Services, Inc. (the "Company") to be used at the Annual Meeting of
Stockholders on Tuesday, June 3, 1997 (the "Annual Meeting"). This Proxy
Statement, the enclosed form of proxy and the 1996 Annual Report are being sent
to stockholders on or about May 2, 1997.
At the Annual Meeting, stockholders will be asked to consider and vote upon
the following items:
1. The election of seven directors to serve for a term of one year until
the next Annual Meeting of Stockholders and until their respective
successors have been duly elected and qualified;
2. An amendment to the 1994 Stock Compensation Program to increase the
maximum number of shares of the Company's common stock issuable under
the Program;
3. The appointment of Arthur Andersen LLP as independent auditors of the
Company for the 1997 fiscal year; and
4. Such other business as may properly come before the Annual Meeting or
any adjournment thereof.
The 1996 Annual Report that accompanies this Proxy Statement is not to be
regarded as proxy soliciting material.
The Board of Directors of the Company believes that election of its
director nominees, the approval of the amendment to the 1994 Stock Compensation
Program and ratification of the appointment of Arthur Andersen LLP as the
Company's independent auditors are in the best interests of the Company and its
stockholders and recommends to the stockholders of the Company the approval of
each of these proposals.
1
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VOTING
Shares represented by duly executed and unrevoked proxies in the enclosed
form received by the Board of Directors will be voted at the Annual Meeting in
accordance with the specifications made therein by the stockholders, unless
authority to do so is withheld. If no specification is made, shares represented
by duly executed and unrevoked proxies in the enclosed form will be voted FOR
the election as directors of the nominees listed herein, FOR the approval of the
amendment to the 1994 Stock Compensation Program, FOR the ratification of Arthur
Andersen LLP as the Company's independent auditors and, with respect to any
other matter that may properly come before the Annual Meeting, in the discretion
of the persons voting the respective proxies.
No provision for rights of appraisal or similar rights of dissenters are
applicable with respect to the matters to be voted upon at the Annual Meeting.
Execution of a proxy will not in any way affect a stockholder's right to
attend the meeting and vote in person, and any stockholder giving a proxy may
revoke it at any time prior to its exercise at the Annual Meeting by giving
notice of such revocation either personally or in writing to the Secretary of
the Company at the Company's executive offices, located at the address set forth
above, by subsequently executing and delivering another proxy or by voting in
person at the Annual Meeting.
The Company has retained ChaseMellon Shareholder Services to assist in
soliciting proxies from brokers and nominees for the Annual Meeting. The
estimated cost for these services is $10,000 and will be borne by the Company.
It is contemplated that this solicitation will be primarily by mail. In
addition, some of the officers, directors and employees of the Company may
solicit proxies by telephone.
Only holders of record of the Company's common stock, $.01 par value (the
"Common Stock"), as of the close of business on April 14, 1997 (the "Record
Date"), will be entitled to vote at the Annual Meeting. On the Record Date,
there were outstanding 3,210,325 shares of Common Stock. Each share of Common
Stock is entitled to one vote on all matters presented at the Annual Meeting.
VOTE REQUIRED
The election of the director nominees requires a plurality of the votes
cast in person or by proxy at the Annual Meeting. Under Delaware law, the
Company's Certificate of Incorporation and the Company's Bylaws, shares as to
which a stockholder abstains or withholds from voting on the election of
directors and shares as to which a broker indicates that it does not have
discretionary authority to vote ("broker non-votes") on the election of
directors will not be counted as voting thereon and therefore will not affect
the election of the nominees receiving a plurality of the votes cast.
The approval of the amendment to the 1994 Stock Compensation Program and
the ratification of the appointment of Arthur Andersen LLP as independent
auditors of the Company for the 1997 fiscal year require the affirmative vote of
the holders of at least a majority of the aggregate outstanding shares of Common
Stock represented at the meeting.
ELECTION OF DIRECTORS
The Certificate of Incorporation of the Company fixes the number of
directors at not less than one nor more than nine, with the exact number to be
set by resolution of the Board of Directors. In April 1997, the Board of
Directors increased the authorized number of directors from five to seven. The
Board of Directors proposes the election of seven directors to hold office until
the next Annual Meeting and until their successors are duly elected and
qualified. Unless authority to vote for directors has been withheld in the
proxy, the persons named in the enclosed proxy intend to vote at the Annual
Meeting for the election of the seven nominees presented below. Except as set
forth below, persons named as proxies may not vote for the election of any
person to the office of director for which a bona fide nominee is not named in
the Proxy Statement. All nominees have consented to serve as a director for the
ensuing year. Although the Board of Directors does not contemplate that any of
the nominees will be unable to serve, if any nominee withdraws or otherwise
becomes unavailable to serve, the persons named in the enclosed proxy will vote
for any substitute nominee designated by the Board of Directors.
The names and certain information concerning the persons to be nominated
as directors by the Board of Directors at the Annual Meeting are set forth
below.
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THE BOARD OF DIRECTORS RECOMMENDS THAT YOU VOTE FOR THE ELECTION OF EACH
---
OF THE NOMINEES NAMED BELOW.
NOMINEES FOR DIRECTORS FOR TERMS EXPIRING IN 1998
<TABLE>
<CAPTION>
NAME AND AGE AS OF THE POSITION, PRINCIPAL OCCUPATION, BUSINESS
JUNE 3, 1997 MEETING DATE EXPERIENCE AND DIRECTORSHIPS
- ----------------------------- ----------------------------
<S> <C>
Douglas C. Boyd, 51 Mr. Boyd is the President and Chief Executive
Officer of Boyd Communications, an integrated
marketing communications company based in Los
Angeles, California. Mr. Boyd has served in
such capacity since 1972.
