<PAGE>
UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
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:
-------------------------------------------------------------------------
(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.:
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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 Park Hyatt Hotel
2151 Avenue of the Stars
Los Angeles, California 90067
June 9, 1998
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 9:00
a.m. (Los Angeles time) on Tuesday, June 9, 1998, at the Park Hyatt Hotel, 2151
Avenue of the Stars, Los Angeles, California, 90067 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 1998 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 13, 1998, 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 fiscal year 1997 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 27, 1998
<PAGE>
Glacier Water Services, Inc.
2261 Cosmos Court
Carlsbad, California 92009
---------------------------
Annual Meeting of Stockholders
To Be Held June 9, 1998
---------------------------
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 9, 1998 (the "Annual Meeting"). This Proxy Statement, the
enclosed form of proxy and the fiscal year 1997 Annual Report are being sent to
stockholders on or about May 5, 1998.
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 1998 fiscal year; and
4. Such other business as may properly come before the Annual Meeting or
any adjournment thereof.
The fiscal year 1997 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 $20,000 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 13, 1998 (the "Record
Date"), will be entitled to vote at the Annual Meeting. On the Record Date,
there were outstanding 3,198,325 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 1998 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. The Board of Directors has set the
authorized number of directors at seven, and 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 1999
<TABLE>
<CAPTION>
Name and Age as of the Position, Principal Occupation, Business
June 9, 1998 Meeting Date Experience and Directorships
- ------------------------- ----------------------------
<S> <C>
Douglas C. Boyd, 52 Mr. Boyd has been a director of the Company since June 1997. 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, 62 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, 52 Mr. Gordon has been the Company's President and Chief Operating Officer since September
1994, and a director of the Company since June 1997. 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, 53 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, 45 Mr. Shlecter has been a director of the Company since June 1997. Mr. Schlecter is the
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, 49 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 capacity since 1992. Mr. Sinnott is also a Director of Plains Resources Inc. and
National Energy Group, Inc.
Jerry R. Welch, 47 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 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 six times during the 1997 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. No member of the Board of Directors, the Audit Committee, the
Compensation Committee or the Nominating Committee attended fewer than 75% of
the meetings of the Board or such Committees.
THE AUDIT COMMITTEE
The members of the Audit Committee for the 1997 fiscal year were Messrs.
Foreman, Shlecter and Sinnott. The Audit Committee met in August 1997 and March
1998. 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
3
<PAGE>
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 observations on adequacy of
internal controls, quality of financial reporting, and other accounting and
auditing matters.
THE COMPENSATION COMMITTEE
The members of the Compensation Committee for fiscal year 1997 were Messrs.
Boyd, Foreman and Kayne. The Compensation Committee 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 1997,
March 1997, December 1997, February 1998 and April 1998 to determine the
compensation of the executive officers and key employees of the Company.
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 1998, for the purpose of nominating the
nominees named in this Proxy Statement.
4
<PAGE>
EXECUTIVE OFFICERS OF THE REGISTRANT
<TABLE>
<CAPTION>
Name Position Age
- ---- -------- ---
<S> <C> <C>
Jerry R. Welch.......... Chairman of the Board, Chief Executive Officer 47
and Director
Jerry A. Gordon......... President, Chief Operating Officer and Director 52
Glen A. Skumlien........ Executive Vice President, Operations 48
S. Dane Seibert......... Senior Vice President, Marketing 49
John T. Vuagniaux....... Senior Vice President, Operations 49
Gerald E. Compas........ Vice President, Sales 54
Brenda K. Foster........ Vice President, Controller and Secretary 31
Dana B. Gilbert......... Vice President, National Accounts 49
Roger J. Gilchrist...... Vice President, Eastern Operations 49
Luz E. Gonzales......... Vice President, Human Resources 45
Brian T. Nakagawa....... Vice President, Technology & Information Systems 44
Raymond J. Schweitzer... Vice President, International Operations 50
</TABLE>
The executive officers are elected by and serve at the discretion of the Board
of Directors until their successors are duly chosen and qualified.