Peter B. Foreman, 61 Mr. Foreman has been a director of the Company
since June 1989. Mr. Foreman is currently the
President of Sirius Corporation, an investment
management firm located in Chicago, Illinois.
From 1976 to January 1994, Mr. Foreman was a
partner of Harris Associates, an investment
advisory firm located in Chicago, Illinois. He
presently serves on the Board of Directors of
National Picture and Framing Company, Eagle Food
Centers, Inc. and PCA International, Inc.
Jerry A. Gordon, 51 Mr. Gordon has been the Company's President and
Chief Operating Officer since September 1994.
Mr. Gordon joined the Company in June 1993 as
Vice President of Marketing. From 1992 to 1993
Mr. Gordon was a business consultant
specializing in management operations in
start-up companies.
Richard A. Kayne, 52 Mr. Kayne has been a director of the Company
since March 1995. Mr. Kayne currently serves as
President and Chief Executive Officer of Kayne
Anderson Investment Management and its broker
dealer affiliate, KA Associates, Inc. Mr. Kayne
has been with Kayne Anderson Investment
Management since 1985 when it was founded by Mr.
Kayne and John E. Anderson. Mr. Kayne is also a
Director of Foremost Corporation of America and
The Right Start, Inc.
Scott H. Shlecter, 44 Mr. Shlecter is President and a founder of the
North American practice of LEK/Alcar Consulting
Group, an international business consulting
firm. Mr Shlecter has served in such capacity
since 1974.
Robert V. Sinnott, 48 Mr. Sinnott has been a director of the Company
since April 1993. Mr. Sinnott currently serves
as a Senior Vice President of Kayne Anderson
Investment Management and has served in such a
capacity since 1992. Mr. Sinnott is also a
Director of Plains Resources Inc. and National
Energy Group, Inc.
Jerry R. Welch, 46 Mr. Welch has been a director of the Company
since October 1991, has been the Chairman of the
Board since April 1993 and was appointed Chief
Executive Officer in September 1994. From
October 1991 until his resignation in September
1992, Mr. Welch served as the Company's Chief
Executive Officer. He also served as Chairman
of the Board from January 1992 through September
1992. Mr. Welch currently serves as a Senior
Vice President of Kayne Anderson Investment
Management and has served in such a capacity
since January 1993. Mr. Welch is also the
Chairman of the Board and Chief Executive
Officer of The Right Start, Inc. Kayne Anderson
Investment Management holds an equity ownership
position in The Right Start, Inc.
</TABLE>
INFORMATION REGARDING THE BOARD OF DIRECTORS AND COMMITTEES
The Board of Directors is responsible for the overall affairs of the
Company. The Board of Directors met a total of five times during the 1996
fiscal year, including regularly scheduled and special meetings. The Board of
Directors has a standing Audit Committee, Compensation Committee and a
Nominating Committee. The current members of each of the Board's committees are
listed below.
THE AUDIT COMMITTEE
The members of the Audit Committee for the 1996 fiscal year were Messrs.
Foreman and Sinnott and Mr. Timothy G. Clark, an outgoing director of the
Company. The Audit Committee met in February 1996. The Audit Committee, which
is composed solely of outside directors, meets periodically with the Company's
independent auditors and management to discuss accounting principles, financial
and accounting controls, the scope and results of the annual audit, internal
controls and other matters; advises the Board on matters related to accounting
and auditing; and reviews management's selection of independent auditors. The
independent auditors have complete access to the committee, without management
present, to discuss results of their audit and their
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<PAGE>
observations on adequacy of internal controls, quality of financial reporting,
and other accounting and auditing matters. The Board of Directors intends to
appoint Mr. Shlecter to replace Mr. Clark on the Audit Committee.
THE COMPENSATION COMMITTEE
The members of the Compensation Committee for fiscal year 1996 were Messrs.
Foreman and Kayne and Mr. Timothy G. Clark, an outgoing director of the Company.
The Compensation Committee, which is composed solely of outside directors,
reviews and takes action regarding terms of compensation, employment contracts
and pension matters that concern officers and key employees of the Company. The
Compensation Committee is also responsible for the administration and award of
stock options under the Company's stock option plans. The Compensation
Committee met in February 1996, February 1997 and March 1997 to determine the
compensation of the executive officers and key employees of the Company. The
Board of Directors intends to appoint Mr. Boyd to replace Mr. Clark on the
Compensation Committee.
THE NOMINATING COMMITTEE
The current members of the Nominating Committee are Messrs. Foreman,
Sinnott and Welch. The Nominating Committee recommends to the Board nominees
for Board membership and makes recommendations as to Board policies concerning
the selection, tenure and qualification of directors. The Nominating Committee
reviews the qualifications of, among others, those persons recommended for
nomination to the Board of Directors by stockholders. A stockholder suggesting
a nominee to the Board should send the nominee's name, biographical material,
beneficial ownership of the Company's stock and other relevant information in
writing to the Secretary of the Company in a timely manner as set forth in the
Company's Bylaws, accompanied by a consent of such nominee to serve as a
director if elected. Nominees must be willing to devote the time required to
serve effectively as a director and as a member of one or more Board committees.
In order to submit a nomination, a stockholder must be a holder of record on the
date of such submission and on the record date for determining stockholders
entitled to vote at the meeting at which the election will take place. The
Nominating Committee met in April 1997, for the purpose of nominating the
nominees named in this Proxy Statement.
4
<PAGE>
EXECUTIVE COMPENSATION
SUMMARY OF COMPENSATION
The table below presents information concerning the compensation of the
Chief Executive Officer of the Company and the four executive officers of the
Company (the "Named Executive Officers") who received over $100,000 as
compensation for services rendered to the Company during fiscal year 1996.
<TABLE>
<CAPTION>
SUMMARY COMPENSATION TABLE
Long-Term
Compensation
Annual Compensation Awards
---------------------------------------------------- ----------------------
Name Other All
and Annual Other
Principal Salary Bonus (1) Compensation(2) Options Compensation
Position Year ($) ($) ($) (#) ($)
-------- ---- ------ --------- --------------- ------- ------------
<S> <C> <C> <C> <C> <C> <C>
Jerry R. Welch Chairman of 1996 -- -- -- 6,700 $82,000
the Board and Chief 1995 -- -- -- 6,151 $94,000
Executive Officer(3,4) 1994 -- -- -- 1,500 $63,333
Jerry A. Gordon 1996 $168,027 $ 45,000 -- 10,000 --
President and Chief 1995 $168,806 -- -- 10,000 --
Operating Officer 1994 $105,675 $ 700 -- 28,000 --
S. Dane Seibert 1996 $140,374 $ 61,250 -- 7,000 --
Senior Vice President, 1995 $106,191 -- -- 30,000 --
Marketing and Sales(5) 1994 -- -- -- -- --
Glen A. Skumlien 1996 $117,046 $ 26,250 -- 3,000 --
Executive Vice 1995 $115,160 -- -- -- --
President 1994 $ 96,800 $ 22,000 -- 13,000 --
John T. Vuagniaux 1996 $100,548 $ 22,500 -- 10,000 --
Senior Vice President, 1995 $ 88,716 -- -- 20,000 --
Operations 1994 -- -- -- -- --
</TABLE>
(1) Except as indicated in (5), amounts represent bonuses earned in fiscal 1996
and paid in 1997.
(2) Other Annual Compensation did not exceed the lesser of $50,000 or 10% of
the Named Executive Officer's salary and bonus.
(3) All Other Compensation for Mr. Welch represents fees for his services as
Chief Executive Officer in 1996, 1995 and the period from September through
December 1994, and director's fees in 1994.
(4) Long-Term Compensation Awards for Mr. Welch includes 5,200 options received
in 1996 in lieu of director's fees of $18,000, and 4,651 options received
in 1995 in lieu of director's fees of $18,000.
(5) $35,000 of Mr. Seibert's 1996 bonus was paid in 1996; the remaining $26,250
was paid in 1997.
5
<PAGE>
OPTION GRANTS IN FISCAL 1996
The following table presents certain information regarding stock option
grants to each of the Named Executive Officers during the fiscal year ended
December 31, 1996.
<TABLE>
<CAPTION>
Potential Realizable
Value at Assumed
Annual Rates
of Stock Price
Appreciation for
Individual Grants Option Term
----------------- ---------------------
Number of
Securities Percent of Total
Underlying Options Exercise
Options Granted to or Base
Granted Employees in Price Expiration 5% 10%
Name (#) Fiscal Year ($/Share) Date ($) ($)
- ---- ---------- ---------------- --------- ---------- --- ---
<S> <C> <C> <C> <C> <C> <C>
Jerry R. Welch 1,500 9% $18.625 2006 $ 17,875 $ 45,011
5,200 $19.625 2001 $ 28,194 $ 62,302
Jerry A. Gordon 10,000 13% $ 19.50 2006 $122,632 $310,778
S. Dane Seibert 7,000 9% $ 19.50 2006 $ 85,842 $217,545
Glen A. Skumlien 3,000 4% $ 19.50 2006 $ 36,790 $ 93,233
John T. Vuagniaux 10,000 13% $ 19.50 2006 $122,632 $310,778
</TABLE>
OPTION EXERCISES IN FISCAL 1996 AND FISCAL YEAR-END OPTION VALUES
The following table presents certain information regarding stock option
exercises during fiscal 1996 and fiscal year-end option values of unexercised
options for each of the Named Executive Officers.
<TABLE>
<CAPTION>
Value of
Number of Unexercised
Unexercised in-the-Money
Options Options
at FY-End at FY-End
(#) ($)
Shares Acquired ----------- ------------
on Exercise Value Realized Exercisable/ Exercisable/
Name (#) ($) Unexercisable Unexercisable
---- --------------- -------------- ------------- -------------
<S> <C> <C> <C> <C>
Jerry R. Welch -- -- 11,776/10,575 $ 90,921/$56,743
Jerry A. Gordon -- -- 33,000/37,000 $292,686/$223,186
S. Dane Seibert -- -- 7,500/29,500 $ 32,811/$122,060
Glen A. Skumlien 3,000 32,250 24,500/12,500 $ 283,999/$94,250
John T. Vuagniaux -- -- 5,000/25,000 $ 18,875/$90,374
</TABLE>
6
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COMPENSATION OF DIRECTORS
Mr. Welch, the Chairman of the Board and Chief Executive Officer, receives
$25,000 per quarter for his services as such. The other directors are
compensated for their services at $4,500 per quarter. All members of the Board
of Directors may elect to defer all or a portion of their annual compensation
and receive instead options to purchase common stock of the Company at the fair
market value on the date the options are granted. All members of the Board of
Directors are reimbursed for all expenses incurred in connection with their
serving on the Board.