Jerry R. Welch
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. He also served as Chairman of the Board from January 1992
through September 1992. From October 1991 until his resignation in September
1992, Mr. Welch served as the Company's Chief Executive Officer. 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.
Jerry A. Gordon
Mr. Gordon has served as the President and Chief Operating Officer of Glacier
Water Services, Inc. since September 1994, and as a Director of the Company
since June 1997. 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.
Glen A. Skumlien
Mr. Skumlien has served as Executive Vice President, Operations since
September 1994. From November 1991 to September 1994, Mr. Skumlien served as
Vice President-Operations.
S. Dane Seibert
Mr. Seibert has served as Senior Vice President of Marketing since joining
the Company in March 1995. From 1990 until joining the Company Mr. Seibert was
Corporate Vice President - International Marketing for Miller/Zell Inc.
John T. Vuagniaux
Mr. Vuagniaux has served as Senior Vice President, Operations since November
1996, after joining the Company in January 1995 as Vice President, Service
Support. From April 1994 to January 1995, Mr. Vuagniaux was owner of Logistics
Solutions, a consulting firm specializing in logistics and operations
management. From January 1992 to April 1994, Mr. Vuagniaux was Director of
Distribution for Blockbuster Entertainment Corporation.
5
<PAGE>
Gerald E. Compas
Mr. Compas has served as Vice President, Sales since March 1997. From June
1991 to March 1997, Mr. Compas served as the Director of Sales and Marketing for
the Aqua-Vend division of McKesson Water Products Company.
Brenda K. Foster
Ms. Foster has served as Vice President, Controller since February 1996, after
joining the Company as Controller in September 1995. Ms. Foster is a Certified
Public Accountant, and worked as an auditor for Ernst & Young LLP from 1988 to
1995.
Dana B. Gilbert
Mr. Gilbert has served as Vice President, National Accounts since February
1996. Mr. Gilbert joined the Company in January 1992 as a Sales Manager. From
January 1994 to February 1996, Mr. Gilbert served as Regional Sales Manager for
the Western Division.
Roger J. Gilchrist
Mr. Gilchrist has served as Vice President, Eastern Operations since February
1996. Mr. Gilchrist joined the Company in April 1988 as a District Manager. In
May 1993, Mr. Gilchrist assumed the position of Regional Sales Manager for the
Eastern Division.
Luz E. Gonzales
Mrs. Gonzales joined the Company in February 1995 as Vice President of Human
Resources. From 1981 to February 1995, Mrs. Gonzales was Corporate Director of
Human Resources for Southwest Water Company, a water service company.
Brian T. Nakagawa
Mr. Nakagawa has served as Vice President, Technology and Information Systems
since February 1996, after joining the Company as Director of Technology and
Information Systems in June 1995. Prior to joining the Company Mr. Nakagawa was
the owner of New Frontier Technologies, an information systems consulting
company.
Raymond J. Schweitzer
Mr. Schweitzer has served as the Company's Vice President, International
Operations since December 1997. From March 1993 to December 1997, Mr.
Schweitzer served as the Vice President, International Sales and Marketing for
Shelcor, Inc., an international toy manufacturer.
6
<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 $100,000 as
compensation for services rendered to the Company during fiscal year 1997.