1994 STOCK COMPENSATION PROGRAM AND PROPOSED AMENDMENTS
1994 Stock Compensation Program
The Company has adopted its 1994 Stock Compensation Program (the
"Program") to provide a means of encouraging certain officers, employees,
directors, advisors and consultants of the Company and its subsidiaries or any
parent company to obtain a proprietary interest in the enterprise and thereby
create an additional incentive for such persons to further the Company's growth
and development. The Program provides for the granting of options to certain
officers, employees, directors, advisors and consultants of the Company and its
subsidiaries or any parent company to purchase shares of the Company's common
stock. The following description of the Program is qualified in its entirety by
the full text of the Program, copies of which have been filed with the
Securities and Exchange Commission.
The Program is divided into two parts. Part I is the 1994 Employee Stock
Option Plan and Part II is the 1994 Non-Employee Director Stock Option Plan. As
described in further detail herein, Part I provides for discretionary grants of
stock options to officers, employees, advisors and consultants of the Company.
Such stock options may be either incentive stock options (each, an "ISO") under
Section 422 of the Internal Revenue Code of 1986, as amended (the "Code"), or
nonqualified stock options that are not intended to be, or do not qualify as,
ISOs (each, an "NSO"), provided, however, that ISOs may only be granted to
-------- -------
employees of the Company. Part II provides for the non-discretionary annual
grant of options to purchase 1,500 shares of the Company's common stock to each
non-employee director of the Company. Stock options granted under Part II may
only be NSOs. An ISO or NSO that is issued or issuable under the Program may be
referred to herein as an "Option"; and the Common Stock issued or issuable upon
exercise of an Option shall be referred to herein as "Stock". The holder of an
Option may be referred to herein as a "holder" or "optionee". The Program is
not an "employee benefit plan" under Section 3(3) of the Employee Retirement
Income Security Act of 1974 ("ERISA"), and, therefore, is not subject to the
provisions of ERISA. The Program is not a qualified plan under Section 401(a)
of the Code.
Additionally, under both Parts I and II of the Program, directors of the
Company who are paid a fee for their services as directors ("Directors' Fees")
will be allowed to make an election (a "Deferral Election") to receive
Directors' Fees (excluding reimbursement of expenses) in the form of options
("Deferral Election Stock Options") to acquire the Company's common stock. The
Deferral Election Stock Options shall be granted on the date of the Company's
Annual Meeting in each year for which a Deferral Election has been made. The
number of Deferral Election Stock Options granted to an electing director shall
be an amount whose value, as determined by an independent valuation expert
retained by the Compensation Committee, is equivalent on the date of the grant
to the cash compensation which the director would otherwise have been entitled
to receive for such year. In general, Deferral Election Stock Options will vest
and become exercisable one year from the date of grant (or such longer period as
the Compensation Committee may set) and will be exercisable at a price per share
equal to the closing price of the Company's common stock on the exchange on
which it is traded at the close of business on the first trading day preceding
the date of grant. Deferral Election Stock Options will become immediately
exercisable upon a director's death or disability or upon a Change of Control.
If a director's membership on the Board of Directors ends for any reason other
than death, disability or a Change in Control, then the number of Deferral
Election Stock Options granted for the year in which the membership ends shall
be reduced to reflect the amount of compensation actually earned by the director
in that year and the remaining Deferral Election Stock Options granted in that
year shall be immediately exercisable. Once any Deferral Election Stock Options
become exercisable, they shall remain exercisable for the lesser of (i) five
years after the date of grant or (ii) one year after the director's membership
on the Board of Directors ends for any reason. Deferral Election Stock Options
granted to non-employee directors may only be NSOs.
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<PAGE>
The Program is administered by the Compensation Committee consisting of
two or more disinterested members (non-employee directors who are only eligible
for formula grants and Deferral Election Stock Options under Part II of the
Program). The Compensation Committee may, from time to time and subject to the
provisions of the Program, adopt rules and regulations relating thereto and make
all other determinations as it deems necessary or desirable for the
administration of the Program. The Program is to be administered in accordance
with Rule 16b-3 under the Exchange Act.
The Compensation Committee may from time to time modify or amend the
Program as it deems necessary or desirable but may not change an Option already
granted without the written consent of the holder of such Option (or Stock
issued on exercise thereof), except pursuant to the adjustments for changes in
capital structure and certain business combinations described below and provided
that the terms and provisions of the Program which determine the eligibility of
non-employee directors under Part II and the amount, price and timing of the
formula grants and Deferral Elections under Part II may not be amended more than
once every six months except to comport with changes in the Code or ERISA. In
addition, unless approved at an annual meeting or a special meeting by the
holders of at least a majority of the outstanding shares of Common Stock
entitled to vote thereon, no amendment or change shall be made in the Program
(i) increasing the total number of shares which may be issued under the Program,
(ii) changing the minimum purchase prices specified in the Program, (iii)
increasing the maximum term for any option, (iv) materially modifying the
requirements for eligibility under the Program, (v) changing the term of the
Program or (vi) materially increasing the benefits accruing to participants
under the Program.
The Program will continue in effect until March 17, 2004 or until such
earlier time as (i) Options have been granted and exercised with respect to all
shares that are available under the Program or (ii) the Program is terminated by
the Compensation Committee. The Compensation Committee shall have the right to
suspend or terminate the Program at any time, but such suspension or termination
shall not affect the exercise of Options then outstanding under the Program.
The maximum numbers of shares of common stock issuable under Parts I and
II of the Program are currently 175,000 and 100,000 respectively, subject to
adjustment as described below. Such shares of common stock may be authorized
and unissued shares or may be treasury shares. If any Options terminate or
expire without having been exercised in full, the shares which were subject to
the unexercised portion of such Options shall be available for issuance under
the Plan. As of December 31, 1996, no options had been exercized under Parts I
and II of the Program. 161,851 and 46,053 shares were reserved for issuance
subject to outstanding options under Parts I and II of the Program,
respectively, and 13,149 and 53,947 shares were reserved for future grants of
stock options under Parts I and II of the Program, respectively.
In the event of changes in the common stock by virtue of a stock
dividend, stock split, reverse stock split, reclassification, combination or
exchange of shares, or by reason of a merger, consolidation, recapitalization or
reorganization involving the Company, the Compensation Committee will
appropriately and proportionately adjust the maximum number and kind of shares
as to which Options may be granted under the Program and will make a
corresponding adjustment in the number and kind of shares issuable upon exercise
of outstanding Options.
Upon the occurrence of a Change of Control (as defined below), Options
held by individuals who are employed by the Company (or who are members of the
Board) as of the date of such Change of Control or who were terminated (or
removed from the Board) in anticipation of such Change of Control shall
immediately vest and become exercisable and in the event of a Change of Control
of the type described in (i), below, such individuals shall have the right to
require the Company to repurchase their Options for the difference between the
fair market value of the underlying stock and the exercise price of the Options.
"Change of Control" for purposes of this provision means (i) the acquisition by
a person or entity other than the Company, any officer or director of the
Company or Kayne Anderson Investment Management, Inc., of over 50% of the
Company's stock, (ii) approval by the shareholders of a merger, reorganization
or consolidation that results in new ownership of the Company or (iii) approval
by the shareholders of a liquidation of the Company or the disposition of
substantially all of its assets.
In the event the employment by the Company or any parent or subsidiary of
the Company (or membership on the Board), of an optionee under the Program is
terminated for any reason (other than death, disability, or termination for
Cause), any Option held by such optionee may be exercised, during its term,
within a period of 90 days after the date of such termination of employment (or
membership on the Board) to the extent
8
<PAGE>
such option was exercisable at the time of such termination of employment (or
membership on the Board), or with respect to optionees under Part I only, within
such other period, and subject to such terms and conditions, as may be
prescribed by the Compensation Committee. In the event the employment by the
Company or any parent or subsidiary of the Company (or membership on the Board)
of an optionee under the Program is terminated due to death or disability, such
Optionee's Options shall immediately vest and become exercisable within a period
of one year after the date of such termination of employment (or membership on
the Board) or, with respect to optionees under Part I only, within such other
period, and subject to such terms and conditions, as may be prescribed by the
Compensation Committee. In the event such optionee was terminated (or removed
from the Board) for Cause, all unexercised Options held by such optionee shall
be forfeited and canceled. "Cause" is defined as (i) the willful failure to
perform duties other than due to physical or mental incapacity, (ii) conviction
for a felony, (iii) misconduct which is material injurious to the Company or
(iv) the willful commission of any fraud on the Company. Notwithstanding the
foregoing, Deferral Election Stock Options generally will remain exercisable for
the lesser of (i) 10 years after the date of grant of such options or (ii) one
year after the director's membership on the Board ends for any reason.
The Company has registered under the applicable securities laws the Stock
to be issued upon exercise of any Options and as a result such shares will be
freely transferable under the Securities Act of 1933, as amended (the
"Securities Act"); provided that shares of common stock acquired upon the
exercise of Options held by "affiliates" (as defined in the Securities Act) of
the Company may be resold by them only in compliance with Rule 144 under the
Securities Act or as otherwise permitted under the Securities Act.
Proposed Amendment to the Program
The Board of Directors has proposed an amendment (the "Amendment") to the
Program to increase the maximum number of shares of common stock issuable under
Part I of the Program from 175,000 to 275,000 shares and the maximum number of
shares of common stock issuable under Part II of the Program from 100,000 to
150,000, subject to the approval of the stockholders of the Company as provided
herein. The Amendment, approved by the Compensation Committee of the Board of
Directors effective as of February 10, 1997, is set forth in its entirety on
Exhibit 1 hereto.
THE BOARD OF DIRECTORS RECOMMENDS THAT YOU VOTE FOR THE ADOPTION OF THE
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PROPOSED AMENDMENT TO THE 1994 STOCK COMPENSATION PROGRAM.
The Company intends to file a registration statement with respect to the
additional shares of common stock underlying the additional options promptly
after approval of the Amendment is received.
On February 10, 1997, the Board of Directors granted, subject to approval
of the Amendment by the stockholders of the Company as provided herein, an
aggregate of 24,000 options to purchase shares of the Company's common stock to
four of the Company's executive officers in the following amounts: (i) 6,000
options to Jerry A. Gordon, the Company's President and Chief Operating Officer,
(ii) 6,000 options to S. Dane Seibert, the Company's Senior Vice President,
Marketing and Sales, (iii) 6,000 options to Glen A. Skumlien, the Company's
Executive Vice President, and (iv) 6,000 options to John T. Vuagniaux, the
Company's Senior Vice President, Operations. An additional 22,000 options were
granted to six other employees of the Company. The exercise price for each of
the 46,000 options granted was $26.25, the last sale price of the Company's
common stock on the date of grant as reported on the American Stock Exchange.
The realizable value of each of these options is dependent on the future
performance of the Company's common stock. The last sale price of the
Company's common stock was $24.125 per share on April 11, 1997.
On March 31, 1997, the Board of Directors granted, subject to approval of
the Amendment by the shareholders of the Company as provided herein, options to
purchase 6,000 shares of the Company's common stock to another employee of the
Company hired on that date. The exercise price of the options is $25.25, the
last sale price of the Company's common stock on the date of grant. A total of
59,649 shares are available for grant to eligible participants under Part I of
the Program subsequent to the grants listed above, pending approval of the
Amendment by the stockholders of the Company. No options have been granted
pursuant to the proposed Amendment under Part II of the Program.