SUMMARY COMPENSATION TABLE
<TABLE>
<CAPTION>
Long-Term
Compensation
Annual Compensation Awards
--------------------------------------- ----------------------
Name Other All
And Annual Other
Principal Salary Bonus (1) Compensation(2) Options Compensation
Position Year ($) ($) ($) (#) ($)
-------- ---- ----------- ----- ------- ------- -------------
<S> <C> <C> <C> <C> <C> <C>
Jerry R. Welch Chairman 1997 -- -- -- 7,317 $82,000
of the Board and Chief 1996 -- -- -- 6,700 $82,000
Executive Officer(3,4) 1995 -- -- -- 6,151 $94,000
Jerry A. Gordon 1997 $177,175 -- -- 6,000 --
President and Chief 1996 $168,027 $45,000 -- 10,000 --
Operating Officer 1995 $168,806 -- -- 10,000 --
S. Dane Seibert 1997 $156,912 -- -- 6,000 --
Senior Vice President, 1996 $140,374 $61,250 -- 7,000 --
Marketing (5) 1995 $106,191 -- -- 30,000 --
Glen A. Skumlien 1997 $129,066 -- -- 6,000 --
Executive Vice 1996 $117,046 $26,250 -- 3,000 --
President 1995 $115,160 -- -- -- --
John T. Vuagniaux 1997 $117,519 -- -- 6,000 --
Senior Vice President, 1996 $100,548 $22,500 -- 10,000 --
Operations 1995 $ 88,716 -- -- 20,000 --
</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.
(4) Long-Term Compensation Awards for Mr. Welch includes 4,317 options received
in 1997, 5,200 options received in 1996, and 4,651 options received in
1995, in lieu of director's fees of $18,000 in each year.
(5) $35,000 of Mr. Seibert's 1996 bonus was paid in 1996; the remaining $26,250
was paid in 1997.
7
<PAGE>
OPTION GRANTS IN FISCAL 1997
The following table presents certain information regarding stock option
grants to each of the Named Executive Officers during the fiscal year ended
January 4, 1998.
<TABLE>
<CAPTION>
Potential
Realizable
Value at Assumed
Annual Rates
of Stock Price
Appreciation for
Individual Grants Option Term
---------------------- -------------------
Number of
Securities Percent of Total
Underlying Options Exercise
Options Granted to or Base
Granted Employees in Price Expiration 5% 10%
Name (#) Fiscal Year ($/Share) Date ($) ($)
---- ------- ----------- -------- ---------- ------- --------
<S> <C> <C> <C> <C> <C> <C>
Jerry R. Welch 1,500 7% $22.125 2007 $20,871 $ 52,892
4,317 $ 23.50 2002 $28,028 $ 61,935
1,500 $ 30.00 2008 $28,300 $ 71,718
Jerry A. Gordon 6,000 6% $ 26.25 2007 $99,049 $251,013
S. Dane Seibert 6,000 6% $ 26.25 2007 $99,049 $251,013
Glen A. Skumlien 6,000 6% $ 26.25 2007 $99,049 $251,013
John T. Vuagniaux 6,000 6% $ 26.25 2007 $99,049 $251,013
</TABLE>
OPTION EXERCISES IN FISCAL 1997 AND FISCAL YEAR-END OPTION VALUES
The following table presents certain information regarding stock option
exercises during fiscal 1997 and fiscal year-end option values of unexercised
options for each of the Named Executive Officers.
<TABLE>
<CAPTION>
Value of
Number of Unexercised
Unexercised in-the-Money
Options Options
at FY-End at FY-End
(#) ($)
Shares Acquired -------------- ------------------
on Exercise Value Realized Exercisable/ Exercisable/
Name (#) ($) Unexercisable Unexercisable
- ----------------------------- ---------------- --------------- -------------- ------------------
<S> <C> <C> <C> <C>
Jerry R. Welch -- -- 20,851/8,817 $ 287,461/$59,324
Jerry A. Gordon -- -- 50,500/25,500 $781,468/$255,655
S. Dane Seibert -- -- 16,750/26,250 $190,875/$250,125
Glen A. Skumlien 9,000 $136,125 22,500/11,500 $ 374,343/$94,281
John T. Vuagniaux -- -- 12,500/23,500 $135,250/$210,250
</TABLE>
8
<PAGE>
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 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.