9
<PAGE>
COMPLIANCE WITH SECTION 16(A) OF THE SECURITIES EXCHANGE ACT OF 1934
Section 16(a) of the Securities Exchange Act of 1934, as amended, requires
the Company's executive officers, directors and persons who own more than 10% of
the Company's common stock to file reports of ownership on Forms 3, 4 and 5 with
the Securities and Exchange Commission. Executive officers, directors and 10%
stockholders are required by the Commission to furnish the Company with copies
of all Forms 3, 4 and 5 they file.
Based solely on the Company's review of the copies of such forms it has
received, the Company believes that all of its executive officers, directors and
greater than 10% beneficial owners have complied with all the filing
requirements applicable to them with respect to transactions during fiscal 1996.
No director, officer, affiliate or beneficial owner of the Company, or any
associate thereof, is a party adverse to the Company of any of its subsidiaries
in any lawsuit nor has a material adverse interest thereto.
REPORT OF THE COMPENSATION COMMITTEE
ON EXECUTIVE COMPENSATION/1/
COMPENSATION PHILOSOPHY
The Compensation Committee's executive compensation philosophy is to
provide competitive levels of compensation while establishing a strong, explicit
link between executive compensation and the achievement of the Company's annual
and long-term performance goals, rewarding above-average corporate performance,
recognizing individual initiative and achievement, and assisting the Company in
attracting and retaining highly-skilled management. This philosophy has been
adhered to by developing incentive pay programs which provide competitive
compensation and mirror Company performance. Both short-term and long-term
incentive compensation are based on direct, explicit links to Company
performance and the value received by stockholders.
1996 Executive Compensation
Cash compensation includes base salary and annual bonuses. Base salaries
are set at competitive levels, with reference to the responsibilities undertaken
by personnel and their experience. Annual salary adjustments are determined by
reference to the Company's and the individual's performance, as well as the
competitive marketplace generally. Annual bonuses are awarded based primarily
on management's ability to achieve specified earnings levels.
Stock-Based Incentives
The Compensation Committee believes that it is essential to align the
interests of the executives and other management personnel responsible for the
growth of the Company with the interests of the Company's stockholders. The
Compensation Committee believes that this alignment is best accomplished through
the provision of stock-based incentives. Therefore, the Company has
periodically granted stock options to officers, salaried employees, advisors,
consultants and non-employee directors under the Company's stock option plans.
1996 President and Chief Executive Officer Compensation
Mr. Gordon's compensation as President of the Company for the fiscal year
1996 was deteremined by the Compensation Committee of the Board. For fiscal
year 1996, the Compensation Committee determined that Mr. Gordon would be
entitled to receive base salary of $160,000 and a bonus of between $18,000 and
$60,000, subject to the Company's achievement of specified earnings levels in
fiscal year 1996. Mr. Gordon earned a bonus of $45,000 in fiscal 1996. In
March 1996, the Compensation Committee also granted Mr. Gordon options to
purchase 10,000 shares of the Company's common stock.
During fiscal year 1996, Mr. Welch received $20,500 per quarter for his
services as Chief Executive Officer. Mr. Welch elected to defer the $4,500 per
quarter fee related to his service as Chairman of the Board, and in lieu of such
compensation, received options to purchase 5,200 shares of common stock of the
Company. Mr. Welch is also employed as a Senior Vice President of Kayne
Anderson Investment Management and as Chairman of the Board and Chief Executive
Officer of The Right Start, Inc., and devotes a substantial amount of his time
and attention to such employment.
- -----------------------------
/1/ Notwithstanding anything to the contrary set forth in any of the Company's
previous or future filings under the Securities Act of 1933 or the Exchange
Act of 1934, the Report of the Compensation Committee on Executive
Compensation shall not be incorporated by reference in any such filings.
10
<PAGE>
Summary
After its review of the Company's existing programs, the Compensation
Committee believes that the total compensation program for executives of the
Company over the last fiscal year was competitive with the compensation programs
provided by other corporations with which the Company competes for management
talent. The Compensation Committee also believes that the annual bonuses and
stock-based incentives provided opportunities to participants that are
consistent with the returns that are generated on behalf of the Company's
stockholders.
Limitation of Tax Deduction for Executive Compensation
The Omnibus Budget Reconciliation Act of 1993 (the "Act") prevents publicly
traded companies from receiving a tax deduction on compensation paid to proxy-
named executive officers in excess of $1 million annually, effective for
compensation paid after 1993. Although the Compensation Committee has not
adopted a policy relating to the Act, the Compensation Committee believes that
there will be little, if any, impact from this limitation to the Company.
COMPENSATION COMMITTEE:
Peter B. Foreman
Richard A. Kayne
Timothy G. Clark (outgoing director)
11
<PAGE>
PERFORMANCE GRAPH/2/
The following graph compares the Company's cumulative total stockholder
return on its Common Stock for the period from the Company's initial public
offering on March 13, 1992, to December 31, 1996, with returns on, respectively,
the American Stock Exchange Index and an industry index consisting of the
American Stock Exchange Consumer Industry Index. The return lines assume a $100
investment in the Company's stock (or in the basket of stocks represented by the
given index) at the beginning of the period presented.
GLACIER WATER SERVICES, INC. STOCK PERFORMANCE GRAPH
FROM MARCH 13, 1992 THROUGH DECEMBER 31, 1996
COMPARISON OF FIVE-YEAR CUMULATIVE TOTAL RETURN
AMONG HOO, AMEX AND INDUSTRY
PERFORMANCE GRAPH APPEARS HERE
<TABLE>
<CAPTION>
Measurement Period
(Fiscal Year Covered) HOO AMEX INDUSTRY
- ------------------- ---------- --------- ----------
<S> <C> <C> <C>
Measurement Pt- 3/13/92 $100 $100 $100
FYE 12/31/92 $104.5455 $101.06 $110.32
FYE 12/31/93 $117.0455 $120.7869 $118.4396
FYE 12/31/94 $175 $109.8436 $108.4433
FYE 12/31/95 $169.3182 $138.7764 $129.272
FYE 12/31/96 $207.9545 $147.6488 $113.912
</TABLE>
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/2/ Notwithstanding anything to the contrary set forth in any of the Company's
previous or future filings under the Securities Act of 1933 or the
Exchange Act of 1934, this Performance Graph shall not be incorporated by
reference in any such filings.
12
<PAGE>
SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT
The following table sets forth as of March 31, 1997 certain information
regarding the shares of Common Stock beneficially owned by each stockholder who
is known by the Company to beneficially own in excess of 5% of the outstanding
shares of Common Stock (based solely upon a review of Schedules 13D and 13G
filed with the Commission), by each director and Named Executive Officer and by
all executive officers and directors as a group.
<TABLE>
<CAPTION>
AMOUNT AND
NATURE OF
BENEFICIAL PERCENT
NAME OF BENEFICIAL OWNER(1) OWNERSHIP OF CLASS
--------------------------- ---------- --------
<S> <C> <C>
Richard A. Kayne(2) 1,211,447 37.7%
Liberty Investment Management, Inc. (3) 229,000 7.1%
Peter B. Foreman(4) 74,806 2.3%
Jerry R. Welch(4)(5) 14,901 *
Timothy G. Clark(4) 11,450 *
Robert V. Sinnott(4)(5) 14,901 *
Jerry A. Gordon(4) 39,750 1.2%
S. Dane Seibert(4) 16,850 *
Glen A. Skumlien(4) 27,000 *
John T. Vuagniaux 12,500 *
Executive officers and directors 1,450,730 42.8%
as a group (14 persons)
</TABLE>
__________________
* Less than 1%.
(1) Unless otherwise indicated, the address of each of the stockholders named
in this table is: c/o Glacier Water Services, Inc., 2261 Cosmos Court,
Carlsbad, California 92009.
(2) The shares listed include 1,009,155 shares held by four investment
partnerships, 110,866 shares held by Mr. Kayne individually, 86,400 shares
held by three managed accounts and 5,026 currently exercisable stock
options held by Mr. Kayne. Mr. Kayne has shared dispositive and voting
power with KAIM Non-Traditional, L.P. with respect to all of the shares
held by the investment partnerships and managed accounts. Mr. Kayne has
sole dispositive and voting power over the shares he holds individually.
Mr. Kayne disclaims beneficial ownership as to the shares held in the
managed accounts. The address for Richard A. Kayne is c/o Kayne Anderson
Investment Management, 1800 Avenue of the Stars, Second Floor, Los Angeles,
California 90067.
(3) These securities are owned by various individual investors, for which
Liberty Investment Management, Inc. serves as investment advisor with power
to direct investments and/or sole power to vote the securities. The
address for Liberty Investment Management, Inc. is 2502 Rocky Point Drive,
Suite 500, Tampa, Florida, 33607.
(4) Shares beneficially owned include stock options exercisable within 60 days
of March 31, 1997 in the amout of 14,901 held by Mr. Foreman, 14,901 held
by Mr. Welch, 10,250 held by Mr. Clark, 14,901 held by Mr. Sinnott, 39,750
held by Mr. Gordon, 16,750 held by Mr. Seibert, 27,000 held by Mr. Skumlien
and 12,500 held by Mr. Vuagniaux.
(5) Messrs. Welch and Sinnott are Senior Vice Presidents of Kayne Anderson
Investment Management; however, they disclaim beneficial ownership with
respect to any shares held by Kayne Anderson Investment Management or any
of its affiliates.
13
<PAGE>
CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS
Pursuant to the Board of Directors' approval to repurchase up to
250,000 shares of the Company's common stock, the Company repurchased 3,000
shares of its common stock from Glen A. Skumlien, Executive Vice President of
the Company, at a purchase price of $20.00 per share, the price of the Company's
stock on the date of repurchase.
SELECTION OF AUDITORS
The Board of Directors has appointed Arthur Andersen LLP Independent Public
Accountants, as independent auditors of the Company for the fiscal year ending
January 2, 1998, subject to ratification by the stockholders of the Company.
It is intended that, in the absence of contrary specifications, the shares
represented by the proxies will be voted FOR the following resolution ratifying
the appointment of Arthur Andersen LLP.
"RESOLVED, that the stockholders of Glacier Water Services, Inc. hereby
ratify and approve the appointment of Arthur Andersen LLP as the independent
auditors of such Company for the fiscal year ending January 2, 1998."
The affirmative vote of the holders of at least a majority of the aggregate
outstanding shares of Common Stock represented at the meeting is required to
adopt the foregoing resolution. A representative of Arthur Andersen LLP is
expected to be present at the Annual Meeting, will be given an opportunity to
make a statement on behalf of his firm if such representative so desires, and
will be available to respond to any appropriate questions of any stockholder.
Arthur Andersen LLP were the Company's independent auditors for the fiscal year
ended December 31, 1996.
THE BOARD OF DIRECTORS RECOMMENDS A VOTE FOR THE RATIFICATION OF THE
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APPOINTMENT OF ARTHUR ANDERSEN LLP AS INDEPENDENT AUDITORS OF THE COMPANY FOR
THE FISCAL YEAR ENDING JANUARY 2, 1998.