9
<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 conform 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 275,000 and 150,000 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 January 4, 1998, no options had been exercised under Part I,
and 200 shares had been exercised under Part II of the Program. 230,668 and
83,938 shares were reserved for issuance subject to outstanding options under
Part I and II of the Program, respectively, and 44,332 and 65,862 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
10
<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) 5 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 275,000 to 525,000 shares, and the maximum number of
shares of common stock issuable under Part II of the Program from 150,000 to
180,000 shares, 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 April 14, 1998, is set forth in its entirety
on Exhibit 1 hereto.
THE BOARD OF DIRECTORS RECOMMENDS THAT YOU VOTE FOR THE ADOPTION OF THE
---
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 April 14, 1998, the Compensation Committee of the Board of Directors
granted, subject to approval of the Amendment by the stockholders of the Company
as provided herein, an aggregate of 205,552 performance options to purchase
shares of the Company's common stock to four of the Company's executive officers
in the following amounts: (i) 33,333 options to Jerry A. Gordon, the Company's
President and Chief Operating Officer, (ii) 22,222 options to S. Dane Seibert,
the Company's Senior Vice President, Marketing, (iii) 22,222 options to Glen A.
Skumlien, the Company's Executive Vice President, and (iv) 22,222 options to
John T. Vuagniaux, the Company's Senior Vice President, Operations. An
additional 105,553 performance options were granted to seven other officers of
the Company. The options will only become exercisable on the date which follows
thirty (30) consecutive trading days on which the closing price of the Company's
common stock is at or above $75.00 per share. If the closing price of the
Company's common stock does not trade at or above $75.00 per share for thirty
(30) consecutive trading days within five years from the date of grant of such
options, such options shall automatically expire. However, at the election of
the option holder, the exercisability of such options may become subject to
additional vesting restrictions over time in order to qualify all or a portion
of such options as Incentive Stock Options ("ISO's"). The exercise price for
each of the 205,552 options granted was $31.25, 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 $30.88 per share on April 17, 1998.
A total of 88,780 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.
11
<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 1997.
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.
Fiscal 1997 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.
Fiscal 1997 President and Chief Executive Officer Compensation
Mr. Gordon's compensation as President of the Company for the fiscal year
1997 was determined by the Compensation Committee of the Board. For fiscal year
1997, the Compensation Committee determined that Mr. Gordon would be entitled to
receive base salary of $170,000 and a bonus of $65,000, subject to the Company's
achievement of specified earnings levels in fiscal year 1997. No bonus was
awarded to Mr. Gordon in fiscal 1997. In March 1997, the Compensation Committee
granted Mr. Gordon options to purchase 6,000 shares of the Company's common
stock.
- -------------------
/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.
12
<PAGE>
During fiscal year 1997, 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 4,317 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.
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:
Douglas C. Boyd
Peter B. Foreman
Richard A. Kayne
13
<PAGE>
PERFORMANCE GRAPH/2/
The following graph compares the Company's cumulative total stockholder
return on its Common Stock for the period from December 31, 1992, to January 4,
1998, with returns on, respectively, the American Stock Exchange Index and an
industry index consisting of the Dow Jones Industry Group Beverages, Soft
Drink. The graph presented in prior years used as its industry index the
American Stock Exchange Consumer Industry Index. This index is no longer
published by the American Stock Exchange. Accordingly, the Company has selected
the industry index that it believes is the most representative of its industry
group. 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 DECEMBER 31, 1992 THROUGH JANUARY 4, 1998
PERFORMANCE GRAPH APPEARS HERE
<TABLE>
<CAPTION>
Measurement Period GLACIER WATER PEER GROUP AMEX MARKET
(Fiscal Year Covered) SERVICES INDEX INDEX
- --------------------- ------------- --------- -----------
<S> <C> <C> <C>
Measurement Pt- 1992 $100.00 $100.00 $100.00
FYE 1993 $111.96 $106.50 $118.81
FYE 1994 $167.39 $112.51 $104.95
FYE 1995 $161.96 $165.13 $135.28
FYE 1996 $198.91 $218.02 $142.74
FYE 1997 $269.57 $284.95 $171.76
</TABLE>
ASSUMES $100 INVESTED ON JAN. 1, 1993
ASSUMES DIVIDEND REINVESTED
FISCAL YEAR ENDING JAN. 4, 1998
- ------------------------
/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.