ANNUAL REPORT
The Annual Report of the Company, including financial statements for the
fiscal year ended December 31, 1996, is being forwarded to each stockholder with
this Proxy Statement. Stockholders may obtain a copy of this report without
charge by writing to the Secretary of the Company.
OTHER MATTERS
The Board of Directors has no knowledge of any other matters which may come
before the Annual Meeting. If any other matters shall properly come before the
meeting, the persons named in the proxies will have discretionary authority to
vote the shares thereby represented in accordance with their best judgment.
PROPOSALS OF STOCKHOLDERS
Stockholder proposals, if any, which may be considered for inclusion in the
Company's proxy materials for the 1998 Annual Meeting must be received by the
Company at its offices at 2261 Cosmos Court, Carlsbad, California 92009 not
later than December 2, 1997.
Dated: April 23, 1997
14
<PAGE>
EXHIBIT 1
THIRD AMENDMENT TO GLACIER WATER SERVICES, INC.
1994 STOCK COMPENSATION PROGRAM
1. Purpose.
-------
The purpose of this Third Amendment to Glacier Water Services,
Inc. 1994 Stock Compensation Program (the "Third Amendment") is to increase
the maximum number of shares of common stock under the Program.
2. Definitions.
-----------
Terms used in this Amendment and not defined herein shall have
the meaning ascribed to them in the Glacier Water Services, Inc. 1994
Stock Compensation Program (the "Program").
3. Common Shares Subject to Options.
--------------------------------
Article 2 of the Program is amended by deleting the number
"175,000" and replacing it with the number "275,000" in the first sentence
thereof. Such number pertains to the maximum number of options for common
stock to be granted under Part I of the 1994 Stock Compensation Program.
Article 2 of the Program is amended by deleting the number
"100,000" and replacing it with the number "150,000" in the second sentence
thereof. Such number pertains to the maximum number of options for common
stock to be granted under Part II of the 1994 Stock Compensation Program.
4. Date of the Amendment and Approval of Shareholders.
--------------------------------------------------
This Third Amendment is effective as of February 10, 1997, and is
subject to the approval by affirmative vote of the holders of a majority of
the shares present, either in person or by proxy, and entitled to vote at a
duly held meeting of the shareholders at which a quorum is present
representing a majority of all outstanding shareholders either in person or
by proxy. If such shareholder approval is not obtained, this Third
Amendment shall have no further effect and any options granted in reliance
of shareholder approval hereof shall be automatically canceled.
<PAGE>
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GLACIER WATER SERVICES, INC.
ANNUAL MEETING OF STOCKHOLDERS--JUNE 3, 1997
THIS PROXY IS SOLICITED ON BEHALF OF THE BOARD OF DIRECTORS
The undersigned stockholder of Glacier Water Services, Inc. (the "Company")
hereby appoints Jerry R. Welch and Jerry A. Gordon, and each of them, the true
and lawful attorneys, agents and proxies of the undersigned, with full power of
substitution to each of them, to vote all shares of Common Stock which the
undersigned may be entitled to vote at the Annual Meeting of Stockholders of
the Company to be held on June 3, 1997, and at any adjournment of such meeting,
with all powers which the undersigned would possess if personally present, for
the following purposes:
THIS PROXY WILL BE VOTED AS DIRECTED OR, IF NO DIRECTION IS INDICATED WILL BE
VOTED FOR THE ADOPTION OF EACH PROPOSAL DESCRIBED ON THE REVERSE SIDE AND VOTED
---
FOR THE ELECTION OF THE NOMINEES NAMED ON THE REVERSE HEREOF.
- ---
(CONTINUED AND TO BE SIGNED ON THE REVERSE SIDE)
- -------------------------------------------------------------------------------
<PAGE>
- --------------------------------------------------------------------------------
[X] Please mark
your votes
as this
Item 1. ELECTION OF DIRECTORS
NOMINEES: JERRY R. WELCH SCOTT H. SHLECTER
DOUGLAS C. BOYD RICHARD A. KAYNE
JERRY A. GORDON ROBERT V. SINNOTT
PETER B. FOREMAN
INSTRUCTION: To withhold authority to vote for any individual nominees, write
that nominee's name in the space provided below.
- --------------------------------------------------------------------------
FOR each WITHHELD
nominee listed AUTHORITY
(except as to vote for
marked to the each nominee
contrary): listed.
[_] [_]
Item 2. Approval of an amendment to the 1994 Stock Compensation Program to
increase the maximum number of shares of the Company's common stock issuable
under the Program.
FOR AGAINST ABSTAIN
[_] [_] [_]
Item 3. Ratification of the appointment of Arthur Andersen LLP as independent
auditors of the Company for the 1997 fiscal year.
FOR AGAINST ABSTAIN
[_] [_] [_]
Item 4. In their discretion upon such other matters as they properly come before
this meeting.
FOR AGAINST ABSTAIN
[_] [_] [_]
The undersigned hereby acknowledge receipt of the Notice of Annual Meeting and
Proxy Statement dated April 23, 1997.
Dated:
-------------------------------------------------------------------------
- -------------------------------------------------------------------------------
(Signature)
- -------------------------------------------------------------------------------
(Signature)
- -------------------------------------------------------------------------------
(Print Name Here)
PLEASE SIGN YOUR NAME OR NAMES, EXACTLY AS STENCILED. WHEN SIGNING AS
ATTORNEY, EXECUTOR, ADMINISTRATOR, TRUSTEE, GUARDIAN OR CORPORATE OFFICER,
PLEASE GIVE YOUR FULL TITLE AS SUCH.
- --------------------------------------------------------------------------------