14
<PAGE>
SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT
The following table sets forth as of March 31, 1998 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) 1,311,322 37.8%
Goldman, Sachs & Co. and The Goldman Sachs Group, 227,700 7.1%
L.P. (3)
Peter B. Foreman (4) 81,506 2.4%
Jerry R. Welch (4)(5) 21,601 *
Scott H. Shlecter (4) -- *
Robert V. Sinnott (4)(5) 21,601 *
Douglas C. Boyd (4) -- *
Jerry A. Gordon (4) 58,750 1.7%
S. Dane Seibert (4) 27,600 *
Glen A. Skumlien (4) 26,500 *
John T. Vuagniaux (4) 21,500 *
Executive officers and directors 1,617,005 46.6%
as a group (17 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 1,045,680 shares held by four investment
partnerships, 112,566 shares held by Mr. Kayne individually, 142,100 shares
held by three managed accounts and 10,976 stock options exercisable within
60 days of March 31, 1998 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) The address for Goldman, Sachs & Co. and The Goldman, Sachs Group, L.P. is
85 Broad Street, New York, NY 10004.
(4) Shares beneficially owned include stock options exercisable within 60 days
of March 31, 1998 in the amout of 21,601 held by Mr. Foreman, 21,601 held
by Mr. Sinnott, 21,601 held by Mr. Welch, 58,750 held by Mr. Gordon, 27,500
held by Mr. Seibert, 26,500 held by Mr. Skumlien and 21,500 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.
15
<PAGE>
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 3, 1999, 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 3, 1999."
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 was the Company's independent auditors for the fiscal year
ended January 4, 1998.
THE BOARD OF DIRECTORS RECOMMENDS A VOTE FOR THE RATIFICATION OF THE
---
APPOINTMENT OF ARTHUR ANDERSEN LLP AS INDEPENDENT AUDITORS OF THE COMPANY FOR
THE FISCAL YEAR ENDING JANUARY 3, 1999.
ANNUAL REPORT
The Annual Report of the Company, including financial statements for the
fiscal year ended January 4, 1998, 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 1999 Annual Meeting must be received by the
Company at its offices at 2261 Cosmos Court, Carlsbad, California 92009 not
later than December 1, 1998.
Dated: April 27, 1998
16
<PAGE>
EXHIBIT 1
FOURTH AMENDMENT TO GLACIER WATER SERVICES, INC.
1994 STOCK COMPENSATION PROGRAM
1. Purpose.
-------
The purpose of this Fourth Amendment to Glacier Water Services, Inc.
1994 Stock Compensation Program (the "Fourth 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 "275,000"
and replacing it with the number "525,000" 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 "150,000"
and replacing it with the number "180,000" 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 Fourth Amendment is effective as of April 14, 1998, 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 Fourth
Amendment shall have no further effect and any options granted in reliance
of shareholder approval hereof shall be automatically canceled.
<PAGE>
GLACIER WATER SERVICES, INC.
ANNUAL MEETING OF STOCKHOLDERS--JUNE 9, 1998
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 9, 1998, 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>
Please mark
[X] your votes
as this
Item 1. ELECTION OF DIRECTORS
NOMINEES: JERRY R. WELCH SCOTT H. SHLECTER
DOUGLAS C. BOYD RICHARD A. KAYNE
PETER B. FOREMAN ROBERT V. SINNOTT
JERRY A. GORDON
INSTRUCTION: To withhold authority to vote for any individual nominees, write
that nominee's name in the space provided below.
____________________________________________________________
FOR each nominee listed (except as marked to the contrary): [_]
WITHHELD AUTHORITY to vote for each nominee 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 1998 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 27, 1998.
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.
